Prosperity Bancshares, Inc.® Reports Record Fourth Quarter 2013 Earnings

By PR Newswire,  January 24, 2014, 06:03:00 AM EDT


- Named Best Bank in America for 2014 by Forbes Magazine

- Fourth quarter 2013 earnings per share (diluted) increased 15.3% to $0.98 compared with the fourth quarter 2012

- Net income increased $14.705 million or 30.5% compared with the fourth quarter 2012

- Completed the acquisition of First Victoria National Bank

- Nonperforming assets remain low at 0.15% of fourth quarter average earning assets

- Loans increased $2.595 billion or 50.1% compared with 2012

- Deposits increased $3.649 billion or 31.3% compared with 2012

HOUSTON, Jan. 24, 2014 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE:PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income for the quarter ended December 31, 2013, of $62.971 million or $0.98 per diluted common share, an increase in net income of $14.705 million or 30.5%, compared with $48.266 million, and an increase in diluted earnings per share of 15.3%, compared with $0.85 per diluted common share for the same period in 2012.  Prosperity also reported net income for the year ended December 31, 2013 of $221.398 million or $3.65 per diluted common share, up 31.9% from 2012 net income of $167.901 million and up 13.0% from 2012 diluted earnings per common share of $3.23.

"I am 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 have worked very hard and this honor recognizes them for that," said David Zalman, Prosperity's Chairman and Chief Executive Officer. 

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

"We look forward to our pending merger with F&M Bancorporation and its wholly owned subsidiary ("F&M Bank") headquartered in Tulsa, Oklahoma, which we hope to close at the end of the first quarter or very early in the second quarter of this year.  The pending merger with F&M Bank, 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 from a size standpoint," added Zalman.

"We could not be more pleased with our earnings per share for 2013 increasing 13.0% 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 31.3% 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," concluded Zalman.

Prosperity's management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio.  In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30).  Prosperity has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented.  Please refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.

Results of operations for the three months ended December 31, 2013

For the three months ended December 31, 2013, net income was $62.971 million compared with $48.266 million for the same period in 2012.  Net income per diluted common share was $0.98 for the three months ended December 31, 2013 compared with $0.85 for the same period in 2012.  Annualized returns on average assets, average common equity and average tangible common equity for the three months ended December 31, 2013 were 1.42%, 9.53% and 23.97%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 40.21% for the three months ended December 31, 2013.

Net interest income before provision for credit losses for the quarter ended December 31, 2013, increased 34.3% to $145.469 million compared with $108.301 million during the same period in 2012.  The increase was primarily due to a 23.2% increase in average interest-earning assets for the same period.  Linked quarter net interest income before provision for credit losses increased 15.0% or $18.936 million to $145.469 million compared with $126.533 million during the three months ended September 30, 2013.  The net interest margin on a tax equivalent basis increased to 3.82% for the three months ended December 31, 2013, compared with 3.53% for the same period in 2012 and 3.59% for the three months ended September 30, 2013.  Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis increased on a linked quarter basis from 3.19% for the quarter ended September 30, 2013 to 3.35% for the quarter ended December 31, 2013. 

Noninterest income increased $1.052 million or 4.4% to $25.158 million for the three months ended December 31, 2013, compared with $24.106 million for the same period in 2012.  The increase was primarily due to the acquisitions of FVNB Corp. and First Victoria National Bank (collectively "FVNB") on November 1, 2013, Coppermark Bancshares, Inc. and  Coppermark Bank (collectively "Coppermark") on April 1, 2013 and East Texas Financial Services on January 1, 2013, partially offset by a decrease in debit card income as a result of a Durbin Amendment that became effective on July 1, 2013.  This Federal Reserve rule is applicable to financial institutions that have assets of $10 billion or more and imposes limits on the amount of interchange, or swipe, fees that can be collected.  On a linked quarter basis, noninterest income increased 16.7% or $3.604 million.

Noninterest expense increased $11.624 million or 20.4% to $68.592 million for the three months ended December 31, 2013, compared with $56.968 million for the same period in 2012.  The increase was primarily due to additional noninterest expenses associated with the acquisitions of FVNB, Coppermark and East Texas Financial Services.  On a linked quarter basis, noninterest expense increased 11.5% or $7.055 million due mainly to the acquisition of FVNB and one-time pre-tax merger expenses of $2.032 million primarily related to the FVNB acquisition.

Loans at December 31, 2013 were $7.775 billion, an increase of $2.595 billion or 50.1%, compared with $5.180 billion at December 31, 2012.  Linked quarter loans increased $1.593 billion or 25.8% from $6.183 billion at September 30, 2013. 

Deposits at December 31, 2013 were $15.291 billion, an increase of $3.649 billion or 31.3% compared with $11.642 billion at December 31, 2012.  Linked quarter deposits increased $2.835 billion or 22.8% from $12.456 billion at September 30, 2013. 

Average loans increased 40.8% or $2.098 billion to $7.238 billion for the quarter ended December 31, 2013, compared with $5.140 billion for the same period in 2012.  On a linked quarter basis, average loans increased 17.3% or $1.065 billion from $6.173 billion for the quarter ended September 30, 2013. Average deposits increased 26.0% to $14.191 billion for the quarter ended December 31, 2013, compared with $11.259 billion for the same period of 2012.   On a linked quarter basis, average deposits increased 14.1% or $1.758 billion from $12.432 billion for the quarter ended September 30, 2013. 

Results of operations for the twelve months ended December 31, 2013

For the twelve months ended December 31, 2013, net income was $221.398 million compared with $167.901 million for the same period in 2012.  Net income per diluted common share was $3.65 for the twelve months ended December 31, 2013 compared with $3.23 for the same period in 2012.  Returns on average assets, average common equity and average tangible common equity for the twelve months ended December 31, 2013 were 1.36%, 9.31%, and 22.52%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 41.60% for the twelve months ended December 31, 2013. 

Net interest income before provision for credit losses for the twelve months ended December 31, 2013 increased $118.120 million or 31.0% to $498.826 million compared with $380.706 million during the same period in 2012.  The increase was attributable primarily to a 29.6% increase in average earning assets over the same period. 

Noninterest income increased $19.892 million or 26.3% to $95.427 million for the twelve months ended December 31, 2013 compared with $75.535 million for the same period in 2012.  The increase was primarily due to the full year effect of the acquisition of American State Bank ("ASB"), including their trust department and home loan center, in addition to the East Texas Financial Services, Coppermark and FVNB acquisitions completed in 2013.

Noninterest expense increased $48.739 million or 24.6% to $247.196 million for the twelve months ended December 31, 2013 compared with $198.457 million for the same period in 2012.  This increase in noninterest expense was the result of the completion of three acquisitions in 2013 and the full year effect of the ASB acquisition.  Additionally, total noninterest expense for the twelve months ended December 31, 2013 included one-time pre-tax merger expenses of $3.203 million.

Average loans increased 37.4% or $1.689 billion to $6.203 billion for the twelve months ended December 31, 2013, compared with $4.514 billion for the same period in 2012.  Average deposits increased 30.9% to $12.764 billion for the twelve months ended December 31, 2013, compared with $9.749 billion for the same period in 2012. 

The table below provides detail on loans acquired and deposits assumed in the Community National Bank ("Community National"), East Texas Financial Services, Coppermark and FVNB acquisitions completed on October 1, 2012, January 1, 2013, April 1, 2013 and November 1, 2013, respectively:

 

Balance Sheet Data (at period end)



















(In thousands)





















Dec 31, 2013



Sep 30, 2013



Jun 30, 2013



Mar 31, 2013



Dec 31, 2012



(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)





















Loans acquired (including new  

production since respective

acquisition dates):



















   Community National

$         59,992



$         62,673



$         61,722



$          61,966



$         63,940

   East Texas Financial Services

99,281



104,403



111,626



117,863



-

   Coppermark

616,333



688,656



772,965



-



-

   FVNB

1,588,238



-



-



-



-

All other

5,411,377



5,326,857



5,226,170



5,083,195



5,116,000

Total loans

$    7,775,221



$    6,182,589



$    6,172,483



$     5,263,024



$    5,179,940









































Deposits assumed (including new

deposits since respective acquisition

dates):



















   Community National

$       159,302



$       154,378



$       156,210



$        156,274



$       160,404

   East Texas Financial Services

81,200



90,649



88,289



98,359



-

   Coppermark

1,031,993



1,073,567



1,087,137



-



-

   FVNB

2,239,415



-



-



-



-

All other

11,779,361



11,137,205



11,177,014



11,458,834



11,481,440

Total deposits

$  15,291,271



$  12,455,799



$  12,508,650



$   11,713,467



$  11,641,844

 

As reflected in the table above, loan and deposit growth was impacted by the acquisitions of Community National, East Texas Financial Services, Coppermark and FVNB.  Excluding loans acquired in these acquisitions and new production at the acquired banking centers since the respective acquisition dates, loans at December 31, 2013 grew 5.8% compared with December 31, 2012 and 1.6% (6.3% annualized) on a linked quarter basis. Excluding deposits assumed in these acquisitions and new deposits generated at the acquired banking centers since the respective acquisition dates, deposits at December 31, 2013 grew 2.6% compared with December 31, 2012 and increased 5.8% (23.1% annualized) on a linked quarter basis.

At December 31, 2013, Prosperity had $18.642 billion in total assets, $7.775 billion in loans and $15.291 billion in deposits. Assets, loans and deposits at December 31, 2013 increased by 27.8%, 50.1% and 31.3%, respectively, compared with their respective levels at December 31, 2012.

Asset Quality

Nonperforming assets totaled $22.504 million or 0.15% of quarterly average earning assets at December 31, 2013, compared with $13.015 million or 0.10% of quarterly average earning assets at December 31, 2012, and $12.687 million or 0.09% of quarterly average earning assets at September 30, 2013.  The allowance for credit losses was 0.87% of total loans at December 31, 2013, 1.01% of total loans at December 31, 2012 and 0.97% of total loans at September 30, 2013.  Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.25% and 1.20% of remaining loans as of December 31, 2013 and September 30, 2013, respectively.  Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure. 

The provision for credit losses was $7.865 million for the three months ended December 31, 2013 compared with $4.025 million for the three months ended September 30, 2013 and $3.550 million for the three months ended December 31, 2012.  The provision for credit losses was $17.240 million for the twelve months ended December 31, 2013 compared with $6.100 million for the twelve months ended December 31, 2012. 

Net charge offs were $496 thousand for the three months ended December 31, 2013 compared with $288 thousand for the three months ended September 30, 2013 and $1.913 million for the three months ended December 31, 2012. Net charge offs were $2.522 million for the twelve months ended December 31, 2013 compared with $5.130 million for the twelve months ended December 31, 2012. 

Conference Call

Prosperity's management team will host a conference call on Friday, January 24, 2014 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity's fourth quarter 2013 earnings. Individuals and investment professionals may participate in the call by dialing 866-952-1906, the reference code is PBUS.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at http://www.prosperitybankusa.com.  The webcast may be accessed directly from Prosperity's home page by clicking the "About Us" tab and then the "Presentations & Calls" link.

Pending Acquisition of F&M Bancorporation

On August 29, 2013, Prosperity announced the signing of a definitive merger agreement with F&M Bancorporation Inc. ("FMBC") and its wholly-owned subsidiary The F&M Bank & Trust Company (collectively, "F&M Bank") headquartered in Tulsa, Oklahoma.  F&M Bank operates 13 banking offices; 10 in Tulsa, Oklahoma and surrounding areas (including 1 loan production office) and 3 in Dallas, Texas.  As of December 31, 2013, FMBC on a consolidated basis, reported total assets of $2.568 billion, total loans of $1.761 billion and total deposits of $2.332 billion. 

Under the terms of the definitive agreement, Prosperity will issue approximately 3,298,246 shares of Prosperity common stock plus $47.000 million in cash for all outstanding shares of FMBC capital stock, subject to certain conditions and potential adjustments.  The transaction is subject to customary closing conditions, including the receipt of customary regulatory approvals and approval by FMBC's shareholders.

Acquisition of FVNB Corp.

On November 1, 2013, Prosperity completed the acquisition of FVNB Corp. and its wholly-owned subsidiary First Victoria National Bank (collectively, "FVNB") headquartered in Victoria, Texas.  First Victoria National Bank operated 33 banking offices; 4 in Victoria, Texas; 7 in the South Texas area including Corpus Christi; 6 in the Bryan/College Station area; 5 in the Central Texas area including New Braunfels; and 11 in the Houston area including The Woodlands and Huntsville.  As of September 30, 2013, FVNB, on a consolidated basis, reported total assets of $2.473 billion, total loans of $1.648 billion and total deposits of $2.195 billion. 

Pursuant to the terms of the acquisition agreement, Prosperity issued 5,570,667 shares of Prosperity common stock plus $91.250 million in cash for all outstanding shares of FVNB Corp. capital stock, which resulted in a premium of $278.3 million. 

Acquisition of Coppermark Bancshares, Inc.

On April 1, 2013, Prosperity completed the acquisition of Coppermark Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank (collectively, "Coppermark") headquartered in Oklahoma City, Oklahoma. Coppermark operated 9 full-service banking offices; 6 in Oklahoma City, Oklahoma and surrounding areas and 3 in the Dallas, Texas area. As of March 31, 2013, Coppermark reported, on a consolidated basis, total assets of $1.2 billion, total loans of $847.6 million and total deposits of $1.1 billion.

Pursuant to the terms of the acquisition agreement, Prosperity issued 3,258,718 shares of Prosperity common stock plus $60.0 million in cash for all outstanding shares of Coppermark Bancshares capital stock, which resulted in a premium of $91.7 million.

Acquisition of East Texas Financial Services, Inc.

On January 1, 2013, Prosperity completed the acquisition of East Texas Financial Services, Inc. (OTC BB:FFBT) and its wholly-owned subsidiary, First Federal Bank Texas ("Firstbank"). Firstbank operated 4 banking offices in the Tyler MSA, including 3 locations in Tyler, Texas and 1 location in Gilmer, Texas. As of December 31, 2012, East Texas Financial Services reported, on a consolidated basis, total assets of $165.0 million, total loans of $129.3 million and total deposits of $112.3 million.

Pursuant to the terms of the acquisition agreement, Prosperity issued 530,940 shares of Prosperity common stock for all outstanding shares of East Texas Financial Services capital stock, which resulted in a premium of $7.0 million.

Acquisition of Community National Bank

On October 1, 2012, Prosperity completed the acquisition of Community National Bank, Bellaire, Texas.  Community National operated 1 banking office in Bellaire, Texas, in the Houston Metropolitan Area. As of September 30, 2012, Community National reported total assets of $183.0 million, total loans of $68.0 million and total deposits of $164.6 million. 

Pursuant to the terms of the acquisition agreement, Prosperity issued 372,282 shares of Prosperity common stock plus $11.4 million in cash for all outstanding shares of Community National capital stock, which resulted in a premium of $10.6 million.

Prosperity Bancshares, Inc. ®

Prosperity Bancshares Inc. ® is a $18.642 billionHouston, Texas based regional financial holding company, formed in 1983. Operating under a community banking philosophy and seeking to develop broad customer relationships based on service and convenience, Prosperity offers a variety of traditional loan and deposit products to its customers, which consist primarily of small and medium sized businesses and consumers. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services at http://www.prosperitybankusa.com, Retail Brokerage Services, Credit Cards, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management; and Mobile Banking. Prosperity currently operates 238 full-service banking locations; 63 in the Houston area, including The Woodlands and Huntsville; 26 in the South Texas area including Corpus Christi and Victoria; 35 in the Dallas/Fort Worth area; 22 in the East Texas area; 36 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area and 6 in the Central Oklahoma area.

 

Bryan/College Station Area -

McKinney

Gladebrook

Colony Creek

Bryan

McKinney-Stonebridge

Heights

Edna

Bryan-29th Street

Midway

Highway 6 West

Goliad

Bryan-East

Plano

Hillcroft

Kingsville

Bryan-North

Preston Forest

Little York

Mathis

Caldwell

Preston Road

Medical Center

Padre Island

College Station

Red Oak

Memorial Drive

Palacios

Crescent Point

Sachse

Northside

Port Lavaca

Hearne

The Colony

Pasadena

Portland

Huntsville

Turtle Creek

Pecan Grove

Rockport

Madisonville

Westmoreland

River Oaks

Sinton

Navasota



Sugar Land

Taft

New Waverly

Fort Worth -

SW Medical Center

Victoria

Rock Prairie

Haltom City

Tanglewood

Victoria-Navarro

Southwest Parkway

Keller

Uptown

Victoria-North

Tower Point

Roanoke

Waugh Drive

Victoria-North #2

Wellborn Road

Stockyards

Westheimer







West University

West Texas Area -

Central Texas Area -



Woodcreek





Other Dallas/Fort Worth Locations -



Abilene -

Austin -

Arlington

Other Houston Area Locations -

Antilley Road

183

Azle

Angleton

Barrow Street

Allandale

Ennis

Bay City

Cypress Street

Cedar Park

Gainesville

Beaumont

Judge Ely

Congress

Glen Rose

Cinco Ranch

Mockingbird

Lakeway

Granbury

Cleveland



Liberty Hill

Mesquite

East Bernard



Northland

Muenster

El Campo

Lubbock -

Oak Hill

Sanger

Dayton

4th Street

Parmer Lane

Waxahachie

Galveston

66th Street

Research Blvd

Weatherford

Groves

82nd Street

Westlake



Hempstead

86th Street



East Texas Area -

Hitchcock

98th Street



Athens

Katy

Avenue Q

Other Central Texas Locations -

Blooming Grove

Katy-S. Mason Road

North University

Bastrop

Canton

Katy-Spring Green

Texas Tech Student Union

Canon Lake

Carthage

Liberty



Cuero

Corsicana

Magnolia



Dime Box

Crockett

Magnolia Parkway

Midland -

Dripping Springs

Eustace

Mont Belvieu

Wadley

Elgin

Gilmer

Nederland

Wall Street

Flatonia

Grapeland

Needville



Georgetown

Gun Barrel City

Rosenberg



Gonzales

Jacksonville

Shadow Creek

Odessa -

Gruene

Kerens

Spring

Grandview

Hallettsville

Longview

Sweeny

Grant

Kingsland

Mount Vernon

The Woodlands-I-45

Kermit Highway

La Grange

Palestine

The Woodlands-Research Forest

Parkway

Lexington

Rusk

Tomball



New Braunfels

Seven Points

Waller

Other West Texas Locations -

Pleasanton

Teague

West Columbia

Big Spring

Round Rock

Tyler-Beckham

Wharton

Brownfield

San Antonio

Tyler-South Broadway

Winnie

Brownwood

Schulenburg

Tyler-University

Wirt

Cisco

Seguin

Winnsboro



Comanche

Smithville



South Texas Area -

Early

Thorndale

Houston Area -



Floydada

Weimar



Corpus Christi -

Gorman

Yoakum

Houston -

Airline

Levelland

Yorktown

Aldine

Calallen

Littlefield



Allen Parkway

Carmel

Merkel

Dallas/Fort Worth Area -

Bellaire

Northwest

Plainview



Beltway

Saratoga

San Angelo

Dallas -

Clear Lake

Timbergate

Slaton

Abrams Centre

Copperfield

Water Street

Snyder

Balch Springs

Cypress





Camp Wisdom

Downtown

Other South Texas Locations -



Cedar Hill

Eastex

Alice

Oklahoma

Dallas - Central Expressway

Fairfield

Aransas Pass

23rd Street

Frisco

First Colony

Beeville

Edmond

Frisco-West

Gessner



Expressway

Independence





I-240

Kiest





Memorial







Norman















 

In connection with the proposed merger of F&M Bancorporation Inc. into Prosperity Bancshares, Inc., Prosperity Bancshares filed with the Securities and Exchange Commission a registration statement on Form S-4 to register the shares of Prosperity's common stock to be issued to the shareholders of F&M Bancorporation.  The registration statement included a proxy statement/prospectus which will be sent to the shareholders of F&M Bancorporation seeking their approval of the proposed transaction.

WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY, F&M BANCORPORATION INC. AND THE PROPOSED TRANSACTION.

Investors and security holders may obtain free copies of these documents through the website maintained by the Securities and Exchange Commission at http://www.sec.gov.  Documents filed with the SEC by Prosperity will be available free of charge by directing a request by telephone or mail to Prosperity Bancshares, Inc., Prosperity Bank Plaza, 4295 San Felipe, Houston, Texas 77027 Attn: Investor Relations. Prosperity's telephone number is (281) 269-7199.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the securities laws that are based on current expectations, assumptions, estimates and projections about Prosperity and its subsidiaries.  These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements.  These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks;  continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives.  Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate fluctuations and interest rate fluctuations; and weather.  These and various other factors are discussed in Prosperity's Annual Report on Form 10-K for the year ended December 31, 2012 and other reports and statements Prosperity has filed with the SEC. Copies of the SEC filings for Prosperity Bancshares® may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)























 Dec 31, 2013 



 Sep 30, 2013 



 Jun 30, 2013 



 Mar 31, 2013 



 Dec 31, 2012 

Balance Sheet Data



















 (at period end)















Total loans

$       7,775,221



$       6,182,589



$       6,172,483



$        5,263,024



$       5,179,940

Investment securities(A)

8,224,448



7,771,345



8,017,884



7,985,811



7,442,065

Federal funds sold 

400



1,121



606



835



352

Allowance for credit losses

(67,282)



(59,913)



(56,176)



(55,049)



(52,564)

Cash and due from banks

380,990



269,987



250,542



180,577



325,952

Goodwill

1,674,209



1,351,782



1,350,834



1,235,743



1,217,162

Core deposit intangibles

37,912



25,233



26,688



26,514



26,159

Other real estate

7,299



7,432



10,244



9,913



7,234

Fixed assets, net

282,925



232,240



227,455



206,829



205,268

Other assets

325,906



272,463



270,158



227,117



232,005

Total assets

$     18,642,028



$     16,054,279



$     16,270,718



$      15,081,314



$     14,583,573





















Demand deposits

$       4,108,835



$       3,368,357



$       3,283,082



$        2,995,828



$       3,016,205

Interest-bearing deposits

11,182,436



9,087,442



9,225,568



8,717,639



8,625,639

Total deposits

15,291,271



12,455,799



12,508,650



11,713,467



11,641,844

Securities sold under repurchase agreements

364,357



431,969



481,170



470,241



454,502

Federal funds purchased and other borrowings

10,689



605,951



781,215



576,768



256,753

Junior subordinated debentures

124,231



85,055



85,055



85,055



85,055

Other liabilities

64,662



86,393



69,346



86,328



56,030

Total liabilities

15,855,210



13,665,167



13,925,436



12,931,859



12,494,184

Shareholders' equity(B)

2,786,818



2,389,112



2,345,282



2,149,455



2,089,389

Total liabilities and equity

$     18,642,028



$     16,054,279



$     16,270,718



$      15,081,314



$     14,583,573





















(A) Includes $7,512, $8,588, $9,724, $12,054 and $13,824, in unrealized gains on available for sale securities for the quarterly periods ending December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively.

(B) Includes $4,883, $5,582, $6,321, $7,835 and $8,986, in after-tax unrealized gains on available for sale securities for the quarterly periods ending December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)































Three Months Ended



Year Ended



Dec 31, 2013



Sep 30, 2013



Jun 30, 2013



Mar 31, 2013



Dec 31, 2012



Dec 31, 2013



Dec 31, 2012





























Income Statement Data



























Interest income:



























Loans

$       110,575



$         94,236



$         89,842



$          81,464



$         82,727



$       376,117



$       271,324

Securities(C)

45,100



41,961



39,384



36,548



34,956



162,993



148,374

Federal funds sold and other earning assets

76



16



76



19



36



187



144

Total interest income

155,751



136,213



129,302



118,031



117,719



539,297



419,842





























Interest expense:



























Deposits

9,048



8,314



9,170



8,690



8,217



35,222



34,486

Junior subordinated debentures

730



610



606



605



631



2,551



2,593

Securities sold under repurchase agreements

280



317



312



292



294



1,201



705

Other borrowings

224



439



472



362



276



1,497



1,352

Total interest expense

10,282



9,680



10,560



9,949



9,418



40,471



39,136

Net interest income

145,469



126,533



118,742



108,082



108,301



498,826



380,706

Provision for credit losses

7,865



4,025



2,550



2,800



3,550



17,240



6,100

Net interest income after provision for credit losses

137,604



122,508



116,192



105,282



104,751



481,586



374,606





























Noninterest income:



























Nonsufficient funds (NSF) fees

9,669



8,649



8,346



8,509



9,292



35,173



29,113

Credit card, debit card and ATM card income 

4,662



4,307



7,007



6,487



6,683



22,463



21,057

Service charges on deposit accounts

3,460



3,169



3,304



2,931



2,877



12,864



11,112

Trust income

1,542



901



896



1,017



915



4,356



1,746

Mortgage income

549



931



1,567



991



1,120



4,038



2,681

Brokerage income

719



233



263



303



154



1,518



648

Bank owned life insurance income

1,011



916



932



776



1,242



3,635



2,673

Net gain (loss) on sale of assets

40



126



(180)



1



(244)



(13)



(231)

Net gain (loss) on sale of other real estate

196



(864)



237



(105)



(113)



(536)



(457)

Other noninterest income

3,310



3,186



2,902



2,531



2,180



11,929



7,193

Total noninterest income

25,158



21,554



25,274



23,441



24,106



95,427



75,535





























Noninterest expense:



























Salaries and benefits

40,633



37,135



37,517



33,209



31,980



148,494



115,505

Core deposit intangibles amortization

1,594



1,455



1,341



1,755



1,932



6,145



7,229

Net occupancy and equipment

4,893



5,094



4,669



4,278



4,812



18,934



16,475

Depreciation

3,072



2,679



2,464



2,378



2,491



10,593



8,923

Debit card, data processing and software amortization

3,333



2,756



3,249



2,570



3,106



11,908



9,445

Regulatory assessments and FDIC insurance

2,771



2,516



2,579



2,395



2,365



10,261



7,679

Communications (includes telephone, courier and postage)

2,468



2,397



2,410



2,196



2,381



9,471



8,158

Other real estate expense

176



75



237



223



465



711



1,810

Other noninterest expense

9,652



7,430



6,834



6,763



7,436



30,679



23,233

Total noninterest expense

68,592



61,537



61,300



55,767



56,968



247,196



198,457

Net income before taxes

94,170



82,525



80,166



72,956



71,889



329,817



251,684

Federal income taxes

31,199



27,247



26,322



23,651



23,623



108,419



83,783

Net income available to common shareholders

$         62,971



$         55,278



$         53,844



$          49,305



$         48,266



$       221,398



$       167,901





























(C) Interest income on securities was reduced by net premium amortization of $12,017, $15,136, $18,838, $22,710 and $23,992 for the three month periods ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively, and $68,701 and $66,889 for the years ended December 31, 2013 and 2012, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars and share amounts in thousands, except per share data and market prices)































Three Months Ended



Year Ended



Dec 31, 2013



Sep 30, 2013



Jun 30, 2013



Mar 31, 2013



Dec 31, 2012



Dec 31, 2013



Dec 31, 2012





























Profitability



























Net income

$         62,971



$         55,278



$         53,844



$          49,305



$         48,266



$       221,398



$       167,901





























Basic earnings per share

$             0.98



$             0.92



$             0.89



$              0.87



$             0.86



$             3.66



$             3.24

Diluted earnings per share

$             0.98



$             0.91



$             0.89



$              0.86



$             0.85



$             3.65



$             3.23





























Return on average assets(D) 

1.42%



1.37%



1.33%



1.33%



1.36%



1.36%



1.35%

Return on average common equity(D) 

9.53%



9.31%



9.27%



9.23%



9.28%



9.31%



9.10%

Return on average tangible common equity(D) (E)

23.97%



22.14%



22.32%



22.30%



22.92%



22.52%



21.93%

Tax equivalent net interest margin(F)

3.82%



3.59%



3.43%



3.42%



3.53%



3.58%



3.53%

Efficiency ratio(G)

40.21%



41.59%



42.51%



42.40%



42.95%



41.60%



43.48%





























Liquidity and Capital Ratios



























Equity to assets

14.95%



14.88%



14.41%



14.25%



14.33%



14.95%



14.33%

Tier 1 risk-based capital

13.29%



14.74%



14.15%



14.77%



14.40%



13.29%



14.40%

Total risk-based capital

14.03%



15.55%



14.91%



15.61%



15.22%



14.03%



15.22%

Tier 1 leverage capital

7.44%



7.37%



7.07%



7.10%



7.10%



7.44%



7.10%

Tangible equity to tangible assets(E)

6.35%



6.90%



6.50%



6.42%



6.34%



6.35%



6.34%





























Other Data



























Shares used in computed earnings per share



























Basic

64,024



60,344



60,250



56,988



56,427



60,421



51,794

Diluted

64,173



60,504



60,394



57,134



56,554



60,578



51,941

Period end shares outstanding

66,048



60,383



60,315



57,014



56,447



66,048



56,447

Cash dividends paid per common share

$           0.240



$           0.215



$           0.215



$            0.215



$           0.215



$           0.885



$           0.800

Book value per share

$           42.19



$           39.57



$           38.88



$            37.70



$           37.02



$           42.19



$           37.02

Tangible book value per share(E)

$           16.27



$           16.76



$           16.05



$            15.56



$           14.99



$           16.27



$           14.99





























Common Stock Market Price



























High

$           65.07



$           61.99



$           52.38



$            47.56



$           43.54



$           65.07



$           47.66

Low

61.53



51.85



44.33



42.38



38.56



42.38



38.56

Period end market price

63.39



61.84



51.79



47.39



42.00



63.39



42.00

Net charge-offs

$              496



$              288



$           1,423



$               315



$           1,913



$           2,522



$           5,130

Employees - FTE

2,995



2,454



2,496



2,304



2,266



2,995



2,266

Number of banking centers

238



218



219



224



217



238



217





























(D) Interim periods annualized.









(E) Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconcilation of this non-GAAP financial measure.

(F) Net interest margin for all periods presented is calculated on an actual 365 day basis or 366 day basis.



(G) Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale of assets and securities.  Additionally, taxes are not part of this calculation. 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)







































YIELD ANALYSIS 

Three Months Ended





Dec 31, 2013



Sep 30, 2013



Dec 31, 2012





Average

Balance



Interest

Earned/

Interest Paid



Average

Yield/

Rate



Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate



Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate









































Interest-Earning Assets: 





































Loans

$   7,238,438



$ 110,575



6.06%



$   6,173,394



$   94,236



6.06%



$   5,140,163



$   82,727



6.40%



Investment securities

7,992,673



45,100



2.24%

(H)

8,015,221



41,961



2.08%

(H)

7,228,418



34,956



1.92%

(H)

Federal funds sold and other earning assets

103,413



76



0.29%



27,451



16



0.22%



75,135



36



0.19%



  Total interest-earning assets 

15,334,524



$ 155,751



4.03%



14,216,066



$ 136,213



3.80%



12,443,716



$ 117,719



3.76%



Allowance for credit losses 

(60,170)











(56,765)











(50,775)











Noninterest-earning assets 

2,502,276











2,034,968











1,844,756











  Total assets

$ 17,776,630











$ 16,194,269











$ 14,237,697

















































Interest-Bearing Liabilities: 





































Interest-bearing demand deposits

$   2,963,899



$     1,899



0.25%



$   2,400,555



$     1,708



0.28%



$   2,328,969



$     1,803



0.31%



Savings and money market deposits

4,654,044



3,049



0.26%



4,233,911



2,911



0.27%



3,600,109



2,580



0.29%



Certificates and other time deposits 

2,712,699



4,100



0.60%



2,489,848



3,695



0.59%



2,366,155



3,834



0.64%



Securities sold under repurchase agreements 

398,100



280



0.28%



455,276



317



0.28%



459,998



294



0.25%



Federal funds purchased and other borrowings 

210,492



224



0.42%



772,083



439



0.23%



272,239



276



0.40%



Junior subordinated debentures 

111,172



730



2.61%



85,055



610



2.85%



85,055



631



2.95%



  Total interest-bearing liabilities 

11,050,406



10,282



0.37%

(I)

10,436,728



9,680



0.37%

(I)

9,112,525



9,418



0.41%

(I)







































Noninterest-bearing liabilities: 





































Noninterest-bearing demand deposits

3,860,296











3,308,158











2,963,998











Other liabilities 

223,394











73,571











80,085











  Total liabilities

15,134,096











13,818,457











12,156,608











Shareholders' equity 

2,642,534











2,375,812











2,081,089











  Total liabilities and shareholders' equity 

$ 17,776,630











$ 16,194,269











$ 14,237,697

















































Net interest income and margin 





$ 145,469



3.76%







$ 126,533



3.53%







$ 108,301



3.46%









































Non-GAAP to GAAP reconciliation:





































Tax equivalent adjustment





2,152











2,028











2,099













































Net interest income and margin





































     (tax equivalent basis)





$ 147,621



3.82%







$ 128,561



3.59%







$ 110,400



3.53%







(H) Yield on securities was impacted by net premium amortization of $12,017, $15,136 and $23,992 for the three month periods ended December 31, 2013, September 30, 2013 and December 31, 2012, respectively.



(I) Total cost of funds, including noninterest bearing deposits, was 0.27%, 0.28% and 0.31% for the three months ended December 31, 2013, September 30, 2013 and December 31, 2012, respectively.



 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



























YIELD ANALYSIS 

Year Ended





2013



2012





Average

Balance



Interest

Earned/ Interest

Paid



Average

Yield/

 Rate



Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate





























Interest-Earning Assets: 

























Loans

$   6,202,897



$376,117



6.06%



$   4,514,171



$271,324



6.01%



Investment securities

7,932,782



162,993



2.05%

(J)

6,364,917



148,374



2.33%

(J)

Federal funds sold and other earning assets

50,318



187



0.37%



68,900



144



0.21%



  Total interest-earning assets 

14,185,997



$539,297



3.80%



10,947,988



$419,842



3.83%



Allowance for credit losses 

(57,001)











(51,770)











Noninterest-earning assets 

2,126,918











1,536,448











  Total assets

$ 16,255,914











$ 12,432,666





































Interest-Bearing Liabilities: 

























Interest-bearing demand deposits

$   2,651,320



$    7,917



0.30%



$   1,979,345



$    8,228



0.42%



Savings and money market deposits

4,237,323



11,961



0.28%



3,174,256



10,600



0.33%



Certificates and other time deposits 

2,530,065



15,344



0.61%



2,152,382



15,658



0.73%



Securities sold under repurchase agreements 

443,231



1,201



0.27%



263,689



705



0.27%



Federal funds purchased and other borrowings 

470,854



1,497



0.32%



416,925



1,352



0.32%



Junior subordinated debentures 

91,584



2,551



2.79%



85,055



2,593



3.05%



  Total interest bearing liabilities 

10,424,377



40,471



0.39%

(K)

8,071,652



39,136



0.48%

(K)



























Noninterest-bearing liabilities: 

























Noninterest-bearing demand deposits

3,345,594











2,442,860











Other liabilities 

107,709











73,820











  Total liabilities

13,877,680











10,588,332











Shareholders' equity 

2,378,234











1,844,334











  Total liabilities and shareholders' equity 

$ 16,255,914











$ 12,432,666





































Net interest income and margin 





$498,826



3.52%







$380,706



3.48%





























Non-GAAP to GAAP reconciliation:

























Tax equivalent adjustment





8,368











5,965

































Net interest income and margin 

























     (tax equivalent basis)





$507,194



3.58%







$386,671



3.53%







(J) Yield on securities was impacted by net premium amortization of $68,701 and $66,889 for the years ended December 31, 2013 and 2012, respectively.



(K) Total cost of funds, including noninterest bearing deposits, was 0.29% and 0.37% for the years ended December 31, 2013 and 2012, respectively.



 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)































Three Months Ended



Year Ended



Dec 31, 2013



Sep 30, 2013



Jun 30, 2013



Mar 31, 2013



Dec 31, 2012



Dec 31, 2013



Dec 31, 2012





























Adjustment to Loan Yield (L)



























Interest on loans, as reported

$       110,575



$         94,236



$         89,842



$          81,464



$         82,727



$       376,117



$       271,324

   Less: Purchase accounting adjustment- loan discount accretion

(19,979)



(16,421)



(12,031)



(14,292)



(14,523)



(62,723)



(26,413)

Interest on loans without discount accretion

$         90,596



$         77,815



$         77,811



$          67,172



$         68,204



$       313,394



$       244,911

Average loans

$    7,238,438



$    6,173,394



$    6,114,598



$     5,263,784



$    5,140,163



$    6,202,897



$    4,514,171

Loan yield without discount accretion

4.97%



5.00%



5.10%



5.18%



5.28%



5.05%



5.43%

Loan yield, as reported

6.06%



6.06%



5.89%



6.28%



6.40%



6.06%



6.01%



























































Three Months Ended



Year Ended



Dec 31, 2013



Sep 30, 2013



Jun 30, 2013



Mar 31, 2013



Dec 31, 2012



Dec 31, 2013



Dec 31, 2012





























Adjustment to Securities Yield (L)



























Interest on securities, as reported

$         45,100



$         41,961



$         39,384



$          36,548



$         34,956



$       162,993



$       148,374

   Add: Purchase accounting adjustment-securities amortization

1,892



2,275



2,599



3,106



3,540



9,872



6,991

Interest on securities including amortization

$         46,992



$         44,236



$         41,983



$          39,654



$         38,496



$       172,865



$       155,365

Average securities

$    7,992,673



$    8,015,221



$    7,964,157



$     7,755,567



$    7,228,418



$    7,932,782



$    6,364,917

Securities yield without purchase accounting adjustment

2.33%



2.19%



2.11%



2.07%



2.12%



2.18%



2.44%

Securities yield, as reported

2.24%



2.08%



1.98%



1.91%



1.92%



2.05%



2.33%





























Net Interest Margin (tax equivalent basis, excluding  purchase accounting adjustments to yield)

3.35%



3.19%



3.09%



3.08%



3.18%



3.20%



3.35%





























Net Interest Margin (tax equivalent basis), as reported

3.82%



3.59%



3.43%



3.42%



3.53%



3.58%



3.53%





























Net income available to common shareholders, as reported

$         62,971



$         55,278



$         53,844



$          49,305



$         48,266



$       221,398



$       167,901

    Less:  Purchase accounting adjustments, net of tax (M)

(12,095)



(9,476)



(6,335)



(7,560)



(7,374)



(35,476)



(12,957)

Net income available to common shareholders, adjusted

$         50,876



$         45,802



$         47,509



$          41,745



$         40,892



$       185,922



$       154,944



Acquired Loans Accounted for

Under ASC 310-20



Acquired Loans Accounted for

Under ASC 310-30



Total Loans Accounted for

Under ASC 310-20 and 310-30



Balance at

Acquisition

Date



Balance at

Sep 30,

2013



Balance at

Dec 31,

2013



Balance at

Acquisition

Date



Balance at

Sep 30, 2013



Balance at

Dec 31, 2013



Balance at

Acquisition

Date



Balance at

Sep 30, 2013



Balance at

Dec 31, 2013

Loan marks:



































Previouly acquired banks (N)

$      81,328



$         32,842



$         28,040



$      28,764



$         21,977



$         20,741



$    110,092



$         54,819



$         48,781

2013 acquisitions (O)

78,299



19,101



59,758



34,783



19,122



24,756



113,082



38,223



84,514

Total

$    159,627



$         51,943



$         87,798



$      63,547



$         41,099



$         45,497



$    223,174



$         93,042



$       133,295





































Acquired portfolio loan balances:



































Previouly acquired banks (N)

$ 1,298,380



$       602,128



$       522,620



$      57,979



$         39,715



$         37,724



$ 1,356,359



$       641,843



$       560,344

2013 acquisitions (O)

2,541,268



595,119



1,936,355



77,300



37,639



49,256



2,618,568



632,758



1,985,611

Total

$ 3,839,648



$    1,197,247



$    2,458,975



$    135,279



$         77,354



$         86,980



$ 3,974,927

(P)

$    1,274,601



$    2,545,955





































(L)  Non-GAAP financial measure.

















(M) Using effective tax rate of 33.1%, 33.0%, 32.8%, 32.4% and 32.9% for the three month periods ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively, and 32.9% and 33.3% for the years ended December 31, 2013 and 2012, respectively.

(N)  Includes Bank of Texas, Bank Arlington, ASB and Community National, all of which were acquired in 2012.

(O)  Includes East Texas Financial Services, Coppermark and FVNB.  FVNB added $1.634 billion in loans with related loan marks of $60.228 million at acquisition date.

(P)  Actual principal balances acquired.

















 





Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)























Three Months Ended



 Dec 31,

2013 



 Sep 30,

2013 



 Jun 30,

2013 



 Mar 31,

2013 



 Dec 31,

2012 

YIELD TREND







































Interest-Earning Assets: 



















Loans

6.06%



6.06%



5.89%



6.28%



6.40%

Investment securities (Q) 

2.24%



2.08%



1.98%



1.91%



1.92%

Federal funds sold and other earning assets

0.29%



0.22%



0.87%



0.22%



0.19%

  Total interest-earning assets 

4.03%



3.80%



3.67%



3.67%



3.76%





















Interest-Bearing Liabilities: 



















Interest-bearing demand deposits

0.25%



0.28%



0.33%



0.34%



0.31%

Savings and money market deposits

0.26%



0.27%



0.30%



0.30%



0.29%

Certificates and other time deposits 

0.60%



0.59%



0.61%



0.62%



0.64%

Securities sold under repurchase agreements

0.28%



0.28%



0.27%



0.26%



0.25%

Federal funds purchased and other borrowings 

0.42%



0.23%



0.35%



0.41%



0.40%

Junior subordinated debentures 

2.61%



2.85%



2.86%



2.88%



2.95%

  Total interest-bearing liabilities 

0.37%



0.37%



0.40%



0.42%



0.41%





















Net Interest Margin 

3.76%



3.53%



3.37%



3.36%



3.46%

Net Interest Margin (tax equivalent)

3.82%



3.59%



3.43%



3.42%



3.53%









































(Q) Yield on securities was impacted by net premium amortization of $12,017, $15,136, $18,838, $22,710 and $23,992 for the three month periods ended December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)























Three Months Ended



Dec 31, 2013



Sep 30, 2013



June 30, 2013



Mar 31, 2013



Dec 31, 2012

Balance Sheet Averages



















Total loans

$    7,238,438



$    6,173,394



$      6,114,598



$     5,263,784



$    5,140,163

Investment securities

7,992,673



8,015,221



7,964,157



7,755,567



7,228,418

Federal funds sold and other earning assets

103,413



27,451



35,113



34,793



75,135

Total interest-earning assets

15,334,524



14,216,066



14,113,868



13,054,144



12,443,716

Allowance for credit losses

(60,170)



(56,765)



(57,754)



(53,242)



(50,775)

Cash and due from banks

232,666



189,082



279,271



206,990



198,797

Goodwill

1,560,905



1,351,236



1,331,568



1,226,332



1,211,596

Core deposit intangibles

30,641



25,938



25,893



25,244



27,108

Other real estate

7,254



9,494



19,605



11,789



9,571

Fixed assets, net

251,688



231,480



223,769



207,517



206,869

Other assets

419,122



227,738



234,710



171,589



190,815

Total assets

$  17,776,630



$  16,194,269



$    16,170,930



$   14,850,363



$  14,237,697





















Noninterest-bearing deposits

$    3,860,296



$    3,308,158



$      3,295,211



$     2,939,621



$    2,963,998

Interest-bearing demand deposits

2,963,899



2,400,555



2,580,750



2,659,489



2,328,969

Savings and money market deposits

4,654,044



4,233,911



4,261,466



3,790,416



3,600,109

Certificates and other time deposits

2,712,699



2,489,848



2,543,895



2,370,499



2,366,155

Total deposits

14,190,938



12,432,472



12,681,322



11,760,025



11,259,231

Securities sold under repurchase agreements

398,100



455,276



471,430



448,542



459,998

Federal funds purchased and other borrowings

210,492



772,083



541,034



358,120



272,239

Junior subordinated debentures

111,172



85,055



85,055



85,055



85,055

Other liabilities

223,394



73,571



69,741



62,716



80,085

Shareholders' equity

2,642,534



2,375,812



2,322,348



2,135,905



2,081,089

Total liabilities and equity

$  17,776,630



$  16,194,269



$    16,170,930



$   14,850,363



$  14,237,697

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)































































Dec 31, 2013



Sep 30, 2013



Jun 30, 2013



Mar 31, 2013



Dec 31, 2012

Period End Balances



























































Loan Portfolio





























Commercial and other

$   1,322,975

17.0%



$   1,028,799

16.6%



$      999,677

16.2%



$      760,531

14.5%



$      798,882

15.4%

Construction

865,511

11.1%



703,193

11.4%



694,585

11.2%



575,307

10.9%



550,768

10.6%

1-4 family residential

1,870,365

24.2%



1,503,771

24.4%



1,452,268

23.7%



1,338,936

25.5%



1,255,765

24.3%

Home equity

261,355

3.4%



211,742

3.4%



208,739

3.4%



203,815

3.9%



186,801

3.6%

Commercial real estate

2,753,797

35.3%



2,304,862

37.2%



2,390,820

38.6%



1,993,518

37.8%



1,990,642

38.4%

Agriculture (includes farmland)

531,258

6.8%



321,518

5.2%



314,945

5.1%



286,789

5.4%



285,637

5.5%

Consumer

169,960

2.2%



108,704

1.8%



111,449

1.8%



104,128

2.0%



111,445

2.2%

Total loans

$   7,775,221





$   6,182,589





$   6,172,483





$   5,263,024





$   5,179,940































































Deposit Types





























Noninterest-bearing DDA

$   4,108,835

26.9%



$   3,368,357

27.0%



$   3,283,082

26.0%



$   2,995,828

25.6%



$   3,016,205

25.9%

Interest-bearing DDA

3,470,316

22.7%



2,366,997

19.0%



2,483,428

19.9%



2,521,998

21.5%



2,626,331

22.6%

Money market

3,320,062

21.7%



2,834,172

22.8%



2,868,880

23.0%



2,509,501

21.4%



2,362,454

20.3%

Savings

1,571,504

10.3%



1,413,153

11.3%



1,371,214

11.0%



1,345,044

11.5%



1,293,552

11.1%

Certificates and other time deposits

2,820,554

18.4%



2,473,120

19.9%



2,502,046

20.1%



2,341,096

20.0%



2,343,302

20.1%

Total deposits

$ 15,291,271





$ 12,455,799





$ 12,508,650





$ 11,713,467





$ 11,641,844

































Loan to Deposit Ratio

50.8%





49.6%





49.3%





44.9%





44.5%































































Construction Loans





























Single family residential





























   construction

$      271,491

30.9%



$      239,980

33.5%



$      234,257

32.9%



$      177,218

30.6%



$      161,401

29.2%

Land development

83,820

9.6%



60,927

8.6%



63,857

9.0%



42,520

7.4%



42,199

7.6%

Raw land

48,996

5.6%



52,789

7.4%



59,701

8.4%



46,672

8.1%



58,794

10.6%

Residential lots

122,449

14.0%



95,361

13.4%



91,018

12.8%



93,598

16.2%



92,697

16.8%

Commercial lots

103,878

11.9%



58,085

8.2%



60,960

8.6%



64,394

11.2%



63,716

11.5%

Commercial construction and other

244,124

28.0%



204,940

28.9%



200,633

28.3%



153,047

26.5%



134,427

24.3%

Net unaccreted discount

(9,247)





(8,889)





(15,841)





(2,142)





(2,466)



Total construction loans

$      865,511





$      703,193





$      694,585





$      575,307





$      550,768



 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)























Three Months Ended



Dec 31, 2013



Sep 30, 2013



Jun 30, 2013



Mar 31, 2013



Dec 31, 2012





















Asset Quality



















Nonaccrual loans

$         10,231



$           4,954



$           4,295



$            7,529



$           5,382

Accruing loans 90 or more days past due

4,947



283



325



642



331

Total nonperforming loans

15,178



5,237



4,620



8,171



5,713

Repossessed assets

27



18



-



49



68

Other real estate

7,299



7,432



10,244



9,913



7,234

  Total nonperforming assets

$         22,504



$         12,687



$         14,864



$          18,133



$         13,015









































Nonperforming assets:



















Commercial

$           3,153



$           1,223



$           1,191



$            3,896



$           1,568

Construction

4,558



4,611



5,898



3,678



3,522

1-4 family (including home equity)

6,279



2,441



2,112



3,746



3,081

Commercial real estate (including multi-family)

8,033



4,233



4,330



5,533



2,608

Agriculture 

279



23



1,213



1,183



1,463

Consumer and other

202



156



120



97



773

Total 

$         22,504



$         12,687



$         14,864



$          18,133



$         13,015





















Number of loans/properties

203



128



123



124



116





















Allowance for credit losses at end of period

$         67,282



$         59,913



$         56,176



$          55,049



$         52,564





















Net charge-offs:



















Commercial

$                  7



$              119



$              148



$                 59



$              205

Construction

(12)



(30)



124



(56)



21

1-4 family (including home equity)

21



15



35



102



65

Commercial real estate (including multi-family)

(311)



(471)



801



(57)



1,012

Agriculture

(85)



13



13



(7)



70

Consumer and other

876



642



302



274



540

Total 

$              496



$              288



$           1,423



$               315



$           1,913









































Asset Quality Ratios



















Nonperforming assets to average earning assets

0.15%



0.09%



0.11%



0.14%



0.10%

Nonperforming assets to loans and other real estate

0.29%



0.20%



0.24%



0.34%



0.25%

Net charge-offs to average loans  (annualized)

0.03%



0.02%



0.09%



0.02%



0.15%

Allowance for credit losses to total loans

0.87%



0.97%



0.91%



1.05%



1.01%

Allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30) (E)

1.25%



1.20%



1.18%



1.25%



1.22%

 

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

(Dollars and share amounts in thousands, except per share data)

Consolidated Financial Highlights

NOTES TO SELECTED FINANCIAL DATA

Prosperity's management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30).  Prosperity has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented.  Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and Prosperity believes that its presentation, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Prosperity's business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook.  These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

 







Three Months Ended



Year Ended





 Dec 31, 2013 



 Sep 30, 2013 



 Jun 30, 2013 



 Mar 31, 2013 



 Dec 31, 2012 



 Dec 31, 2013 



 Dec 31, 2012 































Return on average tangible common equity:





























Net income



$               62,971



$              55,278



$               53,844



$               49,305



$               48,266



$             221,398



$             167,901

Average shareholders' equity



$          2,642,534



$         2,375,812



$          2,322,348



$          2,135,905



$          2,081,089



$          2,378,234



$          1,844,334

Less: Average goodwill and other intangible assets



(1,591,546)



(1,377,174)



(1,357,461)



(1,251,576)



(1,238,704)



(1,395,323)



(1,078,804)

         Average tangible shareholders' equity



$          1,050,988



$            998,638



$             964,887



$             884,329



$             842,385



$             982,911



$             765,530

Return on average tangible common  equity:



23.97%



22.14%



22.32%



22.30%



22.92%



22.52%



21.93%































Tangible book value per share:





























Shareholders' equity



$          2,786,818



$         2,389,112



$          2,345,282



$          2,149,455



$          2,089,389



$          2,786,818



$          2,089,389

Less: Goodwill and other intangible assets



(1,712,121)



(1,377,015)



(1,377,522)



(1,262,257)



(1,243,321)



(1,712,121)



(1,243,321)

         Tangible shareholders' equity



$          1,074,697



$         1,012,097



$             967,760



$             887,198



$             846,068



$          1,074,697



$             846,068































Period end shares outstanding



66,048



60,383



60,315



57,014



56,447



66,048



56,447

Tangible book value per share:



$                 16.27



$                16.76



$                 16.05



$                 15.56



$                 14.99



$                 16.27



$                 14.99































Tangible equity to tangible assets ratio:





























Tangible shareholders' equity



$          1,074,697



$         1,012,097



$             967,760



$             887,198



$             846,068



$          1,074,697



$             846,068































Total assets



$        18,642,028



$       16,054,279



$        16,270,718



$        15,081,314



$        14,583,573



$        18,642,028



$        14,583,573

Less: Goodwill and other intangible assets



(1,712,121)



(1,377,015)



(1,377,522)



(1,262,257)



(1,243,321)



(1,712,121)



(1,243,321)

         Tangible assets



$        16,929,907



$       14,677,264



$        14,893,196



$        13,819,057



$        13,340,252



$        16,929,907



$        13,340,252































Tangible equity to tangible assets ratio:



6.35%



6.90%



6.50%



6.42%



6.34%



6.35%



6.34%





























































 

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

(Dollars in thousands)







Dec 31, 2013



Sep 30, 2013



Dec 31, 2012

Allowance for credit losses to total loans, excluding acquired loans:

























Allowance for credit losses



$ 67,282



$ 59,913



$ 52,564

Total loans



$ 7,775,221



$ 6,182,589



$ 5,179,940

Less: Fair value of acquired loans accounted for under ASC













     Topics 310-20 and 310-30 (does not include new production)



$ 2,412,660



$ 1,181,559



$ 887,953

Total loans less acquired loans



$ 5,362,561



$ 5,001,030



$ 4,291,987

Allowance for credit losses to total loans, excluding













     acquired loans (non-GAAP basis)



1.25%



1.20%



1.22%

 

 

SOURCE Prosperity Bancshares, Inc.



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