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Prosperity Bancshares, Inc.® First Quarter Earnings Up 7.7%
- 1Q 2012 Earnings Per Share of $0.77 (diluted)

HOUSTON, April 27, 2012 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank®, reported net income for the three months ended March 31, 2012 of $36.487 million or $0.77 per diluted common share, an increase in net income of $2.609 million or 7.7%, compared with $33.878 million or $0.72 per diluted common share for the same period in 2011. 

"I am proud to report another quarter of increased earnings and strong performance for our company.  I want to recognize our customers, our associates, our shareholders and our directors for their support of our company.  Without any of these groups we would not be enjoying the success we are experiencing today.  We appreciate the dedication and loyalty they continue to give to our company," commented David Zalman, Chairman and Chief Executive Officer. 

"I continue to be pleased with the positive recognition we have received this year.  After being named by Forbes in December as the 'Best Bank in America for 2012,' we were pleased to learn last week that we ranked 3rd in Texas for customer satisfaction by J.D. Powers and Associates, up from number 13 last year.  We all work very hard to give our customers a positive experience by living up to our service commitment daily which is: Greet the customer with a smile; Address the customer by name; Try to say YES instead of NO; and Thank the customer for banking with us.

We are very excited about our upcoming merger with American State Financial Corporation.  After the merger, we expect to have approximately $15 billion in assets with 215 locations throughout Texas to serve all of our customers.   Our company is fortunate to be located in one the fastest growing states in the nation with one of the best economies" continued Zalman.

In addition to Prosperity's GAAP (generally accepted accounting principles) financial reporting, Prosperity's management includes certain non-GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews return on average tangible common equity, tangible book value per share and the tangible equity to tangible assets ratio.  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 March 31, 2012

For the three months ended March 31, 2012, net income was $36.487 million compared with $33.878 million for the same period in 2011.  Net income per diluted common share was $0.77 for the three months ended March 31, 2012 and $0.72 for the same period in 2011. Returns on average assets, average common equity and average tangible common equity, each on annualized basis, for the three months ended March 31, 2012 were 1.39%, 9.15% and 22.57%, respectively.  Prosperity's efficiency ratio (excluding net gains and losses on the sale of assets) was 42.23% for the three months ended March 31, 2012.

Net interest income before provision for credit losses for the three months ended March 31, 2012 increased 1.8% to $81.846 million compared with $80.413 million during the same period in 2011.  The increase in net interest income was primarily due to growth in average earning assets of $929.799 million or 11.3% from $8.208 billion at March 31, 2011 to $9.137 billion at March 31, 2012.  The net interest margin on a tax equivalent basis decreased 38 basis points to 3.64% for the three months ended March 31, 2012 compared with 4.02% for the same period in 2011 and decreased 18 basis points from 3.82% reported for the three months ended December 31, 2011.  The 18 basis point linked quarter decrease was due in part to decreased asset yields combined with an 11.3% increase in average earning assets.

Non-interest income increased $78,000 or 0.6% to $13.945 million for the three months ended March 31, 2012 compared with $13.867 million for the same period in 2011. The increase was mainly attributable to an increase in debit card and ATM card income and a gain on sale of ORE, partially offset by a decrease in NSF fees.

Non-interest expense decreased $1.236 million or 3.0% to $40.459 million for the three months ended March 31, 2012 compared with $41.695 million for the same period in 2011. The decrease was mainly attributable to a decrease in regulatory assessments and FDIC insurance and a decrease in CDI amortization.

Loans at March 31, 2012 were $3.875 billion, an increase of $301.942 million or 8.5%, compared with $3.573 billion at March 31, 2011.  Loans increased 2.9% (11.6% annualized) or $108.956 million on a linked quarter basis compared with loans of $3.766 billion at December 31, 2011.  As reflected in the table below, linked quarter loans at March 31, 2012 were impacted by the loans acquired in connection with the Texas Bankers acquisition.  Excluding the loans acquired in this acquisition, linked quarter loans increased 8.7% on an annualized basis.

Deposits at March 31, 2012 were $8.544 billion, an increase of $728.067 million or 9.3%, compared with $7.816 billion at March 31, 2011.  Linked quarter deposits increased $484.197 million or 6.0% (24.0% annualized) from $8.060 billion at December 31, 2011.  As reflected in the table below, linked quarter deposits at March 31, 2012 were impacted by the deposits assumed in connection with the Texas Bankers, Inc. acquisition. Excluding the deposits assumed in this acquisition, linked quarter deposits increased 21.2% on an annualized basis.

Balance Sheet Data (at period end)

Mar 31, 2012

Dec 31, 2011

Mar 31, 2011

(In thousands)

(Unaudited)

(Unaudited)

(Unaudited)





Loans:




Acquired with Texas Bankers

$           27,053

$                   0

$                   0

All other

3,847,809

3,765,906

3,572,920

Total Loans

$     3,874,862

$     3,765,906

$     3,572,920









Deposits:




Acquired with Texas Bankers

$        56,085

$                   0

$                   0

All other

8,488,366

8,060,254

7,816,384

Total Deposits

$     8,544,451

$     8,060,254

$     7,816,384

Average loans increased 8.6% or $302.467 million to $3.819 billion for the three months ended March 31, 2012 compared with $3.517 billion for the same period of 2011.  Linked quarter average loans increased 1.8% or $69.068 million from $3.750 billion for the three months ended December 31, 2011. Average deposits increased 9.5% or $730.208 million to $8.429 billion for the three months ended March 31, 2012 compared with $7.698 billion for the same period of 2011.  Linked quarter average deposits increased 6.7% or $529.483 million from $7.899 billion for the three months ended December 31, 2011.

At March 31, 2012, Prosperity had $10.890 billion in total assets, $3.875 billion in loans and $8.544 billion in deposits. Assets, loans and deposits at March 31, 2012 increased 12.0%, 8.5% and 9.3%, respectively, compared with their level at March 31, 2011.

Asset Quality

Non-performing assets totaled $14.873 million or 0.16% of average earning assets at March 31, 2012 compared with $12.888 million or 0.16% of average earning assets at March 31, 2011 and $12.052 million or 0.14% of average earning assets at December 31, 2011.  The allowance for credit losses was 1.33% of total loans at March 31, 2012 compared with 1.45% at March 31, 2011 and 1.37% of total loans at December 31, 2011.

Non-performing assets

(In thousands)

Mar 31, 2012

Dec 31, 2011

Mar 31, 2011


Amount

#

Amount

#

Amount

#

Construction

$   4,116

26

$   4,649

28

$   6,511

37

Agriculture and agriculture real estate

67

4

49

3

17

2

1-4 family (including home equity)

3,207

35

3,689

38

3,130

25

Commercial real estate (including multi-family)

6,773

16

2,877

9

2,299

7

Commercial

690

15

767

17

861

12

Consumer

20

5

21

4

70

9

Total

$ 14,873

101

$ 12,052

99

$ 12,888

92

The provision for credit losses was $150,000 for the three months ended March 31, 2012 and $1.700 million for the three months ended March 31, 2011.  Net charge-offs were $102,000 for the three months ended March 31, 2012 and $1.524 million for the three months ended March 31, 2011.

Net Charge-offs

(In thousands)

Three Months

 Ended

Mar 31, 2012

Three Months

Ended

Dec 31, 2011

Three Months

 Ended

Mar 31, 2011

1-4 family (including home equity)

$            50

$            676

$            226

Agriculture

0

153

(1)

Commercial

(15)

843

216

Commercial RE (including multi-family)

18

218

320

Construction

22

--

697

Consumer

27

179

66

Total

$         102

$         2,069

$         1,524

Conference Call

Prosperity's management team will host a conference call on Friday, April 27, 2012 at 10:30 a.m. Eastern Daylight Time (9:30 a.m. Central Daylight Time) to discuss Prosperity's first quarter earnings. Individuals and investment professionals may participate in the call by dialing 800-895-0198.  The reference code is PBTX.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at www.prosperitybanktx.com.  The webcast may be accessed directly from Prosperity's Investor Relations page by clicking on the "1st Quarter Results and Webcast" link.

Acquisition of American State Financial Corporation

On February 27, 2012, Prosperity announced the signing of a definitive merger agreement with American State Financial Corporation and its wholly owned subsidiary American State Bank (collectively referred to as "ASB") whereby American State Bank will be merged with and into Prosperity Bank.  This is the fourth transaction announced by Prosperity within the past few months.

American State Bank operates thirty-seven (37) full service banking offices in eighteen (18) counties across West Texas. As of March 31, 2012, ASB, on a consolidated basis, reported total assets of $3.16 billion, total loans of $1.24 billion and total deposits of $2.51 billion.

Under the terms of the definitive agreement, Prosperity will issue up to 8,525,000 shares of Prosperity common stock plus $178.5 million in cash for all outstanding shares of American State Financial Corporation capital stock, subject to certain conditions and potential adjustment.

Pending Acquisition of East Texas Financial Services, Inc.

On December 9, 2011, Prosperity announced the signing of a definitive agreement to acquire East Texas Financial Services, Inc. (OTC BB: FFBT) and its wholly-owned subsidiary, First Federal Bank Texas ("FirstBank").            

First Bank operates four (4) banking offices in the Tyler MSA, including three (3) locations in Tyler, Texas and one (1) location in Gilmer, Texas. As of March 31, 2012, First Bank reported total assets of $208.6 million, total loans of $153.5 million and total deposits of $127.6 million.

Under the terms of the definitive agreement, Prosperity will issue up to 531,000 shares of Prosperity common stock for all outstanding shares of East Texas Financial Services capital stock, subject to certain conditions and potential adjustments.

Acquisition of The Bank Arlington

On April 1, 2012, Prosperity completed the previously announced acquisition of The Bank Arlington.  The Bank Arlington operated one (1) banking office in Arlington, Texas, in the Dallas/Fort Worth CMSA. As of March 31, 2012, The Bank Arlington reported total assets of $37.3 million, total loans of $22.8 million and total deposits of $33.2 million.

Prosperity now operates thirty-two (32) banking centers in the Dallas/Fort Worth CMSA.

Under the terms of the agreement, Prosperity issued 135,389 shares of Prosperity common stock for all outstanding shares of The Bank Arlington capital stock.

Acquisition of Texas Bankers, Inc.

On January 1, 2012, Prosperity completed the previously announced acquisition of Texas Bankers, Inc. and its wholly-owned subsidiary, Bank of Texas, Austin, Texas.

The three (3) Bank of Texas banking offices in the Austin, Texas CMSA consisted of a location in Rollingwood, which was consolidated with Prosperity's Westlake location and remains in Bank of Texas' Rollingwood banking office; one banking center in downtown Austin, which was consolidated into Prosperity's downtown Austin location; and another banking center in Thorndale. Prosperity now operates thirty-four (34) banking centers in the Central Texas area including Austin and San Antonio.

Texas Bankers, Inc. reported, on a consolidated basis, total assets of $77.0 million, total loans of $27.6 million and total deposits of $70.4 million on December 31, 2011.

Under the terms of the agreement, Prosperity issued 314,953 shares of Prosperity common stock for all outstanding shares of Texas Bankers capital stock which resulted in a premium of $5.2 million.

Prosperity Bancshares, Inc.®

Prosperity Bancshares Inc.®, recently named "America's Best Bank" by Forbes, is a $10.9 billion Houston, 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.prosperitybanktx.com, Retail Brokerage Services, MasterMoney Debit Cards, and 24 hour voice response banking.  Prosperity currently operates one hundred seventy six (176) full service banking locations; fifty-nine (59) in the Houston area; twenty (20) in the South Texas area including Corpus Christi and Victoria; thirty-two (32) in the Dallas/Fort Worth area; twenty-one (21) in the East Texas area; thirty-four (34) in the Central Texas area including Austin and San Antonio; and ten (10) in the Bryan/College Station area.

Bryan/College Station Area -

Dallas/Fort Worth Area -

Gun Barrel City

Bay City



Jacksonville

Beaumont

Bryan

Dallas -

Kerens

Cinco Ranch

Bryan-East

Abrams Centre

Longview

Cleveland

Bryan-North

Balch Springs

Mount Vernon

East Bernard

Caldwell

Camp Wisdom

Palestine

El Campo

College Station

Cedar Hill

Rusk

Dayton

Greens Prairie

Central Expressway

Seven Points

Galveston

Madisonville

East Renner

Teague

Groves

Navasota

Frisco

Tyler

Hempstead

Rock Prairie

Frisco-West

Tyler-University

Hitchcock

Wellborn Road

Independence

Winnsboro

Katy


Kiest


Liberty

Central Texas Area -

McKinney


Magnolia


McKinney-Stonebridge

Houston Area -

Mont Belvieu

Austin -

Midway


Nederland

183

Preston Forest

Houston -

Needville

Allandale

Preston Road

Aldine

Shadow Creek

Cedar Park

Red Oak

Allen Parkway

Sweeny

Congress

Sachse

Bellaire

Tomball

Lakeway

The Colony

Beltway

Waller

Liberty Hill

Turtle Creek

Clear Lake

West Columbia

Northland

Westmoreland

Copperfield

Wharton

Oak Hill


Cypress

Winnie

Parmer Lane


Downtown

Wirt

Research Blvd

Fort Worth -

Eastex


Westlake

Haltom City

Fairfield



Keller

First Colony

South Texas Area -


Roanoke

Gessner


Other Central Texas

Locations -

Stockyards

Gladebrook

Corpus Christi -

Bastrop


Harrisburg

Airline

Cuero


Heights

Carmel 

Dime Box

Other Dallas/Fort Worth

Locations -

Highway 6 West

Northwest 

Dripping Springs

Arlington

Hillcroft

Saratoga

Elgin

Azle

Little York

Water Street

Flatonia

Ennis

Medical Center


Georgetown

Gainesville

Memorial Drive

Other South Texas

Gonzales

Mesquite

Northside

 Locations -

Hallettsville

Muenster

Pasadena

Alice

Kingsland

Sanger

Pecan Grove

Aransas Pass

La Grange

Waxahachie

Piney Point

Beeville

Lexington


River Oaks

Edna

New Braunfels


Royal Oaks

Goliad

Pleasanton

East Texas Area -

Sugar Land

Kingsville

Round Rock

Athens

SW Medical Center

Mathis

San Antonio

Athens-South

Tanglewood

Padre Island

Schulenburg

Blooming Grove

Uptown

Palacios

Seguin

Canton

Waugh Drive

Port Lavaca

Smithville

Carthage

West University

Portland

Thorndale

Corsicana

Woodcreek

Rockport

Weimar

Crockett


Sinton

Yoakum

Eustace

Other Houston Area

Victoria

Yorktown

Grapeland

Locations -

Victoria-North


In connection with the proposed merger of American State Financial Corporation into Prosperity Bancshares, Inc., Prosperity has 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 American State Financial Corporation. The registration statement includes a proxy statement/prospectus which will be sent to the shareholders of American State Financial Corporation 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, AMERICAN STATE FINANCIAL CORPORATION AND THE PROPOSED TRANSACTION.

In connection with the proposed merger of East Texas Financial Services, Inc. into Prosperity, Prosperity has 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 stockholders of East Texas Financial Services. The registration statement includes a proxy statement/prospectus which was sent to the stockholders of East Texas Financial Services 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, EAST TEXAS FINANCIAL SERVICES 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; weather; and the stock price volatility associated with "small-cap" companies.  These and various other factors are discussed in Prosperity's Annual Report on Form 10-K for the year ended December 31, 2011 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 www.prosperitybanktx.com.

Prosperity Bancshares, Inc. ®

Financial Highlights

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



Three Months Ended


Mar 31, 2012

Dec 31, 2011

Sept 30, 2011

June 30, 2011

Mar 31, 2011

Selected Earnings and Per

Share Data

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)







Total interest income

$       91,616

$         89,658

$          93,189

$         95,652

$       93,409

Total interest expense

9,770

9,571

10,651

12,022

12,996

Net interest income

81,846

80,087

82,538

83,630

80,413

Provision for credit losses

150

1,150

950

1,400

1,700

Net interest income after






  provision for credit losses

81,696

78,937

81,588

82,230

78,713







Total non-interest income

13,945

14,065

14,581

13,530

13,867

Total non-interest expense

40,459

38,385

41,151

42,514

41,695

Net income before taxes

55,182

54,617

55,018

53,246

50,885

Federal income taxes

18,695

18,211

18,645

18,154

17,007







Net income

$         36,487

$         36,406

$           36,373

$         35,092

$         33,878







Basic earnings per share

$0.77

$0.78

$0.78

$0.75

$0.72







Diluted earnings per share

$0.77

$0.77

$0.77

$0.75

$0.72







Period end shares outstanding

47,297

46,910

46,893

46,888

46,782

Weighted average shares






     outstanding (basic)

47,238

46,893

46,890

46,864

46,733

Weighted average shares






     outstanding (diluted)

47,411

47,028

47,033

47,057

46,942


 

Prosperity Bancshares, Inc. ®

Financial Highlights

(Dollars in thousands)



Three Months Ended


Mar 31, 2012

Mar 31, 2011

Dec 31, 2011

Dec 31, 2010

Balance Sheet Averages

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)






Total loans

$      3,818,991

$      3,516,524

$      3,749,923

$      3,421,698

Investment securities

5,192,257

4,677,900

4,596,017

4,542,433

Federal funds sold and





     other temporary investments

126,154

13,179

62,035

14,305

Total earning assets

9,137,402

8,207,603

8,407,975

7,978,436

Allowance for credit losses

(51,601)

(51,697)

(51,713)

(51,551)

Cash and due from banks

157,979

137,811

136,856

133,620

Goodwill

928,417

924,412

924,537

923,687

Core deposit intangibles (CDI)

20,102

27,711

21,890

29,822

Other real estate

8,640

12,745

9,803

13,121

Fixed assets, net

163,190

159,261

160,261

160,177

Other assets

136,012

143,768

119,870

133,839

Total assets

$      10,500,141

$      9,561,614

$      9,729,479

$      9,321,151











Non-interest bearing deposits

$      1,970,942

$      1,672,590

$      1,924,037

$      1,661,448

Interest bearing deposits

6,457,659

6,025,803

5,975,081

5,791,726

Total deposits

8,428,601

7,698,393

7,899,118

7,453,174

Securities sold under





     repurchase agreements

53,304

51,609

60,999

77,759

Federal funds purchased and





     other borrowings

272,760

191,945

66,834

198,677

Junior subordinated





     debentures

85,055

91,063

85,055

92,265

Other liabilities

65,137

59,556

60,628

54,429

Shareholders' equity(A)

1,595,284

1,469,048

1,556,845

1,444,847

Total liabilities and equity

$      10,500,141

$      9,561,614

$      9,729,479

$      9,321,151






(A)  Includes $13,425, $14,150, $14,515 and $17,516 in average after-tax unrealized gains (losses) on available for sale securities for the three month periods ending March 31, 2012, March 31, 2011,  December 31, 2011 and December 31, 2010, respectively.


 


Three Months Ended


Mar 31, 2012

Mar 31, 2011

Dec 31, 2011

Dec 31, 2010

Income Statement Data

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)






Interest on loans

$        53,217

$        52,200

$            53,899

$            52,722

Interest on securities

38,321

41,204

35,719

39,708

Interest on federal funds sold and





     other temporary investments

78

5

40

6

Total interest income

91,616

93,409

89,658

92,436

Interest expense - deposits

8,791

11,512

8,682

11,749

Interest expense - debentures

663

1,147

632

803

Interest expense - other

316

337

257

375

Total interest expense

9,770

12 ,996

9,571

12,927

Net interest income (B)

81,846

80,413

80,087

79,509

Provision for credit losses

150

1,700

1,150

2,900

Net interest income after





     provision for credit losses

81,696

78,713

78,937

76,609






Non-sufficient funds (NSF) fees

5,389

6,107

5,860

6,905

Debit card and ATM card income

3,836

3,452

4,189

3,261

Service charges on deposit accounts

2,441

2,483

2,515

2,614

Net (loss)/gain on sale of assets

(7)

165

--

2

Net gain/(loss) on sale of ORE

418

(160)

(473)

(915)

Other non-interest income

1,868

1,820

1,974

2,038

Total non-interest income

13,945

13,867

14,065

13,905






Salaries and benefits (C)

23,252

23,204

21,258

21,421

CDI amortization

1,695

2,034

1,879

2,172

Net occupancy and equipment

3,557

3,648

3,655

3,975

Depreciation

2,035

2,021

2,051

1,999

Data processing





 and software amortization

1,532

1,672

1,417

1,515

Regulatory assessments and FDIC   insurance

1,548

3,001

1,518

2,812

 ORE Expense

691

292

680

1,013

Other non-interest expense

6,149

5,823

5,927

6,320

Total non-interest expense

40,459

41,695

38,385

41,227

Net income before taxes

55,182

50,885

54,617

49,287

Federal income taxes

18,695

17,007

18,211

16,489

Net income available





to common shareholders

$        36,487

$        33,878

$            36,406

$          32,798






(B) Net interest income on a tax equivalent basis would be $82,742, $81,302, $80,937 and $80,238, for the three months ended March 31, 2012, March 31, 2011, December 31, 2011 and December 31, 2010, respectively.

(C) Salaries and benefits includes stock-based compensation expense of $1,215, $708, $972 and $825 for the three months ended March 31, 2012, March 31, 2011, December 31, 2011 and December 31, 2010, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights

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



As of and for the

Three Months Ended



Mar 31, 2012

Mar 31, 2011

Dec 31, 2011

Dec 31, 2010

Common Share and

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

     Other Data





Employees - FTE

1,690

1,672

1,664

1,708






Book value per share

$          34.03

$          31.65

$          33.41

$          31.11

Tangible book value per share

$          13.98

$          11.31

$          13.25

$          10.70











Period end shares outstanding

47,297

46,782

46,910

46,684

Weighted average shares





     outstanding (basic)

47,238

46,733

46,893

46,671

Weighted average shares





     outstanding (diluted)

47,411

46,942

47,028

46,818






Non-accrual loans

$          7,142

$          2,279

$          3,578

$          4,439

Accruing loans 90 or more





     days past due

0

76

0

189

Restructured loans

0

0

0

0

Total non-performing loans

7,142

2,355

3,578

4,628

Repossessed assets

13

68

146

161

Other real estate

7,718

10,465

8,328

11,053

  Total non-performing assets

$        14,873

$        12,888

$        12,052

$        15,842






Allowance for credit losses at





     end of period

$        51,642

$        51,760

$        51,594

$        51,584






Net charge-offs

$          102

$          1,524

$          2,069

$          2,670






Basic earnings per share

$            0.77

$            0.72

$            0.78

$            0.70






Diluted earnings per share

$            0.77

$            0.72

$            0.77

$            0.70


 

Prosperity Bancshares, Inc.®

Financial Highlights



Three Months Ended


Mar 31, 2012

Mar 31, 2011

Dec 31, 2011

Dec 31, 2010

Performance Ratios

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)






Return on average





     assets (annualized)  

1.39%

1.42%

1.50%

1.41%

Return on average common





     equity (annualized)  

9.15%

9.22%

9.35%

9.08%

Return on average tangible





     common equity (annualized)

22.57%

26.22%

23.86%

26.70%

Net interest margin (D)





     (tax equivalent) (annualized)

3.64%

4.02%

3.82%

3.99%






Efficiency ratio(E)

42.23%

44.30%

40.77%

44.13%






Asset Quality Ratios










Non-performing assets to





     average earning assets

0.16%

0.16%

0.14%

0.20%

Non-performing assets to loans





     and other real estate

0.38%

0.36%

0.32%

0.45%

Net charge-offs





     to average loans

0.00%

0.04%

0.06%

0.08%

Allowance for credit losses to





     total loans

1.33%

1.45%

1.37%

1.48%






Common Stock Market Price










High

$47.60

$42.92

$41.74

$39.96






Low

$39.66

$38.23

$31.31

$30.37






Period end market price

$45.80

$42.77

$40.35

$39.28






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

(E) The efficiency ratio is calculated by dividing total non-interest expense (excluding provision for credit losses) by net interest income plus non-interest income (excluding net gains and losses on the sale of assets). Additionally, taxes are not part of this calculation.


 

Prosperity Bancshares, Inc.®

Financial Highlights

(Dollars in thousands)



Mar 31, 2012

Dec 31, 2011

Sept 30, 2011

June 30, 2011


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Loan Portfolio (at period end)


















Commercial

$    475,860

12.3%

$    439,854

11.7%

$   451,541

12.1%

$   455,791

12.4%

Construction

484,295

12.5%

482,140

12.8%

490,193

13.1%

483,581

13.2%

1-4 family residential

1,036,318

26.7%

1,007,266

26.8%

981,388

26.3%

941,250

25.7%

Home equity

149,597

3.9%

146,999

3.8%

139,553

3.7%

131,213

3.6%

Commercial real estate

1,473,925

38.0%

1,441,226

38.3%

1,426,704

38.2%

1,411,501

38.5%

Agriculture

178,474

4.6%

170,234

4.5%

168,011

4.5%

160,780

4.4%

Consumer

76,393

2.0%

78,187

2.1%

80,240

2.1%

81,132

2.2%

Total loans

$ 3,874,862


$ 3,765,906


$3,737,630


$3,665,248











Deposit Types (at period end)


















Non-interest bearing DDA

$ 2,088,749

24.4%

$ 1,972,226

24.5%

$1,861,907

23.9%

$1,788,756

23.3%

Interest bearing DDA

1,671,760

19.5%

1,532,701

19.0%

1,332,914

17.1%

1,358,649

17.7%

Money market

2,312,107

27.1%

2,042,243

25.3%

1,995,248

25.6%

1,878,679

24.5%

Savings

554,211

6.5%

514,780

6.4%

498,451

6.4%

471,082

6.1%

Time < $100

938,911

11.0%

968,806

12.0%

1,005,672

12.9%

1,037,492

13.6%

Time > $100

978,713

11.5%

1,029,498

12.8%

1,104,547

14.1%

1,133,034

14.8%

Total deposits

$ 8,544,451


$ 8,060,254


$7,798,739


$7,667,692




















Loan to Deposit Ratio

45.3%


46.7%


47.9%


47.8%











Construction Loans (at period end)


















Single family residential     

     construction

$     142,584

29.4%

$       136,030

28.2%

$   126,926

25.9%

$   124,995

25.8%

Land development

41,177

8.5%

43,084

8.9%

44,400

9.1%

46,405

9.6%

Raw land

63,006

13.0%

61,177

12.7%

64,178

13.1%

69,769

14.4%

Residential lots

88,054

18.2%

86,848

18.0%

88,600

18.1%

86,515

17.9%

Commercial lots

51,642

10.7%

49,645

10.3%

54,016

11.0%

54,419

11.3%

Commercial construction and other  

97,832

20.2%

105,356

21.9%

112,073

22.8%

101,478

21.0%

Total construction loans

$     484,295


$    482,140


$   490,193


$   483,581











 

Prosperity Bancshares, Inc.®

Financial Highlights

(Dollars in thousands)



Mar 31, 2012

Dec 31, 2011

Sept 30, 2011

June 30, 2011

Mar 31, 2011

Balance Sheet Data

 (at period end)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)







Total loans

$    3,874,862

$    3,765,906

$   3,737,630

$   3,665,248

$    3,572,920

Investment securities (F)

5,646,529

4,658,936

4,430,530

4,641,664

4,798,642

Federal funds sold

445

642

294

350

517

Allowance for credit losses

(51,642)

(51,594)

(52,513)

(51,932)

(51,760)

Cash and due from banks

151,467

212,800

211,261

145,910

145,521

Goodwill

929,161

924,537

924,537

924,537

924,537

Core deposit intangibles

19,301

20,996

22,874

24,799

26,742

Other real estate

7,718

8,328

8,216

8,841

10,465

Fixed assets, net

162,676

159,656

160,099

160,119

159,050

Other assets

149,438

122,464

124,159

137,611

136,313

Total assets

$    10,889,955

$    9,822,671

$   9,567,087

$   9,657,147

$    9,722,947







Demand deposits

$    2,088,749

$    1,972,226

$   1,861,907

$   1,788,756

$    1,730,427

Interest bearing deposits

6,455,702

6,088,028

5,936,832

5,878,936

6,085,957

Total deposits

8,544,451

8,060,254

7,798,739

7,667,692

7,816,384

Securities sold under






     repurchase agreements

58,481

54,883

66,166

91,288

51,847

Federal funds purchased and






     other borrowings

527,536

12,790

13,583

248,839

228,092

Junior subordinated debentures

85,055

85,055

85,055

85,055

85,055

Other liabilities

64,899

42,424

62,205

52,625

61,071

Total liabilities

9,280,422

8,255,406

8,025,748

8,145,499

8,242,449

Shareholders' equity (G)

1,609,533

1,567,265

1,541,339

1,511,648

1,480,498

Total liabilities and equity

$    10,889,955

$    9,822,671

$   9,567,087

$   9,657,147

$    9,722,947







(F) Includes $19,542, $20,726, $24,278, $23,647 and $21,088 in unrealized gains on available for sale securities for the quarterly periods ending March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.

(G) Includes $12,702, $13,472, $15,781, $15,371 and $13,707 in after-tax unrealized gains on available for sale securities for the quarterly periods ending March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.


 

 

Prosperity Bancshares, Inc.®

Financial Highlights

(Dollars in thousands)



Three Months Ended


Mar 31, 2012

Dec 31, 2011

Sept 30, 2011

June 30, 2011

Mar 31, 2011

Income Statement Data

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)







Interest on loans

$        53,217

$        53,899

$           54,471

$        53,703

$        52,200

Interest on securities

38,321

35,719

38,714

41,943

41,204

Interest on federal funds






  sold and other earning assets

78

40

4

6

5

    Total interest income

91,616

89,658

93,189

95,652

93,409

Interest expense - deposits

8,791

8,682

9,717

11,064

11,512

Interest expense - debentures

663

632

607

598

1,147

Interest expense - other

316

257

327

360

337

    Total interest expense

9,770

9,571

10,651

12,022

12,996

    Net interest income

81,846

80,087

82,538

83,630

80,413

Provision for credit losses

150

1,150

950

1,400

1,700

    Net interest income after






      provision for credit losses

81,696

78,937

81,588

82,230

78,713







Non-sufficient funds (NSF) fees

5,389

5,860

6,249

6,226

6,107

Debit card and ATM card income

3,836

4,189

3,941

3,809

3,452

Service charges on deposit accounts

2,441

2,515

2,472

2,511

2,483

Net (loss)/gain on sale of assets

(7)

--

17

195

165

Net gain/(loss) on sale of ORE

418

(473)

95

(366)

(160)

Net loss on the sale of securities

--

--

--

(581)

--

Other non-interest income

1,868

1,974

1,807

1,736

1,820

    Total non-interest income

13,945

14,065

14,581

13,530

13,867







Salaries and benefits

23,252

21,258

23,601

23,994

23,204

CDI amortization

1,695

1,879

1,924

1,943

2,034

Net occupancy and equipment

3,557

3,655

3,784

3,547

3,648

Depreciation

2,035

2,051

2,041

2,037

2,021

Data processing






     and software amortization

1,532

1,417

1,954

1,780

1,672

Regulatory assessments and FDIC insurance

1,548

1,518

1,488

2,894

3,001

ORE expense

691

680

235

294

292

Other non-interest expense

6,149

5,927

6,124

6,025

5,823

    Total non-interest expense

40,459

38,385

41,151

42,514

41,695

    Net income before taxes

55,182

54,617

55,018

53,246

50,885

Federal income taxes

18,695

18,211

18,645

18,154

17,007

    Net income available






       to common shareholders

$        36,487

$        36,406

$           36,373

$        35,092

$        33,878


 

Prosperity Bancshares, Inc.®

Financial Highlights



Three Months Ended


Mar 31, 2012

Dec 31, 2011

Sept. 30, 2011

June 30, 2011

Mar 31, 2011

Comparative Quarterly

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Asset Quality, Performance






     & Capital Ratios












Return on average






     assets (annualized)

1.39%

1.50%

1.52%

1.45%

1.42%

Return on average common






     equity (annualized)

9.15%

9.35%

9.51%

9.36%

9.22%

Return on average tangible






     equity (annualized)

22.57%

23.86%

25.03%

25.56%

26.22%

Net interest margin






     (tax equivalent) (annualized)

3.64%

3.82%

4.02%

4.06%

4.02%







Employees - FTE

1,690

1,664

1,678

1,675

1,672







Efficiency ratio

42.23%

40.77%

42.38%

43.58%

44.30%

Non-performing assets to






     average earning assets

0.16%

0.14%

0.16%

0.15%

0.16%

Non-performing assets to loans






     and other real estate

0.38%

0.32%

0.36%

0.35%

0.36%

Net charge-offs to






     average loans

0.00%

0.06%

0.01%

0.03%

0.04%

Allowance for credit losses to






     total loans

1.33%

1.37%

1.40%

1.42%

1.45%







Book value per share

$34.03

$33.41

$32.87

$32.24

$31.65







Tangible book value per share

$13.98

$13.25

$12.67

$11.99

$11.31







Tier 1 risk-based capital

15.70%

15.90%

15.47%

14.72%

14.00%







Total risk-based capital

16.80%

17.09%

16.69%

15.93%

15.21%







Tier 1 leverage capital

7.68%

7.89%

7.70%

7.24%

6.97%







Tangible equity to tangible assets

6.65%

7.00%

6.89%

6.46%

6.03%







Equity to assets

14.78%

15.96%

16.11%

15.65%

15.23%








 

Prosperity Bancshares, Inc.®

Supplemental Financial Data (Unaudited)

(Dollars in thousands)



Three Months Ended March 31, 2012

Three Months Ended March 31, 2011

YIELD ANALYSIS

Average

Interest Earned

Average

Average

Interest Earned

Average


Balance

/ Interest Paid

Yield/Rate

Balance

/ Interest Paid

Yield/Rate








Interest Earning Assets:







Loans

$      3,818,991

$          53,217

5.60%

$   3,516,524

$          52,200

6.02%

Investment securities

5,192,257

38,321

2.95%

4,677,900

41,204

3.52%

Federal funds sold and other







   earning assets

126,154

78

0.25%

13,179

5

0.15%

  Total interest earning assets

9,137,402

$          91,616

4.03%

8,207,603

$          93,409

4.62%

Allowance for credit losses

(51,601)



(51,697)



Non-interest earning assets

1,414,340



1,405,708



  Total assets

$      10,500,141



$   9,561,614










Interest Bearing Liabilities:







Interest bearing demand deposits

$     1,694,240

$             2,063

0.49%

$     1,489,160

$             2,238

0.61%

Savings and money market deposits

2,792,348

2,589

0.37%

2,359,077

3,336

0.57%

Certificates and other time deposits

1,971,071

4,139

0.84%

2,177,566

5,938

1.11%

Securities sold under repurchase agreements          

53,304

37

0.28%

51,609

69

0.54%

Federal funds purchased and other borrowings

272,760

279

0.41%

191,945

268

0.57%

Junior subordinated debentures

85,055

663

3.14%

91,063

1,147

5.11%

  Total interest bearing liabilities

$     6,868,778

$            9,770

0.57%

$   6,360,420

$           12,996

0.83%

Non-interest bearing liabilities:







Non-interest bearing demand deposits

$     1,970,942



$   1,672,590



Other liabilities

65,137



59,556



  Total liabilities

$     8,904,857



$   8,092,566



Shareholders' equity

$     1,595,284



$   1,469,048



  Total liabilities and shareholders' equity

$     10,500,141



$   9,561,614










Net Interest Income & Margin


$         81,846

3.60%


$         80,413

3.97%








Net Interest Income & Margin







     (tax equivalent)


$         82,742

3.64%


$         81,302

4.02%

 

Prosperity Bancshares, Inc.®

Supplemental Financial Data (Unaudited)

(Dollars in thousands)



Three Months Ended December 31, 2011

Three Months Ended December 31, 2010

YIELD ANALYSIS

Average

Interest Earned

Average

Average

Interest Earned

Average


Balance

/ Interest Paid

Yield/Rate

Balance

/ Interest Paid

Yield/Rate








Interest Earning Assets:







Loans

$      3,749,923

$          53,899

5.70%

$   3,421,698

$          52,722

6.11%

Investment securities

4,596,017

35,719

3.11%

4,542,433

39,708

3.50%

Federal funds sold and other







   earning assets

62,035

40

0.26%

14,305

6

0.17%

  Total interest earning assets

8,407,975

$        89,658

4.23%

7,978,436

$         92,436

4.60%

Allowance for credit losses

(51,713)



(51,551)



Non-interest earning assets

1,373,217



1,394,266



  Total assets

$      9,729,479



$     9,321,151










Interest Bearing Liabilities:







Interest bearing demand deposits

$     1,363,900

$             1,450

0.42%

$     1,291,312

$             1,772

0.54%

Savings and money market deposits

2,553,227

2,450

0.38%

2,229,295

3,189

0.57%

Certificates and other time deposits

2,057,954

4,782

0.92%

2,271,119

6,788

1.19%

Securities sold under repurchase agreements          

60,999

63

0.41%

77,759

110

0.56%

Federal funds purchased and other borrowings

66,834

194

1.15%

198,677

265

0.53%

Junior subordinated debentures

85,055

632

2.95%

92,265

803

3.45%

  Total interest bearing liabilities

$     6,187,969

$           9,571

0.61%

$     6,160,427

$           12,927

0.83%

Non-interest bearing liabilities:







Non-interest bearing demand deposits

$     1,924,037



$     1,661,448



Other liabilities

60,628



54,429



  Total liabilities

$     8,172,634



$     7,876,304



Shareholders' equity

$     1,556,845



$     1,444,847



  Total liabilities and shareholders' equity

$     9,729,479



$     9,321,151










Net Interest Income & Margin


$          80,087

3.78%


$          79,509

3.95%








Net Interest Income & Margin







     (tax equivalent)


$          80,937

3.82%


$          80,238

3.99%

 

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

(Dollars in thousands)


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.  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 better 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.

 

Prosperity Bancshares, Inc.®


Notes to Selected Financial Data (Unaudited)


(Dollars and share amounts in thousands)





Three months ended


Non-GAAP Financial Measures

Mar 31, 2012

Dec 31, 2011

Sept 30, 2011

June 30, 2011

Mar 31, 2011


Return on average tangible common equity:





Net income

$     36,487

$     36,406

$      36,373

$     35,092

$     33,878


Average shareholders' equity

1,595,284

1,556,845

1,529,718

1,499,385

1,469,048


Less: Average goodwill and other intangible assets

(948,519)

(946,427)

(948,351)

(950,265)

(952,123)


       Average tangible shareholders' equity

$   646,765

$   610,418

$    581,367

$   549,120

$   516,925


Return on average tangible common equity (annualized):

22.57%

23.86%

25.03%

25.56%

26.22%









Tangible book value per share:





Shareholders' equity

$1,609,533

$1,567,265

$  1,541,339

$1,511,648

$1,480,498


Less: Goodwill and other intangible assets

(948,462)

(945,533)

(947,411)

(949,336)

(951,279)


         Tangible shareholders' equity

$   661,071

$   621,732

$    593,928

$   562,312

$   529,219









Period end shares outstanding

47,297

46,910

46,893

46,888

46,782


Tangible book value per share:

$       13.98

$       13.25

$        12.67

$       11.99

$        11.31









Tangible equity to tangible assets ratio:




Tangible shareholders' equity

$  661,071

$  621,732

$   593,928

$  562,312

$  529,219









Total assets

$10,889,955

$9,822,671

$9,567,087

$9,657,147

$9,722,947


Less: Goodwill and other intangible assets

(948,462)

(945,533)

(947,411)

(949,336)

(951,279)


       Tangible assets

$9,941,493

$8,877,138

$8,619,676

$8,707,811

$8,771,668









Tangible equity to tangible assets ratio:

6.65%

7.00%

6.89%

6.46%

6.03%









 

SOURCE Prosperity Bancshares, Inc.

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