Prosperity Bancshares, Inc.® Reports Strong First Quarter 2014 Earnings - Acquisition of F&M Bancorporation Inc. completed on April 1, 2014

- First quarter 2014 earnings per share (diluted) increased 17.4% to $1.01 compared with the first quarter 2013

- Net income increased $17.832 million or 36.2% compared with the first quarter 2013

- Nonperforming assets remain low at 0.11% of first quarter average earning assets

- Loans increased $2.489 billion or 47.3% compared with the first quarter 2013

- Deposits increased $3.747 billion or 32.0% compared with the first quarter 2013

- Named to the 2013 Keefe Bruyette & Woods Honor Roll

HOUSTON, April 23, 2014 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income for the quarter ended March 31, 2014, of $67.137 million or $1.01 per diluted common share, an increase in net income of $17.832 million or 36.2%, compared with $49.305 million, and an increase in diluted earnings per share of 17.4%, compared with $0.86 per diluted common share for the same period in 2013. 

"I am honored and excited to share with everyone the great results we had in the first quarter of 2014.  We were again named the Best Bank in America by Forbes magazine.  In fact, we were recognized in both 2012 and 2014 as the Best Bank in America.  The earnings speak for themselves, with diluted earnings per share of $1.01 for the quarter, an increase of 17.4% compared with the first quarter of 2013.  We continued to see good organic loan growth. Excluding loans acquired in acquisitions, loans at March 31, 2014 grew 8.2% compared with March 31, 2013 and 1.8% (7.2% annualized) on a linked quarter basis.  We continue to see strong organic deposit growth as well," said David Zalman, Prosperity's Chairman and Chief Executive Officer.

"We are finished with the operational integration of First Victoria National Bank and could not be more pleased.  All of the associates with First Victoria have been great and have taken a number of leadership roles in our company.  We completed the acquisition of F&M Bank this month and expect the operational integration to take place in June.  We are very excited about this transaction and look forward to a great future and relationship with all of the associates of F&M," continued Zalman.

"I am also pleased to announce Prosperity Bancshares' inclusion into the 2013 Keefe Bruyette & Woods Honor Roll.  To qualify for this honor, the company must maintain extraordinarily high quantitative metrics for the last 10 years.  "Thirty-one banking institutions posted a 10-year record worthy of admission to this year's KBW Honor Roll," added Zalman.

"I continue to see growth and prosperity for our company.  Texas and Oklahoma continue to have some of the best economies in the United States.  We continue to see large population gains, low unemployment, strong housing markets, strong construction, commercial, manufacturing markets and an influx of companies moving operations to Texas and Oklahoma because of a friendly business climate supported by state government," 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 FASB Accounting Standards Codification ("ASC") Topics 310-20, "Receivables-Nonrefundable Fees and Other Costs" and 310-30, "Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality".  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, 2014

For the three months ended March 31, 2014, net income was $67.137 million compared with $49.305 million for the same period in 2013.  Net income per diluted common share was $1.01 for the three months ended March 31, 2014 compared with $0.86 for the same period in 2013.  Net income for the quarter includes the effects of one-time gains on sale of assets of $3.310 million and one-time merger expenses of $731 thousand.  Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2014 were 1.43%, 9.52% and 24.23%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 42.04% for the three months ended March 31, 2014.

Net interest income before provision for credit losses for the quarter ended March 31, 2014, increased 32.9% to $143.691 million compared with $108.082 million during the same period in 2013.  The increase was primarily due to a 25.1% increase in average interest-earning assets for the same period.  The net interest margin on a tax equivalent basis for the three months ended March 31, 2014 increased to 3.62% compared with 3.42% for the same period in 2013 and decreased from 3.82% for the three months ended December 31, 2013.  Linked quarter net interest income before provision for credit losses decreased 1.2% or $1.778 million to $143.691 million compared with $145.469 million during the three months ended December 31, 2013, primarily due to a $6.5 million decrease in purchase accounting adjustments from purchased loans.  Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis decreased on a linked quarter basis from 3.35% for the quarter ended December 31, 2013 to 3.33% for the quarter ended March 31, 2014. 

Noninterest income increased $5.163 million or 22.0% to $28.604 million for the three months ended March 31, 2014, compared with $23.441 million for the same period in 2013.  This increase was primarily due to gains on the sale of assets described below and an increase in fees and service charges as a result of the additional accounts acquired in the acquisitions consummated during 2013.  Additionally, trust and brokerage income increased as a result of the additional products and services acquired through the FVNB Corp. and its wholly-owned subsidiary, First Victoria National Bank (collectively, "FVNB") acquisition in 2013.  These increases were partially offset by a decrease in debit card income as a result of the 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 $3.446 million or 13.7% primarily due to a $2.224 million gain on the sale of the agent bank credit card and agent bank merchant processing business of Bankers Credit Card Services, Inc., a subsidiary acquired as part of the acquisition of Coppermark Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank (collectively "Coppermark") and $1.086 million in gains on the sale of real property.

Noninterest expense increased $15.267 million or 27.4% to $71.034 million for the three months ended March 31, 2014, compared with $55.767 million for the same period in 2013.  This increase was primarily due to additional noninterest expenses associated with the acquisitions of Coppermark and FVNB.  On a linked quarter basis, noninterest expense increased 3.6% or $2.442 million primarily due to the additional noninterest expenses associated with the full quarter effect of the FVNB acquisition.  Additionally, one-time pre-tax merger expenses of $731 thousand primarily related to the FVNB acquisition were recorded during the first quarter of 2014. 

Loans at March 31, 2014 were $7.752 billion, an increase of $2.489 billion or 47.3%, compared with $5.263 billion at March 31, 2013, primarily due to the addition of Coppermark and FVNB.  Linked quarter loans decreased $22.821 million or 0.30% from $7.775 billion at December 31, 2013. 

Deposits at March 31, 2014 were $15.460 billion, an increase of $3.747 billion or 32.0% compared with $11.713 billion at March 31, 2013, primarily due to the addition of Coppermark and FVNB.  Linked quarter deposits increased $168.786 million or 1.10% from $15.291 billion at December 31, 2013. 

Average loans increased 47.3% or $2.492 billion to $7.756 billion for the quarter ended March 31, 2014, compared with $5.264 billion for the same period in 2013.  On a linked quarter basis, average loans increased 7.2% or $517.559 million from $7.238 billion for the quarter ended December 31, 2013. Average deposits increased 30.8% or $3.622 billion to $15.382 billion for the quarter ended March 31, 2014, compared with $11.760 billion for the same period of 2013.   On a linked quarter basis, average deposits increased 8.4% or $1.191 billion from $14.191 billion for the quarter ended December 31, 2013. 

The table below provides detail on loans acquired and deposits assumed in the acquisitions of East Texas Financial Services Inc. and First Federal Bank Texas (collectively "East Texas Financial Services"), Coppermark and FVNB completed on January 1, 2013, April 1, 2013 and November 1, 2013, respectively:

 

Balance Sheet Data (at period end)





(In thousands)











Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Mar 31, 2013


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)











Loans acquired (including new production since respective acquisition dates):










   East Texas Financial Services

$          92,474


$         99,281


$       104,403


$       111,626


$        117,863

   Coppermark

580,416


616,333


688,656


772,965


-

   FVNB

1,509,927


1,588,238


-


-


-

All other

5,569,583


5,471,369


5,389,530


5,287,892


5,145,161

Total loans

$     7,752,400


$    7,775,221


$    6,182,589


$    6,172,483


$     5,263,024





















Deposits assumed (including new deposits since respective acquisition dates):










   East Texas Financial Services

$          76,734


$         81,200


$         90,649


$         88,289


$          98,359

   Coppermark

1,014,436


1,031,993


1,073,567


1,087,137


-

   FVNB

2,164,824


2,239,415


-


-


-

All other

12,204,063


11,938,663


11,291,583


11,333,224


11,615,108

Total deposits

$   15,460,057


$  15,291,271


$  12,455,799


$  12,508,650


$   11,713,467

 

As reflected in the table above, loan and deposit growth was impacted by the acquisitions of 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 March 31, 2014 grew $424.422 million or 8.2% compared with March 31, 2013 and increased $98.214 million or 1.8% (7.2% 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 March 31, 2014 grew $588.955 million or 5.1% compared with March 31, 2013 and increased $265.400 million or 2.2% (8.8% annualized) on a linked quarter basis.

At March 31, 2014, Prosperity had $18.913 billion in total assets, $7.752 billion in loans and $15.460 billion in deposits. Assets, loans and deposits at March 31, 2014 increased by 25.4%, 47.3% and 32.0%, respectively, compared with their respective levels at March 31, 2013.

Asset Quality

Nonperforming assets totaled $18.696 million or 0.11% of quarterly average earning assets at March 31, 2014, compared with $18.133 million or 0.14% of quarterly average earning assets at March 31, 2013, and $22.504 million or 0.15% of quarterly average earning assets at December 31, 2013.  The allowance for credit losses was 0.87% of total loans at March 31, 2014, 1.05% of total loans at March 31, 2013 and 0.87% of total loans at December 31, 2013.  Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.18% of remaining loans as of March 31, 2014, compared to 1.25% at March 31, 2013 and 1.25% at December 31, 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 $600 thousand for the three months ended March 31, 2014 compared with $7.865 million for the three months ended December 31, 2013 and $2.800 million for the three months ended March 31, 2013. 

Net charge offs were $786 thousand for the three months ended March 31, 2014 compared with $496 thousand for the three months ended December 31, 2013 and $315 thousand for the three months ended March 31, 2013.

Conference Call

Prosperity's management team will host a conference call on Wednesday, April 23, 2014 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity's first quarter 2014 earnings. Individuals and investment professionals may participate in the call by dialing 866-952-1907, 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.

Dividend

Prosperity Bancshares, Inc. declared a second quarter cash dividend of $0.240, to be paid on July 1, 2014 to all shareholders of record as of June 16, 2014.

Acquisition of F&M Bancorporation

On April 1, 2014, Prosperity completed the acquisition of F&M Bancorporation Inc. ("FMBC") and its wholly-owned subsidiary The F&M Bank & Trust Company ("F&M Bank") headquartered in Tulsa, Oklahoma.  F&M Bank operated 13 banking offices; 9 in Tulsa, Oklahoma and surrounding areas, 3 in Dallas, Texas and 1 loan production office in Oklahoma City, Oklahoma.  As of March 31, 2014, FMBC, on a consolidated basis, reported total assets of $2.412 billion, total loans of $1.738 billion and total deposits of $2.267 billion.

Under the terms of the definitive agreement, Prosperity issued 3,298,022 shares of Prosperity common stock plus $34.24 million in cash for all outstanding shares of FMBC capital stock.  Accordingly, such information is not included in the quarter ended March 31, 2014 financial results. 

Acquisition of FVNB Corp.

On November 1, 2013, Prosperity completed the acquisition of FVNB Corp. and its wholly-owned subsidiary First Victoria National Bank 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 goodwill of $323.407 million as of March 31, 2014.  Additionally, the Company recognized $18.411 million of core deposit intangibles as of March 31, 2014.  These goodwill and core deposit intangible balances as of March 31, 2014 do not include subsequent fair value adjustments that are still being finalized. 

Acquisition of Coppermark Bancshares, Inc.

On April 1, 2013, Prosperity completed the acquisition of Coppermark Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank 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 $1.248 billion, total loans of $847.558 million and total deposits of $1.120 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 goodwill of $117.653 million.  Additionally, the Company recognized $1.514 million of core deposit intangibles.   

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 $165.955 million, total loans of $129.307 million and total deposits of $112.293 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 goodwill of $15.007 million.

Prosperity Bancshares, Inc. ®

As of March 31, 2014, Prosperity Bancshares Inc. ®, recently named America's Best Bank for 2014 by Forbes, is an $18.913 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.prosperitybankusa.com, Retail Brokerage Services, Credit Cards, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management; Mortgage Services and Mobile Banking. Since completing the merger with F&M, Prosperity now operates 248 full-service banking locations; 63 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 38 in the Dallas/Fort Worth area; 22 in the East Texas area; 30 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, 6 in the Central Oklahoma area and 9 in the Tulsa, Oklahoma area.

 

Bryan/College Station Area -


Sachse


River Oaks


Rockport

Bryan


The Colony


Sugar Land


Sinton

Bryan-29thStreet


Turtle Creek


SW Medical Center


Taft

Bryan-East


Turtle Creek LPO


Tanglewood


Victoria

Bryan-North


Westmoreland


Uptown


Victoria-Navarro

Caldwell




Waugh Drive


Victoria-North

College Station


Fort Worth -


Westheimer


Yoakum

Crescent Point


Haltom City


West University


Yorktown

Hearne


Keller


Woodcreek



Huntsville


Roanoke




West Texas Area -

Madisonville


Stockyards


Other Houston Area


Abilene -

Navasota




Locations -


Antilley Road

New Waverly


Other Dallas/Fort Worth


Angleton


Barrow Street

Rock Prairie


Locations -


Bay City


Cypress Street

Southwest Parkway


Arlington


Beaumont


Judge Ely

Tower Point


Azle


Cinco Ranch


Mockingbird

Wellborn Road


Ennis


Cleveland





Gainesville


East Bernard


Lubbock -

Central Texas Area -


Glen Rose


El Campo


4thStreet

Austin -


Granbury


Dayton


66thStreet

183


Mesquite


Galveston


82ndStreet

Allandale


Muenster


Groves


86thStreet

Cedar Park


Sanger


Hempstead


98thStreet

Congress


Waxahachie


Hitchcock


Avenue Q

Lakeway


Weatherford


Katy


North University

Liberty Hill




Katy-S. Mason Road


Texas Tech Student Union

Northland


East Texas Area -


Katy-Spring Green



Oak Hill


Athens


Liberty


Midland -

Research Blvd


Blooming Grove


Magnolia


Wadley

Westlake


Canton


Magnolia Parkway


Wall Street



Carthage


Mont Belvieu



Other Central Texas Locations -


Corsicana


Nederland


Odessa -

Bastrop


Crockett


Needville


Grandview

Canyon Lake


Eustace


Rosenberg


Grant

Dime Box


Gilmer


Shadow Creek


Kermit Highway

Dripping Springs


Grapeland


Spring


Parkway

Elgin


Gun Barrel City


Sweeny



Flatonia


Jacksonville


The Woodlands-I-45


Other West Texas Locations -

Georgetown


Kerens


The Woodlands-Research Forest


Big Spring

Gruene


Longview


Tomball


Brownfield

Kingsland


Mount Vernon


Waller


Brownwood

La Grange


Palestine


West Columbia


Cisco

Lexington


Rusk


Wharton


Comanche

New Braunfels


Seven Points


Winnie


Early

Pleasanton


Teague


Wirt


Floydada

Round Rock


Tyler-Beckham




Gorman

San Antonio


Tyler-South Broadway


South Texas Area -


Levelland

Schulenburg


Tyler-University


Corpus Christi -


Littlefield

Seguin


Winnsboro


Airline


Merkel

Smithville




Calallen


Plainview

Thorndale


Houston Area -


Carmel


San Angelo

Weimar


Houston -


Northwest


Slaton



Aldine


Saratoga


Snyder

Dallas/Fort Worth Area -


Allen Parkway


Timbergate



Dallas -


Bellaire


Water Street


Oklahoma

Abrams Centre


Beltway




Central Oklahoma-

Balch Springs


Clear Lake


Other South Texas


23rd Street

Camp Wisdom


Copperfield


Locations -


Edmond

Cedar Hill


Cypress


Alice


Expressway

Dallas – Central Expressway


Downtown


Aransas Pass


I-240

Forest Park


Eastex


Beeville


Memorial

Frisco


Fairfield


Colony Creek


Norman

Frisco-West


First Colony


Cuero



Independence


Gessner


Edna


Tulsa-

Kiest


Gladebrook


Goliad


Garnett

McKinney


Heights


Gonzales


Harvard

McKinney-Stonebridge


Highway 6 West


Hallettsville


Memorial

Midway


Little York


Kingsville


Owasso

Northwest Highway


Medical Center


Mathis


Sheridan

Plano


Memorial Drive


Padre Island


S. Harvard

Preston Forest


Northside


Palacios


Utica Square

Preston Road


Pasadena


Port Lavaca


Utica Tower

Red Oak


Pecan Grove


Portland


Yale

 

"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, 2013 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)












 Mar 31, 2014 


 Dec 31, 2013 


 Sep 30, 2013 


 Jun 30, 2013 


 Mar 31, 2013 

Balance Sheet Data










 (at period end)








Total loans

$        7,752,400


$       7,775,221


$       6,182,589


$       6,172,483


$        5,263,024

Investment securities(A)

8,561,337


8,224,448


7,771,345


8,017,884


7,985,811

Federal funds sold 

382


400


1,121


606


835

Allowance for credit losses

(67,096)


(67,282)


(59,913)


(56,176)


(55,049)

Cash and due from banks

349,860


380,990


269,987


250,542


180,577

Goodwill

1,672,004


1,671,520


1,351,782


1,350,834


1,235,743

Core deposit intangibles, net

39,702


42,049


25,233


26,688


26,514

Other real estate owned

7,372


7,299


7,432


10,244


9,913

Fixed assets, net

280,812


282,925


232,240


227,455


206,829

Other assets

316,360


324,458


272,463


270,158


227,117

Total assets

$      18,913,133


$     18,642,028


$     16,054,279


$     16,270,718


$      15,081,314











Noninterest-bearing deposits

$        4,142,042


$       4,108,835


$       3,368,357


$       3,283,082


$        2,995,828

Interest-bearing deposits

11,318,015


11,182,436


9,087,442


9,225,568


8,717,639

Total deposits

15,460,057


15,291,271


12,455,799


12,508,650


11,713,467

Securities sold under repurchase agreements

349,074


364,357


431,969


481,170


470,241

Other borrowings

40,451


10,689


605,951


781,215


576,768

Junior subordinated debentures

124,231


124,231


85,055


85,055


85,055

Other liabilities

98,566


64,662


86,393


69,346


86,328

Total liabilities

16,072,379


15,855,210


13,665,167


13,925,436


12,931,859

Shareholders' equity(B)

2,840,754


2,786,818


2,389,112


2,345,282


2,149,455

Total liabilities and equity

$      18,913,133


$     18,642,028


$     16,054,279


$     16,270,718


$      15,081,314











(A) Includes $7,023, $7,512, $8,588, $9,724 and $12,054, in unrealized gains on available for sale securities for the quarterly periods ending March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.

(B) Includes $4,565, $4,883, $5,582, $6,321 and $7,835, in after-tax unrealized gains on available for sale securities for the quarterly periods ending March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)












Three Months Ended


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Mar 31, 2013











Income Statement Data










Interest income:










Loans

$        107,144


$       110,575


$         94,236


$         89,842


$          81,464

Securities(C)

47,056


45,100


41,961


39,384


36,548

Federal funds sold and other earning assets

48


76


16


76


19

Total interest income

154,248


155,751


136,213


129,302


118,031











Interest expense:










Deposits

9,387


9,048


8,314


9,170


8,690

Securities sold under repurchase agreements

237


280


317


312


292

Junior subordinated debentures

775


730


610


606


605

Other borrowings

158


224


439


472


362

Total interest expense

10,557


10,282


9,680


10,560


9,949

Net interest income

143,691


145,469


126,533


118,742


108,082

Provision for credit losses

600


7,865


4,025


2,550


2,800

Net interest income after provision for credit losses

143,091


137,604


122,508


116,192


105,282











Noninterest income:










Nonsufficient funds (NSF) fees

8,870


9,669


8,649


8,346


8,509

Credit card, debit card and ATM card income 

4,724


4,662


4,307


7,007


6,487

Service charges on deposit accounts

4,037


3,460


3,169


3,304


2,931

Trust income

1,800


1,542


901


896


1,017

Mortgage income

593


549


931


1,567


991

Brokerage income

1,269


719


233


263


303

Bank owned life insurance income

1,028


1,011


916


932


776

Net gain (loss) on sale of assets

3,310


40


126


(180)


1

Net (loss) gain on sale of other real estate

(60)


196


(864)


237


(105)

Other noninterest income

3,033


3,310


3,186


2,902


2,531

Total noninterest income

28,604


25,158


21,554


25,274


23,441











Noninterest expense:










Salaries and benefits

43,408


40,633


37,135


37,517


33,209

Net occupancy and equipment

5,339


4,893


5,094


4,669


4,278

Debit card, data processing and software amortization

3,184


3,333


2,756


3,249


2,570

Regulatory assessments and FDIC insurance

2,726


2,771


2,516


2,579


2,395

Core deposit intangibles amortization

2,045


1,594


1,455


1,341


1,755

Depreciation

3,201


3,072


2,679


2,464


2,378

Communications

2,737


2,468


2,397


2,410


2,196

Other real estate expense

396


176


75


237


223

Other noninterest expense

7,998


9,652


7,430


6,834


6,763

Total noninterest expense

71,034


68,592


61,537


61,300


55,767

Net income before taxes

100,661


94,170


82,525


80,166


72,956

Federal income taxes

33,524


31,199


27,247


26,322


23,651

Net income available to common shareholders

$          67,137


$         62,971


$         55,278


$         53,844


$          49,305











(C) Interest income on securities was reduced by net premium amortization of $12,280, $12,017, $15,136, $18,838 and $22,710 for the three month periods ended March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

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












Three Months Ended


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Mar 31, 2013











Profitability










Net income

$          67,137


$         62,971


$         55,278


$         53,844


$          49,305











Basic earnings per share

$              1.01


$             0.98


$             0.92


$             0.89


$              0.87

Diluted earnings per share

$              1.01


$             0.98


$             0.91


$             0.89


$              0.86











Return on average assets(D) 

1.43%


1.42%


1.37%


1.33%


1.33%

Return on average common equity(D) 

9.52%


9.53%


9.31%


9.27%


9.23%

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

24.23%


23.97%


22.14%


22.32%


22.30%

Tax equivalent net interest margin(F)

3.62%


3.82%


3.59%


3.43%


3.42%

Efficiency ratio(G)

42.04%


40.21%


41.59%


42.51%


42.40%











Liquidity and Capital Ratios










Equity to assets

15.02%


14.95%


14.88%


14.41%


14.25%

Tier 1 risk-based capital

13.85%


13.29%


14.74%


14.15%


14.77%

Total risk-based capital

14.59%


14.03%


15.55%


14.91%


15.61%

Tier 1 leverage capital

7.30%


7.44%


7.37%


7.07%


7.10%

Tangible equity to tangible assets(E)

6.56%


6.35%


6.90%


6.50%


6.42%











Other Data










Shares used in computed earnings per share










Basic

66,186


64,024


60,344


60,250


56,988

Diluted

66,280


64,173


60,504


60,394


57,134

Period end shares outstanding

66,261


66,048


60,383


60,315


57,014

Cash dividends paid per common share

$            0.240


$           0.240


$           0.215


$           0.215


$            0.215

Book value per share

$            42.87


$           42.19


$           39.57


$           38.88


$            37.70

Tangible book value per share(E)

$            17.04


$           16.27


$           16.76


$           16.05


$            15.56











Common Stock Market Price










High

$            67.68


$           65.49


$           62.00


$           52.40


$            47.56

Low

59.75


61.18


51.85


44.33


42.38

Period end closing price

66.15


63.39


61.84


51.79


47.39

Employees – FTE

2,888


2,995


2,454


2,496


2,304

Number of banking centers

236


238


218


219


224











(D) Interim periods annualized.

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

(F) Net interest margin for all periods presented is calculated on an actual 365 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



Mar 31, 2014


Dec 31, 2013


Mar 31, 2013



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

$   7,755,997


$ 107,144


5.60%


$   7,238,438


$ 110,575


6.06%


$   5,263,784


$   81,464


6.28%


Investment securities

8,466,946


47,056


2.25%

(H)

7,992,673


45,100


2.24%

(H)

7,755,567


36,548


1.91%

(H)

Federal funds sold and other earning assets

101,700


48


0.19%


103,413


76


0.29%


34,793


19


0.22%


      Total interest-earning assets 

16,324,643


$ 154,248


3.83%


15,334,524


$ 155,751


4.03%


13,054,144


$ 118,031


3.67%


Allowance for credit losses 

(67,222)






(60,170)






(53,242)






Noninterest-earning assets 

2,550,893






2,502,276






1,849,461






      Total assets

$ 18,808,314






$ 17,776,630






$ 14,850,363

























Interest-Bearing Liabilities: 



















Interest-bearing demand deposits

$   3,554,366


$     2,132


0.24%


$   2,963,899


$     1,899


0.25%


$   2,659,489


$     2,210


0.34%


Savings and money market deposits

4,992,442


3,155


0.26%


4,654,044


3,049


0.26%


3,790,416


2,829


0.30%


Certificates and other time deposits 

2,816,701


4,100


0.59%


2,712,699


4,100


0.60%


2,370,499


3,651


0.62%


Securities sold under repurchase agreements

347,747


237


0.28%


398,100


280


0.28%


448,542


292


0.26%


Other borrowings

51,932


158


1.23%


210,492


224


0.42%


358,120


362


0.41%


Junior subordinated debentures 

124,231


775


2.53%


111,172


730


2.61%


85,055


605


2.88%


      Total interest-bearing liabilities 

11,887,419


10,557


0.36%

(I)

11,050,406


10,282


0.37%

(I)

9,712,121


9,949


0.42%

(I)




















Noninterest-bearing liabilities: 



















Noninterest-bearing demand deposits

4,018,094






3,860,296






2,939,621






Other liabilities 

82,288






223,394






62,716






      Total liabilities

15,987,801






15,134,096






12,714,458






Shareholders' equity 

2,820,513






2,642,534






2,135,905






      Total liabilities and shareholders' equity 

$ 18,808,314






$ 17,776,630






$ 14,850,363

























Net interest income and margin 



$ 143,691


3.57%




$ 145,469


3.76%




$ 108,082


3.36%





















Non-GAAP to GAAP reconciliation:



















Tax equivalent adjustment



2,052






2,152






2,125























Net interest income and margin

 (tax equivalent basis)



$ 145,743


3.62%




$ 147,621


3.82%




$ 110,207


3.42%



(H) Yield on securities was impacted by net premium amortization of $12,280, $12,017 and $22,710 for the three month periods ended March 31,2014, December 31, 2013 and March 31, 2013, respectively.

(I) Total cost of funds, including noninterest-bearing deposits, was 0.27%, 0.27% and 0.32% for the three months ended March 31, 2014, December 31, 2013 and March 31, 2013, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)












Three Months Ended


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Mar 31, 2013

Adjustment to Loan Yield (J)










Interest on loans, as reported

$        107,144


$       110,575


$         94,236


$         89,842


$        81,464

    Less: Purchase accounting adjustment-loan discount accretion

(13,475)


(19,979)


(16,421)


(12,031)


(14,292)

Interest on loans without discount accretion

$          93,669


$         90,596


$         77,815


$         77,811


$        67,172

Average loans

$     7,755,997


$    7,238,438


$    6,173,394


$    6,114,598


$   5,263,784

Loan yield without discount accretion

4.90%


4.97%


5.00%


5.10%


5.18%

Loan yield, as reported

5.60%


6.06%


6.06%


5.89%


6.28%











Adjustment to Securities Yield (J)










Interest on securities, as reported

$          47,056


$         45,100


$         41,961


$         39,384


$        36,548

    Add: Purchase accounting adjustment-securities amortization

1,964


1,892


2,275


2,599


3,106

Interest on securities including amortization

$          49,020


$         46,992


$         44,236


$         41,983


$        39,654

Average securities

$     8,466,946


$    7,992,673


$    8,015,221


$    7,964,157


$   7,755,567

Securities yield without purchase accounting adjustment

2.35%


2.33%


2.19%


2.11%


2.07%

Securities yield, as reported

2.25%


2.24%


2.08%


1.98%


1.91%











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

3.33%


3.35%


3.19%


3.09%


3.08%











Net Interest Margin (tax equivalent basis), as reported

3.62%


3.82%


3.59%


3.43%


3.42%











Net income available to common shareholders, as reported

$          67,137


$         62,971


$         55,278


$         53,844


$        49,305

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

(7,677)


(12,095)


(9,476)


(6,335)


(7,560)

Net income available to common shareholders, adjusted

$          59,460


$         50,876


$         45,802


$         47,509


$        41,745




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 Dec 31, 2013


Balance at Mar 31, 2014


Balance at Acquisition Date


Balance at Dec 31, 2013


Balance at Mar 31, 2014


Balance at Acquisition Date


Balance at Dec 31, 2013


Balance at Mar 31, 2014

Loan marks:


















Previously acquired banks (L)

$      81,328


$         28,040


$          24,412


$      28,764


$         20,741


$          19,929


$    110,092


$         48,781


$      44,341

2013 acquisitions (M)

78,299


59,758


52,751


34,783


24,756


22,096


113,082


84,514


74,847

Total 

$    159,627


$         87,798


$          77,163


$      63,547


$         45,497


$          42,025


$    223,174


$       133,295


$    119,188



















Acquired portfolio loan balances:


















Previously acquired banks (L)

$ 1,298,380


$       522,620


$        466,159


$      57,979


$         37,724


$          36,501


$ 1,356,359


$       560,344


$    502,660

2013 acquisitions (M)

2,541,268


1,936,355


1,657,646


77,300


49,256


45,626


2,618,568


1,985,611


1,703,272

Total

$ 3,839,648


$    2,458,975


$     2,123,805


$    135,279


$         86,980


$          82,127

(N)

$ 3,974,927


$    2,545,955


$ 2,205,932



















(J) Non-GAAP financial measure.

(K) Using effective tax rate of 33.3%, 33.1%, 33.0%, 32.8% and 32.4% for the three month periods ended March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.

(L) Includes Bank of Texas, Bank Arlington, American State Bank and Community National Bank, all of which were acquired in 2012.

(M) Includes East Texas Financial Services, Coppermark and FVNB. During the fourth quarter of 2013, FVNB added $1.634 billion in loans with related purchase accounting adjustments of $60.228 million at acquisition date.

(N) Actual principal balances acquired.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)












Three Months Ended


 Mar 31, 2014 


 Dec 31, 2013 


 Sep 30, 2013 


 Jun 30, 2013 


 Mar 31, 2013 

YIELD TREND




















Interest-Earning Assets: 










Loans

5.60%


6.06%


6.06%


5.89%


6.28%

Investment securities (O) 

2.25%


2.24%


2.08%


1.98%


1.91%

Federal funds sold and other earning assets

0.19%


0.29%


0.22%


0.87%


0.22%

  Total interest-earning assets 

3.83%


4.03%


3.80%


3.67%


3.67%











Interest-Bearing Liabilities: 










Interest-bearing demand deposits

0.24%


0.25%


0.28%


0.33%


0.34%

Savings and money market deposits

0.26%


0.26%


0.27%


0.30%


0.30%

Certificates and other time deposits 

0.59%


0.60%


0.59%


0.61%


0.62%

Securities sold under repurchase agreements

0.28%


0.28%


0.28%


0.27%


0.26%

Other borrowings

1.23%


0.42%


0.23%


0.35%


0.41%

Junior subordinated debentures 

2.53%


2.61%


2.85%


2.86%


2.88%

  Total interest-bearing liabilities 

0.36%


0.37%


0.37%


0.40%


0.42%











Net Interest Margin 

3.57%


3.76%


3.53%


3.37%


3.36%

Net Interest Margin (tax equivalent)

3.62%


3.82%


3.59%


3.43%


3.42%





















(O) Yield on securities was impacted by net premium amortization of $12,280, $12,017, $15,136, $18,838 and $22,710 for the three month periods ended March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands) 



Three Months Ended


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


June 30, 2013


Mar 31, 2013

Balance Sheet Averages










Total loans

$     7,755,997


$    7,238,438


$    6,173,394


$      6,114,598


$     5,263,784

Investment securities

8,466,946


7,992,673


8,015,221


7,964,157


7,755,567

Federal funds sold and other earning assets

101,700


103,413


27,451


35,113


34,793

Total interest-earning assets

16,324,643


15,334,524


14,216,066


14,113,868


13,054,144

Allowance for credit losses

(67,222)


(60,170)


(56,765)


(57,754)


(53,242)

Cash and due from banks

255,297


232,666


189,082


279,271


206,990

Goodwill

1,673,216


1,560,905


1,351,236


1,331,568


1,226,332

Core deposit intangibles, net

38,754


30,641


25,938


25,893


25,244

Other real estate

7,885


7,254


9,494


19,605


11,789

Fixed assets, net

282,411


251,688


231,480


223,769


207,517

Other assets

293,330


419,122


227,738


234,710


171,589

Total assets

$   18,808,314


$  17,776,630


$  16,194,269


$    16,170,930


$   14,850,363











Noninterest-bearing deposits

$     4,018,094


$    3,860,296


$    3,308,158


$      3,295,211


$     2,939,621

Interest-bearing demand deposits

3,554,366


2,963,899


2,400,555


2,580,750


2,659,489

Savings and money market deposits

4,992,442


4,654,044


4,233,911


4,261,466


3,790,416

Certificates and other time deposits

2,816,701


2,712,699


2,489,848


2,543,895


2,370,499

Total deposits

15,381,603


14,190,938


12,432,472


12,681,322


11,760,025

Securities sold under repurchase agreements

347,747


398,100


455,276


471,430


448,542

Other borrowings

51,932


210,492


772,083


541,034


358,120

Junior subordinated debentures

124,231


111,172


85,055


85,055


85,055

Other liabilities

82,288


223,394


73,571


69,741


62,716

Shareholders' equity

2,820,513


2,642,534


2,375,812


2,322,348


2,135,905

Total liabilities and equity

$   18,808,314


$  17,776,630


$  16,194,269


$    16,170,930


$   14,850,363

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)
































Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Mar 31, 2013

Period End Balances






























Loan Portfolio















Commercial and other

$   1,312,405

16.9%


$   1,322,975

17.0%


$   1,028,799

16.6%


$      999,677

16.2%


$      760,531

14.5%

Construction

888,985

11.5%


865,511

11.1%


703,193

11.4%


694,585

11.2%


575,307

10.9%

1-4 family residential

1,906,480

24.7%


1,870,365

24.2%


1,503,771

24.4%


1,452,268

23.7%


1,338,936

25.5%

Home equity

263,966

3.4%


261,355

3.4%


211,742

3.4%


208,739

3.4%


203,815

3.9%

Commercial real estate

2,709,386

34.9%


2,753,797

35.3%


2,304,862

37.2%


2,390,820

38.6%


1,993,518

37.8%

Agriculture (includes farmland)

512,857

6.6%


531,258

6.8%


321,518

5.2%


314,945

5.1%


286,789

5.4%

Consumer and other

158,321

2.0%


169,960

2.2%


108,704

1.8%


111,449

1.8%


104,128

2.0%

Total loans

$   7,752,400



$   7,775,221



$   6,182,589



$   6,172,483



$   5,263,024
































Deposit Types















Noninterest-bearing DDA

$   4,142,042

26.9%


$   4,108,835

26.9%


$   3,368,357

27.0%


$   3,283,082

26.0%


$   2,995,828

25.6%

Interest-bearing DDA

3,446,375

22.3%


3,470,316

22.7%


2,366,997

19.0%


2,483,428

19.9%


2,521,998

21.5%

Money market

3,468,016

22.4%


3,320,062

21.7%


2,834,172

22.8%


2,868,880

23.0%


2,509,501

21.4%

Savings

1,630,395

10.5%


1,571,504

10.3%


1,413,153

11.3%


1,371,214

11.0%


1,345,044

11.5%

Certificates and other time deposits

2,773,229

17.9%


2,820,554

18.4%


2,473,120

19.9%


2,502,046

20.1%


2,341,096

20.0%

Total deposits

$ 15,460,057



$ 15,291,271



$ 12,455,799



$ 12,508,650



$ 11,713,467

















Loan to Deposit Ratio

50.1%



50.8%



49.6%



49.3%



44.9%
































Construction Loans















Single family residential construction

$      292,137

32.6%


$      271,491

30.9%


$      239,980

33.5%


$      234,257

32.9%


$      177,218

30.6%

Land development

73,974

8.2%


83,820

9.6%


60,927

8.6%


63,857

9.0%


42,520

7.4%

Raw land

55,384

6.2%


48,996

5.6%


52,789

7.4%


59,701

8.4%


46,672

8.1%

Residential lots

118,733

13.2%


122,449

14.0%


95,361

13.4%


91,018

12.8%


93,598

16.2%

Commercial lots

99,300

11.1%


103,878

11.9%


58,085

8.2%


60,960

8.6%


64,394

11.2%

Commercial construction and other

257,942

28.7%


244,124

28.0%


204,940

28.9%


200,633

28.3%


153,047

26.5%

Net unaccreted discount

(8,485)



(9,247)



(8,889)



(15,841)



(2,142)


Total construction loans

$      888,985



$      865,511



$      703,193



$      694,585



$      575,307


 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)












Three Months Ended


Mar 31, 2014


Dec 31, 2013


Sep 30, 2013


Jun 30, 2013


Mar 31, 2013











Asset Quality










Nonaccrual loans

$            7,714


$         10,231


$           4,954


$           4,295


$            7,529

Accruing loans 90 or more days past due

3,519


4,947


283


325


642

Total nonperforming loans

11,233


15,178


5,237


4,620


8,171

Repossessed assets

91


27


18


-


49

Other real estate

7,372


7,299


7,432


10,244


9,913

  Total nonperforming assets

$          18,696


$         22,504


$         12,687


$         14,864


$          18,133





















Nonperforming assets:










Commercial and industrial

$            4,748


$           3,153


$           1,223


$           1,191


$            3,896

Construction, land development and other land loans

4,053


4,558


4,611


5,898


3,678

1-4 family residential (including home equity)

5,435


6,279


2,441


2,112


3,746

Commercial real estate (including multi-family residential)

4,196


8,033


4,233


4,330


5,533

Agriculture (includes farmland)

104


279


23


1,213


1,183

Consumer and other

160


202


156


120


97

Total 

$          18,696


$         22,504


$         12,687


$         14,864


$          18,133











Number of loans/properties

164


203


128


123


124











Allowance for credit losses at end of period

$          67,096


$         67,282


$         59,913


$         56,176


$          55,049











Net charge-offs:










Commercial and industrial

$                 81


$                  7


$              119


$              148


$                 59

Construction, land development and other land loans

(17)


(12)


(30)


124


(56)

1-4 family residential (including home equity)

131


21


15


35


102

Commercial real estate (including multi-family residential)

60


(311)


(471)


801


(57)

Agriculture (includes farmland)

(81)


(85)


13


13


(7)

Consumer and other

612


876


642


302


274

Total 

$               786


$              496


$              288


$           1,423


$               315





















Asset Quality Ratios










Nonperforming assets to average earning assets

0.11%


0.15%


0.09%


0.11%


0.14%

Nonperforming assets to loans and other real estate

0.24%


0.29%


0.20%


0.24%


0.34%

Net charge-offs to average loans  (annualized)

0.04%


0.03%


0.02%


0.09%


0.02%

Allowance for credit losses to total loans

0.87%


0.87%


0.97%


0.91%


1.05%

Allowance for credit losses to total loans 










(excluding acquired loans accounted for under ASC Topics 310-20 and 310-30) (E)

1.18%


1.25%


1.20%


1.18%


1.25%


 

 

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



 Mar 31, 2014 


 Dec 31, 2013 


 Sep 30, 2013 


 Jun 30, 2013 


 Mar 31, 2013 












Return on average tangible common equity:











Net income


$               67,137


$               62,971


$               55,278


$               53,844


$               49,305

Average shareholders' equity


$          2,820,513


$          2,642,534


$          2,375,812


$          2,322,348


$          2,135,905

Less: Average goodwill and other intangible assets


(1,711,970)


(1,591,546)


(1,377,174)


(1,357,461)


(1,251,576)

         Average tangible shareholders' equity


$          1,108,543


$          1,050,988


$             998,638


$             964,887


$             884,329

Return on average tangible common equity(D)


24.23%


23.97%


22.14%


22.32%


22.30%












Tangible book value per share:











Shareholders' equity


$          2,840,754


$          2,786,818


$          2,389,112


$          2,345,282


$          2,149,455

Less: Goodwill and other intangible assets


(1,711,706)


(1,712,121)


(1,377,015)


(1,377,522)


(1,262,257)

         Tangible shareholders' equity


$          1,129,048


$          1,074,697


$          1,012,097


$             967,760


$             887,198












Period end shares outstanding


66,261


66,048


60,383


60,315


57,014

Tangible book value per share:


$                 17.04


$                 16.27


$                 16.76


$                 16.05


$                 15.56












Tangible equity to tangible assets ratio:











Tangible shareholders' equity


$          1,129,048


$          1,074,697


$          1,012,097


$             967,760


$             887,198












Total assets


$        18,913,133


$        18,642,028


$        16,054,279


$        16,270,718


$        15,081,314

Less: Goodwill and other intangible assets


(1,711,706)


(1,712,121)


(1,377,015)


(1,377,522)


(1,262,257)

         Tangible assets


$        17,201,427


$        16,929,907


$        14,677,264


$        14,893,196


$        13,819,057












Tangible equity to tangible assets ratio


6.56%


6.35%


6.90%


6.50%


6.42%

 

 

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

(Dollars in thousands)




 Mar 31, 2014 


 Dec 31, 2013 


 Mar 31, 2013 








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







Allowance for credit losses


$               67,096


$               67,282


$               55,049

Total loans


$          7,752,400


$          7,775,221


$          5,263,024

Less: Fair value of acquired loans accounted for under ASC







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


$          2,086,744


$          2,412,660


$             853,751

Total loans less acquired loans


$          5,665,656


$          5,362,561


$          4,409,273

Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis)


1.18%


1.25%


1.25%

 

SOURCE Prosperity Bancshares, Inc.



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