Prosperity Bancshares, Inc.® Reports Second Quarter 2015 Earnings

- Second quarter 2015 earnings per share (diluted) of $1.03

- Second quarter net income of $71.932 million

- Nonperforming assets remain low at 0.19% of second quarter average earning assets

- Return on second quarter average assets of 1.33%

- Second quarter efficiency ratio of 42.35%

Jul 24, 2015, 06:05 ET from Prosperity Bancshares, Inc.

HOUSTON, July 24, 2015 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income for the quarter ended June 30, 2015 of $71.932 million or $1.03 per diluted common share. Additionally, nonperforming assets remain low at 0.19% of second quarter average earning assets with return on second quarter average assets of 1.33%.

"Texas, which has been the top state in job creation for the past decade, continues to produce opportunities and growth in employment despite the struggling oil and gas industry.  Texas payrolls increased by 16,700 workers in June, while unemployment fell to 4.2%.  Refining, petrochemicals and service industries are offsetting job losses in the oil industry.  Employment in the health services and education sectors has been strong as well.  Austin continues to boom with an annual job growth rate of 6.6%.  Texas is now America's top technology exporter, surpassing longtime leader California.  The Texas strategy of avoiding burdensome taxation and regulation continues to attract growing businesses and has resulted in economic diversification," said David Zalman, Prosperity's Chairman and Chief Executive Officer.  

"During the second quarter of 2015, our bank continued to see growth in loans and deposits compared to the same quarter a year ago, excluding the F&M acquisition.  In our experience, most of the banks we have acquired go through a transition period during which we anticipate loans and deposits to decrease.  We continue to see opportunities in the markets we serve and are optimistic about the potential business possibilities that are being presented to us," continued Zalman.

"We continue to grow core earnings.  Net income for the quarter ended June 30, 2015 (excluding purchase accounting adjustments) was $63.800 million, an increase of $4.191 million or 7.0%, compared with $59.609 million in net income (excluding purchase accounting adjustments) for the quarter ended June 30, 2014," added Zalman. 

"I would like to thank our associates and directors for all of their hard work and dedication and give a special thank you to all of our customers for their continued business and loyalty," concluded Zalman.

Results of operations for the three months ended June 30, 2015

Net income was $71.932 million for the three months ended June 30, 2015 compared with $75.506 million for the same period in 2014. Net income per diluted common share was $1.03 for the three months ended June 30, 2015 compared with $1.08 for the same period in 2014. Net income (excluding purchase accounting adjustments) was $63.800 million for the quarter ended June 30, 2015 compared with $59.609 million for the quarter ended June 30, 2014. Net income per diluted common share (excluding purchase accounting adjustments) was $0.91 for the three months ended June 30, 2015 compared with $0.85 for the three months ended June 30, 2014. The reconciliation of these non-GAAP financial measures is shown on page 12. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2015 were 1.33%, 8.61% and 20.49%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and taxes) was 42.35% for the three months ended June 30, 2015.

Net interest income before provision for credit losses for the quarter ended June 30, 2015 was $158.239 million compared with $174.055 million during the same period in 2014. This change was primarily due to a decrease in loan discount accretion of $11.750 million for the quarter ended June 30, 2015 compared with the quarter ended June 30, 2014. Linked quarter net interest income before provision for credit losses was $158.239 million compared with $162.905 million during the three months ended March 31, 2015. This change was primarily due to a decrease in loan discount accretion of $6.045 million for the quarter ended June 30, 2015 compared with the quarter ended March 31, 2015. The net interest margin on a tax equivalent basis decreased to 3.39% for the three months ended June 30, 2015, compared with 3.83% for the same period in 2014 and 3.57% for the three months ended March 31, 2015. This was primarily due to the decrease in loan discount accretion and lower yields on average interest earning assets partially offset by lower rates paid on average interest bearing liabilities for the quarter ended June 30, 2015. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis was 3.13% for the three months ended June 30, 2015, compared with 3.31% for the same period in 2014 and 3.17% for the three months ended March 31, 2015.

Noninterest income was $30.297 million for the three months ended June 30, 2015 compared with $32.597 million for the same period in 2014. This change was primarily due to a decrease in net gain on sale of assets and NSF fees. On a linked quarter basis, noninterest income increased $1.876 million or 6.6% compared with the quarter ended March 31, 2015. This was primarily due to an increase in other noninterest income resulting from a merchant incentive payment of $1.5 million recorded during the second quarter of 2015.

Noninterest expense was $79.735 million for the three months ended June 30, 2015 compared with $87.292 million for the same period in 2014. This change was primarily due to a decrease in salary and benefits expense. On a linked quarter basis, noninterest expense increased $273 thousand or 0.3% compared with the quarter ended March 31, 2015.

Results of operations for the six months ended June 30, 2015

Net income was $145.573 million for the six months ended June 30, 2015 compared with $142.643 million for the same period in 2014.  Net income per diluted common share was $2.08 for the six months ended June 30, 2015 compared with $2.10 for the same period in 2014. Net income (excluding purchase accounting adjustments) was $125.183 million for the six months ended June 30, 2015 compared with $119.020 million for the six months ended June 30, 2014. Net income per diluted common share (excluding purchase accounting adjustments) was $1.79 for the six months ended June 30, 2015 compared with $1.75 for the six months ended June 30, 2014. The reconciliation of these non-GAAP financial measures is shown on page 12.  Returns on average assets, average common equity and average tangible common equity, each on an annualized basis, for the six months ended June 30, 2015 were 1.35%, 8.80% and 21.16%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 42.09% for the six months ended June 30, 2015.

Net interest income before provision for credit losses for the six months ended June 30, 2015, increased $3.398 million to $321.144 million compared with $317.746 million during the same period in 2014.  The increase was primarily due to an 8.1% increase in average interest earning assets and a decrease in average rate paid on interest bearing liabilities, partially offset by a decrease in average yield on interest earning assets and a $5.578 million decrease in loan discount accretion.  The net interest margin on a tax equivalent basis for the six months ended June 30, 2015 decreased to 3.48% compared with 3.73% for the same period in 2014. This was primarily due to lower yields on average interest earning assets and the decrease in loan discount accretion, partially offset by lower rates paid on interest bearing liabilities for the six months ended June 30, 2015.  Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis decreased to 3.15% for the six months ended June 30, 2015 from 3.32% for the same period in 2014. 

Noninterest income was $58.718 million for the six months ended June 30, 2015 compared with $61.261 million for the same period in 2014. This change was primarily due to a decrease in gain on sale of assets and NSF fees, partially offset by an increase in mortgage income. Noninterest expense was $159.197 million for the six months ended June 30, 2015 compared with $158.386 million for the same period in 2014. 

The table below provides detail on total loans and deposits including loans acquired and deposits assumed in the acquisition of F&M completed on April 1, 2014:

Balance Sheet Data (at period end)

(In thousands)

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Loans acquired (including new production since acquisition date):

   F&M

$    1,080,439

$     1,139,849

$    1,224,498

$    1,451,075

$    1,502,836

   All other loans

8,033,896

8,026,156

8,019,685

7,917,813

7,805,326

Total loans

$    9,114,335

$     9,166,005

$    9,244,183

$    9,368,888

$    9,308,162

Deposits assumed (including new deposits since acquisition date):

   F&M

$    1,548,817

$     1,705,203

$    2,063,229

$    1,905,233

$    2,090,468

   All other deposits

15,452,847

15,856,149

15,629,929

15,108,794

15,190,587

Total deposits

$  17,001,664

$   17,561,352

$  17,693,158

$  17,014,027

$  17,281,055

 

Loans at June 30, 2015 were $9.114 billion, a decrease of $193.827 million or 2.1%, compared with $9.308 billion at June 30, 2014. Linked quarter loans decreased $51.670 million or 0.6% from $9.166 billion at March 31, 2015.  Excluding loans acquired in the F&M acquisition and new production at the acquired banking centers since the acquisition date, loans at June 30, 2015 increased $228.570 million or 2.9% compared with June 30, 2014 and increased $7.740 million or 0.1% on a linked quarter basis.

Deposits at June 30, 2015 were $17.002 billion, a decrease of $279.391 million or 1.6%, compared with $17.281 billion at June 30, 2014. Linked quarter deposits decreased $559.688 million or 3.2% from $17.561 billion at March 31, 2015. Excluding deposits assumed in the F&M acquisition and new deposits generated at the acquired banking centers since the acquisition date, deposits at June 30, 2015 increased $262.260 million or 1.7% compared with June 30, 2014 and decreased $403.302 million or 2.5% on a linked quarter basis, primarily due to seasonality.

At June 30, 2015, Prosperity had $21.686 billion in total assets, $9.114 billion in loans and $17.002 billion in deposits. At June 30, 2015 assets increased by 2.1%, loans decreased by 2.1% and deposits decreased by 1.6%, compared with their respective levels at June 30, 2014.

Asset Quality

Nonperforming assets totaled $35.119 million or 0.19% of quarterly average earning assets at June 30, 2015, compared with $28.521 million or 0.15% of quarterly average earning assets at June 30, 2014, and $35.376 million or 0.19% of quarterly average earning assets at March 31, 2015.  The allowance for credit losses was 0.89% of total loans at June 30, 2015, 0.79% of total loans at June 30, 2014 and 0.88% of total loans at March 31, 2015.  Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.09% of remaining loans as of June 30, 2015, compared with 1.15% at June 30, 2014 and 1.12% at March 31, 2015.  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 $500 thousand for the three months ended June 30, 2015 compared with $6.325 million for the three months ended June 30, 2014 and $1.250 million for the three months ended March 31, 2015.  The provision for credit losses was $1.750 million for the six months ended June 30, 2015 compared with $6.925 million for the six months ended June 30, 2014. 

Net charge offs were $491 thousand for the three months ended June 30, 2015 compared with $155 thousand for the three months ended June 30, 2014 and $1.049 million for the three months ended March 31, 2015. Net charge offs were $1.540 million for the six months ended June 30, 2015 compared with $941 thousand for the six months ended June 30, 2014.

Conference Call

Prosperity's management team will host a conference call on Friday, July 24, 2015 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity's second quarter 2015 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383. The elite entry number is 8652160.

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

Non-GAAP Financial Measures

Prosperity's management uses certain non−GAAP 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.  Further, as a result of acquisitions, and the related purchase accounting adjustments, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its net income and earnings per share (excluding purchase accounting adjustments) and 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 related 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.

Dividend

Prosperity Bancshares, Inc. ("Bancshares") declared a third quarter cash dividend of $0.2725 per share, to be paid on October 1, 2015 to all shareholders of record as of September 18, 2015.

Capital Management

The Basel III Capital Rules adopted by the federal regulatory authorities in 2013 substantially revised the risk-based capital requirements applicable to Bancshares and Prosperity Bank. The Basel III Capital Rules became effective for Prosperity on January 1, 2015, subject to a phase-in period for certain provisions. Among other things, the Basel III Capital Rules introduced a new capital measure called "Common Equity Tier 1," which is a comparison of the sum of certain equity capital components to total risk-weighted assets, and revised the risk-weighting approach of the capital ratios with a more risk-sensitive approach that expanded the risk-weighting categories from the previous Basel I derived categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets. Prosperity's capital ratios as of June 30, 2015 reflect the phase-in provisions of the new Basel III Capital Rules.

Acquisition of F&M Bancorporation Inc.

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") headquartered in Tulsa, Oklahoma.  F&M 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.

Pursuant to the terms of the acquisition agreement, Prosperity issued 3,298,022 shares of Prosperity common stock plus $34.240 million in cash for all outstanding shares of FMBC capital stock, which resulted in goodwill of $206.010 million as of June 30, 2015. Additionally, Prosperity recognized $27.140 million of core deposit intangibles as of June 30, 2015.

Prosperity Bancshares, Inc. ®

As of June 30, 2015, Prosperity Bancshares Inc. ® is a $21.686 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 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.

Prosperity currently operates 245 full-service banking locations: 61 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 37 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

Sugar Land

Taft

Bryan

The Colony

SW Medical Center

Victoria

Bryan-29th Street

Turtle Creek Turtle Creek Loan Office

Tanglewood

Victoria-Navarro

Bryan-East

Westmoreland

Uptown

Victoria-North

Bryan-North

Waugh Drive

Yoakum

Caldwell

Fort Worth -

Westheimer

Yorktown

College Station

Haltom City

West University

Crescent Point

Keller

Woodcreek

West Texas Area -

Hearne

Roanoke

Abilene -

Huntsville

Stockyards

Other Houston Area

Antilley Road

Madisonville

Locations -

Barrow Street

Navasota

Other Dallas/Fort Worth

Angleton

Cypress Street

New Waverly

Locations -

Bay City

Judge Ely

Rock Prairie

Arlington

Beaumont

Mockingbird

Southwest Parkway

Azle

Cinco Ranch

Tower Point

Ennis

Cleveland

Lubbock -

Wellborn Road

Gainesville

East Bernard

4th Street

Glen Rose

El Campo

66th Street

Central Texas Area -

Granbury

Dayton

82nd Street

Austin -

Mesquite

Galveston

86th Street

183

Muenster

Groves

98th Street

Allandale

Sanger

Hempstead

Avenue Q

Cedar Park

Waxahachie

Hitchcock

North University

Congress

Weatherford

Katy

Texas Tech Student Union

Lakeway

Katy-Spring Green

Liberty Hill

East Texas Area -

Liberty

Midland -

Northland

Athens

Magnolia

Wadley

Oak Hill

Blooming Grove

Magnolia Parkway

Wall Street

Research Blvd

Canton

Mont Belvieu

Westlake

Carthage

Nederland

Odessa -

Corsicana

Needville

Grandview

Other Central Texas Locations -

Crockett

Rosenberg

Grant

Bastrop

Eustace

Shadow Creek

Kermit Highway

Canyon Lake

Gilmer

Spring

Parkway

Dime Box

Grapeland

Sweeny

Dripping Springs

Gun Barrel City

The Woodlands-I-45

Other West Texas Locations -

Elgin

Jacksonville

The Woodlands-Research Forest

Big Spring

Flatonia

Kerens

Tomball

Brownfield

Georgetown

Longview

Waller

Brownwood

Gruene

Mount Vernon

West Columbia

Cisco

Kingsland

Palestine

Wharton

Comanche

La Grange

Rusk

Winnie

Early

Lexington

Seven Points

Wirt

Floydada

New Braunfels

Teague

Gorman

Pleasanton

Tyler-Beckham

South Texas Area -

Levelland

Round Rock

Tyler-South Broadway

Corpus Christi -

Littlefield

San Antonio

Tyler-University

Airline

Merkel

Schulenburg

Winnsboro

Calallen

Plainview

Seguin

Carmel

San Angelo

Smithville

Northwest

Slaton

Thorndale

Houston Area -

Saratoga

Snyder

Weimar

Houston -

Timbergate

Aldine

Water Street

Oklahoma

Dallas/Fort Worth Area -

Bellaire

Central Oklahoma-

Dallas -

Beltway

Other South Texas

23rd Street

Abrams Centre

Clear Lake

Locations -

Edmond

Balch Springs

Copperfield

Alice

Expressway

Camp Wisdom

Cypress

Aransas Pass

I-240

Cedar Hill

Downtown

Beeville

Memorial

Dallas – Central Expressway

Eastex

Colony Creek

Norman

Forest Park

Fairfield

Cuero

Frisco

First Colony

Edna

Tulsa-

Frisco-West

Gessner

Goliad

Garnett

Kiest

Gladebrook

Gonzales

Harvard

McKinney

Heights

Hallettsville

Memorial

McKinney-Stonebridge

Highway 6 West

Kingsville

Owasso

Midway

Little York

Mathis

Sheridan

Northwest Highway

Medical Center

Padre Island

S. Harvard

Plano

Memorial Drive

Palacios

Utica Square

Preston Forest

Northside

Port Lavaca

Utica Tower

Preston Road

Pasadena

Portland

Yale

Red Oak

Pecan Grove

Rockport

River Oaks

Sinton

 

"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, 2014 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)

June 30, 2015

 Mar 31, 2015 

 Dec 31, 2014 

 Sep 30, 2014 

 Jun 30, 2014 

Balance Sheet Data

 (at period end)

Total loans

$      9,114,335

$        9,166,005

$       9,244,183

$       9,368,888

$       9,308,162

Investment securities(A)

9,698,079

9,579,496

9,045,776

8,845,909

8,851,235

Federal funds sold 

1,451

1,639

569

484

3,630

Allowance for credit losses

(80,972)

(80,963)

(80,762)

(77,613)

(73,266)

Cash and due from banks

353,047

352,642

677,285

330,952

509,853

Goodwill

1,881,955

1,881,955

1,874,191

1,892,255

1,894,270

Core deposit intangibles, net

54,068

56,458

58,947

34,474

37,072

Other real estate owned

2,806

3,010

3,237

5,504

5,093

Fixed assets, net

275,347

276,468

281,549

283,011

285,751

Other assets

386,171

370,149

402,758

433,450

426,306

Total assets

$    21,686,287

$      21,606,859

$     21,507,733

$     21,117,314

$     21,248,106

Noninterest-bearing deposits

$      5,040,628

$        5,038,436

$       4,936,420

$       4,968,867

$       4,921,398

Interest-bearing deposits

11,961,036

12,522,916

12,756,738

12,045,160

12,359,657

Total deposits

17,001,664

17,561,352

17,693,158

17,014,027

17,281,055

Other borrowings

886,741

331,914

8,724

289,972

200,210

Securities sold under repurchase agreements

334,189

318,418

315,523

358,053

388,342

Junior subordinated debentures

-

-

167,531

167,531

167,531

Other liabilities

106,408

93,314

77,971

104,781

90,374

Total liabilities

18,329,002

18,304,998

18,262,907

17,934,364

18,127,512

Shareholders' equity(B)

3,357,285

3,301,861

3,244,826

3,182,950

3,120,594

Total liabilities and equity

$    21,686,287

$      21,606,859

$     21,507,733

$     21,117,314

$     21,248,106

(A) Includes $4,655, $5,296, $5,737, $5,756 and $6,706  in unrealized gains on available for sale securities for the quarterly periods ending June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively.

(B) Includes $3,026, $3,442, $3,729, $3,741 and $4,359  in after-tax unrealized gains on available for sale securities for the quarterly periods ending June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

Three Months Ended

Year-to-Date

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Jun 30, 2015

Jun 30, 2014

Income Statement Data

Interest income:

Loans

$       119,404

$        124,878

$       139,396

$       140,521

$       138,655

$       244,282

$       245,799

Securities(C)

48,530

48,562

47,108

46,910

47,670

97,092

94,726

Federal funds sold and other earning assets

47

165

74

35

178

212

226

Total interest income

167,981

173,605

186,578

187,466

186,503

341,586

340,751

Interest expense:

Deposits

9,169

9,577

7,326

10,240

10,918

18,746

20,305

Other borrowings

365

129

200

225

189

494

347

Securities sold under repurchase agreements

208

203

202

245

254

411

491

Junior subordinated debentures

-

791

1,099

1,099

1,087

791

1,862

Total interest expense

9,742

10,700

8,827

11,809

12,448

20,442

23,005

Net interest income

158,239

162,905

177,751

175,657

174,055

321,144

317,746

Provision for credit losses

500

1,250

6,350

5,000

6,325

1,750

6,925

Net interest income after provision for credit losses

157,739

161,655

171,401

170,657

167,730

319,394

310,821

Noninterest income:

Nonsufficient funds (NSF) fees

8,310

7,918

9,345

9,734

9,099

16,228

17,969

Credit card, debit card and ATM card income 

6,003

5,638

5,786

5,921

6,030

11,641

11,182

Service charges on deposit accounts

4,189

4,179

4,263

4,255

4,325

8,368

7,934

Trust income

2,047

2,009

2,165

2,099

2,044

4,056

3,844

Mortgage income

1,513

1,148

1,049

1,414

1,208

2,661

1,801

Brokerage income

1,541

1,409

1,455

1,743

1,401

2,950

2,670

Bank owned life insurance income

1,390

1,380

1,392

1,404

1,365

2,770

2,393

Net gain on sale of assets

270

1,379

24

23

1,301

1,649

4,611

Other noninterest income

5,034

3,361

3,901

3,598

5,824

8,395

8,857

Total noninterest income

30,297

28,421

29,380

30,191

32,597

58,718

61,261

Noninterest expense:

Salaries and benefits

47,819

49,966

49,557

52,179

54,126

97,785

97,534

Net occupancy and equipment

5,812

5,964

6,620

6,801

5,996

11,776

11,335

Debit card, data processing and software amortization

4,045

3,817

4,553

4,044

4,009

7,862

7,193

Regulatory assessments and FDIC insurance

4,253

4,354

4,354

4,051

3,886

8,607

6,612

Core deposit intangibles amortization

2,390

2,489

2,667

2,598

2,630

4,879

4,675

Depreciation

3,420

2,916

3,491

3,516

3,522

6,336

6,723

Communications

2,835

2,809

2,993

2,960

2,919

5,644

5,656

Other real estate expense

129

132

363

72

188

261

584

Net (gain) loss on sale of other real estate

(32)

14

(726)

30

(1,404)

(18)

(1,344)

Other noninterest expense

9,064

7,001

10,164

9,289

11,420

16,065

19,418

Total noninterest expense

79,735

79,462

84,036

85,540

87,292

159,197

158,386

Income before income taxes

108,301

110,614

116,745

115,308

113,035

218,915

213,696

Provision for income taxes

36,369

36,973

38,517

38,738

37,529

73,342

71,053

Net income available to common shareholders

$         71,932

$          73,641

$         78,228

$         76,570

$         75,506

$       145,573

$       142,643

(C) Interest income on securities was reduced by net premium amortization of $15,466, $14,144, $13,031, $13,531 and $12,837 for the three month periods ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively, and $29,610 and $25,117 for the six month periods ended June 30, 2015 and June 30, 2014, respectively. 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

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

Three Months Ended

Year-to-Date

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Jun 30, 2015

Jun 30, 2014

Profitability

Net income

$         71,932

$          73,641

$         78,228

$         76,570

$         75,506

$       145,573

$       142,643

Basic earnings per share

$             1.03

$              1.05

$             1.12

$             1.10

$             1.08

$             2.08

$             2.10

Diluted earnings per share

$             1.03

$              1.05

$             1.12

$             1.10

$             1.08

$             2.08

$             2.10

Return on average assets(D) 

1.33%

1.37%

1.48%

1.45%

1.42%

1.35%

1.43%

Return on average common equity(D) 

8.61%

8.98%

9.70%

9.69%

9.75%

8.80%

9.72%

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

20.49%

21.84%

23.87%

24.84%

24.06%

21.16%

24.12%

Tax equivalent net interest margin(F)

3.39%

3.57%

3.89%

3.85%

3.83%

3.48%

3.73%

Efficiency ratio(G)

42.35%

41.83%

40.78%

41.55%

42.90%

42.09%

42.51%

Liquidity and Capital Ratios

Equity to assets

15.48%

15.28%

15.09%

15.07%

14.69%

15.48%

14.69%

Common equity tier 1 capital(H)

12.91%

12.40%

N/A

N/A

N/A

12.91%

N/A

Tier 1 risk-based capital

12.91%

(I)

12.40%

(I)

13.80%

13.18%

12.50%

12.91%

(I)

12.50%

Total risk-based capital

13.63%

(I)

13.14%

(I)

14.56%

13.90%

13.18%

13.63%

(I)

13.18%

Tier 1 leverage capital

7.35%

(I)

6.96%

(I)

7.69%

7.40%

6.98%

7.35%

(I)

6.98%

Period end tangible equity to period end tangible assets(E)

7.20%

6.93%

6.70%

6.55%

6.16%

7.20%

6.16%

Other Data

Shares used in computed earnings per share

Basic

70,037

70,034

69,768

69,751

69,667

70,035

67,936

Diluted

70,053

70,055

69,796

69,791

69,728

70,054

68,014

Period end shares outstanding

70,040

70,024

69,780

69,756

69,744

70,040

69,744

Cash dividends paid per common share

$         0.2725

$          0.2725

$         0.2725

$         0.2400

$         0.2400

$         0.5450

$         0.4800

Book value per share

$           47.93

$            47.15

$           46.50

$           45.63

$           44.74

$           47.93

$           44.74

Tangible book value per share(E)

$           20.29

$            19.47

$           18.80

$           18.01

$           17.05

$           20.29

$           17.05

Common Stock Market Price

High

$           59.30

$            55.88

$           61.15

$           63.73

$           67.49

$           59.30

$           67.68

Low

50.91

45.01

52.62

55.99

56.04

45.01

56.04

Period end closing price

57.74

52.48

55.36

57.17

62.60

57.74

62.60

Employees – FTE

3,065

3,081

3,096

3,057

3,199

3,065

3,199

Number of banking centers

245

244

245

245

247

245

247

(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.  Additionally, taxes are not part of this calculation. 

(H) Common equity tier 1 capital ratio is a new ratio required under the Basel III Capital Rules effective January 1, 2015.

(I)  Calculated pursuant to the phase-in provisions of the Basel III Capital Rules. 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS 

Three Months Ended

Jun 30, 2015

Mar 31, 2015

Jun 30, 2014

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

$     9,133,625

$ 119,404

5.24%

$   9,189,380

$ 124,878

5.51%

$   9,468,136

$ 138,655

5.87%

Investment securities

9,688,961

48,530

2.01%

(J)

9,241,434

48,562

2.13%

(J)

8,748,322

47,670

2.19%

(J)

Federal funds sold and other earning assets

79,659

47

0.24%

267,672

165

0.25%

234,302

178

0.30%

  Total interest-earning assets 

18,902,245

$ 167,981

3.56%

18,698,486

$ 173,605

3.77%

18,450,760

$ 186,503

4.05%

Allowance for credit losses 

(80,868)

(80,681)

(72,587)

Noninterest-earning assets 

2,817,644

2,871,702

2,939,375

  Total assets

$   21,639,021

$ 21,489,507

$ 21,317,548

Interest-Bearing Liabilities: 

Interest-bearing demand deposits

$     3,891,682

$     2,227

0.23%

$   4,178,883

$     2,583

0.25%

$   3,568,475

$     2,272

0.26%

Savings and money market deposits

5,476,931

3,374

0.25%

5,542,081

3,405

0.25%

5,479,978

3,550

0.26%

Certificates and other time deposits 

2,821,058

3,568

0.51%

2,956,038

3,589

0.49%

3,379,819

5,096

0.60%

Other borrowings 

684,371

365

0.21%

72,118

129

0.73%

140,906

189

0.54%

Securities sold under repurchase agreements 

333,220

208

0.25%

340,469

203

0.24%

382,692

254

0.27%

Junior subordinated debentures 

-

-

119,408

791

2.69%

167,531

1,087

2.60%

  Total interest-bearing liabilities 

13,207,262

9,742

0.30%

(K)

13,208,997

10,700

0.33%

(K)

13,119,401

12,448

0.38%

(K)

Noninterest-bearing liabilities: 

Noninterest-bearing demand deposits

4,992,301

4,899,279

4,735,575

Other liabilities 

98,133

100,648

365,169

  Total liabilities

18,297,696

18,208,924

18,220,145

Shareholders' equity 

3,341,325

3,280,583

3,097,403

  Total liabilities and shareholders' equity 

$   21,639,021

$ 21,489,507

$ 21,317,548

Net interest income and margin 

$ 158,239

3.36%

$ 162,905

3.53%

$ 174,055

3.78%

Non-GAAP to GAAP reconciliation:

Tax equivalent adjustment

1,563

1,664

2,083

Net interest income and margin (tax equivalent basis)

$ 159,802

3.39%

$ 164,569

3.57%

$ 176,138

3.83%

(J) Yield on securities was impacted by net premium amortization of $15,466, $14,144 and $12,837 for the three month periods ended June 30, 2015, March 31, 2015 and June 30, 2014, respectively.

(K) Total cost of funds, including noninterest bearing deposits, was 0.21%, 0.24%and 0.28% for the three months ended June 30, 2015, March 31, 2015 and June 30, 2014, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS 

Year-to-Date

2015

2014

Average Balance

Interest Earned/ Interest Paid

Average Yield/ Rate

Average Balance

Interest Earned/ Interest Paid

Average Yield/ Rate

Interest-Earning Assets: 

Loans

$   9,161,349

$244,282

5.38%

$                       8,616,796

$245,799

5.75%

Investment securities

9,466,434

97,092

2.07%

(L)

8,608,411

94,726

2.22%

(L)

Federal funds sold and other earning assets

173,147

212

0.25%

168,368

226

0.27%

      Total interest-earning assets 

18,800,930

$341,586

3.66%

17,393,575

$340,751

3.95%

Allowance for credit losses 

(80,775)

(69,919)

Noninterest-earning assets 

2,843,739

2,746,112

      Total assets

$ 21,563,894

$                     20,069,768

Interest-Bearing Liabilities: 

Interest-bearing demand deposits

$   4,034,489

$    4,810

0.24%

$                       3,561,460

$    4,404

0.25%

Savings and money market deposits

5,509,326

6,779

0.25%

5,237,557

6,705

0.26%

Certificates and other time deposits 

2,888,176

7,157

0.50%

3,099,815

9,196

0.60%

Other borrowings

379,936

494

0.26%

96,666

347

0.72%

Securities sold under repurchase agreements 

336,824

411

0.25%

365,316

491

0.27%

Junior subordinated debentures 

59,374

791

2.69%

145,881

1,862

2.57%

      Total interest-bearing liabilities 

13,208,125

20,442

0.31%

(M)

12,506,695

23,005

0.37%

(M)

Noninterest-bearing liabilities: 

Noninterest-bearing demand deposits

4,946,138

4,378,471

Other liabilities 

99,375

224,497

      Total liabilities

18,253,638

17,109,663

Shareholders' equity 

3,310,256

2,960,105

      Total liabilities and shareholders' equity 

$ 21,563,894

$                     20,069,768

Net interest income and margin 

$321,144

3.44%

$317,746

3.68%

Non-GAAP to GAAP reconciliation:

Tax equivalent adjustment

3,227

4,135

Net interest income and margin (tax equivalent basis)

$324,371

3.48%

$321,881

3.73%

(L) Yield on securities was impacted by net premium amortization of $29,610 and $25,117 for the six month periods ended June 30, 2015 and 2014, respectively.

(M) Total cost of funds, including noninterest bearing deposits, was 0.23% and 0.27% for the six month periods ended June 30, 2015 and 2014, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Year -to-Date

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Jun 30, 2015

Jun 30, 2014

Adjustment to Loan Yield (N)

Interest on loans, as reported

$       119,404

$        124,878

$       139,396

$       140,521

$       138,655

$       244,282

$       245,799

   Purchase accounting adjustment-  loan discount accretion

(13,602)

(19,647)

(28,590)

(28,458)

(25,352)

(33,249)

(38,827)

Interest on loans without discount accretion

$       105,802

$        105,231

$       110,806

$       112,063

$       113,303

$       211,033

$       206,972

Average loans

$    9,133,625

$     9,189,380

$    9,325,330

$    9,381,248

$    9,468,136

$    9,161,349

$    8,616,796

Loan yield without purchase accounting adjustment

4.65%

4.64%

4.71%

4.74%

4.80%

4.65%

4.84%

Loan yield, as reported

5.24%

5.51%

5.93%

5.94%

5.87%

5.38%

5.75%

Adjustment to Securities Yield (N)

Interest on securities, as reported

$         48,530

$          48,562

$         47,108

$         46,910

$         47,670

$         97,092

$         94,726

   Purchase accounting adjustment-

securities amortization

1,579

1,647

1,590

1,466

1,570

3,226

3,534

Interest on securities without amortization

$         50,109

$          50,209

$         48,698

$         48,376

$         49,240

$       100,318

$         98,260

Average securities

$    9,688,961

$     9,241,434

$    8,835,176

$    8,836,309

$    8,748,322

$    9,466,434

$    8,608,411

Securities yield without purchase accounting adjustment

2.07%

2.20%

2.19%

2.17%

2.26%

2.14%

2.30%

Securities yield, as reported

2.01%

2.13%

2.12%

2.11%

2.19%

2.07%

2.22%

Adjustment to Time Deposits Yield (N)

Interest on time deposits, as reported

$           3,568

$            3,589

$           1,957

$           4,751

$           5,096

$           7,157

$           9,196

   Purchase accounting adjustment-

time deposit amortization

220

420

2,443

16

16

640

97

Interest on time deposits without amortization

$           3,788

$            4,009

$           4,400

$           4,767

$           5,112

$           7,797

$           9,293

Average time deposits

$    2,821,058

$     2,956,038

$    3,083,047

$    3,235,185

$    3,379,819

$    2,888,176

$    3,099,815

Time deposits yield without purchase accounting adjustment

0.54%

0.55%

0.57%

0.58%

0.61%

0.54%

0.60%

Time deposits yield, as reported

0.51%

0.49%

0.25%

0.58%

0.60%

0.50%

0.60%

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

3.13%

3.17%

3.25%

3.26%

3.31%

3.15%

3.32%

Net Interest Margin (tax equivalent basis), as reported

3.39%

3.57%

3.89%

3.85%

3.83%

3.48%

3.73%

Net income available to common shareholders, as reported

$         71,932

$          73,641

$         78,228

$         76,570

$         75,506

$       145,573

$       142,643

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

(8,132)

(12,263)

(19,729)

(17,935)

(15,897)

(20,390)

(23,623)

Net income available to common shareholders, adjusted

$         63,800

$          61,378

$         58,499

$         58,635

$         59,609

$       125,183

$       119,020

Basic earnings per share, adjusted (N)

$             0.91

$              0.88

$             0.84

$             0.84

$             0.86

$             1.79

$             1.75

Diluted earnings per share, adjusted (N)

$             0.91

$              0.88

$             0.84

$             0.84

$             0.85

$             1.79

$             1.75

 

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 Mar 31, 2015

Balance at Jun 30, 2015

Balance at Acquisition Date

Balance at Mar 31, 2015

Balance at Jun 30, 2015

Balance at Acquisition Date

Balance at Mar 31, 2015

Balance at Jun 30, 2015

Loan marks:

Acquired banks (P)

$            225,589

$          78,289

$          67,895

$            131,906

$          51,647

$          48,277

$            357,495

$        129,936

$        116,172

Acquired portfolio loan balances:

Acquired banks (P)

5,456,934

1,939,609

1,727,123

255,846

100,973

94,601

5,712,780

 (Q)

2,040,582

1,821,724

Acquired portfolio loan balances less loan marks

$         5,231,345

$     1,861,320

$     1,659,228

$            123,940

$          49,326

$          46,324

$         5,355,285

$     1,910,646

$     1,705,552

(N)  Non-GAAP financial measure.

(O) Using effective tax rate of 33.6%, 33.4%, 33.0%, 33.6% and 33.2% for the three month periods ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively, and 33.5% and 33.2% for the six month periods ended June 30, 2015 and 2014, respectively.

(P)  Includes Bank of Texas, Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank and F&M Bank.

(Q)  Actual principal balances acquired.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Jun 30, 2015

 Mar 31, 2015 

 Dec 31, 2014 

 Sep 30, 2014 

 Jun 30, 2014 

YIELD TREND

Interest-Earning Assets: 

Loans

5.24%

5.51%

5.93%

5.94%

5.87%

Investment securities (R) 

2.01%

2.13%

2.12%

2.11%

2.19%

Federal funds sold and other earning assets

0.24%

0.25%

0.20%

0.15%

0.30%

  Total interest-earning assets 

3.56%

3.77%

4.04%

4.06%

4.05%

Interest-Bearing Liabilities: 

Interest-bearing demand deposits

0.23%

0.25%

0.23%

0.24%

0.26%

Savings and money market deposits

0.25%

0.25%

0.24%

0.25%

0.26%

Certificates and other time deposits 

0.51%

0.49%

0.25%

0.58%

0.60%

Other borrowings

0.21%

0.73%

0.47%

0.42%

0.54%

Securities sold under repurchase agreements

0.25%

0.24%

0.25%

0.25%

0.27%

Junior subordinated debentures 

2.69%

2.60%

2.60%

2.60%

  Total interest-bearing liabilities 

0.30%

0.33%

0.28%

0.36%

0.38%

Net Interest Margin 

3.36%

3.53%

3.85%

3.81%

3.78%

Net Interest Margin (tax equivalent)

3.39%

3.57%

3.89%

3.85%

3.83%

(R) Yield on securities was impacted by net premium amortization of $15,466, $14,144, $13,031, $13,531 and $12,837 for the three month periods ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Jun 30, 2015

March 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Balance Sheet Averages

Total loans

$    9,133,625

$          9,189,380

$    9,325,330

$    9,381,248

$    9,468,136

Investment securities

9,688,961

9,241,434

8,835,176

8,836,309

8,748,322

Federal funds sold and other earning assets

79,659

267,672

143,705

95,378

234,302

Total interest-earning assets

18,902,245

18,698,486

18,304,211

18,312,935

18,450,760

Allowance for credit losses

(80,868)

(80,681)

(76,948)

(73,977)

(72,587)

Cash and due from banks

241,110

284,395

273,503

267,389

284,432

Goodwill

1,881,955

1,874,274

1,883,654

1,893,667

1,803,534

Core deposit intangibles, net

55,245

57,687

43,157

35,753

38,469

Other real estate

2,972

3,536

4,843

5,405

8,562

Fixed assets, net

276,761

280,515

282,827

285,039

292,075

Other assets

359,601

371,295

395,045

394,509

512,303

Total assets

$  21,639,021

$        21,489,507

$  21,110,292

$  21,120,720

$  21,317,548

Noninterest-bearing deposits

$    4,992,301

$          4,899,279

$    5,045,097

$    4,939,388

$    4,735,575

Interest-bearing demand deposits

3,891,682

4,178,883

3,546,825

3,399,655

3,568,475

Savings and money market deposits

5,476,931

5,542,081

5,442,568

5,502,326

5,479,978

Certificates and other time deposits

2,821,058

2,956,038

3,083,047

3,235,185

3,379,819

Total deposits

17,181,972

17,576,281

17,117,537

17,076,554

17,163,847

Other borrowings

684,371

72,118

168,167

215,222

140,906

Securities sold under repurchase agreements

333,220

340,469

323,882

389,726

382,692

Junior subordinated debentures

-

119,408

167,531

167,531

167,531

Other liabilities

98,133

100,648

106,222

109,287

365,169

Shareholders' equity

3,341,325

3,280,583

3,226,953

3,162,400

3,097,403

Total liabilities and equity

$  21,639,021

$        21,489,507

$  21,110,292

$  21,120,720

$  21,317,548

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Period End Balances

Loan Portfolio

Commercial and other

$    1,774,652

19.5%

$    1,851,906

20.2%

$     1,952,945

21.1%

$   2,058,217

22.0%

$   2,139,983

23.0%

Construction

1,068,056

11.7%

1,040,845

11.3%

1,026,475

11.1%

1,041,300

11.1%

1,005,099

10.8%

1-4 family residential

2,289,114

25.1%

2,272,788

24.8%

2,250,251

24.4%

2,210,141

23.6%

2,153,801

23.1%

Home equity

273,538

3.0%

269,894

2.9%

271,930

2.9%

269,850

2.9%

267,759

2.9%

Commercial real estate

2,958,239

32.5%

3,021,656

33.0%

3,030,340

32.8%

3,091,090

33.0%

3,027,945

32.6%

Agriculture (includes farmland)

600,745

6.6%

556,839

6.1%

551,646

6.0%

534,672

5.7%

542,360

5.8%

Consumer

149,991

1.6%

152,077

1.7%

160,596

1.7%

163,618

1.7%

171,215

1.8%

Total loans

$    9,114,335

$    9,166,005

$     9,244,183

$   9,368,888

$   9,308,162

Deposit Types

Noninterest-bearing DDA

$    5,040,628

29.7%

$    5,038,436

28.7%

$     4,936,420

27.9%

$   4,968,867

29.2%

$   4,921,398

28.5%

Interest-bearing DDA

3,746,939

22.0%

4,038,690

23.0%

4,260,038

24.1%

3,359,606

19.7%

3,467,826

20.1%

Money market

3,607,000

21.2%

3,773,011

21.5%

3,680,711

20.8%

3,788,358

22.3%

3,861,339

22.3%

Savings

1,853,322

10.9%

1,828,790

10.4%

1,784,889

10.1%

1,728,676

10.2%

1,707,645

9.9%

Certificates and other time deposits

2,753,775

16.2%

2,882,425

16.4%

3,031,100

17.1%

3,168,520

18.6%

3,322,847

19.2%

Total deposits

$  17,001,664

$  17,561,352

$   17,693,158

$ 17,014,027

$ 17,281,055

Loan to Deposit Ratio

53.6%

52.2%

52.2%

55.1%

53.9%

Construction Loans

Single family residential construction

$       354,211

33.0%

$       356,081

34.1%

$        329,797

32.0%

$      317,307

30.3%

$      316,579

31.2%

Land development

84,864

7.9%

89,403

8.5%

84,051

8.2%

89,553

8.5%

88,947

8.8%

Raw land

145,885

13.6%

129,470

12.4%

106,058

10.3%

83,013

7.9%

62,731

6.2%

Residential lots

127,671

11.9%

128,064

12.2%

148,763

14.4%

154,027

14.7%

138,769

13.7%

Commercial lots

87,719

8.2%

92,677

8.9%

89,565

8.7%

86,991

8.3%

93,200

9.2%

Commercial construction and other

271,833

25.4%

249,504

23.9%

272,723

26.4%

317,355

30.3%

312,870

30.9%

Net unaccreted discount

(4,127)

(4,354)

(4,482)

(6,946)

(7,997)

Total construction loans

$    1,068,056

$    1,040,845

$     1,026,475

$   1,041,300

$   1,005,099

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Year-to-Date

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Jun 30, 2015

Jun 30, 2014

Asset Quality

Nonaccrual loans

$         31,987

$          29,252

$         31,422

$         26,804

$         23,082

$         31,987

$         23,082

Accruing loans 90 or more days past due

153

2,968

2,193

17,753

335

153

335

Total nonperforming loans

32,140

32,220

33,615

44,557

23,417

32,140

23,417

Repossessed assets

173

146

67

21

11

173

11

Other real estate

2,806

3,010

3,237

5,504

5,093

2,806

5,093

  Total nonperforming assets

$         35,119

$          35,376

$         36,919

$         50,082

$         28,521

$         35,119

$         28,521

Nonperforming assets:

Commercial and industrial

$         20,295

$          16,830

$         21,418

$         26,172

$         14,434

$         20,295

$         14,434

Construction, land development and other land loans

813

3,023

1,893

5,998

2,449

813

2,449

1-4 family residential (including home equity)

5,124

5,087

5,232

7,559

6,909

5,124

6,909

Commercial real estate (including multi-family residential)

7,939

9,736

6,695

9,686

3,970

7,939

3,970

Agriculture (including farmland)

605

281

473

182

140

605

140

Consumer and other

343

419

1,208

485

619

343

619

Total 

$         35,119

$          35,376

$         36,919

$         50,082

$         28,521

$         35,119

$         28,521

Number of loans/properties

161

166

169

194

179

161

179

Allowance for credit losses at end of period

$         80,972

$          80,963

$         80,762

$         77,613

$         73,266

$         80,972

$         73,266

Net charge-offs:

Commercial and industrial

$               (28)

$               504

$              318

$                17

$               (64)

$              476

$                17

Construction, land development and other land loans

(2)

145

(1)

(28)

115

143

98

1-4 family residential (including home equity)

12

86

420

70

406

98

537

Commercial real estate (including multi-family residential)

114

33

1,732

(6)

5

147

65

Agriculture (including farmland)

(65)

(78)

(13)

(53)

(843)

(143)

(924)

Consumer and other

460

359

745

653

536

819

1,148

Total 

$              491

$            1,049

$           3,201

$              653

$              155

$           1,540

$              941

Asset Quality Ratios

Nonperforming assets to average earning assets

0.19%

0.19%

0.20%

0.27%

0.15%

0.19%

0.16%

Nonperforming assets to loans and other real estate

0.39%

0.39%

0.40%

0.53%

0.31%

0.39%

0.31%

Net charge-offs to average loans (annualized)

0.02%

0.05%

0.14%

0.03%

0.01%

0.03%

0.02%

Allowance for credit losses to total loans

0.89%

0.88%

0.87%

0.83%

0.79%

0.89%

0.79%

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

1.09%

1.12%

1.14%

1.14%

1.15%

1.09%

1.15%

 

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 net income and earnings per share (each excluding purchase accounting adjustments) and its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30). Prosperity has included information below and on page 12 of this Earnings Release relating to these non-GAAP financial measures for the applicable periods presented. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and Prosperity believes that its presentation, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Prosperity's business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook.  These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Three Months Ended

Year-to-Date

Jun 30, 2015

 Mar 31, 2015 

 Dec 31, 2014 

 Sep 30, 2014 

 Jun 30, 2014 

 Jun 30, 2015 

 Jun 30, 2014 

Return on average tangible common equity:

Net income

$           71,932

$               73,641

$               78,228

$              76,570

$               75,506

$             145,573

$             142,643

Average shareholders' equity

$      3,341,325

$          3,280,583

$          3,226,953

$         3,162,400

$          3,097,403

$          3,310,256

$          2,960,105

Less: Average goodwill and other intangible assets

(1,937,200)

(1,931,961)

(1,926,811)

(1,929,420)

(1,842,003)

(1,934,595)

(1,777,346)

        Average tangible shareholders' equity

$      1,404,125

$          1,348,622

$          1,300,142

$         1,232,980

$          1,255,400

$          1,375,661

$          1,182,759

Return on average tangible common  equity:

20.49%

21.84%

23.87%

24.84%

24.06%

21.16%

24.12%

Tangible book value per share:

Shareholders' equity

$      3,357,285

$          3,301,861

$          3,244,826

$         3,182,950

$          3,120,594

$          3,357,285

$          3,120,594

Less: Goodwill and other intangible assets

(1,936,023)

(1,938,413)

(1,933,138)

(1,926,729)

(1,931,342)

(1,936,023)

(1,931,342)

        Tangible shareholders' equity

$      1,421,262

$          1,363,448

$          1,311,688

$         1,256,221

$          1,189,252

$          1,421,262

$          1,189,252

Period end shares outstanding

70,040

70,024

69,780

69,756

69,744

70,040

69,744

Tangible book value per share:

$             20.29

$                 19.47

$                 18.80

$                18.01

$                 17.05

$                 20.29

$                 17.05

Period end tangible equity to period end tangible assets ratio:

Tangible shareholders' equity

$      1,421,262

$          1,363,448

$          1,311,688

$         1,256,221

$          1,189,252

$          1,421,262

$          1,189,252

Total assets

$    21,686,287

$        21,606,859

$        21,507,733

$       21,117,314

$        21,248,106

$        21,686,287

$        21,248,106

Less: Goodwill and other intangible assets

(1,936,023)

(1,938,413)

(1,933,138)

(1,926,729)

(1,931,342)

(1,936,023)

(1,931,342)

         Tangible assets

$    19,750,264

$        19,668,446

$        19,574,595

$       19,190,585

$        19,316,764

$        19,750,264

$        19,316,764

Period end tangible equity to period end tangible assets ratio:

7.20%

6.93%

6.70%

6.55%

6.16%

7.20%

6.16%

 

Prosperity Bancshares, Inc.® Notes to Selected Financial Data (Unaudited) (Dollars in thousands)

Three Months Ended

Year-to-Date

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Jun 30, 2015

Jun 30, 2014

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

Allowance for credit losses

$      80,972

$      80,963

$      80,762

$      77,613

$      73,266

$      80,972

$      73,266

Total loans

$ 9,114,335

$ 9,166,005

$ 9,244,183

$ 9,368,888

$ 9,308,162

$ 9,114,335

$ 9,308,162

Less: Fair value of acquired loans (acquired portfolio loan balances less loan marks)

$ 1,705,552

$ 1,910,646

$ 2,154,148

$ 2,536,433

$ 2,948,999

$ 1,705,552

$ 2,948,999

Total loans less acquired loans

$ 7,408,783

$ 7,255,358

$ 7,090,035

$ 6,832,455

$ 6,359,163

$ 7,408,783

$ 6,359,163

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

1.09%

1.12%

1.14%

1.14%

1.15%

1.09%

1.15%

 

SOURCE Prosperity Bancshares, Inc.



RELATED LINKS

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