Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Prosperity Bancshares, Inc.® Reports Strong Third Quarter Earnings



      Prosperity Bancshares, Inc.® Reports Strong Third Quarter Earnings

- 3Q12 Diluted EPS increases 6.5% to $0.82 compared with 3Q11

- Net income increases 27.0% compared with 3Q11

- Tangible Common Equity Ratio at 6.49%

- Non-Performing Assets remain low at 0.11% of Average Earning Assets

- Dividend increases 10.3%

PR Newswire

HOUSTON, Oct. 24, 2012

HOUSTON, Oct. 24, 2012 /PRNewswire/ -- Prosperity Bancshares, Inc.^® (NYSE:
PB), the parent company of Prosperity Bank^®, reported net income for the
quarter ended September 30, 2012 of $46.176 million or $0.82 per diluted
common share, an increase in net income of $9.803 million or 27.0%, compared
with $36.373  million or $0.77 per diluted common share for the same period in
2011.  Reported net income and earnings per share include the combined impact
of preliminary purchase accounting adjustments and one-time merger expenses.

"I am proud to announce such positive results for the third quarter of 2012.
We posted earnings of $46.2 million for the quarter, a 27% increase over the
third quarter last year. Our diluted earnings per share for the quarter came
in at $0.82 compared to $0.77 for the same period last year, representing a
6.5% increase," commented David Zalman, Chairman and Chief Executive Officer. 
"While such earnings include adjustments related to our recent acquisitions,
the performance of our core bank remains strong.  Additionally, our board of
directors approved a 10.3% increase in our dividend to $0.86 per year or
$0.215 per quarter for the next year.  We are pleased to reward our
shareholders with increased dividends as we work to continue building
shareholder value."

"During the past quarter, we closed our merger with American State Financial
Corporation in West Texas which added thirty-seven (37) locations in three new
market areas: Lubbock, Midland-Odessa and Abilene. We are very excited about
our new relationships and working together with their entire team," continued
Zalman.  "The team has worked diligently and tirelessly over the last month
with the operational integration and we thank them for their dedication and
hard work."

"We also recently completed our merger with Community National Bank, located
in Bellaire, Texas in the Houston metropolitan area.  We are excited about the
Bellaire team joining us and increasing our presence in an area we already
service.  The management team and associates at Community National Bank will
add to the already strong team we have in Houston," continued Zalman.  "We owe
all of our success to our team of associates and board members who have helped
grow the company in the right direction with their insight and efforts and for
that I say "thank you"!  We would also like to thank all of our customers for
their business and loyalty to our bank."

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 and related entries and one-time
merger expenses, Prosperity uses certain non-GAAP measures and ratios that
exclude the impact of these items to evaluate its performance, including yield
on loans and securities, net income, diluted earnings per share, efficiency
ratio and allowance for credit losses to total loans (excluding acquired
loans).  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 September 30, 2012

For the three months ended September 30, 2012, net income was $46.176 million
compared with $36.373 million for the same period in 2011.  Net income per
diluted common share was $0.82 for the three months ended September 30, 2012
and $0.77 for the same period in 2011.  Annualized returns on average assets,
average common equity and average tangible common equity for the three months
ended September 30, 2012 were 1.32%, 9.10% and 21.59%, respectively. 

Net interest income before provision for credit losses for the quarter ended
September 30, 2012 increased 29.5% to $106.893 million compared with $82.538
million during the same period in 2011. The increase was attributable to a
49.7% increase in average earning assets during the same period.
 Additionally, the average yield on interest earning assets decreased 69 basis
points while the rate paid on interest bearing liabilities decreased 22 basis
points for the same period. The net interest margin on a tax equivalent basis
decreased to 3.52% for the three months ended September 30, 2012 compared with
4.02% for the same period in 2011.  On a linked quarter basis, the tax
equivalent net interest margin decreased three basis points to 3.52% for the
three months ended September 30, 2012 from 3.55% reported for the three months
ended June 30, 2012. 

The yield on loans was impacted by the purchase accounting adjustments from
recent acquisitions as described in the table below.  As a result of these
purchase accounting adjustments, Prosperity recorded a discount on loans of
$104.931 million, of which $27.116 million relates to loans accounted for
under ASC Topic 310-30 (formerly SOP 03-03) and the remaining $77.815 million
relates to loans accounted for under ASC Topic 310-20 (formerly SFAS No. 91). 
All purchase accounting entries are preliminary and could be subject to
change.

                                                     Three Months Ended

                                                     September 30, 2012
                                                     (In thousands, unaudited)
Adjustment to Loan Yield ^(1)
                                                     $       80,587
Interest on loans, as reported
   Less: Purchase accounting adjustment-loan         (11,188)
discount accretion
Interest on loans without discount accretion         69,399
Average loans                                        $  5,169,101
Loan yield without discount accretion                5.34%
Loan yield, as reported                              6.20%
(1) Non-GAAP financial measure.

The yield on securities was also impacted by the purchase accounting
adjustments from recent acquisitions as described in the table below.
Prosperity recorded a premium on securities of $34.540 million which resulted
in increased amortization of $3.451 million and a decreased yield on
securities. In addition, in connection with the acquisition, American State
Financial Corporation ("ASB") sold $574.0 million in securities yielding
approximately 3.61% prior to July 1, 2012 and Prosperity reinvested those
funds after acquisition date at a yield of approximately 1.70%. ASB recorded a
gain of $44.2 million related to the sale of these securities which resulted
in a lower fair value of the securities portfolio acquired from ASB. The
effect of this sale is included in the table below.

                                                     Three Months Ended
                                                     September 30, 2012
                                                     (In thousands, unaudited)
Adjustment to Securities Yield ^(1)
                                                     $      37,025
Interest on securities, as reported
     Add: Purchase accounting adjustment-securities  3,451
amortization
     Add: Impact of sale of ASB securities prior to  2,741
acquisition
Interest on securities including amortization and    43,217
impact of securities sale
Average securities                                   $ 7,106,871
Securities yield including amortization and impact   2.43%
of securities sale
Securities yield, as reported                        2.08%
(1) Non-GAAP financial measure.

The following table shows the book value of the investment portfolio and
related net amortization as of and for the three month periods indicated
below.

                 Sept 30,    June 30,    Mar 31, 2012 Dec 31, 2011 Sept 30,
                 2012        2012                                  2011
Investment       (Unaudited) (Unaudited) (Unaudited)  (Unaudited)  (Unaudited)
Portfolio
(In thousands)
Period End       $6,799,513  $5,400,044  $5,646,529   $4,658,936   $4,430,530
Securities
Quarterly
Average          7,106,871   5,635,810   5,192,257    4,596,017    4,524,213
Securities
Net Premium      21,423^(1)  11,755      9,719        8,989        6,823
Amortization
% of Average
Quarterly        0.30%       0.21%       0.19%        0.20%        0.15%
Securities
(1) Includes the purchased premium amortization of $3.451 million.

Non-interest income increased $9.247 million or 63.4% to $23.828 million for
the three months ended September 30, 2012 compared with $14.581 million for
the same period in 2011.  The change includes increases in NSF fees, debit
card and ATM card income, service charges on deposit accounts and other income
due to the acquisition of ASB on July 1, 2012. 

Non-interest expense increased $19.091 million or 46.4% to $60.242 million for
the three months ended September 30, 2012 compared with $41.151 million for
the same period in 2011.  The change is primarily due to the acquisition of
ASB.  Prosperity's efficiency ratio (excluding net gains and losses on the
sale of securities and assets) was 46.07% for the three months ended September
30, 2012.  Non-interest expense for the three months ended September 30, 2012
includes one-time merger expenses of approximately $5.404 million, pre-tax
($3.513 million after tax). Excluding these charges, the efficiency ratio
would have been 41.93% for the three months ended September 30, 2012. Refer to
the "Notes to Selected Financial Data" at the end of this Earnings Release for
a reconciliation of this non-GAAP financial measure.

Earnings per share and net income were also impacted by purchase accounting
adjustments, one-time merger expenses of $5.404 million (pre-tax) and the sale
of ASB securities prior to acquisition, as reflected in the table below.

                                                   Three Months Ended
                                                   September 30, 2012
                                                   (In thousands, unaudited)
Impact of Purchase Accounting Adjustments,
One-time Merger Expenses and Securities Sale^(1)
Net income, as reported                            $    46,176
  Less: Purchase accounting adjustment-loan        (11,188)
accretion
  Add: Purchase accounting adjustment-securities   3,451
amortization
  Add: one-time merger expenses                    5,404
  Add:  Impact of sale of ASB securities prior to  2,741
acquisition
     Adjustment subtotal                           408
  Tax effect at 35%                                (143)
     Adjustment subtotal, after tax                265
  Net income adjusted for purchase accounting
adjustments,                                       $    46,441
     one-time merger expenses and securities sale
  Weighted average diluted shares outstanding      56,093
  EPS (diluted) adjusted for purchase accounting
adjustments,                                       $        0.83
     one-time merger expenses and securities sale
  EPS (diluted), as reported                       $        0.82
(1) Non-GAAP financial measure. As illustrated in the table above, the impact
of purchase accounting adjustments, one-time merger expenses and the sale of
ASB securities prior to acquisition had a minimal combined impact on net
income and EPS (diluted).

Average loans increased 39.9% or $1.475 billion to $5.169 billion for the
quarter ended September 30, 2012 compared with $3.694 billion for the same
period in 2011.  Average deposits increased 41.7% or $3.194 billion to $10.846
billion for the quarter ended September 30, 2012 compared with $7.653 billion
for the same period in 2011. 

Loans at September 30, 2012 were $5.079 billion, an increase of $1.341 billion
or 35.9%, compared with $3.738 billion at September 30, 2011 and an increase
of $1.313 billion or 34.9% compared with $3.766 billion at December 31, 2011. 
Linked quarter loans increased $1.129 billion or 28.6% at September 30, 2012
compared with loans of $3.950 billion at June 30, 2012.  As reflected in the
table below, loan growth was impacted by the acquisition of Texas Bankers,
Inc., The Bank Arlington and ASB.  Excluding loans acquired in these
acquisitions and new production at the acquired banking centers since the
respective acquisition dates, year over year loan growth increased 4.4%.

Deposits at September 30, 2012 were $10.955 billion, an increase of $3.156
billion or 40.5%, compared with $7.799 billion at September 30, 2011 and an
increase of $2.894 billion or 35.9% compared with $8.060 billion at December
31, 2011.    Linked quarter deposits increased $2.560 billion or 30.5% at
September 30, 2012 compared with deposits of $8.395 billion at June 30, 2012. 
As reflected in the table below, deposit growth was impacted by the
acquisition of Texas Bankers, Inc., The Bank Arlington and ASB.  Excluding
deposits assumed and new deposits generated at the acquired banking centers
since the respective acquisition dates, year over year deposit growth
increased 6.9%.

The table below provides detail on loans acquired and deposits assumed in the
Texas Bankers, Inc., The Bank Arlington and the ASB transactions completed on
January 1, 2012, April 1, 2012 and July 1, 2012, respectively:

Balance Sheet Data  Sept 30,    June 30,    Mar 31,     Dec 31,     Sept 30,
(at period end)     2012        2012        2012        2011        2011
(In thousands)      (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Loans (including
new production
since respective
acquisition dates):
     Acquired with  $   24,229  $   28,421  $   27,053  $      --   $       --
Texas Bankers, Inc.
     Acquired with  21,806      22,542      --          --          --
The Bank Arlington
     Acquired with
American State      1,131,005   --          --          --          --
          Financial
Corp.
     All other      3,902,063   3,899,369   3,847,809   3,765,906   3,737,630
          Total     $ 5,079,103 $ 3,950,332 $ 3,874,862 $ 3,765,906 $ 3,737,630
Loans
Deposits (including
new deposits since
respective
acquisition dates):
     Assumed with   $   69,818  $   62,739  $   63,681  $      --   $       --
Texas Bankers, Inc.
     Assumed with   33,609      33,505      --          --          --
The Bank Arlington
     Assumed with
American State      2,518,178   --          --          --          --
          Financial
Corp.
     All other      8,332,992   8,298,338   8,480,770   8,060,254   7,798,739
          Total     $           $ 8,394,582 $ 8,544,451 $ 8,060,254 $ 7,798,739
Deposits            10,954,597

At September 30, 2012, Prosperity had $13.712 billion in total assets, $5.079
billion in loans, and $10.955 billion in deposits. Assets, loans and deposits
at September 30, 2012 increased by 43.3%, 35.9% and 40.5%, respectively,
compared with levels at September 30, 2011.

Asset Quality

Non-performing assets totaled $14.051 million or 0.11% of average earning
assets at September 30, 2012 compared with $13.363 million or 0.16% of average
earning assets at September 30, 2011 and $11.873 million or 0.12% of average
earnings assets at June 30, 2012.  The allowance for credit losses was 1.00%
of total loans at September 30, 2012 compared with 1.40% at September 30, 2011
and 1.28% of total loans at June 30, 2012.  Excluding acquired loans from
Texas Bankers, Inc., The Bank Arlington and the ASB transactions, the
allowance for credit losses was 1.27% of remaining loans. Refer to the "Notes
to Selected Financial Data" at the end of this Earnings Release for a
reconciliation of this non-GAAP financial measure.

Non-performing assets                       Sept 30,    June 30,   Sept 30,
                                            2012        2012       2011
(In thousands, unaudited)
                                            Amount  #   Amount  #  Amount  #
Commercial                                  $       19  $       12 $       17
                                            1,599        394        1,440
Construction                                3,182   34  4,056   30 5,042   30
1-4 family (including home equity)          3,089   36  2,284   28 3,894   38
Commercial real estate (including           4,671   15  5,077   12 2,885   11
multi-family)
Agriculture and agriculture real estate     1,476   9   44      3  51      3
Consumer                                    34      6   18      3  51      4
Total                                       $       119 $       88 $       103
                                             14,051      11,873     13,363

Net Charge-offs (Recoveries)    Three Months   Three Months    Three Months
                                Ended          Ended           Ended
(In thousands, unaudited)
                                Sept 30, 2012  June 30, 2012   Sept 30, 2011
Commercial                      $        (511) $               $             7
                                                180
Construction                    155            1,179           (197)
1-4 family (including home      251            90              134
equity)
Commercial real estate          800            296             271
(including multi-family)
Agriculture and agriculture     (30)           (3)             --
real estate
Consumer (including credit      590            118             153
cards)
Total                           $       1,255  $         1,860 $         368

The provision for credit losses was $1.800 million for the three months ended
September 30, 2012 and $950,000 for the three months ended September 30,
2011.  Net charge offs were $1.255 million for the three months ended
September 30, 2012 and $368,000 for the three months ended September 30, 2011.

The provision for credit losses was $2.550 million for the nine months ended
September 30, 2012 compared to $4.050 million for the nine months ended
September 30, 2011.  Net charge offs were $3.217 million for the nine months
ended September 30, 2012 compared to $3.121 million for the nine months ended
September 30, 2011.

Results of operations for the nine months ended September 30, 2012

For the nine months ended September 30, 2012, net income was $119.635 million
compared with $105.343 million for the same period in 2011.  Net income per
diluted common share was $2.37 for the nine months ended September 30, 2012
compared with $2.24 for the same period in 2011.  Annualized returns on
average assets, average common equity and average tangible common equity for
the nine months ended September 30, 2012 were 1.35%, 9.08% and 21.80%,
respectively. 

Net interest income before provision for credit losses for the nine months
ended September 30, 2012 increased $25.824 million or 10.5%, to $272.405
million compared with $246.581 million during the same period in 2011.  The
increase was attributable primarily to a 25.3% increase in average earning
assets during the same period.

Non-interest income increased $9.451 million or 22.5% to $51.429 million for
the nine months ended September 30, 2012 compared with $41.978 million for the
same period in 2011.  The change was mainly attributable to an increase in
debit and ATM card income, an increase in service charges on deposits accounts
and an increase in other income, primarily due to the acquisition of ASB.

Non-interest expense increased $16.129 million or 12.9% to $141.489 million
for the nine months ended September 30, 2012 compared with $125.360 million
for the same period in 2011.  The change is primarily due to increases in
salaries and employee benefits expense for the nine months ended September 30,
2012 compared to the same period in 2011 and is due to the acquisition of ASB.
Prosperity's efficiency ratio was 43.69% for the nine months ended September
30, 2012. Non-interest expense for the nine months ended September 30, 2012
also includes one-time merger expenses of approximately $5.404 million,
pre-tax ($3.513 million after tax). Excluding these charges, the efficiency
ratio would have been 42.02% for the nine months ended September 30, 2012.
Refer to the "Notes to Selected Financial Data" at the end of this Earnings
Release for a reconciliation of this non-GAAP financial measure.

Dividend

Prosperity Bancshares, Inc. declared a fourth quarter cash dividend of $0.215,
an increase of 10.3% over the third quarter dividend of $0.195, to be paid on
December 31, 2012 to all shareholders of record as of December 14, 2012.

Conference Call

Prosperity's management team will host a conference call on Wednesday, October
24, 2012 at 10:30 a.m. Eastern Daylight Time (9:30 a.m. Central Daylight Time)
to discuss Prosperity's third quarter earnings. Individuals and investment
professionals may participate in the call by dialing 800-862-9098, the
reference code is PBTX.

Alternatively, individuals may listen to the live webcast of the presentation
by visiting Prosperity's website at www.prosperitybanktx.com.  The webcast may
be accessed directly from Prosperity's Home page under News and Events.

Acquisition of Community National Bank

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

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

Acquisition of American State Financial Corporation

On July 1, 2012, Prosperity completed the previously announced acquisition of
American State Financial Corporation and its wholly owned subsidiary American
State Bank (collectively referred to as "ASB").  American State Bank operated
thirty-seven (37) full service banking offices in eighteen (18) counties
across West Texas. As of June 30, 2012, ASB, on a consolidated basis, reported
total assets of $3.16 billion, total loans of $1.24 billion and total deposits
of $2.51 billion.

Pursuant to the terms of the acquisition agreement, Prosperity issued
8,524,835 shares of Prosperity common stock plus $178.5 million in cash for
all outstanding shares of American State Financial Corporation capital stock
which resulted in a premium of $240.4 million.

Acquisition of The Bank Arlington

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

Pursuant to the terms of the acquisition agreement, Prosperity issued 135,389
shares of Prosperity common stock for all outstanding shares of The Bank
Arlington capital stock which resulted in a premium of $2.8 million.

Acquisition of Texas Bankers, Inc.

On January 1, 2012, Prosperity completed the previously announced acquisition
of Texas Bankers, Inc. and its wholly-owned subsidiary, Bank of Texas, Austin,
Texas.  The three (3) Bank of Texas banking offices in the Austin, Texas CMSA
consisted of a location in Rollingwood, which was consolidated with
Prosperity's Westlake location and remains in Bank of Texas' Rollingwood
banking office; one banking center in downtown Austin, which was consolidated
into Prosperity's downtown Austin location; and another banking center in
Thorndale. Prosperity now operates thirty-four (34) banking centers in the
Central Texas area including Austin and San Antonio. Texas Bankers, Inc.
reported, on a consolidated basis, total assets of $77.0 million, total loans
of $27.6 million and total deposits of $70.4 million as of December 31, 2011.

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

Pending Acquisition of East Texas Financial Services, Inc.

On December 9, 2011, Prosperity entered into a definitive agreement to acquire
East Texas Financial Services, Inc. (OTC BB: FFBT) and its wholly-owned
subsidiary, First Federal Bank Texas ("Firstbank"). Firstbank operates four
(4) banking offices in the Tyler MSA, including three locations in Tyler,
Texas and one location in Gilmer, Texas. As of September 30, 2012, Firstbank
reported total assets of $191.1 million, total loans of $139.2 million and
total deposits of $116.0 million.

Under the terms of the definitive agreement, Prosperity will issue up to
531,000 shares of Prosperity common stock for all outstanding shares of East
Texas Financial Services capital stock, subject to certain conditions and
potential adjustments. Pending the satisfaction of closing conditions, the
closing is expected to occur in early 2013.

Prosperity Bancshares, Inc.^®

Prosperity Bancshares Inc.^®, recently named "America's Best Bank" by Forbes,
is a $13.7 billion Houston, Texas based regional financial holding company,
formed in 1983. Operating under a community banking philosophy and seeking to
develop broad customer relationships based on service and convenience,
Prosperity offers a variety of traditional loan and deposit products to its
customers, which consist primarily of small and medium sized businesses and
consumers. In addition to established banking products, Prosperity offers a
complete line of services including: Internet Banking services at
http://www.prosperitybanktx.com, Retail Brokerage Services, MasterMoney Debit
Cards, 24 hour voice response banking, Trust and Wealth Management; and Mobile
Banking.  Prosperity currently operates two hundred thirteen (213) full
service banking locations; fifty-nine (59) in the Houston area; twenty (20) in
the South Texas area including Corpus Christi and Victoria; thirty-five (35)
in the Dallas/Fort Worth area; twenty-one (21) in the East Texas area;
thirty-four (34) in the Central Texas area including Austin and San Antonio;
thirty-four (34) in the West Texas area including Lubbock, Midland-Odessa and
Abilene; and ten (10) in the Bryan/College Station area.

Bryan/College      Kiest                      Downtown      Other South Texas
Station Area -
                   McKinney                   Eastex         Locations -
Bryan              McKinney-Stonebridge       Fairfield     Alice
Bryan-East         Midway                     First Colony  Aransas Pass
Bryan-North        Preston Forest             Gessner       Beeville
Caldwell           Preston Road               Gladebrook    Edna
College Station    Red Oak                    Harrisburg    Goliad
Greens Prairie     Sachse                     Heights       Kingsville
Madisonville       The Colony                 Highway 6     Mathis
                                              West
Navasota           Turtle Creek               Hillcroft     Padre Island
Rock Prairie       Westmoreland               Little York   Palacios
Wellborn Road                                 Medical       Port Lavaca
                                              Center
                   Fort Worth -               Memorial      Portland
                                              Drive
Central Texas Area Haltom City                Northside     Rockport
-
                   Keller                     Pasadena      Sinton
Austin -           Roanoke                    Pecan Grove   Victoria
183                Stockyards                 Piney Point   Victoria-North
Allandale                                     River Oaks
Cedar Park         Other Dallas/Fort Worth    Royal Oaks    West Texas Area - 
                   Locations -
Congress           Arlington                  Sugar Land
Lakeway            Azle                       SW Medical    Abilene -
                                              Center
Liberty Hill       Ennis                      Tanglewood    Antilley Road
Northland          Gainesville                Uptown        Barrow Street
Oak Hill           Glen Rose                  Waugh Drive   Cypress Street
Parmer Lane        Granbury                   West          Judge Ely
                                              University
Research Blvd      Mesquite                   Woodcreek     Mockingbird
Westlake           Muenster
                   Sanger                     Other Houston Lubbock -
                                              Area
Other Central      Waxahachie                 Locations -   4^th Street
Texas Locations -
Bastrop            Weatherford                Angleton      66^th Street
Cuero                                         Bay City      82^nd Street
Dime Box           East Texas Area -          Beaumont      86^th Street
Dripping Springs                              Cinco Ranch   98^th Street
Elgin              Athens                     Cleveland     Avenue Q
Flatonia           Athens-South               East Bernard  North University
Georgetown         Blooming Grove             El Campo      Texas Tech Student
                                                            Union
Gonzales           Canton                     Dayton
Hallettsville      Carthage                   Galveston     Midland -
Kingsland          Corsicana                  Groves        Wadley
La Grange          Crockett                   Hempstead     Wall Street
Lexington          Eustace                    Hitchcock
New Braunfels      Grapeland                  Katy          Odessa -
Pleasanton         Gun Barrel City            Liberty       Grandview
Round Rock         Jacksonville               Magnolia      Grant
San Antonio        Kerens                     Mont Belvieu  Kermit Highway
Schulenburg        Longview                   Nederland     Parkway
Seguin             Mount Vernon               Needville
Smithville         Palestine                  Shadow Creek  Other West Texas
                                                            Locations -
Thorndale          Rusk                       Sweeny        Big Spring
Weimar             Seven Points               Tomball       Brownfield
Yoakum             Teague                     Waller        Brownwood
Yorktown           Tyler                      West Columbia Cisco
                   Tyler-University           Wharton       Comanche
Dallas/Fort Worth  Winnsboro                  Winnie        Early
Area -
                                              Wirt          Floydada
Dallas -           Houston Area -                           Gorman
Abrams Centre                                 South Texas   Levelland
                                              Area -
Balch Springs      Houston -                                Littlefield
Camp Wisdom        Aldine                     Corpus        Merkel
                                              Christi -
Cedar Hill         Allen Parkway              Airline       Plainview
Central Expressway Bellaire                   Carmel        San Angelo
East Renner        Beltway                    Northwest     Slaton
Frisco             Clear Lake                 Saratoga      Snyder
Frisco-West        Copperfield                Water Street
Independence       Cypress
---

In connection with the proposed merger of East Texas Financial Services, Inc.
into Prosperity, Prosperity has filed with the Securities and Exchange
Commission a registration statement on Form S-4 to register the shares of
Prosperity's common stock to be issued to the stockholders of East Texas
Financial Services. The registration statement includes a proxy
statement/prospectus which was sent to the stockholders of East Texas
Financial Services seeking their approval of the proposed transaction.

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

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

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: This release contains, and the remarks by Prosperity's management on the
conference call may contain, forward-looking statements within the meaning of
the securities laws that are based on current expectations, assumptions,
estimates and projections about Prosperity, and its subsidiaries.  These
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties, many of which are outside of Prosperity's
control, that may cause actual results to differ materially from those
expressed or implied by the forward-looking statements.  These risks and
uncertainties include but are not limited to whether Prosperity can:
successfully identify acquisition targets and integrate the businesses of
acquired companies and banks;  continue to sustain its current internal growth
rate or total growth rate; provide products and services that appeal to its
customers; continue to have access to debt and equity capital markets; and
achieve its sales objectives.  Other risks include, but are not limited to:
the possibility that credit quality could deteriorate; actions of competitors;
changes in laws and regulations (including changes in governmental
interpretations of regulations and changes in accounting standards); a
deterioration or downgrade in the credit quality and credit agency ratings of
the securities in Prosperity's securities portfolio; customer and consumer
demand, including customer and consumer response to marketing; effectiveness
of spending, investments or programs; fluctuations in the cost and
availability of supply chain resources; economic conditions, including
currency rate fluctuations and interest rate fluctuations; weather; and the
stock price volatility associated with "small-cap" companies.  These and
various other factors are discussed in Prosperity's Annual Report on Form 10-K
for the year ended December 31, 2011 and other reports and statements
Prosperity has filed with the SEC. Copies of the SEC filings for Prosperity
Bancshares^® may be downloaded from the Internet at no charge from
www.prosperitybanktx.com.

 

Prosperity Bancshares, Inc. ^ ®
Financial Highlights
(Dollars and share amounts in thousands, except per share data)
                       Three Months Ended          Nine Months Ended
                       Sept 30, 2012 Sept 30, 2011 Sept 30, 2012 Sept 30, 2011
Selected Earnings and  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
Per
Share Data
Total interest income  $             $             $             $        
                        117,633       93,189       302,123       282,250
Total interest expense 10,740        10,651        29,718        35,669
Net interest income    106,893       82,538        272,405       246,581
Provision for credit   1,800         950           2,550         4,050
losses
Net interest income
after
     provision for     105,093       81,588        269,855       242,531
credit losses
Total non-interest     23,828        14,581        51,429        41,978
income
Total non-interest     60,242        41,151        141,489       125,360
expense
Net income before      68,679        55,018        179,795       159,149
taxes
Federal income taxes   22,503        18,645        60,160        53,806
Net income             $             $             $             $        
                       46,176        36,373        119,635       105,343
Basic earnings per     $0.83         $0.78         $2.38         $2.25
share
Diluted earnings per   $0.82         $0.77         $2.37         $2.24
share
Period end shares      56,093        46,893        56,093        46,893
outstanding
Weighted average
shares
     outstanding       55,958        46,890        50,239        46,830
(basic)
Weighted average
shares
     outstanding       56,093        47,033        50,393        47,013
(diluted)

 

Prosperity Bancshares, Inc.^®
Financial Highlights
(Dollars in thousands)
                Sept 30,     June 30,    Mar 31, 2012 Dec 31, 2011 Sept 30,
                2012         2012                                  2011
Balance Sheet
Data
                (Unaudited)  (Unaudited) (Unaudited)  (Unaudited)  (Unaudited)
 (at period
end)
Total loans     $            $           $            $            $  
                5,079,103    3,950,332    3,874,862    3,765,906   3,737,630
Investment      6,799,513    5,400,044   5,646,529    4,658,936    4,430,530
securities ^(A)
Federal funds   302          133         445          642          294
sold
Allowance for   (50,927)     (50,382)    (51,642)     (51,594)     (52,513)
credit losses
Cash and due    207,650      152,678     151,467      212,800      211,261
from banks
Goodwill        1,200,098    932,965     929,161      924,537      924,537
Core deposit    28,092       17,706      19,301       20,996       22,874
intangibles
Other real      8,846        10,236      7,718        8,328        8,216
estate
Fixed assets,   201,445      166,273     162,676      159,656      160,099
net
Other assets    237,997      157,366     149,438      122,464      124,159
                $ 13,712,119 $           $            $            $  
                             10,737,351   10,889,955   9,822,671   9,567,087
Demand deposits $            $           $            $            $  
                2,827,748    2,083,910    2,088,749    1,972,226   1,861,907
Interest
bearing         8,126,849    6,310,672   6,455,702    6,088,028    5,936,832
deposits
Total deposits  10,954,597   8,394,582   8,544,451    8,060,254    7,798,739
Securities sold
under
     repurchase 443,856      122,743     58,481       54,883       66,166
agreements
Federal funds
purchased and
     other      112,017      437,278     527,536      12,790       13,583
borrowings
Junior
subordinated
     debentures 85,055       85,055      85,055       85,055       85,055
Other           78,418       53,876      64,899       42,424       62,205
liabilities
Total           11,673,943   9,093,534   9,280,422    8,255,406    8,025,748
liabilities
Shareholders'   2,038,176    1,643,817   1,609,533    1,567,265    1,541,339
equity ^(B)
Total                        $           $            $            $  
liabilities and $ 13,712,119 10,737,351   10,889,955  9,822,671    9,567,087
equity
(A) Includes $16,991, $17,709, $19,542, $20,726 and $24,278 in unrealized
gains on available for sale securities for the quarterly periods ending 
September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011, and
September 30, 2011,  respectively.
(B) Includes $11,044, $11,511, $12,702, $13,472 and $15,781 in after-tax
unrealized gains on available for sale securities for the quarterly periods
ending September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011,
and September 30, 2011, respectively.

 

Prosperity Bancshares, Inc. ^ ®
Financial Highlights
(Dollars in thousands)
                      Three Months Ended           Nine Months Ended
                      Sept 30, 2012  Sept 30, 2011 Sept 30, 2012 Sept 30, 2011
Income Statement Data (Unaudited)    (Unaudited)   (Unaudited)   (Unaudited)
Interest on loans     $   80,587     $   54,471    $  188,597    $  160,374
Interest on           37,025         38,714        113,418       121,861
securities
Interest on federal
funds sold and
     other temporary  21             4             108           15
investments
     Total interest   117,633        93,189        302,123       282,250
income
Interest expense –    9,395          9,717         26,269        32,293
deposits
Interest expense –    651            607           1,962         2,352
debentures
Interest expense –    694            327           1,487         1,024
other
Total interest        10,740         10,651        29,718        35,669
expense
Net interest income   106,893        82,538        272,405       246,581
^(C)
Provision for credit  1,800          950           2,550         4,050
losses
Net interest income
after
provision for credit  105,093        81,588        269,855       242,531
losses
Non-sufficient funds  8,494          6,249         19,050        18,582
(NSF) fees
Debit card and ATM    6,246          3,941         14,374        11,202
card income
Service charges on    4,133          2,472         9,006         7,466
deposit accounts
Trust income          831            --            831           --
Mortgage origination  1,350          --            1,350         --
income
Bank Owned Life       736            355           1,430         1,035
Insurance
Net (loss)/gain on    (50)           17            13            377
sale of assets
Net (loss)/gain on    (597)          95            (344)         (431)
sale of ORE
Net loss on sale of   --             --            --            (581)
securities
Other non-interest    2,685          1,452         5,719         4,328
income
Total non-interest    23,828         14,581        51,429        41,978
income 
Salaries and benefits 36,701         23,601        83,525        70,799
^(D)
CDI amortization      2,007          1,924         5,297         5,901
Net occupancy and     4,614          3,784         11,663        10,979
equipment
Depreciation          2,369          2,041         6,432         6,099
Debit card, data
processing
 and software         2,901          1,954         6,339         5,406
amortization
Regulatory
assessments and
     FDIC insurance   2,107          1,488         5,314         7,383
Communications
(includes telephone,  2,226          1,749         5,777         5,188
courier and postage)
ORE expense           1,545          235           2,619         821
Other non-interest    5,772          4,375         14,523        12,784
expense
Total non-interest    60,242         41,151        141,489       125,360
expense
Net income before     68,679         55,018        179,795       159,149
taxes    
Federal income taxes  22,503         18,645        60,160        53,806
Net income available
to common             $  46,176      $  36,373     $  119,635    $  105,343
shareholders
^(C) Net interest income on a tax equivalent basis would be $109,031 and
$83,440 for the three months ended September 30, 2012 and September 30, 2011,
respectively, and $276,271 and $249,345 for the nine months ended September
30, 2012 and September 30, 2011, respectively.
^(D) Salaries and benefits includes stock-based compensation expense of $1,057
and $961 for the three months ended September 30, 2012 and September 30, 2011,
respectively, and $3,218 and $2,604 for the nine months ended September 30,
2012 and September 30, 2011, respectively.

 

 

 

Prosperity Bancshares, Inc.^®
Financial Highlights
(Dollars in thousands)
                            Three Months Ended
                            Sept 30,    June 30,    Mar 31,     Dec 31,     Sept 30,
                            2012        2012        2012        2011        2011
Income Statement Data       (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest on loans           $   80,587  $   54,793  $   53,217  $   53,899  $   54,471
Interest on securities      37,025      38,072      38,321      35,719      38,714
Interest on federal funds
     sold and other earning 21          9           78          40          4
assets
    Total interest income   117,633     92,874      91,616      89,658      93,189
Interest expense - deposits 9,395       8,083       8,791       8,682       9,717
Interest expense -          651         648         663         632         607
debentures
Interest expense - other    694         477         316         257         327
    Total interest expense  10,740      9,208       9,770       9,571       10,651
    Net interest income     106,893     83,666      81,846      80,087      82,538
Provision for credit losses 1,800       600         150         1,150       950
    Net interest income
after
        provision for       105,093     83,066      81,696      78,937      81,588
credit losses
Non-sufficient funds (NSF)  8,494       5,167       5,389       5,860       6,249
fees
Debit card and ATM card     6,246       4,292       3,836       4,189       3,941
income
Service charges on deposit  4,133       2,432       2,441       2,515       2,472
accounts
Trust income                831         --          --          --          --
Mortgage origination income 1,350       --          --          --          --
Bank Owned Life Insurance   736         345         350         347         355
Net (loss)/gain on sale of  (50)        70          (7)         --          17
assets
Net (loss)/gain on sale of  (597)       (165)       418         (473)       95
ORE                        
Other non-interest income   2,685       1,515       1,518       1,627       1,452
    Total non-interest      23,828      13,656      13,945      14,065      14,581
income
Salaries and benefits       36,701      23,572      23,252      21,258      23,601
CDI amortization            2,007       1,595       1,695       1,879       1,924
Net occupancy and equipment 4,614       3,492       3,557       3,655       3,784
Depreciation                2,369       2,028       2,035       2,051       2,041
Debit card, data processing
and
     software  amortization 2,901       1,906       1,532       1,417       1,954
Regulatory assessments and
     FDIC insurance         2,107       1,659       1,548       1,518       1,488
Communications (includes 
   telephone, courier and   2,226       1,802       1,748       1,758       1,749
postage)
ORE expense                 1,545       383         691         680         235
Other non-interest expense  5,772       4,351       4,401       4,169       4,375
    Total non-interest      60,242      40,788      40,459      38,385      41,151
expense
    Net income before taxes 68,679      55,934      55,182      54,617      55,018
Federal income taxes        22,503      18,962      18,695      18,211      18,645
    Net income available
        to common           $   46,176  $   36,972  $   36,487  $   36,406  $   36,373
shareholders

 

 

 

Prosperity Bancshares, Inc.^®
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
                      Three Months Ended September   Three Months Ended September
                      30, 2012                       30, 2011
YIELD ANALYSIS        Average    Interest Average    Average    Interest Average
                                 Earned                         Earned
                                 /                              /
                      Balance    Interest Yield/Rate Balance    Interest Yield/Rate
                                 Paid                           Paid
Interest Earning
Assets:
Loans                 $          $        6.20%      $          $        5.85%
                       5,169,101 80,587               3,694,039 54,471
Investment securities 7,106,871  37,025   2.08%      4,524,213  38,714   3.42%
Federal funds sold
and other
     temporary        53,111     21       0.16%      18,636     4        0.09%
investments
  Total interest      12,329,083 $        3.80%      8,236,888  $        4.49%
earning assets                    117,633                       93,189
Allowance for credit  (53,944)                       (52,208)
losses
Non-interest earning  1,730,120                      1,375,394
assets
  Total assets        $                              $
                      14,005,259                      9,560,074
Interest Bearing
Liabilities:
Interest bearing      $          $        0.41%      $          $        0.50%
demand deposits        2,181,928  2,273               1,319,800  1,667
Savings and money     3,516,601  2,987    0.34%      2,369,745  2,702    0.45%
market deposits
Certificates and      2,387,279  4,135    0.69%      2,134,082  5,348    0.99%
other time deposits
Securities sold under
repurchase            438,410    315      0.29%      90,821     127      0.55%
agreements           
Federal funds
purchased and other   512,739    379      0.29%      135,336    200      0.59%
borrowings
Junior subordinated   85,055     651      3.04%      85,055     607      2.83%
debentures
  Total interest      9,122,012  $        0.47%      6,134,839  $        0.69%
bearing liabilities              10,740                         10,651
Non-interest bearing
liabilities:
Non-interest bearing  2,760,405                      1,828,957
demand deposits
Other liabilities     92,873                         66,560
  Total liabilities   11,975,290                     8,030,356
Shareholders' equity  2,029,969                      1,529,718
  Total liabilities   $                              $
and shareholders'     14,005,259                      9,560,074
equity
Net Interest Income &            $        3.45%                 $        3.98%
Margin                           106,893                        82,538
Net Interest Income &
Margin
     (tax equivalent)            $        3.52%                 $        4.02%
                                 109,031                        83,440

 

 

 

Prosperity Bancshares, Inc.^®
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
                      Nine Months Ended September    Nine Months Ended September
                      30, 2012                       30, 2011
YIELD ANALYSIS        Average    Interest Average    Average    Interest Average
                                 Earned                         Earned
                                 /                              /
                      Balance    Interest Yield/Rate Balance    Interest Yield/Rate
                                 Paid                           Paid
Interest Earning
Assets:
Loans                 $          $        5.85%      $          $        5.93%
                       4,303,984 188,597              3,614,590 160,374
Investment securities 5,983,102  113,418  2.53%      4,635,880  121,861  3.50%
Federal funds sold
and other
     temporary        66,771     108      0.22%      15,031     15       0.13%
investments
  Total interest      10,353,857 $        3.90%      8,265,501  $        4.57%
earning assets                   302,123                        282,250
Allowance for credit  (52,104)                       (51,924)
losses
Non-interest earning  1,498,332                      1,388,905
assets
  Total assets        $                              $
                      11,800,085                      9,602,482
Interest Bearing
Liabilities:
Interest bearing      $          $        0.46%      $          $        0.57%
demand deposits        1,861,954  6,425               1,403,477  5,966
Savings and money     3,031,269  8,020    0.35%      2,377,423  9,386    0.53%
market deposits
Certificates and      2,080,606  11,824   0.76%      2,162,112  16,941   1.05%
other time deposits
Securities sold under
repurchase            197,775    411      0.28%      70,425     306      0.58%
agreements           
Federal funds
purchased and other   465,505    1,076    0.31%      181,656    718      0.53%
borrowings
Junior subordinated   85,055     1,962    3.08%      87,058     2,352    3.61%
debentures
  Total interest      7,722,164  $        0.51%      6,282,151  $        0.76%
bearing liabilities              29,718                         35,669
Non-interest bearing
liabilities:
Non-interest bearing  2,267,876                      1,758,182
demand deposits
Other liabilities     53,320                         62,765
  Total liabilities   10,043,366                     8,103,098
Shareholders' equity  1,756,725                      1,499,384
  Total liabilities   $                              $
and shareholders'     11,800,085                      9,602,482
equity
Net Interest Income &            $        3.51%                 $        3.99%
Margin                           272,405                        246,581
Net Interest Income &
Margin
     (tax equivalent)            $        3.56%                 $        4.03%
                                  276,271                       249,345

Prosperity Bancshares, Inc.^®
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
                      Three Months Ended June 30,    Three Months Ended June 30,
                      2012                           2011
YIELD ANALYSIS        Average    Interest Average    Average    Interest Average
                                 Earned                         Earned
                                 /                              /
                      Balance    Interest Yield/Rate Balance    Interest Yield/Rate
                                 Paid                           Paid
Interest Earning
Assets:
Loans                 $          $        5.63%      $          $        5.93%
                       3,914,352  54,793              3,631,256  53,703
Investment securities 5,635,810  38,072   2.70%      4,707,217  41,919   3.56%
Federal funds sold
and other
   earning assets     20,916     9        0.17%      13,218     30       0.91%
  Total interest      9,571,078  $        3.90%      8,351,691  $        4.59%
earning assets                    92,874                         95,652
Allowance for credit  (50,746)                       (51,861)
losses
Non-interest earning  1,398,857                      1,378,738
assets
  Total assets        $                              $
                      10,919,189                      9,678,568
Interest Bearing
Liabilities:
Interest bearing      $          $        0.49%      $          $        0.59%
demand deposits        1,706,176 2,089                1,403,331 2,061
Savings and money     2,779,524  2,444    0.35%      2,403,330  3,348    0.56%
market deposits
Certificates and      1,880,096  3,550    0.76%      2,175,165  5,655    1.04%
other time deposits
Securities sold under
repurchase            98,968     59       0.24%      68,413     110      0.64%
agreements           
Federal funds
purchased and other   610,499    418      0.28%      218,310    250      0.46%
borrowings
Junior subordinated   85,055     648      3.06%      85,055     598      2.82%
debentures
  Total interest      $          $        0.52%      $          $        0.76%
bearing liabilities   7,160,318  9,208                6,353,604  12,022
Non-interest bearing
liabilities:
Non-interest bearing  $                              $
demand deposits       2,069,965                      1,770,664
Other liabilities     56,742                         54,915
  Total liabilities   $                              $
                      9,287,025                      8,179,183
Shareholders' equity  $                              $
                      1,632,164                      1,499,385
  Total liabilities   $                              $
and shareholders'     10,919,189                      9,678,568
equity
Net Interest Income &            $        3.52%                 $        4.02%
Margin                            83,666                         83,630
Net Interest Income &
Margin
     (tax equivalent)            $        3.55%                 $        4.06%
                                  84,498                         84,603

 

 

Prosperity Bancshares, Inc.^®
Financial Highlights
                      Three Months Ended           Nine Months Ended
                      Sept 30, 2012  Sept 30, 2011 Sept 30, 2012 Sept 30, 2011
Performance Ratios    (Unaudited)    (Unaudited)   (Unaudited)   (Unaudited)
Return on average     1.32%          1.52%         1.35%         1.46%
assets (annualized)
Return on average
common
     equity           9.10%          9.51%         9.08%         9.37%
(annualized) 
Return on average
tangible
     common equity    21.59%         25.03%        21.80%        25.58%
(annualized) ^ (G)
Net interest margin ^
     (tax equivalent) 3.52%          4.02%         3.56%         4.03%
(annualized) ^ (E)
Efficiency ratio^(F)  46.07%         42.38%        43.69%        43.41%
Asset Quality Ratios
Non-performing assets
to
     average earning  0.11%          0.16%         0.14%         0.16%
assets
Non-performing assets
to loans
     and other real   0.28%          0.36%         0.28%         0.36%
estate
Net charge-offs  to   0.02%          0.01%         0.07%         0.09%
average loans
Allowance for credit
losses to
     total loans      1.00%          1.40%         1.00%         1.40%
Allowance for credit
losses to total
     loans (excluding 1.27%          1.40%         1.27%         1.40%
acquired loans) ^(G)
Common Stock Market
Price
High                  $45.40         $46.87        $47.66        $46.87
Low                   $38.90         $30.91        $38.90        $30.91
Period end market     $42.62         $32.68        $42.62        $32.68
price
^(E) Net interest margin for all periods presented is calculated on an actual
365 day or 366 day basis.
^(F)The efficiency ratio is calculated by dividing total non-interest expense
(excluding provision for credit losses) by net interest income plus
non-interest income (excluding net gains and losses on the sale of securities
and assets). Additionally, taxes are not part of this calculation.
^(G)Refer to the "Notes to Selected Financial Data" at the end of this
Earnings Release for a reconciliation of this non-GAAP financial measure.

 

 

Prosperity Bancshares, Inc.^®
Financial Highlights
Comparative        Three Months Ended
Quarterly
Asset Quality,     Sept 30,    June 30,    Mar 31,     Dec 31,     Sept 30,
Performance        2012        2012        2012        2011        2011
     & Capital     (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Ratios
Return on average
     assets        1.32%       1.35%       1.39%       1.50%       1.52%
(annualized)
Return on average
common
     equity        9.10%       9.06%       9.15%       9.35%       9.51%
(annualized)
Return on average
tangible
     common equity 21.59%      21.70%      22.57%      23.86%      25.03%
(annualized)^(G)
Net interest
margin
     (tax
equivalent)        3.52%       3.55%       3.64%       3.82%       4.02%
(annualized)^(E)
Employees – FTE    2,260       1,666       1,690       1,664       1,678
Efficiency         46.07%      41.94%      42.23%      40.77%      42.38%
ratio^(F)
Non-performing
assets to
     average       0.11%       0.12%       0.16%       0.14%       0.16%
earning assets
Non-performing
assets to loans
     and other     0.28%       0.30%       0.38%       0.32%       0.36%
real estate
Net charge-offs to
     average loans 0.02%       0.05%       0.00%       0.06%       0.01%
Allowance for
credit losses to
     total loans   1.00%       1.28%       1.33%       1.37%       1.40%
Allowance for
credit losses to
total loans
(excluding         1.27%           N/A          N/A         N/A         N/A
acquired
loans)^(G)
Book value per     $36.36      $34.63      $34.03      $33.41      $32.87
share
Tangible book
value per          $14.45      $14.60      $13.98      $13.25      $12.67
share^(G)
Tier 1 risk-based  14.43%      16.42%      15.70%      15.90%      15.47%
capital
Total risk-based   15.26%      17.49%      16.80%      17.09%      16.69%
capital
Tier 1 leverage    6.92%       7.69%       7.68%       7.89%       7.70%
capital
Tangible equity to
tangible
     assets^(G)    6.49%       7.08%       6.65%       7.00%       6.89%
Equity to assets   14.86%      15.31%      14.78%      15.96%      16.11%

 

Prosperity Bancshares, Inc.^®
Financial Highlights
(Dollars and share amounts in thousands, except per share data)
                       Three Months Ended          Nine Months Ended
                       Sept 30, 2012 Sept 30, 2011 Sept 30, 2012 Sept 30, 2011
Common Share and       (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
     Other Data
Employees - FTE        2,260         1,678         2,260         1,678
Book value per share   $     36.36   $     32.87   $     36.36   $     32.87
Tangible book value    $     14.45   $     12.67   $     14.45   $     12.67
per share^(G)
Period end shares      56,058        46,893        56,058        46,893
outstanding
Weighted average
shares
     outstanding       55,958        46,890        50,239        46,830
(basic)
Weighted average
shares
     outstanding       56,093        47,033        50,393        47,013
(diluted)
Non-accrual loans      $    5,063    $   5,105     $    5,063    $     5,105
Restructured loans     --            --            --            --
Accruing loans 90 or
more
     days past due     132           20            132           20
Total non-performing   5,195         5,125         5,195         5,125
loans
Repossessed assets     10            22            10            22
Other real estate      8,846         8,216         8,846         8,216
  Total non-performing $    14,051   $  13,363     $    14,051   $     13,363
assets
Allowance for credit
losses at
     end of period     $    50,927   $  52,513     $    50,927   $     52,513
Net charge-offs        $     1,255   $      368    $     3,217   $     3,121
Basic earnings per     $      0.83   $      0.78   $      2.38   $     2.25
share
Diluted earnings per   $      0.82   $      0.77   $      2.37   $     2.24
share

 

 

Prosperity Bancshares, Inc. ^ ®
Financial Highlights
(Dollars in thousands)
                     Three Months Ended            Nine Months Ended
                     Sept 30, 2012  Sept 30, 2011  Sept 30, 2012 Sept 30, 2011
Balance Sheet        (Unaudited)    (Unaudited)    (Unaudited)   (Unaudited)
Averages
Total loans          $  5,169,101   $  3,694,039   4,303,984     3,614,590
Investment           7,106,871      4,524,213      5,983,102     4,635,880
securities
Federal funds sold
and
     other temporary
     investments     53,111         18,636         66,771        15,031
Total earning assets 12,329,083     8,236,888      10,353,857    8,265,501
Allowance for credit (53,944)       (52,208)       (52,104)      (51,924)
losses
Cash and due from    206,124        125,750        166,105       129,526
banks
Goodwill             1,157,330      924,537        1,006,506     924,496
Core deposit         17,280         23,814         18,610        25,737
intangibles (CDI)
Other real estate    11,600         8,637          10,144        10,360
(ORE)
Fixed assets, net    192,542        160,476        173,907       159,890
Other assets         145,244        132,180        123,060       138,896
Total assets         $ 14,005,259   $  9,560,074   $ 11,800,085  $  9,602,482
Non-interest bearing $  2,760,405   $  1,828,957   $  2,267,876  $  1,758,182
deposits
Interest bearing     8,085,808      5,823,627      6,973,829     5,943,012
deposits
Total deposits       10,846,213     7,652,584      9,241,705     7,701,194
Securities sold
under
     repurchase      438,410        90,821         197,775       70,425
agreements
Federal funds
purchased and
     other           512,739        135,336        465,505       181,656
borrowings
Junior subordinated
     debentures      85,055         85,055         85,055        87,058
Other liabilities    92,873         66,560         53,320        62,765
Shareholders'        2,029,969      1,529,718      1,756,725     1,499,384
equity^(H)
Total liabilities    $ 14,005,259   $  9,560,074   $ 11,800,085  $  9,602,482
and equity
^(H) Includes $11,821 and $15,702 in after tax unrealized gains on available
for sale securities for the three months ending September 30, 2012 and
September 30, 2011, respectively, and $12,612 and $14,735 for the nine months
ending September 30, 2012 and September 30, 2011, respectively.

 

 

Prosperity Bancshares, Inc.^®
Financial Highlights
(Dollars in thousands)
                 Sept 30, 2012     June 30, 2012    March 31, 2012  Dec 31, 2011
                 (Unaudited)       (Unaudited)      (Unaudited)     (Unaudited)
Loan Portfolio
Commercial       $   792,247 15.6% $          12.5% $         12.3% $          11.7%
                                   491,907           475,860        439,854
Construction     496,417     9.8%  466,884    11.8% 484,295   12.5% 482,140    12.8%
1-4 family       1,213,872   23.9% 1,084,936  27.4% 1,036,318 26.7% 1,007,266  26.8%
residential
Home equity      183,844     3.6%  154,147    3.9%  149,597   3.9%  146,999    3.8%
Commercial real  1,976,112   38.9% 1,484,787  37.6% 1,473,925 38.0% 1,441,226  38.3%
estate
Agriculture      304,134     6.0%  192,462    4.9%  178,474   4.6%  170,234    4.5%
Consumer         112,477     2.2%  75,209     1.9%  76,393    2.0%  78,187     2.1%
Total Loans      $5,079,103        $3,950,332       $               $3,765,906
                                                    3,874,862
Deposit Types
Non-interest     $2,827,748  25.8% $2,083,910 24.8% $         24.4% $          24.5%
bearing DDA                                         2,088,749       1,972,226
Interest bearing 2,208,568   20.2% 1,684,492  20.1% 1,671,760 19.6% 1,532,701  19.0%
DDA
Money Market     2,303,680   21.0% 2,206,220  26.3% 2,312,107 27.1% 2,042,243  25.3%
Savings          1,276,271   11.6% 581,480    6.9%  554,211   6.5%  514,780    6.4%
Time < $100      1,103,108   10.1% 909,616    10.8% 938,911   11.0% 968,806    12.0%
Time > $100      1,235,222   11.3% 928,864    11.1% 978,713   11.5% 1,029,498  12.8%
Total Deposits   $10,954,597       $8,394,582       $               $8,060,254
                                                    8,544,451
Loan to Deposit  46.4%             47.1%            45.3%           46.7%
Ratio
Construction
Loans
Single family
residential                        $                $               $  
                 $   150,959 30.1% 143,600    30.8% 142,584   29.4% 136,030    28.2%
    
construction
Land development 38,075      7.6%  39,704     8.5%  41,177    8.5%  43,084     8.9%
Raw land         47,620      9.5%  51,070     10.9% 63,006    13.0% 61,177     12.7%
Residential lots 97,445      19.4% 86,201     18.5% 88,054    18.2% 86,848     18.0%
Commercial lots  63,418      12.7% 49,454     10.6% 51,642    10.7% 49,645     10.3%
Commercial
    
construction and 103,677     20.7% 96,855     20.7% 97,832    20.2% 105,356    21.9%
other
Net unaccreted   (4,777)           --               --              --
discount
Total                              $                $               $  
Construction     $   496,417       466,884          484,295         482,140
Loans

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

Consolidated Financial Highlights

NOTES TO SELECTED FINANCIAL DATA

Prosperity's management uses certain non−GAAP (generally accepted accounting
principles) financial measures to evaluate its performance. Specifically,
Prosperity reviews tangible book value per share, return on average tangible
common equity and the tangible equity to tangible assets ratio for internal
planning and forecasting purposes. In addition, due to the application of
purchase accounting and related entries and one-time merger expenses,
Prosperity uses certain non-GAAP measures and ratios that exclude the impact
of these items to evaluate its performance, including yield on loans and
securities, net income, diluted earnings per share, efficiency ratio and
allowance for credit losses to total loans (excluding acquired loans). 
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
                Sept 30,      June 30,     Mar 31, 2012  Dec 31,    Sept 30,
                2012          2012                       2011       2011
Return on average tangible common equity:
Net income      $    46,176   $     36,972 $     36,487  $          $    
                                                         36,406     36,373
Average
shareholders'   2,029,969     1,632,164    1,595,284     1,556,845  1,529,718
equity
Less: Average
goodwill and
other           (1,174,610)   (950,577)    (948,519)     (946,427)  (948,351)
intangible
assets
       Average
tangible        $   855,359   $    681,587 $  646,765    $          $  
shareholders'                                            610,418    581,367
equity
       Return
on average      21.59%        21.70%       22.57%        23.86%     25.03%
tangible
common  equity:
Tangible book value per share:
Shareholders'   $2,038,176    $ 1,643,817  $ 1,609,533   $1,567,265 $1,541,339
equity
Less: Goodwill
and other       (1,228,190)   (950,671)    (948,462)     (945,533)  (947,411)
intangible
assets
        
Tangible        $   809,986   $    693,146 $   661,071   $          $  
shareholders'                                            621,732    593,928
equity
Period end
shares          56,058        47,474       47,297        46,910     46,893
outstanding
Tangible book                 $                          $          $      
value per       $       14.45  14.60       $       13.98 13.25      12.67
share:
Tangible equity to tangible assets ratio:
Tangible                                                            $  
shareholders'   $  809,986    $    693,146 $    661,071  $  621,732 593,928
equity
Total assets    $13,712,119   $10,737,351  $10,889,955   $9,822,671 $9,567,087
Less: Goodwill
and other       (1,228,190)   (950,671)    (948,462)     (945,533)  (947,411)
intangible
assets
       Tangible $12,483,929   $ 9,786,680  $9,941,493    $8,877,138 $8,619,676
assets
Tangible equity
to tangible     6.49%         7.08%        6.65%         7.00%      6.89%
assets ratio:

 

 

Prosperity Bancshares, Inc.^®
Notes to Selected Financial Data (Unaudited)
(Dollars and share amounts in thousands)
                                                 Nine Months Ended
                                                 Sept 30, 2012  Sept 30, 2011
Return on average tangible common equity:
Net income                                       $     119,635  $    105,343
Average shareholders' equity                     1,756,725      1,499,384
Less: Average goodwill and other intangible      (1,025,116)    (950,233)
assets
         Average tangible shareholders' equity   $     731,609  $    549,151
         Return on average tangible common       21.80%         25.58%
equity:
Tangible book value per share:
Shareholders' equity                             $  2,038,176   $   1,541,339
Less: Goodwill and other intangible assets       (1,228,190)    (947,411)
         Tangible shareholders' equity           $    809,986   $    593,928
Period end shares outstanding                    56,058         46,893
Tangible book value per share:                   $        14.45 $       12.67
Tangible equity to tangible assets ratio:
Tangible shareholders' equity                    $      809,986 $     593,928
Total assets                                     $  13,712,119  $    9,567,087
Less: Goodwill and other intangible assets       (1,228,190)    (947,411)
       Tangible assets                           $  12,483,929  $    8,619,676
Tangible equity to tangible assets ratio:        6.49%          6.89%

 

 

Prosperity Bancshares, Inc.^®
Notes to Selected Financial Data (Unaudited)
(Dollars in thousands)
                                         Three Months Ended Nine Months Ended
                                         Sept 30, 2012      Sept 30, 2012
Adjustment to loan yield:
  Interest on loans, as reported         $                  $          
                                          80,587            188,597
  Less: Purchase accounting              (11,188)           (11,889)
adjustment-loan discount accretion
        Interest on loans less discount  $                  $          
accretion                                 69,399            176,708
  Average loans                          $       5,169,101  $        4,303,984
  Loan yield without discount accretion  5.34%              5.48%
(non-GAAP basis)
  Loan yield, as reported                6.20%              5.85%
Adjustment to securities yield:
  Interest on securities                 $                  $          
                                         37,025              113,418
  Add: Purchase accounting               3,451              3,451
adjustment-securities amortization
  Add: Impact of sale of ASB securities  2,741              2,741
prior to acquisition
   Interest on securities including      $                  $          
amortization and impact of               43,217              119,610
     securities sale
  Average investment securities          $        7,106,871 $        
                                                            5,983,102
  Securities yield including
amortization and impact of securities    2.43%              2.67%
sales 
     (non-GAAP basis)
  Securities yield, as reported          2.08%              2.53%
Adjustment to net income and diluted EPS
for purchase accounting adjustments,
one-time merger expenses and securities
sale:
  Net income, as reported                $          46,176  $          119,635
  Less: Purchase accounting              (11,188)           (11,889)
adjustment-loan discount accretion
  Add: Purchase accounting
adjustment-securities premium            3,451              3,451
amortization
  Add: one-time merger expenses          5,404              5,404
  Add: Impact of sale of ASB securities  2,741              2,741
prior to acquisition
       Adjustment subtotal               408                (293)
  Tax effect at 35.0%                    (143)              103
  Adjustment subtotal, after tax         265                (190)
  Net income adjusted for purchase
accounting adjustments, one-time merger  46,441             119,445
expenses and securities sale
  Weighted average shares outstanding    56,093             50,393
(diluted)
  EPS (diluted) adjusted for purchase
accounting adjustments, one-time merger  $                  $                
expenses and securities sale (non-GAAP    0.83              2.37
basis)
  EPS (diluted), as reported             $                  $                
                                          0.82              2.37
Adjustment to efficiency ratio for
one-time merger expenses:
  Net income, as reported                $                  $            
                                          46,176            119,635
  Non-interest expense                   60,242             141,489
  Less: one-time merger expenses         (5,404)            (5,404)
  Non-interest expense less one-time     54,838             136,085
merger expenses
  Non-interest income (excluding gains   23,878             51,416
and losses on assets)
  Net interest income before allowance   106,893            272,405
for credit losses
Efficiency ratio adjusted for one-time   41.93%             42.02%
merger expenses (non-GAAP basis)
Efficiency ratio, as reported            46.07%             43.69%

 

 

Prosperity Bancshares, Inc.^®
Notes to Selected Financial Data (Unaudited)
(Dollars in thousands)
Allowance for credit losses to total  Three Months Ended  Nine Months Ended
loans, excluding acquired loans:      Sept 30, 2012       Sept 30, 2012
Allowance for credit losses           $            50,927 $             50,927
Total loans                           5,079,103           5,079,103
Less: acquired loans (does not        1,066,567           1,066,567
include new production)
        Total loans less acquired     $       4,012,536   $        4,012,536
loans
Allowance for credit losses to total
loans, excluding acquired loans       1.27%               1.27%
(non-GAAP basis)

 

SOURCE Prosperity Bancshares, Inc.

Website: http://www.prosperitybanktx.com
Contact: Dan Rollins, President and Chief Operating Officer, +1-281-269-7199,
dan.rollins@prosperitybanktx.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement