Prosperity Bancshares, Inc.® Reports Strong First Quarter 2014 Earnings

   Prosperity Bancshares, Inc.® Reports Strong First Quarter 2014 Earnings  - Acquisition of F&M Bancorporation Inc. completed on April 1, 2014  - First quarter 2014 earnings per share (diluted) increased 17.4% to $1.01 compared with the first quarter 2013  - Net income increased $17.832 million or 36.2% compared with the first quarter 2013  - Nonperforming assets remain low at 0.11% of first quarter average earning assets  - Loans increased $2.489 billion or 47.3% compared with the first quarter 2013  - Deposits increased $3.747 billion or 32.0% compared with the first quarter 2013  - Named to the 2013 Keefe Bruyette & Woods Honor Roll  PR Newswire  HOUSTON, April 23, 2014  HOUSTON, April 23, 2014 /PRNewswire/ --Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® ^ (collectively, "Prosperity"), reported net income for the quarter ended March 31, 2014, of $67.137 million or $1.01 per diluted common share, an increase in net income of $17.832 million or 36.2%, compared with $49.305 million, and an increase in diluted earnings per share of 17.4%, compared with $0.86 per diluted common share for the same period in 2013.  "I am honored and excited to share with everyone the great results we had in the first quarter of 2014. We were again named the Best Bank in America by Forbes magazine. In fact, we were recognized in both 2012 and 2014 as the Best Bank in America. The earnings speak for themselves, with diluted earnings per share of $1.01 for the quarter, an increase of 17.4% compared with the first quarter of 2013. We continued to see good organic loan growth. Excluding loans acquired in acquisitions, loans at March 31, 2014 grew 8.2% compared with March 31, 2013 and 1.8% (7.2% annualized) on a linked quarter basis. We continue to see strong organic deposit growth as well," said David Zalman, Prosperity's Chairman and Chief Executive Officer.  "We are finished with the operational integration of First Victoria National Bank and could not be more pleased. All of the associates with First Victoria have been great and have taken a number of leadership roles in our company. We completed the acquisition of F&M Bank this month and expect the operational integration to take place in June. We are very excited about this transaction and look forward to a great future and relationship with all of the associates of F&M," continued Zalman.  "I am also pleased to announce Prosperity Bancshares' inclusion into the 2013 Keefe Bruyette & Woods Honor Roll. To qualify for this honor, the company must maintain extraordinarily high quantitative metrics for the last 10 years. "Thirty-one banking institutions posted a 10-year record worthy of admission to this year's KBW Honor Roll," added Zalman.  "I continue to see growth and prosperity for our company. Texas and Oklahoma continue to have some of the best economies in the United States. We continue to see large population gains, low unemployment, strong housing markets, strong construction, commercial, manufacturing markets and an influx of companies moving operations to Texas and Oklahoma because of a friendly business climate supported by state government," concluded Zalman.  Prosperity's management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under FASB Accounting Standards Codification ("ASC") Topics 310-20, "Receivables-Nonrefundable Fees and Other Costs" and 310-30, "Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality". Prosperity has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented. Please refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.  Results of operations for the three months ended March 31, 2014  For the three months ended March 31, 2014, net income was $67.137 million compared with $49.305 million for the same period in 2013. Net income per diluted common share was $1.01 for the three months ended March 31, 2014 compared with $0.86 for the same period in 2013. Net income for the quarter includes the effects of one-time gains on sale of assets of $3.310 million and one-time merger expenses of $731 thousand. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2014 were 1.43%, 9.52% and 24.23%, respectively. Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 42.04% for the three months ended March 31, 2014.  Net interest income before provision for credit losses for the quarter ended March 31, 2014, increased 32.9% to $143.691 million compared with $108.082 million during the same period in 2013. The increase was primarily due to a 25.1% increase in average interest-earning assets for the same period. The net interest margin on a tax equivalent basis for the three months ended March 31, 2014 increased to 3.62% compared with 3.42% for the same period in 2013 and decreased from 3.82% for the three months ended December 31, 2013. Linked quarter net interest income before provision for credit losses decreased 1.2% or $1.778 million to $143.691 million compared with $145.469 million during the three months ended December 31, 2013, primarily due to a $6.5 million decrease in purchase accounting adjustments from purchased loans. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis decreased on a linked quarter basis from 3.35% for the quarter ended December 31, 2013 to 3.33% for the quarter ended March 31, 2014.  Noninterest income increased $5.163 million or 22.0% to $28.604 million for the three months ended March 31, 2014, compared with $23.441 million for the same period in 2013. This increase was primarily due to gains on the sale of assets described below and an increase in fees and service charges as a result of the additional accounts acquired in the acquisitions consummated during 2013. Additionally, trust and brokerage income increased as a result of the additional products and services acquired through the FVNB Corp. and its wholly-owned subsidiary, First Victoria National Bank (collectively, "FVNB") acquisition in 2013. These increases were partially offset by a decrease in debit card income as a result of the Durbin Amendment that became effective on July 1, 2013. This Federal Reserve rule is applicable to financial institutions that have assets of $10 billion or more and imposes limits on the amount of interchange, or swipe, fees that can be collected. On a linked quarter basis, noninterest income increased $3.446 million or 13.7% primarily due to a $2.224 million gain on the sale of the agent bank credit card and agent bank merchant processing business of Bankers Credit Card Services, Inc., a subsidiary acquired as part of the acquisition of Coppermark Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank (collectively "Coppermark") and $1.086 million in gains on the sale of real property.  Noninterest expense increased $15.267 million or 27.4% to $71.034 million for the three months ended March 31, 2014, compared with $55.767 million for the same period in 2013. This increase was primarily due to additional noninterest expenses associated with the acquisitions of Coppermark and FVNB. On a linked quarter basis, noninterest expense increased 3.6% or $2.442 million primarily due to the additional noninterest expenses associated with the full quarter effect of the FVNB acquisition. Additionally, one-time pre-tax merger expenses of $731 thousand primarily related to the FVNB acquisition were recorded during the first quarter of 2014.  Loans at March 31, 2014 were $7.752 billion, an increase of $2.489 billion or 47.3%, compared with $5.263 billion at March 31, 2013, primarily due to the addition of Coppermark and FVNB. Linked quarter loans decreased $22.821 million or 0.30% from $7.775 billion at December 31, 2013.  Deposits at March 31, 2014 were $15.460 billion, an increase of $3.747 billion or 32.0% compared with $11.713 billion at March 31, 2013, primarily due to the addition of Coppermark and FVNB. Linked quarter deposits increased $168.786 million or 1.10% from $15.291 billion at December 31, 2013.  Average loans increased 47.3% or $2.492 billion to $7.756 billion for the quarter ended March 31, 2014, compared with $5.264 billion for the same period in 2013. On a linked quarter basis, average loans increased 7.2% or $517.559 million from $7.238 billion for the quarter ended December 31, 2013. Average deposits increased 30.8% or $3.622 billion to $15.382 billion for the quarter ended March 31, 2014, compared with $11.760 billion for the same period of 2013. On a linked quarter basis, average deposits increased 8.4% or $1.191 billion from $14.191 billion for the quarter ended December 31, 2013.  The table below provides detail on loans acquired and deposits assumed in the acquisitions of East Texas Financial Services Inc. and First Federal Bank Texas (collectively "East Texas Financial Services"), Coppermark and FVNB completed on January 1, 2013, April 1, 2013 and November 1, 2013, respectively:    Balance Sheet Data (at period end) (In thousands)              Mar 31, 2014  Dec 31, 2013  Sep 30,      Jun 30,      Mar 31,                                          2013         2013         2013              (Unaudited)   (Unaudited)   (Unaudited)  (Unaudited)  (Unaudited) Loans acquired (including new production since respective acquisition dates):  East Texas        $         $         $         $         $    Financial    92,474       99,281        104,403      111,626      117,863 Services            580,416       616,333       688,656      772,965      - Coppermark  FVNB      1,509,927     1,588,238     -            -            - All other    5,569,583     5,471,369     5,389,530    5,287,892    5,145,161 Total loans  $           $            $           $           $                7,752,400     7,775,221    6,182,589   6,172,483   5,263,024 Deposits assumed (including new deposits since respective acquisition dates):  East Texas        $         $         $        $        $     Financial    76,734       81,200        90,649       88,289       98,359 Services            1,014,436     1,031,993     1,073,567    1,087,137    - Coppermark  FVNB      2,164,824     2,239,415     -            -            - All other    12,204,063    11,938,663    11,291,583   11,333,224   11,615,108 Total        $            $             $            $            $  deposits     15,460,057    15,291,271   12,455,799  12,508,650  11,713,467    As reflected in the table above, loan and deposit growth was impacted by the acquisitions of East Texas Financial Services, Coppermark and FVNB. Excluding loans acquired in these acquisitions and new production at the acquired banking centers since the respective acquisition dates, loans at March 31, 2014 grew $424.422 million or 8.2% compared with March 31, 2013 and increased $98.214 million or 1.8% (7.2% annualized) on a linked quarter basis. Excluding deposits assumed in these acquisitions and new deposits generated at the acquired banking centers since the respective acquisition dates, deposits at March 31, 2014 grew $588.955 million or 5.1% compared with March 31, 2013 and increased $265.400 million or 2.2% (8.8% annualized) on a linked quarter basis.  At March 31, 2014, Prosperity had $18.913 billion in total assets, $7.752 billion in loans and $15.460 billion in deposits. Assets, loans and deposits at March 31, 2014 increased by 25.4%, 47.3% and 32.0%, respectively, compared with their respective levels at March 31, 2013.  Asset Quality  Nonperforming assets totaled $18.696 million or 0.11% of quarterly average earning assets at March 31, 2014, compared with $18.133 million or 0.14% of quarterly average earning assets at March 31, 2013, and $22.504 million or 0.15% of quarterly average earning assets at December 31, 2013. The allowance for credit losses was 0.87% of total loans at March 31, 2014, 1.05% of total loans at March 31, 2013 and 0.87% of total loans at December 31, 2013. Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.18% of remaining loans as of March 31, 2014, compared to 1.25% at March 31, 2013 and 1.25% at December 31, 2013, respectively. Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure.  The provision for credit losses was $600 thousand for the three months ended March 31, 2014 compared with $7.865 million for the three months ended December 31, 2013 and $2.800 million for the three months ended March 31, 2013.  Net charge offs were $786 thousand for the three months ended March 31, 2014 compared with $496 thousand for the three months ended December 31, 2013 and $315 thousand for the three months ended March 31, 2013.  Conference Call  Prosperity's management team will host a conference call on Wednesday, April 23, 2014 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity's first quarter 2014 earnings. Individuals and investment professionals may participate in the call by dialing 866-952-1907, the reference code is PBUS.  Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at http://www.prosperitybankusa.com. The webcast may be accessed directly from Prosperity's home page by clicking the "About Us" tab and then the "Presentations & Calls" link.  Dividend  Prosperity Bancshares, Inc. declared a second quarter cash dividend of $0.240, to be paid on July 1, 2014 to all shareholders of record as of June 16, 2014.  Acquisition of F&M Bancorporation  On April 1, 2014, Prosperity completed the acquisition of F&M Bancorporation Inc. ("FMBC") and its wholly-owned subsidiary The F&M Bank & Trust Company ("F&M Bank") headquartered in Tulsa, Oklahoma. F&M Bank operated 13 banking offices; 9 in Tulsa, Oklahoma and surrounding areas, 3 in Dallas, Texas and 1 loan production office in Oklahoma City, Oklahoma. As of March 31, 2014, FMBC, on a consolidated basis, reported total assets of $2.412 billion, total loans of $1.738 billion and total deposits of $2.267 billion.  Under the terms of the definitive agreement, Prosperity issued 3,298,022 shares of Prosperity common stock plus $34.24 million in cash for all outstanding shares of FMBC capital stock. Accordingly, such information is not included in the quarter ended March 31, 2014 financial results.  Acquisition of FVNB Corp.  On November 1, 2013, Prosperity completed the acquisition of FVNB Corp. and its wholly-owned subsidiary First Victoria National Bank headquartered in Victoria, Texas. First Victoria National Bank operated 33 banking offices; 4 in Victoria, Texas; 7 in the South Texas area including Corpus Christi; 6 in the Bryan/College Station area; 5 in the Central Texas area including New Braunfels; and 11 in the Houston area including The Woodlands and Huntsville. As of September 30, 2013, FVNB, on a consolidated basis, reported total assets of $2.473 billion, total loans of $1.648 billion and total deposits of $2.195 billion.  Pursuant to the terms of the acquisition agreement, Prosperity issued 5,570,667 shares of Prosperity common stock plus $91.250 million in cash for all outstanding shares of FVNB Corp. capital stock, which resulted in goodwill of $323.407 million as of March 31, 2014. Additionally, the Company recognized $18.411 million of core deposit intangibles as of March 31, 2014. These goodwill and core deposit intangible balances as of March 31, 2014 do not include subsequent fair value adjustments that are still being finalized.  Acquisition of Coppermark Bancshares, Inc.  On April 1, 2013, Prosperity completed the acquisition of Coppermark Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank headquartered in Oklahoma City, Oklahoma. Coppermark operated 9 full-service banking offices; 6 in Oklahoma City, Oklahoma and surrounding areas and 3 in the Dallas, Texas area. As of March 31, 2013, Coppermark reported, on a consolidated basis, total assets of $1.248 billion, total loans of $847.558 million and total deposits of $1.120 billion.  Pursuant to the terms of the acquisition agreement, Prosperity issued 3,258,718 shares of Prosperity common stock plus $60.0 million in cash for all outstanding shares of Coppermark Bancshares capital stock, which resulted in goodwill of $117.653 million. Additionally, the Company recognized $1.514 million of core deposit intangibles.  Acquisition of East Texas Financial Services, Inc.  On January 1, 2013, Prosperity completed the acquisition of East Texas Financial Services, Inc. (OTC BB: FFBT) and its wholly-owned subsidiary, First Federal Bank Texas ("Firstbank"). Firstbank operated 4 banking offices in the Tyler MSA, including 3 locations in Tyler, Texas and 1 location in Gilmer, Texas. As of December 31, 2012, East Texas Financial Services reported, on a consolidated basis, total assets of $165.955 million, total loans of $129.307 million and total deposits of $112.293 million.  Pursuant to the terms of the acquisition agreement, Prosperity issued 530,940 shares of Prosperity common stock for all outstanding shares of East Texas Financial Services capital stock, which resulted in goodwill of $15.007 million.  Prosperity Bancshares, Inc. ^ ®  As of March 31, 2014, Prosperity Bancshares Inc. ^ ®, recently named America's Best Bank for 2014 by Forbes, is an $18.913 billion Houston, Texas based regional financial holding company, formed in 1983. Operating under a community banking philosophy and seeking to develop broad customer relationships based on service and convenience, Prosperity offers a variety of traditional loan and deposit products to its customers, which consist primarily of small and medium sized businesses and consumers. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services at http://www.prosperitybankusa.com, Retail Brokerage Services, Credit Cards, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management; Mortgage Services and Mobile Banking. Since completing the merger with F&M, Prosperity now operates 248 full-service banking locations; 63 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 38 in the Dallas/Fort Worth area; 22 in the East Texas area; 30 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area, 6 in the Central Oklahoma area and 9 in the Tulsa, Oklahoma area.    Bryan/College Station  Sachse             River Oaks          Rockport Area - Bryan                  The Colony         Sugar Land          Sinton Bryan-29^thStreet      Turtle Creek       SW Medical Center   Taft Bryan-East             Turtle Creek LPO   Tanglewood          Victoria Bryan-North            Westmoreland       Uptown              Victoria-Navarro Caldwell                                  Waugh Drive         Victoria-North College Station        Fort Worth -       Westheimer          Yoakum Crescent Point         Haltom City        West University     Yorktown Hearne                 Keller             Woodcreek Huntsville             Roanoke                                West Texas Area                                                               - Madisonville           Stockyards         Other Houston Area  Abilene - Navasota                                  Locations -         Antilley Road New Waverly            Other Dallas/Fort  Angleton            Barrow Street                        Worth Rock Prairie           Locations -        Bay City            Cypress Street Southwest Parkway      Arlington          Beaumont            Judge Ely Tower Point            Azle               Cinco Ranch         Mockingbird Wellborn Road          Ennis              Cleveland                        Gainesville        East Bernard        Lubbock - Central Texas Area -   Glen Rose          El Campo            4^thStreet Austin -               Granbury           Dayton              66^thStreet 183                    Mesquite           Galveston           82^ndStreet Allandale              Muenster           Groves              86^thStreet Cedar Park             Sanger             Hempstead           98^thStreet Congress               Waxahachie         Hitchcock           Avenue Q Lakeway                Weatherford        Katy                North University Liberty Hill                              Katy-S. Mason Road  Texas Tech                                                               Student Union Northland              East Texas Area -  Katy-Spring Green Oak Hill               Athens             Liberty             Midland - Research Blvd          Blooming Grove     Magnolia            Wadley Westlake               Canton             Magnolia Parkway    Wall Street                        Carthage           Mont Belvieu Other Central Texas    Corsicana          Nederland           Odessa - Locations - Bastrop                Crockett           Needville           Grandview Canyon Lake            Eustace            Rosenberg           Grant Dime Box               Gilmer             Shadow Creek        Kermit Highway Dripping Springs       Grapeland          Spring              Parkway Elgin                  Gun Barrel City    Sweeny Flatonia               Jacksonville       The Woodlands-I-45  Other West Texas                                                               Locations -                                           The Georgetown             Kerens             Woodlands-Research  Big Spring                                           Forest Gruene                 Longview           Tomball             Brownfield Kingsland              Mount Vernon       Waller              Brownwood La Grange              Palestine          West Columbia       Cisco Lexington              Rusk               Wharton             Comanche New Braunfels          Seven Points       Winnie              Early Pleasanton             Teague             Wirt                Floydada Round Rock             Tyler-Beckham                          Gorman San Antonio            Tyler-South        South Texas Area -  Levelland                        Broadway Schulenburg            Tyler-University   Corpus Christi -    Littlefield Seguin                 Winnsboro          Airline             Merkel Smithville                                Calallen            Plainview Thorndale              Houston Area -     Carmel              San Angelo Weimar                 Houston -          Northwest           Slaton                        Aldine             Saratoga            Snyder Dallas/Fort Worth      Allen Parkway      Timbergate Area - Dallas -               Bellaire           Water Street        Oklahoma Abrams Centre          Beltway                                Central                                                               Oklahoma- Balch Springs          Clear Lake         Other South Texas   23^rd Street Camp Wisdom            Copperfield        Locations -         Edmond Cedar Hill             Cypress            Alice               Expressway Dallas – Central       Downtown           Aransas Pass        I-240 Expressway Forest Park            Eastex             Beeville            Memorial Frisco                 Fairfield          Colony Creek        Norman Frisco-West            First Colony       Cuero Independence           Gessner            Edna                Tulsa- Kiest                  Gladebrook         Goliad              Garnett McKinney               Heights            Gonzales            Harvard McKinney-Stonebridge   Highway 6 West     Hallettsville       Memorial Midway                 Little York        Kingsville          Owasso Northwest Highway      Medical Center     Mathis              Sheridan Plano                  Memorial Drive     Padre Island        S. Harvard Preston Forest         Northside          Palacios            Utica Square Preston Road           Pasadena           Port Lavaca         Utica Tower Red Oak                Pecan Grove        Portland            Yale    "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the securities laws that are based on current expectations, assumptions, estimates and projections about Prosperity and its subsidiaries. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate fluctuations and interest rate fluctuations; and weather. These and various other factors are discussed in Prosperity's Annual Report on Form 10-K for the year ended December 31, 2013 and other reports and statements Prosperity has filed with the SEC. Copies of the SEC filings for Prosperity Bancshares^® may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.    Prosperity Bancshares, Inc.^® Financial Highlights (Unaudited) (In thousands)                     Mar 31,     Dec 31,    Sep 30,    Jun 30,    Mar 31,                     2014        2013       2013       2013       2013 Balance Sheet Data (at period end) Total loans         $         $        $        $        $                        7,752,400   7,775,221   6,182,589   6,172,483   5,263,024 Investment          8,561,337    8,224,448   7,771,345   8,017,884   7,985,811 securities^(A) Federal funds sold 382          400         1,121       606         835 Allowance for       (67,096)     (67,282)    (59,913)    (56,176)    (55,049) credit losses Cash and due from   349,860      380,990     269,987     250,542     180,577 banks Goodwill            1,672,004    1,671,520   1,351,782   1,350,834   1,235,743 Core deposit        39,702       42,049      25,233      26,688      26,514 intangibles, net Other real estate   7,372        7,299       7,432       10,244      9,913 owned Fixed assets, net   280,812      282,925     232,240     227,455     206,829 Other assets        316,360      324,458     272,463     270,158     227,117 Total assets        $          $         $         $         $                       18,913,133  18,642,028  16,054,279  16,270,718  15,081,314 Noninterest-bearing $         $        $        $        $    deposits            4,142,042   4,108,835   3,368,357   3,283,082   2,995,828 Interest-bearing    11,318,015   11,182,436  9,087,442   9,225,568   8,717,639 deposits Total deposits      15,460,057   15,291,271  12,455,799  12,508,650  11,713,467 Securities sold underrepurchase    349,074      364,357     431,969     481,170     470,241 agreements Other borrowings    40,451       10,689      605,951     781,215     576,768 Junior subordinated 124,231      124,231     85,055      85,055      85,055 debentures Other liabilities   98,566       64,662      86,393      69,346      86,328 Total liabilities   16,072,379   15,855,210  13,665,167  13,925,436  12,931,859 Shareholders'       2,840,754    2,786,818   2,389,112   2,345,282   2,149,455 equity^(B) Total liabilities   $          $         $         $         $   and equity          18,913,133  18,642,028  16,054,279  16,270,718  15,081,314  (A) Includes $7,023, $7,512, $8,588, $9,724 and $12,054, in unrealized gains on available for sale securities for the quarterly periods ending March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively. (B) Includes $4,565, $4,883, $5,582, $6,321 and $7,835, in after-tax unrealized gains on available for sale securities for the quarterly periods ending March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.      Prosperity Bancshares, Inc.^® Financial Highlights (Unaudited) (In thousands)                          Three Months Ended                          Mar 31,    Dec 31,    Sep 30,    Jun 30,    Mar 31,                          2014       2013       2013       2013       2013 Income Statement Data Interest income: Loans                    $       $       $      $      $                              107,144   110,575    94,236     89,842     81,464 Securities^(C)           47,056     45,100     41,961     39,384     36,548 Federal funds sold and   48         76         16         76         19 other earning assets Total interest income    154,248    155,751    136,213    129,302    118,031 Interest expense: Deposits                 9,387      9,048      8,314      9,170      8,690 Securities sold under    237        280        317        312        292 repurchase agreements Junior subordinated      775        730        610        606        605 debentures Other borrowings         158        224        439        472        362 Total interest expense   10,557     10,282     9,680      10,560     9,949 Net interest income      143,691    145,469    126,533    118,742    108,082 Provision for credit     600        7,865      4,025      2,550      2,800 losses Net interest income after provision for      143,091    137,604    122,508    116,192    105,282 credit losses Noninterest income: Nonsufficient funds      8,870      9,669      8,649      8,346      8,509 (NSF) fees Credit card, debit card  4,724      4,662      4,307      7,007      6,487 and ATM card income Service charges on       4,037      3,460      3,169      3,304      2,931 deposit accounts Trust income             1,800      1,542      901        896        1,017 Mortgage income          593        549        931        1,567      991 Brokerage income         1,269      719        233        263        303 Bank owned life          1,028      1,011      916        932        776 insurance income Net gain (loss) on sale  3,310      40         126        (180)      1 of assets Net (loss) gain on sale  (60)       196        (864)      237        (105) of other real estate Other noninterest income 3,033      3,310      3,186      2,902      2,531 Total noninterest income 28,604     25,158     21,554     25,274     23,441 Noninterest expense: Salaries and benefits    43,408     40,633     37,135     37,517     33,209 Net occupancy and        5,339      4,893      5,094      4,669      4,278 equipment Debit card, data processing and software  3,184      3,333      2,756      3,249      2,570 amortization Regulatory assessments   2,726      2,771      2,516      2,579      2,395 and FDIC insurance Core deposit intangibles 2,045      1,594      1,455      1,341      1,755 amortization Depreciation             3,201      3,072      2,679      2,464      2,378 Communications           2,737      2,468      2,397      2,410      2,196 Other real estate        396        176        75         237        223 expense Other noninterest        7,998      9,652      7,430      6,834      6,763 expense Total noninterest        71,034     68,592     61,537     61,300     55,767 expense Net income before taxes  100,661    94,170     82,525     80,166     72,956 Federal income taxes     33,524     31,199     27,247     26,322     23,651 Net income available to  $      $      $      $      $     common shareholders      67,137    62,971     55,278     53,844     49,305  (C) Interest income on securities was reduced by net premium amortization of $12,280, $12,017, $15,136, $18,838 and $22,710 for the three month periods ended March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.      Prosperity Bancshares, Inc.^® Financial Highlights (Unaudited) (Dollars and share amounts in thousands, except per share data and market prices)                        Three Months Ended                        Mar 31,      Dec 31,    Sep 30,    Jun 30,    Mar 31,                        2014         2013       2013       2013       2013 Profitability Net income             $        $      $      $      $                            67,137      62,971     55,278     53,844     49,305 Basic earnings per     $       $      $      $      $     share                   1.01        0.98     0.92     0.89     0.87 Diluted earnings per   $       $      $      $      $     share                   1.01        0.98     0.91     0.89     0.86 Return on average      1.43%        1.42%      1.37%      1.33%      1.33% assets^(D) Return on average      9.52%        9.53%      9.31%      9.27%      9.23% common equity^(D) Return on average tangible common        24.23%       23.97%     22.14%     22.32%     22.30% equity^(D) (E) Tax equivalent net     3.62%        3.82%      3.59%      3.43%      3.42% interest margin^(F) Efficiency ratio^(G)   42.04%       40.21%     41.59%     42.51%     42.40% Liquidity and Capital Ratios Equity to assets       15.02%       14.95%     14.88%     14.41%     14.25% Tier 1 risk-based      13.85%       13.29%     14.74%     14.15%     14.77% capital Total risk-based       14.59%       14.03%     15.55%     14.91%     15.61% capital Tier 1 leverage        7.30%        7.44%      7.37%      7.07%      7.10% capital Tangible equity to     6.56%        6.35%      6.90%      6.50%      6.42% tangible assets^(E) Other Data Shares used in computed earnings per share Basic                  66,186       64,024     60,344     60,250     56,988 Diluted                66,280       64,173     60,504     60,394     57,134 Period end shares      66,261       66,048     60,383     60,315     57,014 outstanding Cash dividends paid    $       $      $      $      $     per common share       0.240        0.240     0.215     0.215     0.215 Book value per share   $       $      $      $      $                            42.87        42.19     39.57     38.88     37.70 Tangible book value    $       $      $      $      $     per share^(E)          17.04        16.27     16.76     16.05     15.56 Common Stock Market Price High                   $       $      $      $      $                            67.68        65.49     62.00     52.40     47.56 Low                    59.75        61.18      51.85      44.33      42.38 Period end closing     66.15        63.39      61.84      51.79      47.39 price Employees – FTE        2,888        2,995      2,454      2,496      2,304 Number of banking      236          238        218        219        224 centers  (D) Interim periods annualized. (E) Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure. (F) Net interest margin for all periods presented is calculated on an actual 365 day basis. (G) Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale of assets and securities. Additionally, taxes are not part of this calculation.      Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands) YIELD ANALYSIS     Three Months Ended                     Mar 31, 2014                      Dec 31, 2013                      Mar 31, 2013                                 Interest  Average                 Interest  Average                 Interest  Average                     Average     Earned/   Yield/      Average     Earned/   Yield/      Average     Earned/   Yield/                     Balance     Interest  Rate        Balance     Interest  Rate        Balance     Interest  Rate                                 Paid                              Paid                              Paid Interest-Earning Assets: Loans               $          $         5.60%       $          $         6.06%       $          $        6.28%                     7,755,997   107,144               7,238,438   110,575               5,263,784   81,464 Investment          8,466,946   47,056    2.25%   (H) 7,992,673   45,100    2.24%   (H) 7,755,567   36,548    1.91%   (H) securities Federal funds sold and other earning   101,700     48        0.19%       103,413     76        0.29%       34,793      19        0.22% assets  Total                     $                                 $                                 $ interest-earning    16,324,643  154,248   3.83%       15,334,524  155,751   4.03%       13,054,144  118,031   3.67% assets Allowance for       (67,222)                          (60,170)                          (53,242) credit losses Noninterest-earning 2,550,893                         2,502,276                         1,849,461 assets  Total assets  $                                 $                                 $                     18,808,314                        17,776,630                        14,850,363 Interest-Bearing Liabilities: Interest-bearing    $          $       0.24%       $          $       0.25%       $          $       0.34% demand deposits     3,554,366   2,132                 2,963,899   1,899                 2,659,489   2,210 Savings and money   4,992,442   3,155     0.26%       4,654,044   3,049     0.26%       3,790,416   2,829     0.30% market deposits Certificates and other time          2,816,701   4,100     0.59%       2,712,699   4,100     0.60%       2,370,499   3,651     0.62% deposits Securities sold under repurchase    347,747     237       0.28%       398,100     280       0.28%       448,542     292       0.26% agreements Other borrowings    51,932      158       1.23%       210,492     224       0.42%       358,120     362       0.41% Junior subordinated 124,231     775       2.53%       111,172     730       2.61%       85,055      605       2.88% debentures  Total interest-bearing    11,887,419  10,557    0.36%   (I) 11,050,406  10,282    0.37%   (I) 9,712,121   9,949     0.42%   (I) liabilities Noninterest-bearing liabilities: Noninterest-bearing 4,018,094                         3,860,296                         2,939,621 demand deposits Other liabilities  82,288                            223,394                           62,716  Total         15,987,801                        15,134,096                        12,714,458 liabilities Shareholders'       2,820,513                         2,642,534                         2,135,905 equity  Total liabilities and     $                                 $                                 $ shareholders'       18,808,314                        17,776,630                        14,850,363 equity Net interest income             $         3.57%                   $         3.76%                   $         3.36% and margin                     143,691                           145,469                           108,082 Non-GAAP to GAAP reconciliation: Tax equivalent                  2,052                             2,152                             2,125 adjustment Net interest income and margin                      $                                 $                                 $                                 145,743   3.62%                   147,621   3.82%                   110,207   3.42% (tax equivalent basis)  (H) Yield on securities was impacted by net premium amortization of $12,280, $12,017 and $22,710 for the three month periods ended March 31,2014, December 31, 2013 and March 31, 2013, respectively. (I) Total cost of funds, including noninterest-bearing deposits, was 0.27%, 0.27% and 0.32% for the three months ended March 31, 2014, December 31, 2013 and March 31, 2013, respectively.      Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)                       Three Months Ended                       Mar 31,    Dec 31,     Sep 30,     Jun 30,     Mar 31,                       2014       2013        2013        2013        2013 Adjustment to Loan Yield ^(J) Interest on loans, as $       $        $       $       $    reported              107,144   110,575     94,236      89,842      81,464  Less: Purchase accounting            (13,475)   (19,979)    (16,421)    (12,031)    (14,292) adjustment-loan discount accretion Interest on loans     $      $       $       $       $    without discount      93,669    90,596      77,815      77,811      67,172 accretion Average loans         $        $          $          $          $                        7,755,997  7,238,438  6,173,394  6,114,598  5,263,784 Loan yield without    4.90%      4.97%       5.00%       5.10%       5.18% discount accretion Loan yield, as        5.60%      6.06%       6.06%       5.89%       6.28% reported Adjustment to Securities Yield ^(J) Interest on           $      $       $       $       $    securities, as        47,056    45,100      41,961      39,384      36,548 reported  Add: Purchase accounting            1,964      1,892       2,275       2,599       3,106 adjustment-securities amortization Interest on           $      $       $       $       $    securities including  49,020    46,992      44,236      41,983      39,654 amortization Average securities    $        $          $          $          $                        8,466,946  7,992,673  8,015,221  7,964,157  7,755,567 Securities yield without purchase      2.35%      2.33%       2.19%       2.11%       2.07% accounting adjustment Securities yield, as  2.25%      2.24%       2.08%       1.98%       1.91% reported Net Interest Margin (tax equivalent basis, excluding      3.33%      3.35%       3.19%       3.09%       3.08% purchase accounting adjustments to yield) Net Interest Margin (tax equivalent       3.62%      3.82%       3.59%       3.43%       3.42% basis), as reported Net income available to common             $      $       $       $       $    shareholders,as      67,137    62,971      55,278      53,844      49,305 reported  Less: Purchase accounting            (7,677)    (12,095)    (9,476)     (6,335)     (7,560) adjustments, net of tax ^(K) Net income available to common             $      $       $       $       $    shareholders,         59,460    50,876      45,802      47,509      41,745 adjusted               Acquired Loans Accounted for       Acquired Loans Accounted for      Total Loans Accounted for               Under ASC 310-20                    Under ASC 310-30                  Under ASC 310-20 and 310-30              Balance at   Balance at  Balance    Balance at   Balance  Balance     Balance at   Balance at  Balance              Acquisition  Dec 31,     at Mar     Acquisition  at Dec   at Mar      Acquisition  Dec 31,     at Mar              Date         2013        31, 2014   Date         31,      31,         Date         2013        31, 2014                                                               2013     2014 Loan marks: Previously   $          $       $      $          $     $        $           $       $   acquired     81,328      28,040      24,412    28,764                         110,092     48,781      44,341 banks ^(L)                                                    20,741   19,929 2013 acquisitions 78,299       59,758      52,751     34,783       24,756   22,096      113,082      84,514      74,847 ^(M)              $           $       $      $          $     $        $           $        $  Total       159,627     87,798      77,163    63,547                         223,174     133,295     119,188                                                               45,497   42,025 Acquired portfolio loan balances: Previously                $        $       $          $     $                     $        $  acquired     $ 1,298,380  522,620     466,159   57,979                         $ 1,356,359  560,344     502,660 banks ^(L)                                                    37,724   36,501 2013 acquisitions 2,541,268    1,936,355   1,657,646  77,300       49,256   45,626      2,618,568    1,985,611   1,703,272 ^(M)                           $          $        $           $     $                     $          $ Total        $ 3,839,648  2,458,975  2,123,805  135,279                    (N) $ 3,974,927  2,545,955  2,205,932                                                               86,980   82,127  (J) Non-GAAP financial measure. (K) Using effective tax rate of 33.3%, 33.1%, 33.0%, 32.8% and 32.4% for the three month periods ended March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively. (L) Includes Bank of Texas, Bank Arlington, American State Bank and Community National Bank, all of which were acquired in 2012. (M) Includes East Texas Financial Services, Coppermark and FVNB. During the fourth quarter of 2013, FVNB added $1.634 billion in loans with related purchase accounting adjustments of $60.228 million at acquisition date. (N) Actual principal balances acquired.      Prosperity Bancshares, Inc.® Financial Highlights (Unaudited)                               Three Months Ended                               Mar 31,  Dec 31,  Sep 30,  Jun 30,  Mar 31,                               2014     2013     2013     2013     2013 YIELD TREND Interest-Earning Assets: Loans                         5.60%     6.06%     6.06%     5.89%     6.28% Investment securities ^(O)   2.25%     2.24%     2.08%     1.98%     1.91% Federal funds sold and other  0.19%     0.29%     0.22%     0.87%     0.22% earning assets  Total interest-earning      3.83%     4.03%     3.80%     3.67%     3.67% assets Interest-Bearing Liabilities: Interest-bearing demand       0.24%     0.25%     0.28%     0.33%     0.34% deposits Savings and money market      0.26%     0.26%     0.27%     0.30%     0.30% deposits Certificates and other time   0.59%     0.60%     0.59%     0.61%     0.62% deposits Securities sold under         0.28%     0.28%     0.28%     0.27%     0.26% repurchase agreements Other borrowings              1.23%     0.42%     0.23%     0.35%     0.41% Junior subordinated           2.53%     2.61%     2.85%     2.86%     2.88% debentures  Total interest-bearing      0.36%     0.37%     0.37%     0.40%     0.42% liabilities Net Interest Margin          3.57%     3.76%     3.53%     3.37%     3.36% Net Interest Margin (tax      3.62%     3.82%     3.59%     3.43%     3.42% equivalent)  (O) Yield on securities was impacted by net premium amortization of $12,280, $12,017, $15,136, $18,838 and $22,710 for the three month periods ended March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.      Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (In thousands)                     Three Months Ended                     Mar 31,     Dec 31,      Sep 30,      June 30,     Mar 31,                     2014        2013         2013         2013         2013 Balance Sheet Averages Total loans         $         $           $           $          $                       7,755,997   7,238,438   6,173,394   6,114,598   5,263,784 Investment          8,466,946   7,992,673    8,015,221    7,964,157    7,755,567 securities Federal funds sold andother earning   101,700     103,413      27,451       35,113       34,793 assets Total interest-earning    16,324,643  15,334,524   14,216,066   14,113,868   13,054,144 assets Allowance for       (67,222)    (60,170)     (56,765)     (57,754)     (53,242) credit losses Cash and due from   255,297     232,666      189,082      279,271      206,990 banks Goodwill            1,673,216   1,560,905    1,351,236    1,331,568    1,226,332 Core deposit        38,754      30,641       25,938       25,893       25,244 intangibles, net Other real estate   7,885       7,254        9,494        19,605       11,789 Fixed assets, net   282,411     251,688      231,480      223,769      207,517 Other assets        293,330     419,122      227,738      234,710      171,589 Total assets        $          $            $            $           $                      18,808,314  17,776,630  16,194,269  16,170,930  14,850,363 Noninterest-bearing $         $           $           $          $   deposits            4,018,094   3,860,296   3,308,158   3,295,211   2,939,621 Interest-bearing    3,554,366   2,963,899    2,400,555    2,580,750    2,659,489 demand deposits Savings and money   4,992,442   4,654,044    4,233,911    4,261,466    3,790,416 market deposits Certificates and    2,816,701   2,712,699    2,489,848    2,543,895    2,370,499 other time deposits Total deposits      15,381,603  14,190,938   12,432,472   12,681,322   11,760,025 Securities sold underrepurchase    347,747     398,100      455,276      471,430      448,542 agreements Other borrowings    51,932      210,492      772,083      541,034      358,120 Junior subordinated 124,231     111,172      85,055       85,055       85,055 debentures Other liabilities   82,288      223,394      73,571       69,741       62,716 Shareholders'       2,820,513   2,642,534    2,375,812    2,322,348    2,135,905 equity Total liabilities   $          $            $            $           $  and equity          18,808,314  17,776,630  16,194,269  16,170,930  14,850,363      Prosperity Bancshares, Inc.^® Financial Highlights (Unaudited) (Dollars in thousands)                     Mar 31, 2014      Dec 31, 2013      Sep 30, 2013      Jun 30, 2013      Mar 31, 2013 Period End Balances Loan Portfolio Commercial and      $         16.9%  $         17.0%  $         16.6%  $        16.2%  $        14.5% other               1,312,405         1,322,975         1,028,799         999,677          760,531 Construction        888,985    11.5%  865,511    11.1%  703,193    11.4%  694,585    11.2%  575,307    10.9% 1-4 family          1,906,480  24.7%  1,870,365  24.2%  1,503,771  24.4%  1,452,268  23.7%  1,338,936  25.5% residential Home equity         263,966    3.4%   261,355    3.4%   211,742    3.4%   208,739    3.4%   203,815    3.9% Commercial real     2,709,386  34.9%  2,753,797  35.3%  2,304,862  37.2%  2,390,820  38.6%  1,993,518  37.8% estate Agriculture         512,857    6.6%   531,258    6.8%   321,518    5.2%   314,945    5.1%   286,789    5.4% (includes farmland) Consumer and other  158,321    2.0%   169,960    2.2%   108,704    1.8%   111,449    1.8%   104,128    2.0% Total loans         $                $                $                $                $                      7,752,400         7,775,221         6,182,589         6,172,483         5,263,024 Deposit Types Noninterest-bearing $         26.9%  $         26.9%  $         27.0%  $         26.0%  $         25.6% DDA                 4,142,042         4,108,835         3,368,357         3,283,082         2,995,828 Interest-bearing    3,446,375  22.3%  3,470,316  22.7%  2,366,997  19.0%  2,483,428  19.9%  2,521,998  21.5% DDA Money market        3,468,016  22.4%  3,320,062  21.7%  2,834,172  22.8%  2,868,880  23.0%  2,509,501  21.4% Savings             1,630,395  10.5%  1,571,504  10.3%  1,413,153  11.3%  1,371,214  11.0%  1,345,044  11.5% Certificates and    2,773,229  17.9%  2,820,554  18.4%  2,473,120  19.9%  2,502,046  20.1%  2,341,096  20.0% other time deposits Total deposits      $                 $                 $                 $                 $                     15,460,057        15,291,271        12,455,799        12,508,650        11,713,467 Loan to Deposit     50.1%             50.8%             49.6%             49.3%             44.9% Ratio Construction Loans Single family       $               $               $               $               $   residential         292,137   32.6%  271,491   30.9%  239,980   33.5%  234,257   32.9%  177,218   30.6% construction Land development    73,974     8.2%   83,820     9.6%   60,927     8.6%   63,857     9.0%   42,520     7.4% Raw land            55,384     6.2%   48,996     5.6%   52,789     7.4%   59,701     8.4%   46,672     8.1% Residential lots    118,733    13.2%  122,449    14.0%  95,361     13.4%  91,018     12.8%  93,598     16.2% Commercial lots     99,300     11.1%  103,878    11.9%  58,085     8.2%   60,960     8.6%   64,394     11.2% Commercial construction and    257,942    28.7%  244,124    28.0%  204,940    28.9%  200,633    28.3%  153,047    26.5% other Net unaccreted      (8,485)           (9,247)           (8,889)           (15,841)          (2,142) discount Total construction  $               $               $               $               $   loans               888,985          865,511          703,193          694,585          575,307      Prosperity Bancshares, Inc.^® Financial Highlights (Unaudited) (Dollars in thousands)                         Three Months Ended                         Mar 31,     Dec 31,    Sep 30,    Jun 30,    Mar 31,                         2014        2013       2013       2013       2013 Asset Quality Nonaccrual loans        $       $      $      $      $                              7,714    10,231      4,954     4,295     7,529 Accruing loans 90 or    3,519       4,947      283        325        642 more days past due Total nonperforming     11,233      15,178     5,237      4,620      8,171 loans Repossessed assets      91          27         18         -          49 Other real estate       7,372       7,299      7,432      10,244     9,913  Total nonperforming   $       $      $      $      $     assets                  18,696     22,504     12,687     14,864     18,133 Nonperforming assets: Commercial and          $       $      $      $      $     industrial               4,748     3,153     1,223     1,191     3,896 Construction, land development and other   4,053       4,558      4,611      5,898      3,678 land loans 1-4 family residential  5,435       6,279      2,441      2,112      3,746 (including home equity) Commercial real estate (including multi-family 4,196       8,033      4,233      4,330      5,533 residential) Agriculture (includes   104         279        23         1,213      1,183 farmland) Consumer and other      160         202        156        120        97 Total                  $       $      $      $      $                             18,696     22,504     12,687     14,864     18,133 Number of               164         203        128        123        124 loans/properties Allowance for credit    $       $      $      $      $     losses at end of period 67,096     67,282     59,913     56,176     55,049 Net charge-offs: Commercial and          $       $      $      $      $     industrial                  81           119     148                                           7                               59 Construction, land development and other   (17)        (12)       (30)       124        (56) land loans 1-4 family residential  131         21         15         35         102 (including home equity) Commercial real estate (including multi-family 60          (311)      (471)      801        (57) residential) Agriculture (includes   (81)        (85)       13         13         (7) farmland) Consumer and other      612         876        642        302        274 Total                  $       $      $      $      $                                786     496     288    1,423       315 Asset Quality Ratios Nonperforming assets toaverage earning      0.11%       0.15%      0.09%      0.11%      0.14% assets Nonperforming assets to loansand other real    0.24%       0.29%      0.20%      0.24%      0.34% estate Net charge-offs toaverage loans       0.04%       0.03%      0.02%      0.09%      0.02% (annualized) Allowance for credit    0.87%       0.87%      0.97%      0.91%      1.05% losses tototal loans Allowance for credit losses to total loans (excluding acquired loans accounted for     1.18%       1.25%      1.20%      1.18%      1.25% under ASC Topics 310-20 and 310-30) ^(E)      Prosperity Bancshares, Inc.^® Notes to Selected Financial Data (Unaudited) (Dollars and share amounts in thousands, except per share data)  Consolidated Financial Highlights  NOTES TO SELECTED FINANCIAL DATA  Prosperity's management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30). Prosperity has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and Prosperity believes that its presentation, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Prosperity's business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.                   Three Months Ended                Mar 31,     Dec 31,     Sep 30,     Jun 30,     Mar 31,                2014        2013        2013        2013        2013 Return on average tangible common equity: Net income     $       $       $       $       $                       67,137     62,971     55,278     53,844     49,305 Average        $        $        $        $        $     shareholders'  2,820,513   2,642,534   2,375,812   2,322,348   2,135,905 equity Less: Average goodwill and other          (1,711,970)  (1,591,546)  (1,377,174)  (1,357,461)  (1,251,576) intangible assets  Average        $        $        $       $       $      tangible       1,108,543   1,050,988    998,638     964,887     884,329 shareholders' equity Return on average tangible       24.23%       23.97%       22.14%       22.32%       22.30% common equity^(D) Tangible book value per share: Shareholders'  $        $        $        $        $     equity         2,840,754   2,786,818   2,389,112   2,345,282   2,149,455 Less: Goodwill and other          (1,711,706)  (1,712,121)  (1,377,015)  (1,377,522)  (1,262,257) intangible assets  Tangible       $        $        $        $       $      shareholders'  1,129,048   1,074,697   1,012,097    967,760     887,198 equity Period end shares         66,261       66,048       60,383       60,315       57,014 outstanding Tangible book  $       $       $       $       $      value per         17.04     16.27     16.76     16.05     15.56 share: Tangible equity to tangible assets ratio: Tangible       $        $        $        $       $      shareholders'  1,129,048   1,074,697   1,012,097    967,760     887,198 equity Total assets   $         $         $         $         $                   18,913,133  18,642,028  16,054,279  16,270,718  15,081,314 Less: Goodwill and other          (1,711,706)  (1,712,121)  (1,377,015)  (1,377,522)  (1,262,257) intangible assets        $         $         $         $         $    Tangible       17,201,427  16,929,907  14,677,264  14,893,196  13,819,057 assets Tangible equity to      6.56%        6.35%        6.90%        6.50%        6.42% tangible assets ratio      Prosperity Bancshares, Inc.^® Notes to Selected Financial Data (Unaudited) (Dollars in thousands)                                Mar 31, 2014   Dec 31, 2013  Mar 31, 2013 Allowance for credit losses to total loans, excluding acquired loans: Allowance for credit losses    $         $         $                                      67,096            67,282         55,049 Total loans                    $            $           $                                    7,752,400       7,775,221      5,263,024 Less: Fair value of acquired loans accounted for under ASC  Topics 310-20 and       $            $           $       310-30 (does not include new   2,086,744       2,412,660      853,751 production) Total loans less acquired      $            $           $     loans                          5,665,656       5,362,561      4,409,273 Allowance for credit losses to total loans,                1.18%            1.25%           1.25% excludingacquired loans (non-GAAP basis)    SOURCE Prosperity Bancshares, Inc.  Website: https://www.prosperitybankusa.com Contact: David Zalman, Chairman and Chief Executive Officer, 281.269.7199, david.zalman@prosperitybankusa.com  
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