| PRESS RELEASE | For more information contact: | |
| Prosperity Bancshares, Inc.SM | Dan Rollins | |
| 4295 San Felipe | Senior Vice President | |
| Houston, Texas 77027 | 713.693.9300 | |
dan.rollins@prosperitybanktx.com |
FOR IMMEDIATE RELEASE
PROSPERITY BANCSHARES, INC.SM
1Q04 EARNINGS UP 26.2%
Q1 Earnings Per Share of $0.38 (Diluted)
Non-Interest Income increases 37.3%
Q1 Return on Average Tangible Equity of 32.67%
HOUSTON, April 14, 2004. Prosperity Bancshares, Inc.SM (Nasdaq: PRSP), the parent company of Prosperity Bank®, reported today record net income for the first quarter of 2004 totaling $8.063 million, an increase of $1.674 million or 26.2 percent, compared with $6.389 million for the same period in 2003. Diluted earnings per share increased $0.05 or 15.2 percent to $0.38 for the three months ended March 31, 2004 compared with $0.33 for the three months ended March 31, 2003.
“The first quarter of 2004 was a positive start to the year for our Company. I am pleased to report another quarter of record earnings,” commented David Zalman, Prosperity’s President and Chief Executive Officer. “Our results reflect the commitment of over 600 associates that are dedicated to providing quality services to our customers.”
“We remain optimistic that we will achieve our goals for 2004,” added Zalman. “We are confident that our strategy of high credit quality, low overhead and exceptional service positions us for continued growth and will create long-term value for our shareholders.”
1
“Our focus on customer service has never been stronger. I am proud of our bankers and believe that our strong internal deposit growth confirms our impression that customers within our markets are tired of calling 1-800 somewhere and are searching for true relationship banking,” added H. E. “Tim” Timanus, Jr., President and Chief Operating Officer of Prosperity Bank®.
“We continue to be pleased with our progress in the Dallas market,” said James D. “Dan” Rollins III, Prosperity’s Senior Vice President. “During the first quarter, we completed the operational integration of our most recent acquisition and now have eleven full service banking centers with approximately 21% of our total deposit base in that market. Within the past eighteen months, we have completed five acquisitions in the Dallas area.”
Results of Operations for the three months ended March 31, 2004
For the three months ended March 31, 2004, net income was $8.063 million compared with $6.389 million for the same period in 2003. Net income per diluted common share was $0.38 for the three months ended March 31, 2004 compared with $0.33 for the same period in 2003. Return on average assets and average common shareholders’ equity for the three months ended March 31, 2004 was 1.33 percent and 14.44 percent, respectively.
Net interest income for the quarter ended March 31, 2004 increased 24.5 percent, to $19.347 million from $15.544 million during the same period in 2003. The increase was attributable primarily to a 31.2 percent increase in average earning assets.
Non-interest income increased 37.3 percent to $5.272 million for the three months ended March 31, 2004 compared with the same period in 2003.
Non-interest expense for the first quarter of 2004 was $12.459 million, up 25.4 percent compared to the first quarter of 2003. These expenses reflect the Company’s commitment to expanding its franchise with the additional banking centers acquired during 2003 year along with related personnel and acquisition expenses. The Company achieved an excellent efficiency ratio of 50.60 percent for the first quarter of 2004 compared to 51.24 percent for the first quarter of 2003.
Total loans were $770.223 million at March 31, 2004, an increase of $113.655 million or 17.3 percent from March 31, 2003, and an increase of $170 thousand or 0.02 percent from December 31, 2003.
Non-performing assets continued a downward trend to $610 thousand or 0.03 percent of average earning assets at March 31, 2004, compared with $3.459 million or 0.21 percent of average earning assets at March 31, 2003. Annualized net charge-offs were less than 0.01 percent of average loans for the first quarter of 2004 as compared to 0.06 percent during the same period of 2003.
On a linked quarter basis, total deposits grew at an annualized rate of 7.5 percent while total assets grew at an annualized rate of 8.2 percent. Total loans grew at an annualized rate of 0.1 percent. Commercial and industrial loans grew at an annualized rate of 33.2 percent while 1-4 family residential loans and consumer loans were down.
At March 31, 2004, Prosperity had $2.448 billion in total assets, $770.223 million in loans, $2.123 billion in deposits, and more than 150,000 deposit and loan accounts. Assets, loans and deposits at March 31, 2004 grew by 30.2 percent, 17.3 percent and 29.9 percent respectively, compared with their levels at March 31, 2003.
2
Conference Call
Prosperity’s management team will host a conference call on Wednesday, April 14, 2004 at 10:30 a.m. Eastern Daylight Time (9:30 a.m. Central Daylight Time) to discuss their earnings results, business trends and their outlook for 2004. Individuals and investment professionals may participate in the call by dialing 1-800-362-0571.
Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity’s website atwww.prosperitybanktx.com. The webcast may be accessed directly from Prosperity’s Investor Relations page by clicking on the “1st Quarter results and webcast” link.
Acquisition of Abrams Centre National Bank, N.A.
On May 6, 2003, Prosperity completed the acquisition of Abrams Centre National Bank, N.A., in a cash transaction. Abrams Centre National Bank operated two (2) offices in Dallas, Texas, both of which became full service banking centers of Prosperity Bank®.
Acquisition of BankDallas, s.s.b.
On June 1, 2003, Prosperity completed the acquisition of BankDallas, s.s.b., in a cash transaction. BankDallas operated one (1) office in Dallas, Texas, which became a full service banking center of Prosperity Bank®.
Acquisition ofmainbank,n.a., Dallas, Texas
On November 1, 2003, Prosperity completed the acquisition of MainBancorp, Inc., the parent of Dallas basedmainbank,n.a. Prosperity issued 1.5 million shares of its common stock plus $9.2 million in cash for all outstanding shares of MainBancorp. MainBancorp was privately held and operated a total of four (4) banking offices in the Dallas area, all of which became full service banking centers of Prosperity Bank®.
Acquisition of First State Bank of North Texas, Dallas, Texas
On December 9, 2003, Prosperity completed the acquisition of First State Bank of North Texas. Prosperity issued approximately 393,000 shares of its common stock plus $12.4 million in cash for all outstanding shares of First State Bank of North Texas. First State Bank of North Texas was privately held and operated four (4) banking offices in the Dallas area, all of which became full service banking centers of Prosperity Bank®.
Sale of Trust Business
Prosperity Bank® completed the sale of all the trust assets managed by Prosperity Bank® to Frost Bank on December 31, 2003. The trust business was a relatively small contributor to both total revenues and earnings for Prosperity since the business was acquired in 1999.
3
The transaction was accounted for as a purchase and assumption and did not have a material impact on 2003 results.
Corporate Profile
Prosperity Bancshares, Inc. SM, a $2.4 billion Houston, Texas based regional financial holding company, formed in 1983, placed 82nd on Fortune magazine’s annual ranking of “America’s 100 Fastest-Growing Companies” as published in the September 2003 issue. This distinction is one of several for Prosperity over the past few months. Other performance-based honors include ABA Banking Journal (Best of the Big Banks—The Top 50); Fortune Small Business (The FSB 100—America’s Fastest Growing Small Companies); Houston Chronicle (Top 100 Houston Companies) and US Banker (Top 100 Publicly Traded Mid-Tier Banks).
Operating under a community banking philosophy, Prosperity seeks 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 consumers and small and medium sized businesses. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services atwww.prosperitybanktx.com, Retail Brokerage Services, MasterMoney Debit Cards, and 24 hour voice response banking. Prosperity currently operates fifty-one (51) full service banking locations, twenty-nine (29) in the Houston CMSA, eleven (11) in the Dallas area and eleven (11) in eight contiguous counties south and southwest of Houston.
Prosperity Bank® operates the following full service banking centers: Angleton, Bay City, Beeville, Blooming Grove, Clear Lake, Cleveland, Corsicana, Cuero, Dallas—Abrams Centre, Dallas—Camp Wisdom, Dallas—Cedar Hill, Dallas—Kiest, Dallas—Red Oak, Dallas—Preston Road, Dallas—Turtle Creek, Dallas—Westmoreland, Dayton, East Bernard, Edna, El Campo, Ennis, Galveston, Goliad, Hitchcock, Houston—Aldine, Houston—Bellaire, Houston—CityWest, Houston—Copperfield, Houston—Cypress, Houston—Downtown, Houston—Fairfield, Houston—Gladebrook, Houston—Highway 6, Houston—Medical Center, Houston—Memorial, Houston—Post Oak, Houston—River Oaks, Houston—Tanglewood, Houston—Waugh Drive, Houston—Woodcreek, Liberty, Magnolia, Mathis, Mont Belvieu, Needville, Palacios, Sweeny, Victoria, West Columbia, Wharton and Winnie.
– – –
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by our 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 Bancshares, Inc.SM 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 whether we can: continue to sustain our current internal growth rate or our total growth rate; successfully close and integrate acquisitions; continue to provide products and services that appeal to our customers; continue to have access to the debt and equity capital we need to sustain our growth; and achieve our sales objectives. Other risks include 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); 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 our most recent Annual Report on Form 10-K and other filings made with the Securities and Exchange Commission.
Copies of Prosperity Bancshares, Inc.’sSM SEC filings may be downloaded from the Internet at no charge fromwww.prosperitybanktx.com.
4
Prosperity Bancshares, Inc.SM
Financial Highlights (Unaudited)
(Dollars in thousands)
| Three Months Ended | ||||||||||||||||
| Mar 31, 2004 | Mar 31, 2003 | Dec 31, 2003 | Dec 31, 2002 | |||||||||||||
Balance Sheet Averages | ||||||||||||||||
Total loans | $ | 770,811 | $ | 666,870 | $ | 738,512 | $ | 688,457 | ||||||||
Investment securities | 1,393,297 | 989,803 | 1,284,265 | 891,351 | ||||||||||||
Fed funds sold and other earnings | 24,780 | 11,916 | 31,572 | 43,500 | ||||||||||||
Total earning assets | 2,188,888 | 1,668,589 | 2,054,349 | 1,623,308 | ||||||||||||
Allowance for credit losses | (10,314 | ) | (9,567 | ) | (9,940 | ) | (9,551 | ) | ||||||||
Cash and due from banks | 60,976 | 48,736 | 57,618 | 55,454 | ||||||||||||
Goodwill | 116,727 | 68,078 | 90,252 | 66,264 | ||||||||||||
Core Deposit Intangibles (CDI) | 7,920 | 4,233 | 4,443 | 2,699 | ||||||||||||
Other real estate | 167 | 144 | 451 | 526 | ||||||||||||
Fixed assets, net | 34,119 | 27,436 | 32,592 | 24,511 | ||||||||||||
Other assets | 19,849 | 23,090 | 21,576 | 28,672 | ||||||||||||
Total assets | $ | 2,418,332 | $ | 1,830,739 | $ | 2,251,341 | $ | 1,791,883 | ||||||||
Non-interest bearing deposits | $ | 429,390 | $ | 305,852 | $ | 410,697 | $ | 318,353 | ||||||||
Interest bearing deposits | 1,662,462 | 1,291,116 | 1,541,243 | 1,259,000 | ||||||||||||
Total deposits | 2,091,852 | 1,596,968 | 1,951,940 | 1,577,353 | ||||||||||||
Fed funds purchased & other | ||||||||||||||||
interest bearing liabilities | 35,277 | 30,913 | 51,431 | 15,462 | ||||||||||||
Junior subordinated debentures(A) | 59,804 | 34,030 | 49,065 | 34,030 | ||||||||||||
Other liabilities | 8,036 | 10,970 | 7,261 | 12,387 | ||||||||||||
Shareholders’ equity | 223,363 | 157,858 | 191,644 | 152,651 | ||||||||||||
Total liabilities and equity | $ | 2,418,332 | $ | 1,830,739 | $ | 2,251,341 | $ | 1,791,883 | ||||||||
(A) Due to the adoption of SFAS 150 on January 1, 2004, the junior subordinated debentures balance has been deconsolidated and reclassified to a liability from a mezzanine equity item.
5
Prosperity Bancshares, Inc.SM
Financial Highlights (Unaudited)
(Dollars in thousands, except per share data)
| Three Months Ended | ||||||||||||
| Mar 31, 2004 | Mar 31, 2003 | Dec 31, 2003 | Dec 31, 2002 | |||||||||
Income Statement Data | ||||||||||||
Interest on loans | $ | 12,313 | $ | 11,430 | $ | 12,056 | $ | 12,385 | ||||
Interest on securities | 14,005 | 10,742 | 12,925 | 10,319 | ||||||||
Interest on fed funds sold and other earning assets | 54 | 40 | 72 | 133 | ||||||||
Total interest income | 26,372 | 22,212 | 25,053 | 22,837 | ||||||||
Interest expense—deposits | 5,781 | 5,826 | 5,559 | 6,542 | ||||||||
Interest expense—debentures(B) | 996 | 587 | 787 | 604 | ||||||||
Interest expense—other | 248 | 255 | 301 | 286 | ||||||||
Total interest expense | 7,025 | 6,668 | 6,647 | 7,432 | ||||||||
Net interest income(C) | 19,347 | 15,544 | 18,406 | 15,405 | ||||||||
Provision for credit losses | 120 | 120 | 123 | 650 | ||||||||
Net interest income after provision for loan losses | 19,227 | 15,424 | 18,283 | 14,755 | ||||||||
Service charges on deposit accounts | 4,760 | 3,255 | 4,088 | 3,273 | ||||||||
Other income | 512 | 584 | 705 | 893 | ||||||||
Total non-interest income | 5,272 | 3,839 | 4,793 | 4,166 | ||||||||
Salaries and benefits | 6,704 | 5,407 | 6,479 | 5,111 | ||||||||
Core Deposit Intangible (CDI) and Goodwill amortization | 383 | 193 | 228 | 162 | ||||||||
Net occupancy and equipment | 1,270 | 954 | 1,485 | 1,183 | ||||||||
Depreciation | 701 | 605 | 680 | 600 | ||||||||
Data processing | 447 | 615 | 400 | 636 | ||||||||
Other expenses | 2,954 | 2,157 | 3,184 | 1,882 | ||||||||
Total non-interest expenses | 12,459 | 9,931 | 12,456 | 9,574 | ||||||||
Net earnings before taxes | 12,040 | 9,332 | 10,620 | 9,347 | ||||||||
Federal income taxes | 3,977 | 2,943 | 3,427 | 2,965 | ||||||||
Net earnings available to common shareholders | $ | 8,063 | $ | 6,389 | $ | 7,193 | $ | 6,382 | ||||
Basic earnings per share | $ | 0.39 | $ | 0.34 | $ | 0.36 | $ | 0.34 | ||||
Diluted earnings per share | $ | 0.38 | $ | 0.33 | $ | 0.35 | $ | 0.33 | ||||
(B) Due to the adoption of SFAS 150 on January 1, 2004, the Company now includes the dividend payments on junior subordinated debentures as part of interest expense rather than non-interest expense. Prior period data has been restated to reflect the adoption of SFAS 150.
(C) Net interest income on a tax equivalent basis would be $19,852 and $16,109 for the three months ended March 31, 2004 and 2003, respectively and $18,919 and $15,964 for the three months ended December 31, 2003 and 2002, respectively.
6
Prosperity Bancshares, Inc.SM
Financial Highlights (Unaudited)
(Dollars and share amounts in thousands, except per share data)
| Three Months Ended | ||||||||||||
| Mar 31, 2004 | Mar 31, 2003 | Dec 31, 2003 | Dec 31, 2002 | |||||||||
Common Share and Other Data | ||||||||||||
Employees—FTE | 612 | 496 | 629 | 501 | ||||||||
Book value per share | $ | 10.79 | $ | 8.46 | $ | 10.49 | $ | 8.19 | ||||
Tangible book value per share | $ | 4.84 | $ | 4.65 | $ | 4.53 | $ | 4.36 | ||||
Period end shares outstanding | 20,945 | 18,943 | 20,930 | 18,896 | ||||||||
Weighted average shares outstanding (basic) | 20,937 | 18,916 | 20,046 | 18,888 | ||||||||
Weighted average shares outstanding (diluted) | 21,233 | 19,209 | 20,357 | 19,208 | ||||||||
Non-accrual loans | $ | 2 | $ | 2,630 | $ | 2 | $ | 1,125 | ||||
Accruing loans 90 days or more days past due | 523 | 247 | 679 | 120 | ||||||||
Other non-performing loans | 0 | 0 | 0 | 1,100 | ||||||||
Restructured loans | 0 | 0 | 0 | 0 | ||||||||
Total non-performing loans | 525 | 2,877 | 681 | 2,345 | ||||||||
Repossessed assets | 5 | 55 | 40 | 46 | ||||||||
Other real estate | 80 | 527 | 246 | 219 | ||||||||
Total non-performing assets | $ | 610 | $ | 3,459 | $ | 967 | $ | 2,610 | ||||
Allowance for credit losses at end of period | $ | 10,460 | $ | 9,318 | $ | 10,370 | $ | 9,580 | ||||
Net charge-offs | $ | 5 | $ | 383 | $ | 172 | $ | 123 | ||||
7
Prosperity Bancshares, Inc.SM
Financial Highlights (Unaudited)
| Three Months Ended | ||||||||||||||||
| Mar 31, 2004 | Mar 31, 2003 | Dec 31, 2003 | Dec 31, 2002 | |||||||||||||
Performance Ratios | ||||||||||||||||
Return on average assets (annualized) | 1.33 | % | 1.40 | % | 1.28 | % | 1.43 | % | ||||||||
Return on average common equity (annualized) | 14.44 | % | 16.19 | % | 15.01 | % | 16.72 | % | ||||||||
Return on average tangible equity (annualized) | 32.67 | % | 29.87 | % | 29.68 | % | 30.50 | % | ||||||||
Net interest margin(D) (tax equivalent) (annualized) | 3.63 | % | 3.86 | % | 3.68 | % | 3.93 | % | ||||||||
Efficiency ratio(E) | 50.60 | % | 51.24 | % | 53.69 | % | 48.92 | % | ||||||||
Diluted earnings per share | $ | 0.38 | $ | 0.33 | $ | 0.35 | $ | 0.33 | ||||||||
Asset Quality Ratios | ||||||||||||||||
Non-performing assets to loans and other real estate | 0.08 | % | 0.53 | % | 0.13 | % | 0.38 | % | ||||||||
Non-performing assets to average earning assets | 0.03 | % | 0.21 | % | 0.05 | % | 0.19 | % | ||||||||
Net charge-offs to average loans | 0.00 | % | 0.06 | % | 0.02 | % | 0.02 | % | ||||||||
Allowance for credit losses to total loans | 1.36 | % | 1.42 | % | 1.35 | % | 1.41 | % | ||||||||
Common Stock Market Price | ||||||||||||||||
High | $ | 25.15 | $ | 19.77 | $ | 24.35 | $ | 19.95 | ||||||||
Low | $ | 22.30 | $ | 16.30 | $ | 20.75 | $ | 15.28 | ||||||||
Period end market price | $ | 23.67 | $ | 16.58 | $ | 22.64 | $ | 19.00 | ||||||||
(D) Due to the adoption of SFAS 150 on January 1, 2004, the Company now includes the dividend payments on junior subordinated debentures as part of interest expense. Prior period data has been restated to reflect the adoption of SFAS 150. Prior to the adoption of SFAS 150, the Company reported net interest margins on a tax equivalent basis of 4.00%, 3.84% and 4.08%, for the three months ended March 31, 2003, December 31, 2003 and December 31, 2002, respectively. Had SFAS 150 not been adopted on January 1, 2004, the net interest margin on a tax equivalent basis would have been 3.78% for the three months ended March 31, 2004.
(E) Calculated by dividing total non-interest expense (excluding securities losses and credit loss provisions) by net interest income plus non-interest income. Additionally, taxes are not part of this calculation.
8
Prosperity Bancshares, Inc.SM
Financial Highlights (Unaudited)
(Dollars in thousands)
| Mar 31, 2004 | Dec 31, 2003 | Sep 30, 2003 | Jun 30, 2003 | Mar 31, 2003 | ||||||||||||||||
Balance Sheet Data (at period end) | ||||||||||||||||||||
Total loans | $ | 770,223 | $ | 770,053 | $ | 700,221 | $ | 699,525 | $ | 656,568 | ||||||||||
Investment securities | 1,426,636 | 1,376,880 | 1,150,893 | 1,088,507 | 1,056,349 | |||||||||||||||
Federal funds sold and other earning assets | 28,323 | 11,992 | 52,321 | 5,426 | 3,537 | |||||||||||||||
Total earning assets | 2,225,182 | 2,158,925 | 1,903,435 | 1,793,458 | 1,716,454 | |||||||||||||||
Allowance for credit losses | (10,460 | ) | (10,370 | ) | (9,061 | ) | (9,228 | ) | (9,318 | ) | ||||||||||
Cash and due from banks | 55,524 | 71,983 | 51,746 | 66,606 | 52,859 | |||||||||||||||
Goodwill | 116,123 | 118,012 | 76,941 | 77,530 | 67,989 | |||||||||||||||
Core deposit intangibles (CDI) | 8,461 | 6,743 | 4,315 | 4,479 | 4,236 | |||||||||||||||
Other real estate | 80 | 246 | 765 | 1,007 | 527 | |||||||||||||||
Fixed assets, net | 33,651 | 34,299 | 28,278 | 29,228 | 27,469 | |||||||||||||||
Other assets | 20,992 | 20,649 | 23,530 | 21,227 | 20,200 | |||||||||||||||
Total assets | $ | 2,449,553 | $ | 2,400,487 | $ | 2,079,949 | $ | 1,984,307 | $ | 1,880,416 | ||||||||||
Non-interest bearing deposits | $ | 443,137 | $ | 467,389 | $ | 374,877 | $ | 362,193 | $ | 312,104 | ||||||||||
Interest bearing deposits | 1,679,724 | 1,616,359 | 1,452,401 | 1,384,355 | 1,322,161 | |||||||||||||||
Total deposits | 2,122,861 | 2,083,748 | 1,827,278 | 1,746,548 | 1,634,265 | |||||||||||||||
Federal funds purchased and other interest bearing liabilities | 30,578 | 30,936 | 31,074 | 28,992 | 39,966 | |||||||||||||||
Junior subordinated debentures(F) | 59,804 | 59,804 | 46,917 | 34,030 | 34,030 | |||||||||||||||
Other liabilities | 10,383 | 6,411 | 5,701 | 8,147 | 11,891 | |||||||||||||||
Total liabilities | 2,223,626 | 2,180,899 | 1,910,970 | 1,817,717 | 1,720,152 | |||||||||||||||
Shareholders’ equity(G) | 225,927 | 219,588 | 168,979 | 166,590 | 160,264 | |||||||||||||||
Total liabilities and equity | $ | 2,449,553 | $ | 2,400,487 | $ | 2,079,949 | $ | 1,984,307 | $ | 1,880,416 | ||||||||||
(F) Due to the adoption of SFAS 150 on January 1, 2004, the junior subordinated debentures balance has been deconsolidated and reclassified to a liability from a mezzanine equity item.
(G)Includes $1,809, $2,024, $1,373, $3,670 and $2,763 million in unrealized gains on available for sale securities for the quarterly periods ending March 31, 2004, December 31, 2003, September 30, 2003, June 30, 2003 and March 31, 2003 respectively.
9
Prosperity Bancshares, Inc.SM
Financial Highlights (Unaudited)
| Three Months Ended | |||||||||||||||
| Mar 31, 2004 | Dec 31, 2003 | Sept 30, 2003 | Jun 30, 2003 | Mar 31, 2003 | |||||||||||
Comparative Quarterly Asset | |||||||||||||||
Quality, Performance & Capital Ratios | |||||||||||||||
Return on average assets (annualized) | 1.33 | % | 1.28 | % | 1.29 | % | 1.34 | % | 1.40 | % | |||||
Return on average common equity (annualized) | 14.44 | % | 15.01 | % | 15.45 | % | 15.88 | % | 16.19 | % | |||||
Return on average tangible equity (annualized) | 32.67 | % | 29.68 | % | 30.23 | % | 29.82 | % | 29.87 | % | |||||
Net interest margin(H) (tax equivalent) (annualized) | 3.63 | % | 3.68 | % | 3.39 | % | 3.64 | % | 3.86 | % | |||||
Efficiency ratio | 50.60 | % | 53.69 | % | 50.25 | % | 50.73 | % | 51.24 | % | |||||
Non-performing assets to loans and other real estate | 0.08 | % | 0.13 | % | 0.20 | % | 0.32 | % | 0.53 | % | |||||
Non-performing assets to average earning assets | 0.03 | % | 0.05 | % | 0.08 | % | 0.13 | % | 0.21 | % | |||||
Net charge-offs to average loans | 0.00 | % | 0.02 | % | 0.04 | % | 0.11 | % | 0.06 | % | |||||
Allowance for credit losses to total loans | 1.36 | % | 1.35 | % | 1.29 | % | 1.32 | % | 1.42 | % | |||||
Tier 1 risk-based capital | 16.68 | % | 16.69 | % | 16.09 | % | 13.38 | % | 14.93 | % | |||||
Total risk-based capital | 17.78 | % | 17.84 | % | 17.20 | % | 14.47 | % | 16.10 | % | |||||
Tier 1 leverage capital | 6.87 | % | 6.70 | % | 6.85 | % | 6.52 | % | 6.73 | % | |||||
Equity to assets | 9.23 | % | 9.15 | % | 8.13 | % | 8.40 | % | 8.52 | % | |||||
(H) Due to the adoption of SFAS 150 on January 1, 2004, the Company now includes the dividend payments on junior subordinated debentures as part of interest expense. Prior period data has been restated to reflect the adoption of SFAS 150. Prior to the adoption of SFAS 150, the Company reported net interest margins on a tax equivalent basis of 3.84%, 3.54%, 3.77% and 4.00%, for the three months ended December 31, 2003, September 30, 2003, June 30, 2003 and March 31, 2003, respectively. Had SFAS 150 not been adopted on January 1, 2004, the net interest margin on a tax equivalent basis would have been 3.78% for the three months ended March 31, 2004.
10
Prosperity Bancshares, Inc.SM
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
| Three Months Ended Mar 31, 2004 | ||||||||||
| Average Balance | Interest Income/ Interest Expense | Yield/Rate | ||||||||
| YIELD ANALYSIS | ||||||||||
Interest Earning Assets: | ||||||||||
Loans | $ | 770,811 | $ | 12,313 | 6.39 | % | ||||
Investment securities | 1,393,297 | 14,005 | 4.02 | % | ||||||
Federal funds sold | 24,780 | 54 | 0.87 | % | ||||||
Total interest earning assets | 2,188,888 | $ | 26,372 | 4.82 | % | |||||
Allowance for credit losses | (10,314 | ) | ||||||||
Non-interest earning assets | 239,758 | |||||||||
Total assets | $ | 2,418,332 | ||||||||
Interest Bearing Liabilities: | ||||||||||
Interest bearing demand deposits | $ | 490,935 | $ | 1,255 | 1.02 | % | ||||
Savings and money market deposits | 471,630 | 895 | 0.76 | % | ||||||
Certificates and other time deposits | 699,897 | 3,631 | 2.08 | % | ||||||
Junior subordinated debentures | 59,804 | 996 | 6.66 | % | ||||||
Federal funds purchased and other borrowings | 35,277 | 248 | 2.81 | % | ||||||
Total Interest Bearing Liabilities | 1,757,543 | $ | 7,025 | 1.60 | % | |||||
Non-interest Bearing Liabilities: | ||||||||||
Non-interest bearing demand deposits | 429,390 | |||||||||
Other liabilities | 8,036 | |||||||||
Total liabilities | 2,194,969 | |||||||||
Shareholders’ equity | 223,363 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 2,418,332 | ||||||||
Net Interest Income & Margin | $ | 19,347 | 3.54 | % | ||||||
Net Interest Income & Margin (tax equivalent)(I) | $ | 19,852 | 3.63 | % | ||||||
(I) Due to the adoption of SFAS 150 on January 1, 2004, the Company now includes the dividend payments on junior subordinated debentures as part of interest expense rather than non-interest expense. Also in compliance with SFAS 150, the junior subordinated debentures balance has been deconsolidated and reclassified to a liability from a mezzanine equity item. Had SFAS 150 not been adopted on January 1, 2004, the net interest margin on a tax equivalent basis would have been 3.78% for the three months ended March 31, 2004.
11
Prosperity Bancshares, Inc.SM
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
| Three Months Ended Dec 31, 2003 | ||||||||||
| Average Balance | Interest Income/ Interest Expense | Yield/Rate | ||||||||
| YIELD ANALYSIS | ||||||||||
Interest earning assets: | ||||||||||
Loans | $ | 738,512 | $ | 12,056 | 6.53 | % | ||||
Investment securities | 1,284,265 | 12,925 | 4.03 | % | ||||||
Federal funds sold | 31,572 | 72 | 0.91 | % | ||||||
Total interest earning assets | 2,054,349 | $ | 25,053 | 4.88 | % | |||||
Allowance for credit losses | (9,940 | ) | ||||||||
Non-interest earning assets | 206,932 | |||||||||
Total assets | $ | 2,251,341 | ||||||||
Interest Bearing Liabilities: | ||||||||||
Interest bearing demand deposits | $ | 422,937 | $ | 1,107 | 1.05 | % | ||||
Savings and money market deposits | 457,803 | 884 | 0.77 | % | ||||||
Certificates and other time deposits | 660,503 | 3,568 | 2.16 | % | ||||||
Junior subordinated debentures | 49,065 | 787 | 6.42 | % | ||||||
Federal funds purchased and other borrowings | 51,431 | 301 | 2.34 | % | ||||||
Total Interest bearing Liabilities | 1,641,739 | $ | 6,647 | 1.62 | % | |||||
Non-interest bearing Liabilities: | ||||||||||
Non-interest bearing demand deposits | 410,697 | |||||||||
Other liabilities | 7,261 | |||||||||
Total liabilities | 2,059,697 | |||||||||
Shareholders’ equity | 191,644 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 2,251,341 | ||||||||
Net Interest Income & Margin | $ | 18,406 | 3.58 | % | ||||||
Net Interest Income & Margin (tax equivalent)(J) | $ | 18,919 | 3.68 | % | ||||||
(J) Due to the adoption of SFAS 150 on January 1, 2004, the Company now includes the dividend payments on junior subordinated debentures as part of interest expense rather than non-interest expense. Prior period data has been restated to reflect the adoption of SFAS 150. Prior to adoption of SFAS 150, the Company reported a net interest margin on a tax equivalent basis of 3.84% for the three months ended December 31, 2003. Also in compliance with SFAS 150, the junior subordinated debentures balance has been deconsolidated and reclassified to a liability from a mezzanine equity item.
12
Prosperity Bancshares, Inc.SM
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
| Three Months Ended Mar 31, 2003 | ||||||||||
| Average Balance | Interest Income/ Interest Expense | Yield/Rate | ||||||||
| YIELD ANALYSIS | ||||||||||
Interest earning assets: | ||||||||||
Loans | $ | 666,870 | $ | 11,430 | 6.86 | % | ||||
Investment securities | 989,803 | 10,742 | 4.34 | % | ||||||
Federal funds sold | 11,916 | 40 | 1.34 | % | ||||||
Total interest earning assets | 1,668,589 | $ | 22,212 | 5.32 | % | |||||
Allowance for credit losses | (9,567 | ) | ||||||||
Non-interest earning assets | 171,717 | |||||||||
Total assets | $ | 1,830,739 | ||||||||
Interest Bearing Liabilities: | ||||||||||
Interest bearing demand deposits | $ | 335,352 | $ | 1,001 | 1.19 | % | ||||
Savings and money market deposits | 376,989 | 947 | 1.00 | % | ||||||
Certificates and other time deposits | 578,775 | 3,878 | 2.68 | % | ||||||
Junior subordinated debentures | 34,030 | 587 | 6.90 | % | ||||||
Federal funds purchased and other borrowings | 30,913 | 255 | 3.30 | % | ||||||
Total Interest Bearing Liabilities | 1,356,059 | $ | 6,668 | 1.97 | % | |||||
Non-interest Bearing Liabilities: | ||||||||||
Non-interest bearing demand deposits | 305,852 | |||||||||
Other liabilities | 10,970 | |||||||||
Total liabilities | 1,672,881 | |||||||||
Shareholders’ equity | 157,858 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 1,830,739 | ||||||||
Net Interest Income & Margin | $ | 15,544 | 3.73 | % | ||||||
Net Interest Income & Margin (tax equivalent)(K) | $ | 16,109 | 3.86 | % | ||||||
(K) Due to the adoption of SFAS 150 on January 1, 2004, the Company now includes the dividend payments on junior subordinated debentures as part of interest expense rather than non-interest expense. Prior period data has been restated to reflect the adoption of SFAS 150. Prior to adoption of SFAS 150, the Company reported a net interest margin on a tax equivalent basis of 4.00% for the three months ended March 31, 2003. Also in compliance with SFAS 150, the junior subordinated debentures balance has been deconsolidated and reclassified to a liability from a mezzanine equity item.
13
Prosperity Bancshares, Inc.SM
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
| Three Months Ended Dec 31, 2002 | ||||||||||
| Average Balance | Interest Income/ Interest Expense | Yield/Rate | ||||||||
YIELD ANALYSIS | ||||||||||
Interest earning assets: | ||||||||||
Loans | $ | 688,457 | $ | 12,385 | 7.20 | % | ||||
Investment securities | 891,351 | 10,319 | 4.63 | % | ||||||
Federal funds sold | 43,500 | 133 | 1.22 | % | ||||||
Total interest earning assets | 1,623,308 | $ | 22,837 | 5.63 | % | |||||
Allowance for credit losses | (9,551 | ) | ||||||||
Non-interest earning assets | 178,126 | |||||||||
Total assets | $ | 1,791,883 | ||||||||
Interest Bearing Liabilities: | ||||||||||
Interest bearing demand deposits | $ | 279,870 | $ | 802 | 1.15 | % | ||||
Savings and money market deposits | 387,485 | 1,383 | 1.43 | % | ||||||
Certificates and other time deposits | 591,645 | 4,357 | 2.95 | % | ||||||
Junior subordinated debentures | 34,030 | 604 | 7.10 | % | ||||||
Federal funds purchased and other borrowings | 15,462 | 286 | 7.40 | % | ||||||
Total Interest Bearing Liabilities | 1,308,492 | $ | 7,432 | 2.27 | % | |||||
Non-interest Bearing Liabilities: | ||||||||||
Non-interest bearing demand deposits | 318,353 | |||||||||
Other liabilities | 12,387 | |||||||||
Total liabilities | 1,639,232 | |||||||||
Shareholders’ equity | 152,651 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 1,791,883 | ||||||||
Net Interest Income & Margin | $ | 15,405 | 3.80 | % | ||||||
Net Interest Income & Margin (tax equivalent)(L) | $ | 15,964 | 3.93 | % | ||||||
(L) Due to the adoption of SFAS 150 on January 1, 2004, the Company now includes the dividend payments on junior subordinated debentures as part of interest expense rather than non-interest expense. Prior period data has been restated to reflect the adoption of SFAS 150. Prior to adoption of SFAS 150, the Company reported a net interest margin on a tax equivalent basis of 4.08% for the three months ended December 31, 2002. Also in compliance with SFAS 150, the junior subordinated debentures balance has been deconsolidated and reclassified to a liability from a mezzanine equity item.
14
Prosperity Bancshares, Inc.SM
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
| Twelve Months Ended Dec 31, 2003 | ||||||||||
| Average Balance | Interest Income/ Interest Expense | Yield/Rate | ||||||||
YIELD ANALYSIS | ||||||||||
Interest Earning Assets: | ||||||||||
Loans | $ | 697,235 | $ | 46,686 | 6.70 | % | ||||
Investment securities | 1,108,153 | 43,911 | 3.96 | % | ||||||
Federal funds sold | 24,976 | 248 | 0.99 | % | ||||||
Total interest earning assets | 1,830,364 | $ | 90,845 | 4.96 | % | |||||
Allowance for credit losses | (9,525 | ) | ||||||||
Non-interest earning assets | 186,030 | |||||||||
Total assets | $ | 2,006,869 | ||||||||
Interest Bearing Liabilities: | ||||||||||
Interest bearing demand deposits | $ | 371,801 | $ | 4,187 | 1.13 | % | ||||
Savings and money market deposits | 406,333 | 3,502 | 0.86 | % | ||||||
Certificates and other time deposits | 616,353 | 14,944 | 2.42 | % | ||||||
Junior subordinated debentures | 39,400 | 2,627 | 6.67 | % | ||||||
Federal funds purchased and other borrowings | 38,824 | 1,083 | 2.79 | % | ||||||
Total Interest Bearing Liabilities | 1,472,711 | $ | 26,343 | 1.79 | % | |||||
Non-interest Bearing Liabilities: | ||||||||||
Non-interest bearing demand deposits | 354,558 | |||||||||
Other liabilities | 9,433 | |||||||||
Total liabilities | 1,836,702 | |||||||||
Shareholders’ equity | 170,167 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 2,006,869 | ||||||||
Net Interest Income & Margin | $ | 64,502 | 3.52 | % | ||||||
Net Interest Income & Margin (tax equivalent)(M) | $ | 66,615 | 3.64 | % | ||||||
(M) Due to the adoption of SFAS 150 on January 1, 2004, the Company now includes the dividend payments on junior subordinated debentures as part of interest expense rather than non-interest expense. Prior period data has been restated to reflect the adoption of SFAS 150. Prior to adoption of SFAS 150, the Company reported a net interest margin on a tax equivalent basis of 3.78% for the twelve months ended December 31, 2003. Also in compliance with SFAS 150, the junior subordinated debentures balance has been deconsolidated and reclassified to a liability from a mezzanine equity item.
15
Prosperity Bancshares, Inc.SM
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
| Twelve Months Ended Dec 31, 2002 | ||||||||||
| Average Balance | Interest Income/ Interest Expense | Yield/Rate | ||||||||
| YIELD ANALYSIS | ||||||||||
Interest earning assets: | ||||||||||
Loans | $ | 524,885 | $ | 38,330 | 7.30 | % | ||||
Investment securities | 818,362 | 42,104 | 5.14 | % | ||||||
Federal funds sold | 20,956 | 308 | 1.47 | % | ||||||
Total interest earning assets | 1,364,203 | $ | 80,742 | 5.92 | % | |||||
Allowance for credit losses | (7,350 | ) | ||||||||
Non-interest earning assets | 113,905 | |||||||||
Total assets | $ | 1,470,758 | ||||||||
Interest Bearing Liabilities: | ||||||||||
Interest bearing demand deposits | $ | 249,045 | $ | 3,162 | 1.27 | % | ||||
Savings and money market deposits | 315,717 | 5,219 | 1.65 | % | ||||||
Certificates and other time deposits | 505,796 | 16,595 | 3.28 | % | ||||||
Junior subordinated debentures | 29,648 | 2,172 | 7.33 | % | ||||||
Federal funds purchased and other borrowings | 16,435 | 955 | 5.81 | % | ||||||
Total Interest Bearing Liabilities | 1,116,641 | $ | 28,103 | 2.52 | % | |||||
Non-interest Bearing Liabilities: | ||||||||||
Non-interest bearing demand deposits | 230,326 | |||||||||
Other liabilities | 9,557 | |||||||||
Total liabilities | 1,356,524 | |||||||||
Shareholders’ equity | 114,234 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 1,470,758 | ||||||||
Net Interest Income & Margin | $ | 52,639 | 3.86 | % | ||||||
Net Interest Income & Margin (tax equivalent)(N) | $ | 54,562 | 4.00 | % | ||||||
(N) Due to the adoption of SFAS 150 on January 1, 2004, the Company now includes the dividend payments on junior subordinated debentures as part of interest expense rather than non-interest expense. Prior period data has been restated to reflect the adoption of SFAS 150. Prior to adoption of SFAS 150, the Company reported a net interest margin on a tax equivalent basis of 4.16% for the twelve months ended December 31, 2002. Also in compliance with SFAS 150, the junior subordinated debentures balance has been deconsolidated and reclassified to a liability from a mezzanine equity item.
16