Exhibit 99.1
May 20, 2005
“Safe Harbor” Statement
under the Private Securities Litigation Reform Act of 1999
The statements contained in this presentation which are not historical facts contain forward-looking information with respect to plans, projections, or future performance of Prosperity Bancshares, Inc. and its subsidiaries. Forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, may have been made in this document. Prosperity’s results may differ materially from those in the forward-looking statements for a variety of reasons, including actions of competitors; changes in laws and regulations; customer and consumer response to marketing; effectiveness of spending, investment or programs; and economic conditions. These factors, and others, are more fully described in Prosperity Bancshares, Inc.’s filings with the Securities and Exchange Commission.
Copies of Prosperity Bancshares, Inc.’s SEC filings are available over the Internet at no charge from www.freeedgar.com.
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Prosperity is . . .. .
a Track Record of Success
A $3.5 billion Texas based Financial Holding Company
Customer focused
Results oriented
Shareholder driven
Accretive acquisition
Excellent asset quality
Fast growing
Serving Houston, Dallas, Austin, Corpus Christi and many communities along the NAFTA Highway southwest of Houston.
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Total Return Performance
(Percent)
450 400 350 300 250 200 150 100 50 0 -50
Feb-99 Nov-99 Aug-00 Jun-01 Mar-02 Dec-02 Sep-03 Jun-04 Mar-05
IPO
PRSP Bank NASDAQ Russell 3000
$100,000 invested in PRSP at IPO on 11/12/1998 was worth $469,810 on 03/31/2005
Source: CRSP, Center for Research in Security Prices, Graduate School of Business, The University of Chicago 2005.
Used with permission. All rights reserved. crsp.com SNL Financial LC (434) 977-1600 © 2005
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Banking Center Locations
85 Full Service Locations
33 in Houston CMSA
16 in Corpus Christi area
11 in Dallas area
7 in Austin MSA
18 in South Texas along the NAFTA Highway and Interstate 10
Total Population:
Texas: 22,293,020
Population (CMSA)
Houston: 5,106,853
Dallas: 5,643,259
Austin: 1,393,420
Corpus Christi: 406,742
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1Q05 Highlights
1Q05 EPS up 13.2% from 1Q04
1Q05 Return on Average Tangible Equity of 33.38%
1Q05 Total Loans up 94.8% from 1Q04
1Q05 Total Deposits up 36.3% from 1Q04
1Q05 Net Income up 30.9% from 1Q04
1Q05 Total Assets up 42.1% from 1Q04
1Q05 Non-Interest Income up 23.9% from 1Q04
Completed Largest Acquisition to Date
1Q05 Organic Loan Growth of 5.5%
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Balance Sheet Summary
As Originally Reported
(Equity in Millions)
(Millions)
$3,600 $3,300 $3,000 $2,700 $2,400 $2,100 $1,800 $1,500 $1,200 $900 $600 $300 $0
1997 1998 1999 2000 2001 2002 2003 2004 1Q05
$500 $400 $300 $200 $100 $0 $24.9 $41.4 $43.3 $52.6 $88.7 $154.7 $219.6 $275.6 $426.15
Loans Deposits Assets Equity
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Annual Results
As Originally Reported
(Dollars in thousands, except EPS)
5 Year
1999 2000 2001 2002 2003 2004 CAGR
Assets $608,673 $703,073 $1,263,169 $1,823,286 $2,400,487 $2,697,228 34.68%
Loans $223,505 $248,665 $424,400 $679,559 $770,053 $1,035,513 35.89%
Deposits $534,756 $634,262 $1,123,397 $1,586,611 $2,083,748 $2,317,076 34.08%
Non-Int Income $3,530 $5,388 $8,635 $11,594 $16,966 $23,071 45.57%
Net Income $6,474 $8,027 $12,958 $21,321 $26,548 $34,707 39.91%
EPS (diluted) $0.60 $0.74 $0.79 $1.22 $1.36 $1.59 21.52%
EPS Growth 15.40% 23.30% 6.80% 54.40% 11.50% 16.91%
ROAA 1.33% 1.29% 1.09% 1.45% 1.32% 1.36%
ROAE 15.15% 17.41% 15.19% 18.66% 15.60% 14.27%
NIM (te)(1) 4.14% 3.89% 3.71% 4.00% 3.64% 3.63%
NPA to Assets 0.00% 0.00% 0.00% 0.19% 0.05% 0.07%
Efficiency Ratio 55.13% 56.57% 60.14% 50.36% 51.58% 49.23%
Leverage Ratio 6.17% 6.17% 7.57% 6.56% 7.10% 6.30%
Tangible Ratio 4.08% 4.29% 5.33% 4.70% 4.17% 4.38%
(1) 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.
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Quarterly Results
As Originally Reported
(Dollars in thousands, except EPS)
1Q04 2Q04 3Q04 4Q04 1Q05 Percent Change 1Q04-1Q05
Assets $2,449,553 $2,434,344 $2,713,314 $2,697,228 $3,479,747 42.06%
Loans $770,223 $790,920 $1,007,420 $1,035,513 $1,500,138 94.77%
Deposits $2,122,861 $2,079,917 $2,327,278 $2,317,076 $2,893,681 36.31%
Non-Int Income $5,272 $5,455 $6,111 $6,233 $6,533 23.92%
Net Income $8,063 $8,362 $8,946 $9,336 $10,554 30.89%
EPS (diluted) $0.38 $0.39 $0.40 $0.41 $0.43 13.16%
EPS Growth 8.57% 2.63% 2.56% 2.50% 4.88%
ROAA(1) 1.33% 1.37% 1.37% 1.38% 1.42%
ROAE(1) 14.44% 14.63% 14.42% 13.69% 12.87%
NIM (te)(1)(2) 3.63% 3.55% 3.64% 3.71% 3.76%
NPA to Assets 0.03% 0.07% 0.11% 0.07% 0.13%
Efficiency Ratio 50.60% 48.66% 48.55% 49.19% 51.06%
Leverage Ratio 6.87% 7.10% 6.77% 6.30% 8.45%
Tangible Ratio 4.36% 4.48% 4.14% 4.38% 4.86%
(1) Annualized
(2) 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.
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Bond Portfolio
March 31, 2005
Total Market Value of Investment Securities $1,486,463
Preferred $24,000 2%
Municipals $43,448 3%
US Agencies & Treasury $88,588 6%
Corporate $11,965 1%
Other $805 0%
CMOs $274,962 18%
MBS $1,048,843 70%
In Thousands
Portfolio Allocation
HTM $1,207,419 81.2%
AFS $285,192(+) 18.8%
Subtotal $1,492,611 100.0%
Less $6,148(-) Unrealized Loss
Total $1,486,463 100.0%
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Deposit Composition
March 31, 2005
Total Deposits $2,893,681
CDs & IRAs <$100,000 $569,104 19.7%
CDs & IRAs >$100,000 $522,503 18.1%
Non-interest bearing DDA $592,238 20.5%
Interest Bearing DDA $552,835 18.1%
MMA & Savings $687,001 23.6%
In Thousands
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Loan Composition
March 31, 2005 Total Loans $1,500,138
Commercial Real Estate $583,624 38.9%
Commercial $242, 619 16.2%
Construction $195,678 13.0%
1-4 Family Residential $305,710 20.4%
Consumer $73,689 4.9%
Agriculture $49,073 3.3%
Home Equity $49,745 3.3%
In Thousands
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Historical Loan Composition
12/31/2002 12/31/2003 12/31/2004 3/31/2005 CAGR
Loan Composition:
Commercial $93.8 13.8% $94.0 12.2% $144.4 13.9% $242.6 16.2% 34.0%
Construction $52.4 7.7% $36.5 4.7% $109.6 10.6% $195.7 13.0% 50.0%
1-4 Family Residential $206.6 30.4% $237.1 30.8% $260.5 25.2% $305.7 20.4% 12.8%
Home Equity $23.2 3.4% $27.9 3.6% $34.5 3.3% $49.7 3.3% 26.4%
Commercial Real Estate $202.5 29.8% $283.8 36.9% $389.6 37.6% $583.6 38.9% 38.5%
Agriculture $36.6 5.4% $35.9 4.7% $44.1 4.2% $49.1 3.3% 9.5%
Consumer $64.5 9.5% $54.8 7.1% $52.9 5.1% $73.7 4.9% 4.2%
Total Loans $679.6 100.0% $770.0 100.0% $1,035.6 100.0% $1,500.1 100.0% 27.6%
In Millions
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Merger & Acquisition History
$30 $25 $20 $15 $10 $5 $0
Nov-98 May-99 Nov-99 May-00 Nov-00 May-01 Nov-01 May-02 Nov-02 May-03 Nov-03 May-04 Nov-04 May-05
06/21/99
South Texas Bancshares, Inc. Deal Value: $23.4 Location: Beeville
05/02/02
Paradigm Bank Deal Value: $41.6 Location: Houston
08/15/02
First National Bank Deal Value: $5.0 Location: Bay City
03/05/03
BankDallas Deal Value: $7.0 Location: Dallas
10/26/04
FirstCapital Bank Deal Value: $135.7 Location: Corpus Christi
04/26/02
First State Bank Deal Value: $3.7 Location: Needville
11/08/00
Heritage Bank Deal Value: $53.3 Location: Houston
02/22/02
Texas Guaranty Bank Deal Value: $11.8 Location: Houston
06/15/00
Compass Bank – 5 Branches Location: Houston area
07/15/02
Bank of the Southwest Deal Value: $21.0 Location: Dallas
02/03/03
Abrams Centre Bank Deal Value: $16.3 Location: Dallas
07/21/03
mainbank Deal Value: $39.7 Location: Dallas
10/06/03
First State Bank Deal Value: $21.3 Location: Dallas
4/26/04
Liberty Bank Deal Value: $42.0 Location: Austin
5/12/04
Village Bank Deal Value: $20.2 Location: Austin
(Values in millions)
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PRSP Completed Acquisitions
All announced bank acquisitions
At Announcement
Announce Date Seller City State Type Consideration Accounting Method PRSP Assets ($000) Sellers Assets ($000) Sellers’ Asset Contribution (%) Deal Value ($000)
10/26/2004 FirstCapital Bankers, Inc. Corpus Christi TX Thrift Common Stock Purchase 2,709,169 773,566 22.21 135.7
05/12/2004 Village Bank and Trust Austin TX Thrift Cash Purchase 2,449,553 110,400 4.31 20.2
04/26/2004 Liberty Bank Austin TX Thrift Mixed Purchase 2,449,553 186,000 7.06 42.0
12/09/2003 First State Bank of North Texas Dallas TX Bank Mixed Purchase 2,078,532 93,900 4.32 21.3
11/01/2003 Mainbancorp Dallas TX Bank Mixed Purchase 1,983,277 195,700 8.98 39.7
03/05/2003 BankDallas SSB Dallas TX Thrift Cash Purchase 1,822,256 40,716 2.19 7.0
02/03/2003 Abrams Centre Bancshares, Inc. Dallas TX Bank Cash Purchase 1,822,256 95,388 4.97 16.3
08/15/2002 First National Bank of Bay City Bay City TX Bank Cash Purchase 1,360,356 28,174 2.03 5.0
07/15/2002 Southwest Bank Holding Company Dallas TX Bank Cash Purchase 1,289,637 127,055 8.97 21.0
05/02/2002 Paradigm Bancorporation, Incorporated Houston TX Bank Common Stock Purchase 1,289,637 259,262 16.74 41.6
04/26/2002 First State Bank Needville TX Bank Cash Purchase 1,289,637 17,754 1.36 3.7
02/22/2002 Texas Guaranty Bank, N.A. Houston TX Bank Cash Purchase 1,262,152 75,019 5.61 11.8
11/08/2000 Commercial Bancshares, Inc. Houston TX Bank Common Stock Pooling 693,079 401,271 36.67 53.3
06/21/1999 South Texas Bancshares, Inc. Beeville TX Bank Cash Purchase 461,903 142,091 23.53 23.4
06/05/1998 Union State Bank East Bernard TX Bank Cash Purchase 339,287 79,174 18.92 17.6
Branch Acquisitions
Announce Date Seller # of Brchs Branch Type Branch Locale State Amount of Deposits Transferred ($000) Deposit Premium ($000) Premium/ Deposits (%) Assets Transferred: Loans? Y or N
06/15/00 Compass Bancshares, Inc. 5 Bank TX 87,000 NA NA Yes
02/27/98 Grimes County Capital Corporation 1 Bank TX 5,900 250 4.24 No
03/30/97 Wells Fargo & Company 1 Bank TX NA NA NA No
03/11/96 Victoria Bankshares, Inc. 1 Bank TX 46,000 NA NA Yes
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Why Invest in PRSP?
Excellent asset quality
+
Continuing operating efficiencies
+
Expanding non-interest income
+
High-growth Texas operations
Superior Long-term returns
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Contact Information
Corporate Headquarters
Prosperity Bank Plaza
4295 San Felipe
Houston, Texas 77027
713.693.9300 Telephone
713.693.9309 Fax
www.prosperitybanktx.com
Investor Contacts
David Zalman
Chief Executive Officer
979.543.2200
david.zalman@prosperitybanktx.com
David Hollaway
Chief Financial Officer
979.543.2200
david.hollaway@prosperitybanktx.com
Dan Rollins
Senior Vice President
713.693.9300
dan.rollins@prosperitybanktx.com
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