Exhibit 99.1
| | |
| PRESS RELEASE | | For more information contact: |
| |
| Prosperity Bancshares, Inc.® | | David Zalman |
| Prosperity Bank Plaza | | Chairman and Chief Executive Officer |
| 4295 San Felipe | | 281.269.7199 |
| Houston, Texas 77027 | | david.zalman@prosperitybankusa.com |
FOR IMMEDIATE RELEASE
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 |
HOUSTON, April 23, 2014. 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.
Page 1 of 18
“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.
Page 2 of 18
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, 2013 | | | Jun 30, 2013 | | | Mar 31, 2013 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| | | | | |
Loans acquired (including new production since respective acquisition dates): | | | | | | | | | | | | | | | | | | | | |
East Texas Financial Services | | $ | 92,474 | | | $ | 99,281 | | | $ | 104,403 | | | $ | 111,626 | | | $ | 117,863 | |
Coppermark | | | 580,416 | | | | 616,333 | | | | 688,656 | | | | 772,965 | | | | — | |
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 Services | | $ | 76,734 | | | $ | 81,200 | | | $ | 90,649 | | | $ | 88,289 | | | $ | 98,359 | |
Coppermark | | | 1,014,436 | | | | 1,031,993 | | | | 1,073,567 | | | | 1,087,137 | | | | — | |
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.
Page 3 of 18
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 athttp://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.
Page 4 of 18
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 athttp://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.
Page 5 of 18
| | | | | | |
| Bryan/College Station Area - | | Sachse | | River Oaks | | Rockport |
| Bryan | | The Colony | | Sugar Land | | Sinton |
| Bryan-29thStreet | | 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 Worth | | Angleton | | Barrow Street |
| 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 | | 4thStreet |
| Austin - | | Granbury | | Dayton | | 66thStreet |
| 183 | | Mesquite | | Galveston | | 82ndStreet |
| Allandale | | Muenster | | Groves | | 86thStreet |
| Cedar Park | | Sanger | | Hempstead | | 98thStreet |
| 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 - | | Crockett | | Needville | | Grandview |
| Bastrop | | Eustace | | Rosenberg | | Grant |
| Canyon Lake | | Gilmer | | Shadow Creek | | Kermit Highway |
| Dime Box | | Grapeland | | Spring | | Parkway |
| Dripping Springs | | Gun Barrel City | | Sweeny | | |
| Elgin | | Jacksonville | | The Woodlands-I-45 | | Other West Texas Locations - |
| Flatonia | | Kerens | | The Woodlands-Research Forest | | Big Spring |
| Georgetown | | Longview | | Tomball | | Brownfield |
| Gruene | | Mount Vernon | | Waller | | Brownwood |
| Kingsland | | Palestine | | West Columbia | | Cisco |
| La Grange | | Rusk | | Wharton | | Comanche |
| Lexington | | Seven Points | | Winnie | | Early |
| New Braunfels | | Teague | | Wirt | | Floydada |
| Pleasanton | | Tyler-Beckham | | | | Gorman |
| Round Rock | | Tyler-South Broadway | | South Texas Area - | | Levelland |
| San Antonio | | Tyler-University | | Corpus Christi - | | Littlefield |
| Schulenburg | | Winnsboro | | Airline | | Merkel |
| Seguin | | | | Calallen | | Plainview |
| Smithville | | Houston Area - | | Carmel | | San Angelo |
| Thorndale | | Houston - | | Northwest | | Slaton |
| Weimar | | Aldine | | Saratoga | | Snyder |
| | Allen Parkway | | Timbergate | | |
| Dallas/Fort Worth Area - | | Bellaire | | Water Street | | Oklahoma |
| Dallas - | | Beltway | | | | Central Oklahoma- |
| Abrams Centre | | Clear Lake | | Other South Texas | | 23rdStreet |
| Balch Springs | | Copperfield | | Locations - | | Edmond |
| Camp Wisdom | | Cypress | | Alice | | Expressway |
| Cedar Hill | | Downtown | | Aransas Pass | | I-240 |
| Dallas – Central Expressway | | Eastex | | Beeville | | Memorial |
| Forest Park | | Fairfield | | Colony Creek | | Norman |
| Frisco | | First Colony | | Cuero | | |
| Frisco-West | | Gessner | | Edna | | Tulsa- |
| Independence | | Gladebrook | | Goliad | | Garnett |
| Kiest | | Heights | | Gonzales | | Harvard |
| McKinney | | Highway 6 West | | Hallettsville | | Memorial |
| McKinney-Stonebridge | | Little York | | Kingsville | | Owasso |
| Midway | | Medical Center | | Mathis | | Sheridan |
| Northwest Highway | | Memorial Drive | | Padre Island | | S. Harvard |
| Plano | | Northside | | Palacios | | Utica Square |
| Preston Forest | | Pasadena | | Port Lavaca | | Utica Tower |
| Preston Road | | Pecan Grove | | Portland | | Yale |
| Red Oak | | | | | | |
- - -
Page 6 of 18
“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 fromhttp://www.prosperitybankusa.com.
Page 7 of 18
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Mar 31, 2014 | | | Dec 31, 2013 | | | Sep 30, 2013 | | | Jun 30, 2013 | | | Mar 31, 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 securities(A) | | | 8,561,337 | | | | 8,224,448 | | | | 7,771,345 | | | | 8,017,884 | | | | 7,985,811 | |
Federal funds sold | | | 382 | | | | 400 | | | | 1,121 | | | | 606 | | | | 835 | |
Allowance for credit losses | | | (67,096 | ) | | | (67,282 | ) | | | (59,913 | ) | | | (56,176 | ) | | | (55,049 | ) |
Cash and due from banks | | | 349,860 | | | | 380,990 | | | | 269,987 | | | | 250,542 | | | | 180,577 | |
Goodwill | | | 1,672,004 | | | | 1,671,520 | | | | 1,351,782 | | | | 1,350,834 | | | | 1,235,743 | |
Core deposit intangibles, net | | | 39,702 | | | | 42,049 | | | | 25,233 | | | | 26,688 | | | | 26,514 | |
Other real estate owned | | | 7,372 | | | | 7,299 | | | | 7,432 | | | | 10,244 | | | | 9,913 | |
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 deposits | | | 11,318,015 | | | | 11,182,436 | | | | 9,087,442 | | | | 9,225,568 | | | | 8,717,639 | |
| | | | | | | | | | | | | | | | | | | | |
Total deposits | | | 15,460,057 | | | | 15,291,271 | | | | 12,455,799 | | | | 12,508,650 | | | | 11,713,467 | |
Securities sold under repurchase agreements | | | 349,074 | | | | 364,357 | | | | 431,969 | | | | 481,170 | | | | 470,241 | |
Other borrowings | | | 40,451 | | | | 10,689 | | | | 605,951 | | | | 781,215 | | | | 576,768 | |
Junior subordinated debentures | | | 124,231 | | | | 124,231 | | | | 85,055 | | | | 85,055 | | | | 85,055 | |
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’ equity(B) | | | 2,840,754 | | | | 2,786,818 | | | | 2,389,112 | | | | 2,345,282 | | | | 2,149,455 | |
| | | | | | | | | | | | | | | | | | | | |
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. |
Page 8 of 18
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | Mar 31, 2014 | | | Dec 31, 2013 | | | Sep 30, 2013 | | | Jun 30, 2013 | | | Mar 31, 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 other earning assets | | | 48 | | | | 76 | | | | 16 | | | | 76 | | | | 19 | |
| | | | | | | | | | | | | | | | | | | | |
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 repurchase agreements | | | 237 | | | | 280 | | | | 317 | | | | 312 | | | | 292 | |
Junior subordinated debentures | | | 775 | | | | 730 | | | | 610 | | | | 606 | | | | 605 | |
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 losses | | | 600 | | | | 7,865 | | | | 4,025 | | | | 2,550 | | | | 2,800 | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income after provision for credit losses | | | 143,091 | | | | 137,604 | | | | 122,508 | | | | 116,192 | | | | 105,282 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Noninterest income: | | | | | | | | | | | | | | | | | | | | |
Nonsufficient funds (NSF) fees | | | 8,870 | | | | 9,669 | | | | 8,649 | | | | 8,346 | | | | 8,509 | |
Credit card, debit card and ATM card income | | | 4,724 | | | | 4,662 | | | | 4,307 | | | | 7,007 | | | | 6,487 | |
Service charges on deposit accounts | | | 4,037 | | | | 3,460 | | | | 3,169 | | | | 3,304 | | | | 2,931 | |
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 insurance income | | | 1,028 | | | | 1,011 | | | | 916 | | | | 932 | | | | 776 | |
Net gain (loss) on sale of assets | | | 3,310 | | | | 40 | | | | 126 | | | | (180 | ) | | | 1 | |
Net (loss) gain on sale of other real estate | | | (60 | ) | | | 196 | | | | (864 | ) | | | 237 | | | | (105 | ) |
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 equipment | | | 5,339 | | | | 4,893 | | | | 5,094 | | | | 4,669 | | | | 4,278 | |
Debit card, data processing and software amortization | | | 3,184 | | | | 3,333 | | | | 2,756 | | | | 3,249 | | | | 2,570 | |
Regulatory assessments and FDIC insurance | | | 2,726 | | | | 2,771 | | | | 2,516 | | | | 2,579 | | | | 2,395 | |
Core deposit intangibles amortization | | | 2,045 | | | | 1,594 | | | | 1,455 | | | | 1,341 | | | | 1,755 | |
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 expense | | | 396 | | | | 176 | | | | 75 | | | | 237 | | | | 223 | |
Other noninterest expense | | | 7,998 | | | | 9,652 | | | | 7,430 | | | | 6,834 | | | | 6,763 | |
| | | | | | | | | | | | | | | | | | | | |
Total noninterest expense | | | 71,034 | | | | 68,592 | | | | 61,537 | | | | 61,300 | | | | 55,767 | |
| | | | | | | | | | | | | | | | | | | | |
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. |
Page 9 of 18
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars and share amounts in thousands, except per share data and market prices)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | Mar 31, 2014 | | | Dec 31, 2013 | | | Sep 30, 2013 | | | Jun 30, 2013 | | | Mar 31, 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 assets (D) | | | 1.43 | % | | | 1.42 | % | | | 1.37 | % | | | 1.33 | % | | | 1.33 | % |
Return on average common equity (D) | | | 9.52 | % | | | 9.53 | % | | | 9.31 | % | | | 9.27 | % | | | 9.23 | % |
Return on average tangible common equity (D) (E) | | | 24.23 | % | | | 23.97 | % | | | 22.14 | % | | | 22.32 | % | | | 22.30 | % |
Tax equivalent net interest margin (F) | | | 3.62 | % | | | 3.82 | % | | | 3.59 | % | | | 3.43 | % | | | 3.42 | % |
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 capital | | | 13.85 | % | | | 13.29 | % | | | 14.74 | % | | | 14.15 | % | | | 14.77 | % |
Total risk-based capital | | | 14.59 | % | | | 14.03 | % | | | 15.55 | % | | | 14.91 | % | | | 15.61 | % |
Tier 1 leverage capital | | | 7.30 | % | | | 7.44 | % | | | 7.37 | % | | | 7.07 | % | | | 7.10 | % |
Tangible equity to tangible assets(E) | | | 6.56 | % | | | 6.35 | % | | | 6.90 | % | | | 6.50 | % | | | 6.42 | % |
| | | | | |
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 outstanding | | | 66,261 | | | | 66,048 | | | | 60,383 | | | | 60,315 | | | | 57,014 | |
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 price | | | 66.15 | | | | 63.39 | | | | 61.84 | | | | 51.79 | | | | 47.39 | |
Employees – FTE | | | 2,888 | | | | 2,995 | | | | 2,454 | | | | 2,496 | | | | 2,304 | |
Number of banking centers | | | 236 | | | | 238 | | | | 218 | | | | 219 | | | | 224 | |
| (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. |
Page 10 of 18
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| YIELD ANALYSIS | | Three Months Ended | |
| | | Mar 31, 2014 | | | Dec 31, 2013 | | | Mar 31, 2013 | |
| | | Average
Balance | | | Interest
Earned/
Interest
Paid | | | Average
Yield/
Rate | | | Average
Balance | | | Interest
Earned/
Interest
Paid | | | Average
Yield/
Rate | | | Average
Balance | | | Interest
Earned/
Interest
Paid | | | Average
Yield/
Rate | |
| | | | | | | | | |
Interest-Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans | | $ | 7,755,997 | | | $ | 107,144 | | | | 5.60 | % | | $ | 7,238,438 | | | $ | 110,575 | | | | 6.06 | % | | $ | 5,263,784 | | | $ | 81,464 | | | | 6.28 | % |
Investment securities | | | 8,466,946 | | | | 47,056 | | | | 2.25 | %(H) | | | 7,992,673 | | | | 45,100 | | | | 2.24 | %(H) | | | 7,755,567 | | | | 36,548 | | | | 1.91 | %(H) |
Federal funds sold and other earning assets | | | 101,700 | | | | 48 | | | | 0.19 | % | | | 103,413 | | | | 76 | | | | 0.29 | % | | | 34,793 | | | | 19 | | | | 0.22 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 16,324,643 | | | $ | 154,248 | | | | 3.83 | % | | | 15,334,524 | | | $ | 155,751 | | | | 4.03 | % | | | 13,054,144 | | | $ | 118,031 | | | | 3.67 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for credit losses | | | (67,222 | ) | | | | | | | | | | | (60,170 | ) | | | | | | | | | | | (53,242 | ) | | | | | | | | |
Noninterest-earning assets | | | 2,550,893 | | | | | | | | | | | | 2,502,276 | | | | | | | | | | | | 1,849,461 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 18,808,314 | | | | | | | | | | | $ | 17,776,630 | | | | | | | | | | | $ | 14,850,363 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 3,554,366 | | | $ | 2,132 | | | | 0.24 | % | | $ | 2,963,899 | | | $ | 1,899 | | | | 0.25 | % | | $ | 2,659,489 | | | $ | 2,210 | | | | 0.34 | % |
Savings and money market deposits | | | 4,992,442 | | | | 3,155 | | | | 0.26 | % | | | 4,654,044 | | | | 3,049 | | | | 0.26 | % | | | 3,790,416 | | | | 2,829 | | | | 0.30 | % |
Certificates and other time deposits | | | 2,816,701 | | | | 4,100 | | | | 0.59 | % | | | 2,712,699 | | | | 4,100 | | | | 0.60 | % | | | 2,370,499 | | | | 3,651 | | | | 0.62 | % |
Securities sold under repurchase agreements | | | 347,747 | | | | 237 | | | | 0.28 | % | | | 398,100 | | | | 280 | | | | 0.28 | % | | | 448,542 | | | | 292 | | | | 0.26 | % |
Other borrowings | | | 51,932 | | | | 158 | | | | 1.23 | % | | | 210,492 | | | | 224 | | | | 0.42 | % | | | 358,120 | | | | 362 | | | | 0.41 | % |
Junior subordinated debentures | | | 124,231 | | | | 775 | | | | 2.53 | % | | | 111,172 | | | | 730 | | | | 2.61 | % | | | 85,055 | | | | 605 | | | | 2.88 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 11,887,419 | | | | 10,557 | | | | 0.36 | %(I) | | | 11,050,406 | | | | 10,282 | | | | 0.37 | %(I) | | | 9,712,121 | | | | 9,949 | | | | 0.42 | %(I) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing demand deposits | | | 4,018,094 | | | | | | | | | | | | 3,860,296 | | | | | | | | | | | | 2,939,621 | | | | | | | | | |
Other liabilities | | | 82,288 | | | | | | | | | | | | 223,394 | | | | | | | | | | | | 62,716 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities | | | 15,987,801 | | | | | | | | | | | | 15,134,096 | | | | | | | | | | | | 12,714,458 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shareholders’ equity | | | 2,820,513 | | | | | | | | | | | | 2,642,534 | | | | | | | | | | | | 2,135,905 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 18,808,314 | | | | | | | | | | | $ | 17,776,630 | | | | | | | | | | | $ | 14,850,363 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Net interest income and margin | | | | | | $ | 143,691 | | | | 3.57 | % | | | | | | $ | 145,469 | | | | 3.76 | % | | | | | | $ | 108,082 | | | | 3.36 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Non-GAAP to GAAP reconciliation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tax equivalent adjustment | | | | | | | 2,052 | | | | | | | | | | | | 2,152 | | | | | | | | | | | | 2,125 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Net interest income and margin (tax equivalent basis) | | | | | | $ | 145,743 | | | | 3.62 | % | | | | | | $ | 147,621 | | | | 3.82 | % | | | | | | $ | 110,207 | | | | 3.42 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (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. |
Page 11 of 18
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | Mar 31, 2014 | | | Dec 31, 2013 | | | Sep 30, 2013 | | | Jun 30, 2013 | | | Mar 31, 2013 | |
Adjustment to Loan Yield(J) | | | | | | | | | | | | | | | | | | | | |
Interest on loans, as reported | | $ | 107,144 | | | $ | 110,575 | | | $ | 94,236 | | | $ | 89,842 | | | $ | 81,464 | |
Less: Purchase accounting adjustment-loan discount accretion | | | (13,475 | ) | | | (19,979 | ) | | | (16,421 | ) | | | (12,031 | ) | | | (14,292 | ) |
| | | | | | | | | | | | | | | | | | | | |
Interest on loans without discount accretion | | $ | 93,669 | | | $ | 90,596 | | | $ | 77,815 | | | $ | 77,811 | | | $ | 67,172 | |
| | | | | | | | | | | | | | | | | | | | |
Average loans | | $ | 7,755,997 | | | $ | 7,238,438 | | | $ | 6,173,394 | | | $ | 6,114,598 | | | $ | 5,263,784 | |
Loan yield without discount accretion | | | 4.90 | % | | | 4.97 | % | | | 5.00 | % | | | 5.10 | % | | | 5.18 | % |
Loan yield, as reported | | | 5.60 | % | | | 6.06 | % | | | 6.06 | % | | | 5.89 | % | | | 6.28 | % |
| | | | | |
Adjustment to Securities Yield(J) | | | | | | | | | | | | | | | | | | | | |
Interest on securities, as reported | | $ | 47,056 | | | $ | 45,100 | | | $ | 41,961 | | | $ | 39,384 | | | $ | 36,548 | |
Add: Purchase accounting adjustment-securities amortization | | | 1,964 | | | | 1,892 | | | | 2,275 | | | | 2,599 | | | | 3,106 | |
| | | | | | | | | | | | | | | | | | | | |
Interest on securities including amortization | | $ | 49,020 | | | $ | 46,992 | | | $ | 44,236 | | | $ | 41,983 | | | $ | 39,654 | |
| | | | | | | | | | | | | | | | | | | | |
Average securities | | $ | 8,466,946 | | | $ | 7,992,673 | | | $ | 8,015,221 | | | $ | 7,964,157 | | | $ | 7,755,567 | |
Securities yield without purchase accounting adjustment | | | 2.35 | % | | | 2.33 | % | | | 2.19 | % | | | 2.11 | % | | | 2.07 | % |
Securities yield, as reported | | | 2.25 | % | | | 2.24 | % | | | 2.08 | % | | | 1.98 | % | | | 1.91 | % |
| | | | | |
Net Interest Margin (tax equivalent basis, excluding purchase accounting adjustments to yield) | | | 3.33 | % | | | 3.35 | % | | | 3.19 | % | | | 3.09 | % | | | 3.08 | % |
| | | | | |
Net Interest Margin (tax equivalent basis), as reported | | | 3.62 | % | | | 3.82 | % | | | 3.59 | % | | | 3.43 | % | | | 3.42 | % |
| | | | | |
Net income available to common shareholders, as reported | | $ | 67,137 | | | $ | 62,971 | | | $ | 55,278 | | | $ | 53,844 | | | $ | 49,305 | |
Less: Purchase accounting adjustments, net of tax (K) | | | (7,677 | ) | | | (12,095 | ) | | | (9,476 | ) | | | (6,335 | ) | | | (7,560 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net income available to common shareholders, adjusted | | $ | 59,460 | | | $ | 50,876 | | | $ | 45,802 | | | $ | 47,509 | | | $ | 41,745 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Acquired Loans Accounted for
Under ASC 310-20 | | | Acquired Loans Accounted for
Under ASC 310-30 | | | Total Loans Accounted for
Under ASC 310-20 and 310-30 | |
| | | Balance at
Acquisition
Date | | | Balance at
Dec 31,
2013 | | | Balance at
Mar 31,
2014 | | | Balance at
Acquisition
Date | | | Balance at
Dec 31,
2013 | | | Balance at
Mar 31,
2014 | | | Balance at
Acquisition
Date | | | Balance at
Dec 31,
2013 | | | Balance at
Mar 31,
2014 | |
Loan marks: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Previously acquired banks (L) | | $ | 81,328 | | | $ | 28,040 | | | $ | 24,412 | | | $ | 28,764 | | | $ | 20,741 | | | $ | 19,929 | | | $ | 110,092 | | | $ | 48,781 | | | $ | 44,341 | |
2013 acquisitions (M) | | | 78,299 | | | | 59,758 | | | | 52,751 | | | | 34,783 | | | | 24,756 | | | | 22,096 | | | | 113,082 | | | | 84,514 | | | | 74,847 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 159,627 | | | $ | 87,798 | | | $ | 77,163 | | | $ | 63,547 | | | $ | 45,497 | | | $ | 42,025 | | | $ | 223,174 | | | $ | 133,295 | | | $ | 119,188 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Acquired portfolio loan balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Previously acquired banks (L) | | $ | 1,298,380 | | | $ | 522,620 | | | $ | 466,159 | | | $ | 57,979 | | | $ | 37,724 | | | $ | 36,501 | | | $ | 1,356,359 | | | $ | 560,344 | | | $ | 502,660 | |
2013 acquisitions (M) | | | 2,541,268 | | | | 1,936,355 | | | | 1,657,646 | | | | 77,300 | | | | 49,256 | | | | 45,626 | | | | 2,618,568 | | | | 1,985,611 | | | | 1,703,272 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 3,839,648 | | | $ | 2,458,975 | | | $ | 2,123,805 | | | $ | 135,279 | | | $ | 86,980 | | | $ | 82,127 | (N) | | $ | 3,974,927 | | | $ | 2,545,955 | | | $ | 2,205,932 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (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. |
Page 12 of 18
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | Mar 31,
2014 | | | Dec 31,
2013 | | | Sep 30,
2013 | | | Jun 30,
2013 | | | Mar 31,
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 earning assets | | | 0.19 | % | | | 0.29 | % | | | 0.22 | % | | | 0.87 | % | | | 0.22 | % |
Total interest-earning assets | | | 3.83 | % | | | 4.03 | % | | | 3.80 | % | | | 3.67 | % | | | 3.67 | % |
| | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | | 0.24 | % | | | 0.25 | % | | | 0.28 | % | | | 0.33 | % | | | 0.34 | % |
Savings and money market deposits | | | 0.26 | % | | | 0.26 | % | | | 0.27 | % | | | 0.30 | % | | | 0.30 | % |
Certificates and other time deposits | | | 0.59 | % | | | 0.60 | % | | | 0.59 | % | | | 0.61 | % | | | 0.62 | % |
Securities sold under repurchase agreements | | | 0.28 | % | | | 0.28 | % | | | 0.28 | % | | | 0.27 | % | | | 0.26 | % |
Other borrowings | | | 1.23 | % | | | 0.42 | % | | | 0.23 | % | | | 0.35 | % | | | 0.41 | % |
Junior subordinated debentures | | | 2.53 | % | | | 2.61 | % | | | 2.85 | % | | | 2.86 | % | | | 2.88 | % |
Total interest-bearing liabilities | | | 0.36 | % | | | 0.37 | % | | | 0.37 | % | | | 0.40 | % | | | 0.42 | % |
| | | | | |
Net Interest Margin | | | 3.57 | % | | | 3.76 | % | | | 3.53 | % | | | 3.37 | % | | | 3.36 | % |
Net Interest Margin (tax equivalent) | | | 3.62 | % | | | 3.82 | % | | | 3.59 | % | | | 3.43 | % | | | 3.42 | % |
| (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. |
Page 13 of 18
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | Mar 31, 2014 | | | Dec 31, 2013 | | | Sep 30, 2013 | | | June 30, 2013 | | | Mar 31, 2013 | |
Balance Sheet Averages | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 7,755,997 | | | $ | 7,238,438 | | | $ | 6,173,394 | | | $ | 6,114,598 | | | $ | 5,263,784 | |
Investment securities | | | 8,466,946 | | | | 7,992,673 | | | | 8,015,221 | | | | 7,964,157 | | | | 7,755,567 | |
Federal funds sold and other earning assets | | | 101,700 | | | | 103,413 | | | | 27,451 | | | | 35,113 | | | | 34,793 | |
| | | | | | | | | | | | | | | | | | | | |
Total interest-earning assets | | | 16,324,643 | | | | 15,334,524 | | | | 14,216,066 | | | | 14,113,868 | | | | 13,054,144 | |
Allowance for credit losses | | | (67,222 | ) | | | (60,170 | ) | | | (56,765 | ) | | | (57,754 | ) | | | (53,242 | ) |
Cash and due from banks | | | 255,297 | | | | 232,666 | | | | 189,082 | | | | 279,271 | | | | 206,990 | |
Goodwill | | | 1,673,216 | | | | 1,560,905 | | | | 1,351,236 | | | | 1,331,568 | | | | 1,226,332 | |
Core deposit intangibles, net | | | 38,754 | | | | 30,641 | | | | 25,938 | | | | 25,893 | | | | 25,244 | |
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 demand deposits | | | 3,554,366 | | | | 2,963,899 | | | | 2,400,555 | | | | 2,580,750 | | | | 2,659,489 | |
Savings and money market deposits | | | 4,992,442 | | | | 4,654,044 | | | | 4,233,911 | | | | 4,261,466 | | | | 3,790,416 | |
Certificates and other time deposits | | | 2,816,701 | | | | 2,712,699 | | | | 2,489,848 | | | | 2,543,895 | | | | 2,370,499 | |
| | | | | | | | | | | | | | | | | | | | |
Total deposits | | | 15,381,603 | | | | 14,190,938 | | | | 12,432,472 | | | | 12,681,322 | | | | 11,760,025 | |
Securities sold under repurchase agreements | | | 347,747 | | | | 398,100 | | | | 455,276 | | | | 471,430 | | | | 448,542 | |
Other borrowings | | | 51,932 | | | | 210,492 | | | | 772,083 | | | | 541,034 | | | | 358,120 | |
Junior subordinated debentures | | | 124,231 | | | | 111,172 | | | | 85,055 | | | | 85,055 | | | | 85,055 | |
Other liabilities | | | 82,288 | | | | 223,394 | | | | 73,571 | | | | 69,741 | | | | 62,716 | |
Shareholders’ equity | | | 2,820,513 | | | | 2,642,534 | | | | 2,375,812 | | | | 2,322,348 | | | | 2,135,905 | |
| | | | | | | | | | | | | | | | | | | | |
Total liabilities and equity | | $ | 18,808,314 | | | $ | 17,776,630 | | | $ | 16,194,269 | | | $ | 16,170,930 | | | $ | 14,850,363 | |
| | | | | | | | | | | | | | | | | | | | |
Page 14 of 18
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 other | | $ | 1,312,405 | | | | 16.9 | % | | $ | 1,322,975 | | | | 17.0 | % | | $ | 1,028,799 | | | | 16.6 | % | | $ | 999,677 | | | | 16.2 | % | | $ | 760,531 | | | | 14.5 | % |
Construction | | | 888,985 | | | | 11.5 | % | | | 865,511 | | | | 11.1 | % | | | 703,193 | | | | 11.4 | % | | | 694,585 | | | | 11.2 | % | | | 575,307 | | | | 10.9 | % |
1-4 family residential | | | 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 | % |
Home equity | | | 263,966 | | | | 3.4 | % | | | 261,355 | | | | 3.4 | % | | | 211,742 | | | | 3.4 | % | | | 208,739 | | | | 3.4 | % | | | 203,815 | | | | 3.9 | % |
Commercial real estate | | | 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 | % |
Agriculture (includes farmland) | | | 512,857 | | | | 6.6 | % | | | 531,258 | | | | 6.8 | % | | | 321,518 | | | | 5.2 | % | | | 314,945 | | | | 5.1 | % | | | 286,789 | | | | 5.4 | % |
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 DDA | | $ | 4,142,042 | | | | 26.9 | % | | $ | 4,108,835 | | | | 26.9 | % | | $ | 3,368,357 | | | | 27.0 | % | | $ | 3,283,082 | | | | 26.0 | % | | $ | 2,995,828 | | | | 25.6 | % |
Interest-bearing DDA | | | 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 | % |
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 other time deposits | | | 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 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total deposits | | $ | 15,460,057 | | | | | | | $ | 15,291,271 | | | | | | | $ | 12,455,799 | | | | | | | $ | 12,508,650 | | | | | | | $ | 11,713,467 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Loan to Deposit Ratio | | | 50.1 | % | | | | | | | 50.8 | % | | | | | | | 49.6 | % | | | | | | | 49.3 | % | | | | | | | 44.9 | % | | | | |
| | | | | | | | | | |
Construction Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Single family residential construction | | $ | 292,137 | | | | 32.6 | % | | $ | 271,491 | | | | 30.9 | % | | $ | 239,980 | | | | 33.5 | % | | $ | 234,257 | | | | 32.9 | % | | $ | 177,218 | | | | 30.6 | % |
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 other | | | 257,942 | | | | 28.7 | % | | | 244,124 | | | | 28.0 | % | | | 204,940 | | | | 28.9 | % | | | 200,633 | | | | 28.3 | % | | | 153,047 | | | | 26.5 | % |
Net unaccreted discount | | | (8,485 | ) | | | | | | | (9,247 | ) | | | | | | | (8,889 | ) | | | | | | | (15,841 | ) | | | | | | | (2,142 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total construction loans | | $ | 888,985 | | | | | | | $ | 865,511 | | | | | | | $ | 703,193 | | | | | | | $ | 694,585 | | | | | | | $ | 575,307 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Page 15 of 18
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | Mar 31, 2014 | | | Dec 31, 2013 | | | Sep 30, 2013 | | | Jun 30, 2013 | | | Mar 31, 2013 | |
Asset Quality | | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans | | $ | 7,714 | | | $ | 10,231 | | | $ | 4,954 | | | $ | 4,295 | | | $ | 7,529 | |
Accruing loans 90 or more days past due | | | 3,519 | | | | 4,947 | | | | 283 | | | | 325 | | | | 642 | |
| | | | | | | | | | | | | | | | | | | | |
Total nonperforming loans | | | 11,233 | | | | 15,178 | | | | 5,237 | | | | 4,620 | | | | 8,171 | |
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 land loans | | | 4,053 | | | | 4,558 | | | | 4,611 | | | | 5,898 | | | | 3,678 | |
1-4 family residential (including home equity) | | | 5,435 | | | | 6,279 | | | | 2,441 | | | | 2,112 | | | | 3,746 | |
Commercial real estate (including multi-family residential) | | | 4,196 | | | | 8,033 | | | | 4,233 | | | | 4,330 | | | | 5,533 | |
Agriculture (includes farmland) | | | 104 | | | | 279 | | | | 23 | | | | 1,213 | | | | 1,183 | |
Consumer and other | | | 160 | | | | 202 | | | | 156 | | | | 120 | | | | 97 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 18,696 | | | $ | 22,504 | | | $ | 12,687 | | | $ | 14,864 | | | $ | 18,133 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Number of loans/properties | | | 164 | | | | 203 | | | | 128 | | | | 123 | | | | 124 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
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 | | | $ | 7 | | | $ | 119 | | | $ | 148 | | | $ | 59 | |
Construction, land development and other land loans | | | (17 | ) | | | (12 | ) | | | (30 | ) | | | 124 | | | | (56 | ) |
1-4 family residential (including home equity) | | | 131 | | | | 21 | | | | 15 | | | | 35 | | | | 102 | |
Commercial real estate (including multi-family residential) | | | 60 | | | | (311 | ) | | | (471 | ) | | | 801 | | | | (57 | ) |
Agriculture (includes farmland) | | | (81 | ) | | | (85 | ) | | | 13 | | | | 13 | | | | (7 | ) |
Consumer and other | | | 612 | | | | 876 | | | | 642 | | | | 302 | | | | 274 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 786 | | | $ | 496 | | | $ | 288 | | | $ | 1,423 | | | $ | 315 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Asset Quality Ratios | | | | | | | | | | | | | | | | | | | | |
Nonperforming assets to average earning assets | | | 0.11 | % | | | 0.15 | % | | | 0.09 | % | | | 0.11 | % | | | 0.14 | % |
Nonperforming assets to loans and other real estate | | | 0.24 | % | | | 0.29 | % | | | 0.20 | % | | | 0.24 | % | | | 0.34 | % |
Net charge-offs to average loans (annualized) | | | 0.04 | % | | | 0.03 | % | | | 0.02 | % | | | 0.09 | % | | | 0.02 | % |
Allowance for credit losses to total loans | | | 0.87 | % | | | 0.87 | % | | | 0.97 | % | | | 0.91 | % | | | 1.05 | % |
Allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30)(E) | | | 1.18 | % | | | 1.25 | % | | | 1.20 | % | | | 1.18 | % | | | 1.25 | % |
Page 16 of 18
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, 2014 | | | Dec 31, 2013 | | | Sep 30, 2013 | | | Jun 30, 2013 | | | Mar 31, 2013 | |
| | | | | |
Return on average tangible common equity: | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 67,137 | | | $ | 62,971 | | | $ | 55,278 | | | $ | 53,844 | | | $ | 49,305 | |
| | | | | | | | | | | | | | | | | | | | |
Average shareholders’ equity | | $ | 2,820,513 | | | $ | 2,642,534 | | | $ | 2,375,812 | | | $ | 2,322,348 | | | $ | 2,135,905 | |
Less: Average goodwill and other intangible assets | | | (1,711,970 | ) | | | (1,591,546 | ) | | | (1,377,174 | ) | | | (1,357,461 | ) | | | (1,251,576 | ) |
| | | | | | | | | | | | | | | | | | | | |
Average tangible shareholders’ equity | | $ | 1,108,543 | | | $ | 1,050,988 | | | $ | 998,638 | | | $ | 964,887 | | | $ | 884,329 | |
Return on average tangible common equity (D) | | | 24.23 | % | | | 23.97 | % | | | 22.14 | % | | | 22.32 | % | | | 22.30 | % |
| | | | | |
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 intangible assets | | | (1,711,706 | ) | | | (1,712,121 | ) | | | (1,377,015 | ) | | | (1,377,522 | ) | | | (1,262,257 | ) |
| | | | | | | | | | | | | | | | | | | | |
Tangible shareholders’ equity | | $ | 1,129,048 | | | $ | 1,074,697 | | | $ | 1,012,097 | | | $ | 967,760 | | | $ | 887,198 | |
| | | | | |
Period end shares outstanding | | | 66,261 | | | | 66,048 | | | | 60,383 | | | | 60,315 | | | | 57,014 | |
Tangible book value per share: | | $ | 17.04 | | | $ | 16.27 | | | $ | 16.76 | | | $ | 16.05 | | | $ | 15.56 | |
| | | | | |
Tangible equity to tangible assets ratio: | | | | | | | | | | | | | | | | | | | | |
Tangible shareholders’ equity | | $ | 1,129,048 | | | $ | 1,074,697 | | | $ | 1,012,097 | | | $ | 967,760 | | | $ | 887,198 | |
| | | | | |
Total assets | | $ | 18,913,133 | | | $ | 18,642,028 | | | $ | 16,054,279 | | | $ | 16,270,718 | | | $ | 15,081,314 | |
Less: Goodwill and other intangible assets | | | (1,711,706 | ) | | | (1,712,121 | ) | | | (1,377,015 | ) | | | (1,377,522 | ) | | | (1,262,257 | ) |
| | | | | | | | | | | | | | | | | | | | |
Tangible assets | | $ | 17,201,427 | | | $ | 16,929,907 | | | $ | 14,677,264 | | | $ | 14,893,196 | | | $ | 13,819,057 | |
| | | | | |
Tangible equity to tangible assets ratio | | | 6.56 | % | | | 6.35 | % | | | 6.90 | % | | | 6.50 | % | | | 6.42 | % |
Page 17 of 18
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 production) | | $ | 2,086,744 | | | $ | 2,412,660 | | | $ | 853,751 | |
| | | | | | | | | | | | |
Total loans less acquired loans | | $ | 5,665,656 | | | $ | 5,362,561 | | | $ | 4,409,273 | |
Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis) | | | 1.18 | % | | | 1.25 | % | | | 1.25 | % |
Page 18 of 18
