Exhibit 99.1
PRESS RELEASE | For more information contact: |
| |
Prosperity Bancshares, Inc.® | Cullen Zalman |
Prosperity Bank Plaza | Vice President – Banking and Corporate Activities |
4295 San Felipe | 281.269.7199 |
Houston, Texas 77027 | cullen.zalman@prosperitybankusa.com |
FOR IMMEDIATE RELEASE
PROSPERITY BANCSHARES, INC.®
REPORTS FIRST QUARTER
2019 EARNINGS
| • | First quarter earnings per common share (diluted) increased 10.3% to $1.18 compared with the first quarter 2018 |
| • | First quarter net income increased 10.8% to $82.402 million compared with the first quarter 2018 |
| • | Nonperforming assets remain low at 0.21% of first quarter average interest-earning assets |
| • | Return (annualized) on first quarter average assets of 1.46% |
| • | Returns (annualized) on first quarter average common equity of 8.05% and average tangible common equity of 15.24%(1) |
| • | Loans increased 4.0% compared with the first quarter 2018 |
HOUSTON, April 24, 2019. Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, “Prosperity”), reported net income for the quarter ended March 31, 2019 of $82.402 million, an increase of $8.041 million or 10.8% compared with $74.361 million for the same period in 2018. Net income per diluted common share increased 10.3% to $1.18 compared with $1.07 for the same period in 2018. Net income and earnings per diluted common share for the three months ended March 31, 2018 were impacted by net charge-offs of $9.441 million. Additionally, loans increased 4.0% compared with the first quarter 2018 and nonperforming assets remain low at 0.21% of first quarter average interest-earning assets.
“Prosperity is fortunate to operate in vibrant and growing states. We continue to see employment growth and a tailwind from companies expanding in and moving to Texas and Oklahoma due to a business friendly political climate and lower tax rates. However, we did experience some pause in loan growth during the first quarter of 2019, impacted by the continued pay downs we experience,” said David Zalman, Prosperity’s Chairman and Chief Executive Officer.
“Prosperity continues to focus on building core customer relationships, maintaining sound asset quality and operating the bank in an efficient manner, while investing in ever-changing technology and product distribution channels. We intend to continue to grow our company both organically and through mergers and acquisitions,” continued Zalman.
“I want to thank everyone involved in our company for helping to make it the success it has become,” concluded Zalman.
______________
(1) | Refer to the “Notes to Selected Financial Data” at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure. |
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Results of Operations for the Three Months Ended March 31, 2019
Net income was $82.402 million(2) for the three months ended March 31, 2019 compared with $74.361 million(3) for the same period in 2018, an increase of $8.041 million or 10.8%. Net income per diluted common share was $1.18 for the three months ended March 31, 2019 compared with $1.07 for the same period in 2018, an increase of 10.3%. Net income and earnings per diluted common share for the three months ended March 31, 2018 were impacted by net charge-offs of $9.441 million. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2019 were 1.46%, 8.05% and 15.24%(1), respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains on the sale of assets and taxes) was 42.94%(1) for the three months ended March 31, 2019.
Net interest income before provision for credit losses for the three months ended March 31, 2019 was $154.911 million compared with $153.223 million for the same period in 2018, an increase of $1.688 million or 1.1%. Linked quarter net interest income before provision for credit losses decreased $2.337 million or 1.5% to $154.911 million compared with $157.248 million for the three months ended December 31, 2018. Linked quarter net interest income was impacted by a decrease in loan discount accretion of $1.110 million.
The net interest margin on a tax equivalent basis was 3.20% for the three months ended March 31, 2019 compared with 3.16% for the same period in 2018. This change was primarily due to higher average yields on loans and investment securities, partially offset by higher average rates on deposits and other borrowings. On a linked quarter basis, the net interest margin was 3.20% compared with 3.15% for the three months ended December 31, 2018. This increase was primarily due to higher yields and average balances on loans and lower average borrowings mainly resulting from the increase in average deposits.
Noninterest income was $28.144 million for the three months ended March 31, 2019 compared with $27.938 million for the same period in 2018, an increase of $206 thousand or 0.7%. On a linked quarter basis, noninterest income decreased $935 thousand or 3.2% to $28.144 million compared with $29.079 million for the three months ended December 31, 2018. This decrease was primarily due to a decrease in NSF fees and credit card, debit card and ATM card income.
Noninterest expense was $78.571 million for the three months ended March 31, 2019 compared with $80.054 million for the same period in 2018, a decrease of $1.483 million or 1.9%. This decrease was primarily due to a decrease in regulatory assessments and FDIC insurance resulting from the elimination of the FDIC temporary surcharge imposed on large banks by the Dodd-Frank Act. On a linked quarter basis, noninterest expense decreased $2.233 million or 2.8% to $78.571 million compared with $80.804 million for the three months ended December 31, 2018. This change was primarily due to decreases in salaries and benefits, other noninterest expense and regulatory assessments and FDIC insurance.
Balance Sheet Information
At March 31, 2019, Prosperity had $22.354 billion in total assets, a decrease of $118.073 million or 0.5%, compared with $22.472 billion at March 31, 2018.
Loans at March 31, 2019 were $10.414 billion, an increase of $402.606 million or 4.0%, compared with $10.011 billion at March 31, 2018. Linked quarter loans increased $43.709 million or 0.4% (1.7% annualized) from $10.370 billion at December 31, 2018.
Deposits at March 31, 2019 were $17.198 billion, a decrease of $135.109 million or 0.8%, compared with $17.333 billion at March 31, 2018. This was primarily due to lower municipal deposits compared with the prior year. Linked quarter deposits decreased $58.788 million or 0.3% from $17.257 billion at December 31, 2018.
Asset Quality
Nonperforming assets totaled $40.883 million or 0.21% of quarterly average interest-earning assets at March 31, 2019, compared with $33.217 million or 0.17% of quarterly average interest-earning assets at March 31, 2018, and $18.956 million or 0.10% of quarterly average interest-earning assets at December 31, 2018. The linked quarter change was primarily due to a commercial and industrial loan and a 1-4 family residential loan being placed on nonaccrual during the first quarter of 2019.
The allowance for credit losses was $86.091 million or 0.83% of total loans at March 31, 2019, $83.600 million or 0.84% of total loans at March 31, 2018 and $86.440 million or 0.83% of total loans at December 31, 2018. Excluding loans acquired that are
______________
(2) | Includes purchase accounting adjustments of $1.238 million, net of tax, primarily comprised of loan discount accretion of $1.793 million for the three months ended March 31, 2019. |
(3) | Includes purchase accounting adjustments of $1.536 million, net of tax, primarily comprised of loan discount accretion of $2.326 million for the three months ended March 31, 2018. |
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accounted for under FASB Accounting Standards Codification (“ASC”) Topics 310-20 and 310-30, the allowance for credit losses was 0.87%(1) of remaining loans as of March 31, 2019, compared with 0.90%(1) at March 31, 2018 and 0.88%(1) at December 31, 2018.
The provision for credit losses was $700 thousand for the three months ended March 31, 2019 compared with $9.000 million for the three months ended March 31, 2018 and $1.000 million for the three months ended December 31, 2018.
Net charge-offs were $1.049 million for the three months ended March 31, 2019 compared with $9.441 million for the three months ended March 31, 2018 and $556 thousand for the three months ended December 31, 2018.
Dividend
Prosperity Bancshares, Inc. declared a second quarter cash dividend of $0.41 per share to be paid on July 1, 2019 to all shareholders of record as of June 14, 2019.
Conference Call
Prosperity’s management team will host a conference call on Wednesday, April 24, 2019 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity’s first quarter 2019 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The elite entry number is 5401422.
Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity’s website at www.prosperitybankusa.com. The webcast may be accessed from Prosperity’s home page by selecting “Presentations & Calls” from the drop-down menu on the Investor Relations tab and following the instructions.
Non-GAAP Financial Measures
Prosperity’s management uses certain non-GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity, tangible equity to tangible assets ratio and the efficiency ratio, excluding net gains and losses on the sale of assets and securities. Further, as a result of acquisitions and the related purchase accounting adjustments, Prosperity uses certain non-GAAP financial 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, “Receivables-Nonrefundable Fees and Other Costs” and 310-30, “Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality”). Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity’s financial results and that their presentation, together with the accompanying reconciliations, provides a more 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 financial measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP financial measures should not be considered a substitute for, nor of greater importance than, GAAP basis financial measures and results; 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. 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 to the nearest respective GAAP financial measures.
Prosperity Bancshares, Inc. ®
As of March 31, 2019, Prosperity Bancshares, Inc. ® is a $22.354 billion Houston, Texas based regional financial holding company, formed in 1983. Operating under a community banking philosophy and seeking to develop broad customer relationships based on service and convenience, Prosperity offers a variety of traditional loan and deposit products to its customers, which consist primarily of small and medium sized businesses and consumers. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services at www.prosperitybankusa.com, Retail Brokerage Services, Credit Cards, Debit Cards, 24 hour voice response banking, Trust and Wealth Management, Mortgage Services, Cash Management and Mobile Banking.
As of March 31, 2019, Prosperity operated 242 full-service banking locations: 65 in the Houston area, including The Woodlands; 29 in the South Texas area including Corpus Christi and Victoria; 33 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 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 8 in the Tulsa, Oklahoma area.
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“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. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares 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, interest rate and commodity price fluctuations; and weather. These and various other factors are discussed in Prosperity Bancshares’ Annual Report on Form 10-K for the year ended December 31, 2018 and other reports and statements Prosperity Bancshares has filed with the SEC. Copies of the SEC filings for Prosperity Bancshares may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.
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Bryan/College Station Area - | | Keller | | Westheimer | | Taft |
Bryan | | Roanoke | | West University | | Yoakum |
Bryan-29th Street | | Stockyards | | Woodcreek | | Yorktown |
Bryan-East | | | | | | |
Bryan-North | | Other Dallas/Fort Worth Area | | Katy - | | West Texas Area - |
Caldwell | | Locations - | | Cinco Ranch | | Abilene - |
College Station | | Arlington | | Katy-Spring Green | | Antilley Road |
Crescent Point | | Azle | | | | Barrow Street |
Hearne | | Ennis | | The Woodlands - | | Cypress Street |
Huntsville | | Gainesville | | The Woodlands-College Park | | Judge Ely |
Madisonville | | Glen Rose | | The Woodlands-I-45 | | Mockingbird |
Navasota | | Granbury | | The Woodlands-Research Forest | | |
New Waverly | | Mesquite | | | | Lubbock - |
Rock Prairie | | Muenster | | Other Houston Area | | 4th Street |
Southwest Parkway | | Sanger | | Locations - | | 66th Street |
Tower Point | | Waxahachie | | Angleton | | 82nd Street |
Wellborn Road | | Weatherford | | Bay City | | 86th Street |
| | | | Beaumont | | 98th Street |
Central Texas Area - | | East Texas Area - | | Cleveland | | Avenue Q |
Austin - | | Athens | | East Bernard | | North University |
Allandale | | Blooming Grove | | El Campo | | Texas Tech Student Union |
Cedar Park | | Canton | | Dayton | | |
Congress | | Carthage | | Galveston | | Midland - |
Lakeway | | Corsicana | | Groves | | Wadley |
Liberty Hill | | Crockett | | Hempstead | | Wall Street |
Northland | | Eustace | | Hitchcock | | |
Oak Hill | | Gilmer | | Liberty | | Odessa - |
Research Blvd | | Grapeland | | Magnolia | | Grandview |
Westlake | | Gun Barrel City | | Magnolia Parkway | | Grant |
| | Jacksonville | | Mont Belvieu | | Kermit Highway |
Other Central Texas Area | | Kerens | | Nederland | | Parkway |
Locations - | | Longview | | Needville | | |
Bastrop | | Mount Vernon | | Rosenberg | | Other West Texas Area |
Canyon Lake | | Palestine | | Shadow Creek | | Locations - |
Dime Box | | Rusk | | Spring | | Big Spring |
Dripping Springs | | Seven Points | | Tomball | | Brownfield |
Elgin | | Teague | | Waller | | Brownwood |
Flatonia | | Tyler-Beckham | | West Columbia | | Cisco |
Georgetown | | Tyler-South Broadway | | Wharton | | Comanche |
Gruene | | Tyler-University | | Winnie | | Early |
Kingsland | | Winnsboro | | Wirt | | Floydada |
La Grange | | | | | | Gorman |
Lexington | | Houston Area - | | South Texas Area - | | Levelland |
New Braunfels | | Houston - | | Corpus Christi - | | Littlefield |
Pleasanton | | Aldine | | Calallen | | Merkel |
Round Rock | | Alief | | Carmel | | Plainview |
San Antonio | | Bellaire | | Northwest | | San Angelo |
Schulenburg | | Beltway | | Saratoga | | Slaton |
Seguin | | Clear Lake | | Timbergate | | Snyder |
Smithville | | Copperfield | | Water Street | | |
Thorndale | | Cypress | | | | Oklahoma |
Weimar | | Downtown | | Victoria - | | Central Oklahoma Area- |
| | Eastex | | Victoria Main | | Oklahoma City - |
Dallas/Fort Worth Area - | | Fairfield | | Victoria-Navarro | | 23rd Street |
Dallas - | | First Colony | | Victoria-North | | Expressway |
Abrams Centre | | Fry Road | | | | I-240 |
Balch Springs | | Gessner | | Other South Texas Area | | Memorial |
Camp Wisdom | | Gladebrook | | Locations - | | |
Cedar Hill | | Grand Parkway | | Alice | | Other Central Oklahoma Area |
Frisco | | Heights | | Aransas Pass | | Locations - |
Frisco-West | | Highway 6 West | | Beeville | | Edmond |
Kiest | | Little York | | Colony Creek | | Norman |
McKinney | | Medical Center | | Cuero | | |
McKinney-Stonebridge | | Memorial Drive | | Edna | | Tulsa Area- |
Midway | | Northside | | Goliad | | Tulsa - |
Plano | | Pasadena | | Gonzales | | Garnett |
Preston Forest | | Pecan Grove | | Hallettsville | | Harvard |
Preston Road | | Pin Oak | | Kingsville | | Memorial |
Red Oak | | River Oaks | | Mathis | | Sheridan |
Sachse | | Sugar Land | | Padre Island | | S. Harvard |
The Colony | | SW Medical Center | | Palacios | | Utica Tower |
Turtle Creek | | Tanglewood | | Port Lavaca | | Yale |
Westmoreland | | The Plaza | | Portland | | |
| | Uptown | | Rockport | | Other Tulsa Area Locations - |
Fort Worth - | | Waugh Drive | | Sinton | | Owasso |
Haltom City | | | | | | |
- - -
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Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(In thousands)
| | Mar 31, 2019 | | | Dec 31, 2018 | | | Sep 30, 2018 | | | Jun 30, 2018 | | | Mar 31, 2018 | |
Balance Sheet Data (at period end) | | | | | | | | | | | | | | | | | | | | |
Loans | | $ | 10,414,022 | | | $ | 10,370,313 | | | $ | 10,292,846 | | | $ | 10,146,565 | | | $ | 10,011,416 | |
Investment securities(A) | | | 9,137,645 | | | | 9,408,966 | | | | 9,504,733 | | | | 9,620,614 | | | | 9,710,254 | |
Federal funds sold | | | 566 | | | | 552 | | | | 639 | | | | 577 | | | | 469 | |
Allowance for credit losses | | | (86,091 | ) | | | (86,440 | ) | | | (85,996 | ) | | | (84,964 | ) | | | (83,600 | ) |
Cash and due from banks | | | 291,498 | | | | 410,575 | | | | 293,831 | | | | 274,902 | | | | 243,514 | |
Goodwill | | | 1,900,845 | | | | 1,900,845 | | | | 1,900,845 | | | | 1,900,845 | | | | 1,900,845 | |
Core deposit intangibles, net | | | 31,564 | | | | 32,883 | | | | 34,295 | | | | 35,773 | | | | 37,274 | |
Other real estate owned | | | 2,096 | | | | 1,805 | | | | 889 | | | | 10,316 | | | | 10,538 | |
Fixed assets, net | | | 257,595 | | | | 257,046 | | | | 256,426 | | | | 255,465 | | | | 257,057 | |
Other assets | | | 404,501 | | | | 396,857 | | | | 414,075 | | | | 410,647 | | | | 384,547 | |
Total assets | | $ | 22,354,241 | | | $ | 22,693,402 | | | $ | 22,612,583 | | | $ | 22,570,740 | | | $ | 22,472,314 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 5,673,707 | | | $ | 5,666,115 | | | $ | 5,700,242 | | | $ | 5,657,589 | | | $ | 5,707,994 | |
Interest-bearing deposits | | | 11,524,063 | | | | 11,590,443 | | | | 11,033,522 | | | | 11,321,015 | | | | 11,624,885 | |
Total deposits | | | 17,197,770 | | | | 17,256,558 | | | | 16,733,764 | | | | 16,978,604 | | | | 17,332,879 | |
Other borrowings | | | 680,952 | | | | 1,031,126 | | | | 1,501,207 | | | | 1,254,849 | | | | 820,079 | |
Securities sold under repurchase agreements | | | 254,573 | | | | 284,720 | | | | 297,126 | | | | 293,039 | | | | 339,576 | |
Other liabilities | | | 111,156 | | | | 68,174 | | | | 84,789 | | | | 108,796 | | | | 103,635 | |
Total liabilities | | | 18,244,451 | | | | 18,640,578 | | | | 18,616,886 | | | | 18,635,288 | | | | 18,596,169 | |
Shareholders' equity(B) | | | 4,109,790 | | | | 4,052,824 | | | | 3,995,697 | | | | 3,935,452 | | | | 3,876,145 | |
Total liabilities and equity | | $ | 22,354,241 | | | $ | 22,693,402 | | | $ | 22,612,583 | | | $ | 22,570,740 | | | $ | 22,472,314 | |
(A) Includes $895, $392, $586, $436 and $57 in unrealized gains on available for sale securities for the quarterly periods ended March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively.
(B) Includes $706, $310, $463, $345 and $45 in after-tax unrealized gains on available for sale securities for the quarterly periods ended March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively.
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Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(In thousands)
| | Three Months Ended | |
| | Mar 31, 2019 | | | Dec 31, 2018 | | | Sep 30, 2018 | | | Jun 30, 2018 | | | Mar 31, 2018 | |
Income Statement Data | | | | | | | | | | | | | | | | | | | | |
Interest income: | | | | | | | | | | | | | | | | | | | | |
Loans | | $ | 130,065 | | | $ | 130,627 | | | $ | 128,645 | | | $ | 128,445 | | | $ | 116,246 | |
Securities(C) | | | 55,648 | | | | 56,170 | | | | 55,705 | | | | 55,577 | | | | 54,457 | |
Federal funds sold and other earning assets | | | 402 | | | | 397 | | | | 326 | | | | 299 | | | | 315 | |
Total interest income | | | 186,115 | | | | 187,194 | | | | 184,676 | | | | 184,321 | | | | 171,018 | |
| | | | | | | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | | | | | | | |
Deposits | | | 25,128 | | | | 21,643 | | | | 19,208 | | | | 16,061 | | | | 14,472 | |
Other borrowings | | | 5,317 | | | | 7,639 | | | | 7,583 | | | | 6,046 | | | | 2,973 | |
Securities sold under repurchase agreements | | | 759 | | | | 664 | | | | 566 | | | | 411 | | | | 350 | |
Total interest expense | | | 31,204 | | | | 29,946 | | | | 27,357 | | | | 22,518 | | | | 17,795 | |
Net interest income | | | 154,911 | | | | 157,248 | | | | 157,319 | | | | 161,803 | | | | 153,223 | |
Provision for credit losses | | | 700 | | | | 1,000 | | | | 2,350 | | | | 4,000 | | | | 9,000 | |
Net interest income after provision for credit losses | | | 154,211 | | | | 156,248 | | | | 154,969 | | | | 157,803 | | | | 144,223 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest income: | | | | | | | | | | | | | | | | | | | | |
Nonsufficient funds (NSF) fees | | | 7,816 | | | | 8,902 | | | | 8,606 | | | | 7,828 | | | | 7,827 | |
Credit card, debit card and ATM card income | | | 5,971 | | | | 6,508 | | | | 6,242 | | | | 6,335 | | | | 5,961 | |
Service charges on deposit accounts | | | 4,998 | | | | 5,090 | | | | 5,137 | | | | 5,150 | | | | 5,275 | |
Trust income | | | 2,595 | | | | 2,507 | | | | 2,692 | | | | 2,251 | | | | 2,728 | |
Mortgage income | | | 722 | | | | 627 | | | | 856 | | | | 1,109 | | | | 763 | |
Brokerage income | | | 673 | | | | 521 | | | | 784 | | | | 687 | | | | 625 | |
Bank owned life insurance income | | | 1,289 | | | | 1,330 | | | | 1,326 | | | | 1,317 | | | | 1,311 | |
Net gain (loss) on sale of assets | | | 58 | | | | (715 | ) | | | 4 | | | | (44 | ) | | | — | |
Net loss on sale of securities | | | — | | | | — | | | | — | | | | (13 | ) | | | — | |
Other noninterest income | | | 4,022 | | | | 4,309 | | | | 4,977 | | | | 3,751 | | | | 3,448 | |
Total noninterest income | | | 28,144 | | | | 29,079 | | | | 30,624 | | | | 28,371 | | | | 27,938 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest expense: | | | | | | | | | | | | | | | | | | | | |
Salaries and benefits | | | 51,073 | | | | 51,852 | | | | 51,906 | | | | 53,360 | | | | 50,399 | |
Net occupancy and equipment | | | 5,466 | | | | 5,651 | | | | 5,808 | | | | 5,692 | | | | 5,609 | |
Credit and debit card, data processing and software amortization | | | 4,573 | | | | 4,474 | | | | 4,512 | | | | 4,356 | | | | 4,448 | |
Regulatory assessments and FDIC insurance | | | 2,374 | | | | 2,764 | | | | 3,347 | | | | 3,575 | | | | 3,575 | |
Core deposit intangibles amortization | | | 1,319 | | | | 1,412 | | | | 1,478 | | | | 1,501 | | | | 1,568 | |
Depreciation | | | 3,104 | | | | 3,139 | | | | 3,139 | | | | 3,054 | | | | 3,033 | |
Communications | | | 2,270 | | | | 2,404 | | | | 2,442 | | | | 2,606 | | | | 2,580 | |
Other real estate expense | | | 83 | | | | 110 | | | | 219 | | | | 83 | | | | 89 | |
Net (gain) loss on sale or write-down of other real estate | | | (177 | ) | | | 91 | | | | (2 | ) | | | 10 | | | | 122 | |
Other noninterest expense | | | 8,486 | | | | 8,907 | | | | 8,911 | | | | 9,365 | | | | 8,631 | |
Total noninterest expense | | | 78,571 | | | | 80,804 | | | | 81,760 | | | | 83,602 | | | | 80,054 | |
Income before income taxes | | | 103,784 | | | | 104,523 | | | | 103,833 | | | | 102,572 | | | | 92,107 | |
Provision for income taxes | | | 21,382 | | | | 21,192 | | | | 21,310 | | | | 20,975 | | | | 17,746 | |
Net income available to common shareholders | | $ | 82,402 | | | $ | 83,331 | | | $ | 82,523 | | | $ | 81,597 | | | $ | 74,361 | |
(C) Interest income on securities was reduced by net premium amortization of $6,589, $7,338, $8,073, $7,753 and $8,450 for the three-month periods ended March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively.
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Prosperity Bancshares, Inc. ®
Financial Highlights (Unaudited)
(Dollars and share amounts in thousands, except per share data and market prices)
| | Three Months Ended | |
| | Mar 31, 2019 | | | Dec 31, 2018 | | | Sep 30, 2018 | | | Jun 30, 2018 | | | Mar 31, 2018 | |
Profitability | | | | | | | | | | | | | | | | | | | | |
Net income (D) (E) | | $ | 82,402 | | | $ | 83,331 | | | $ | 82,523 | | | $ | 81,597 | | | $ | 74,361 | |
| | | | | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 1.18 | | | $ | 1.19 | | | $ | 1.18 | | | $ | 1.17 | | | $ | 1.07 | |
Diluted earnings per share | | $ | 1.18 | | | $ | 1.19 | | | $ | 1.18 | | | $ | 1.17 | | | $ | 1.07 | |
| | | | | | | | | | | | | | | | | | | | |
Return on average assets (F) | | | 1.46 | % | | | 1.47 | % | | | 1.46 | % | | | 1.44 | % | | | 1.32 | % |
Return on average common equity (F) | | | 8.05 | % | | | 8.25 | % | | | 8.30 | % | | | 8.33 | % | | | 7.69 | % |
Return on average tangible common equity (F) (G) | | | 15.24 | % | | | 15.84 | % | | | 16.17 | % | | | 16.48 | % | | | 15.43 | % |
Tax equivalent net interest margin (D) (E) (H) | | | 3.20 | % | | | 3.15 | % | | | 3.15 | % | | | 3.28 | % | | | 3.16 | % |
Efficiency ratio (G) (I) | | | 42.94 | % | | | 43.20 | % | | | 43.50 | % | | | 43.95 | % | | | 44.19 | % |
| | | | | | | | | | | | | | | | | | | | |
Liquidity and Capital Ratios | | | | | | | | | | | | | | | | | | | | |
Equity to assets | | | 18.38 | % | | | 17.86 | % | | | 17.67 | % | | | 17.44 | % | | | 17.25 | % |
Common equity tier 1 capital | | | 16.76 | % | | | 16.32 | % | | | 15.94 | % | | | 15.65 | % | | | 15.31 | % |
Tier 1 risk-based capital | | | 16.76 | % | | | 16.32 | % | | | 15.94 | % | | | 15.65 | % | | | 15.31 | % |
Total risk-based capital | | | 17.42 | % | | | 16.99 | % | | | 16.60 | % | | | 16.32 | % | | | 15.97 | % |
Tier 1 leverage capital | | | 10.59 | % | | | 10.23 | % | | | 9.94 | % | | | 9.68 | % | | | 9.40 | % |
Period end tangible equity to period end tangible assets (G) | | | 10.66 | % | | | 10.21 | % | | | 9.97 | % | | | 9.69 | % | | | 9.44 | % |
| | | | | | | | | | | | | | | | | | | | |
Other Data | | | | | | | | | | | | | | | | | | | | |
Weighted-average shares used in computing earnings per common share | | | | | | | | | | | | | | | | | | | | |
Basic | | | 69,847 | | | | 69,838 | | | | 69,838 | | | | 69,839 | | | | 69,768 | |
Diluted | | | 69,847 | | | | 69,838 | | | | 69,838 | | | | 69,839 | | | | 69,768 | |
Period end shares outstanding | | | 69,846 | | | | 69,847 | | | | 69,838 | | | | 69,838 | | | | 69,819 | |
Cash dividends paid per common share | | $ | 0.41 | | | $ | 0.41 | | | $ | 0.36 | | | $ | 0.36 | | | $ | 0.36 | |
Book value per common share | | $ | 58.84 | | | $ | 58.02 | | | $ | 57.21 | | | $ | 56.35 | | | $ | 55.52 | |
Tangible book value per common share (G) | | $ | 31.17 | | | $ | 30.34 | | | $ | 29.50 | | | $ | 28.62 | | | $ | 27.76 | |
| | | | | | | | | | | | | | | | | | | | |
Common Stock Market Price | | | | | | | | | | | | | | | | | | | | |
High | | $ | 75.36 | | | $ | 72.24 | | | $ | 76.25 | | | $ | 76.92 | | | $ | 79.20 | |
Low | | $ | 61.65 | | | $ | 57.01 | | | $ | 67.27 | | | $ | 67.30 | | | $ | 68.95 | |
Period end closing price | | $ | 69.06 | | | $ | 62.30 | | | $ | 69.35 | | | $ | 68.36 | | | $ | 72.63 | |
Employees – FTE | | | 3,065 | | | | 3,036 | | | | 3,029 | | | | 3,044 | | | | 3,027 | |
Number of banking centers | | | 242 | | | | 242 | | | | 242 | | | | 242 | | | | 242 | |
(D) Includes purchase accounting adjustments for the periods presented as follows:
| Three Months Ended |
| Mar 31, 2019 | | Dec 31, 2018 | | Sep 30, 2018 | | Jun 30, 2018 | | Mar 31, 2018 |
Loan discount accretion | | | | | | | | | |
ASC 310-20 | $1,474 | | $1,289 | | $1,287 | | $1,452 | | $1,640 |
ASC 310-30 | $319 | | $1,614 | | $2,170 | | $3,771 | | $686 |
Securities net amortization | $234 | | $270 | | $291 | | $366 | | $477 |
Time deposits amortization | — | | — | | — | | $53 | | $53 |
(E) Using effective tax rate of 20.6%, 20.3%, 20.5%, 20.4% and 19.3% for the three-month periods ended March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively.
(F) Interim periods annualized.
(G) Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
(H) Net interest margin for all periods presented is based on average balances on an actual 365 day basis.
(I) 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 8 of 15
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
YIELD ANALYSIS | | Three Months Ended | | |
| | Mar 31, 2019 | | | Dec 31, 2018 | | | Mar 31, 2018 | | |
| | Average Balance | | | Interest Earned/ Interest Paid | | | Average Yield/ Rate | | (J) | Average Balance | | | Interest Earned/ Interest Paid | | | Average Yield/ Rate | | (J) | Average Balance | | | Interest Earned/ Interest Paid | | | Average Yield/ Rate | | (J) |
Interest-Earning Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans | | $ | 10,392,235 | | | $ | 130,065 | | | 5.08% | | | $ | 10,319,596 | | | $ | 130,627 | | | 5.02% | | | $ | 9,990,319 | | | $ | 116,246 | | | 4.72% | | |
Investment securities | | | 9,299,963 | | | | 55,648 | | | 2.43% | | (K) | | 9,499,166 | | | | 56,170 | | | 2.35% | | (K) | | 9,742,601 | | | | 54,457 | | | 2.27% | | (K) |
Federal funds sold and other earning assets | | | 71,842 | | | | 402 | | | 2.27% | | | | 100,339 | | | | 397 | | | 1.57% | | | | 81,779 | | | | 315 | | | 1.56% | | |
Total interest-earning assets | | | 19,764,040 | | | | 186,115 | | | 3.82% | | | | 19,919,101 | | | | 187,194 | | | 3.73% | | | | 19,814,699 | | | | 171,018 | | | 3.50% | | |
Allowance for credit losses | | | (86,507 | ) | | | | | | | | | | | (86,464 | ) | | | | | | | | | | | (81,983 | ) | | | | | | | | | |
Noninterest-earning assets | | | 2,864,039 | | | | | | | | | | | | 2,861,369 | | | | | | | | | | | | 2,823,785 | | | | | | | | | | |
Total assets | | $ | 22,541,572 | | | | | | | | | | | $ | 22,694,006 | | | | | | | | | | | $ | 22,556,501 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | $ | 4,148,377 | | | $ | 6,812 | | | 0.67% | | | $ | 3,720,133 | | | $ | 5,327 | | | 0.57% | | | $ | 4,392,230 | | | $ | 5,063 | | | 0.47% | | |
Savings and money market deposits | | | 5,472,789 | | | | 11,184 | | | 0.83% | | | | 5,382,699 | | | | 9,842 | | | 0.73% | | | | 5,478,411 | | | | 5,242 | | | 0.39% | | |
Certificates and other time deposits | | | 2,062,753 | | | | 7,132 | | | 1.40% | | | | 2,087,871 | | | | 6,474 | | | 1.23% | | | | 2,168,951 | | | | 4,167 | | | 0.78% | | |
Other borrowings | | | 844,873 | | | | 5,317 | | | 2.55% | | | | 1,297,917 | | | | 7,639 | | | 2.34% | | | | 731,500 | | | | 2,973 | | | 1.65% | | |
Securities sold under repurchase agreements | | | 272,630 | | | | 759 | | | 1.13% | | | | 285,984 | | | | 664 | | | 0.92% | | | | 327,136 | | | | 350 | | | 0.43% | | |
Total interest-bearing liabilities | | | 12,801,422 | | | | 31,204 | | | 0.99% | | (L) | | 12,774,604 | | | | 29,946 | | | 0.93% | | (L) | | 13,098,228 | | | | 17,795 | | | 0.55% | | (L) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing demand deposits | | | 5,557,821 | | | | | | | | | | | | 5,785,882 | | | | | | | | | | | | 5,510,320 | | | | | | | | | | |
Other liabilities | | | 86,868 | | | | | | | | | | | | 95,124 | | | | | | | | | | | | 81,414 | | | | | | | | | | |
Total liabilities | | | 18,446,111 | | | | | | | | | | | | 18,655,610 | | | | | | | | | | | | 18,689,962 | | | | | | | | | | |
Shareholders' equity | | | 4,095,461 | | | | | | | | | | | | 4,038,396 | | | | | | | | | | | | 3,866,539 | | | | | | | | | | |
Total liabilities and shareholders' equity | | $ | 22,541,572 | | | | | | | | | | | $ | 22,694,006 | | | | | | | | | | | $ | 22,556,501 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income and margin | | | | | | $ | 154,911 | | | 3.18% | | | | | | | $ | 157,248 | | | 3.13% | | | | | | | $ | 153,223 | | | 3.14% | | |
Non-GAAP to GAAP reconciliation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Tax equivalent adjustment | | | | | | | 863 | | | | | | | | | | | | 892 | | | | | | | | | | | | 941 | | | | | | |
Net interest income and margin (tax equivalent basis) | | | | | | $ | 155,774 | | | 3.20% | | | | | | | $ | 158,140 | | | 3.15% | | | | | | | $ | 154,164 | | | 3.16% | | |
(J) Annualized and based on an actual 365 day basis.
(K) Yield on securities was impacted by net premium amortization of $6,589, $7,338 and $8,450 for the three-month periods ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively.
(L) Total cost of funds, including noninterest bearing deposits, was 0.69%, 0.64% and 0.39% for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively.
Page 9 of 15
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
| Three Months Ended | |
| Mar 31, 2019 | | | Dec 31, 2018 | | | Sep 30, 2018 | | | Jun 30, 2018 | | | Mar 31, 2018 | |
YIELD TREND (M) | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Interest-Earning Assets: | | | | | | | | | | | | | | | | | | | |
Loans | | 5.08 | % | | | 5.02 | % | | | 5.00 | % | | | 5.13 | % | | | 4.72 | % |
Investment securities (N) | | 2.43 | % | | | 2.35 | % | | | 2.29 | % | | | 2.28 | % | | | 2.27 | % |
Federal funds sold and other earning assets | | 2.27 | % | | | 1.57 | % | | | 1.90 | % | | | 1.50 | % | | | 1.56 | % |
Total interest-earning assets | | 3.82 | % | | | 3.73 | % | | | 3.68 | % | | | 3.72 | % | | | 3.50 | % |
| | | | | | | | | | | | | | | | | | | |
Interest-Bearing Liabilities: | | | | | | | | | | | | | | | | | | | |
Interest-bearing demand deposits | | 0.67 | % | | | 0.57 | % | | | 0.51 | % | | | 0.50 | % | | | 0.47 | % |
Savings and money market deposits | | 0.83 | % | | | 0.73 | % | | | 0.67 | % | | | 0.50 | % | | | 0.39 | % |
Certificates and other time deposits | | 1.40 | % | | | 1.23 | % | | | 1.02 | % | | | 0.84 | % | | | 0.78 | % |
Other borrowings | | 2.55 | % | | | 2.34 | % | | | 2.08 | % | | | 1.91 | % | | | 1.65 | % |
Securities sold under repurchase agreements | | 1.13 | % | | | 0.92 | % | | | 0.78 | % | | | 0.55 | % | | | 0.43 | % |
Total interest-bearing liabilities | | 0.99 | % | | | 0.93 | % | | | 0.84 | % | | | 0.70 | % | | | 0.55 | % |
| | | | | | | | | | | | | | | | | | | |
Net Interest Margin | | 3.18 | % | | | 3.13 | % | | | 3.13 | % | | | 3.26 | % | | | 3.14 | % |
Net Interest Margin (tax equivalent) | | 3.20 | % | | | 3.15 | % | | | 3.15 | % | | | 3.28 | % | | | 3.16 | % |
(M) Annualized and based on average balances on an actual 365 day basis.
(N) Yield on securities was impacted by net premium amortization of $6,589, $7,338, $8,073, $7,753 and $8,450 for the three-month periods ended March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively.
Page 10 of 15
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
| | Three Months Ended | |
| | Mar 31, 2019 | | | Dec 31, 2018 | | | Sep 30, 2018 | | | Jun 30, 2018 | | | Mar 31, 2018 | |
Balance Sheet Averages | | | | | | | | | | | | | | | | | | | | |
Loans | | $ | 10,392,235 | | | $ | 10,319,596 | | | $ | 10,208,171 | | | $ | 10,044,064 | | | $ | 9,990,319 | |
Investment securities | | | 9,299,963 | | | | 9,499,166 | | | | 9,647,744 | | | | 9,770,963 | | | | 9,742,601 | |
Federal funds sold and other earning assets | | | 71,842 | | | | 100,339 | | | | 67,974 | | | | 79,947 | | | | 81,779 | |
Total interest-earning assets | | | 19,764,040 | | | | 19,919,101 | | | | 19,923,889 | | | | 19,894,974 | | | | 19,814,699 | |
Allowance for credit losses | | | (86,507 | ) | | | (86,464 | ) | | | (85,254 | ) | | | (84,285 | ) | | | (81,983 | ) |
Cash and due from banks | | | 266,316 | | | | 252,481 | | | | 232,643 | | | | 234,856 | | | | 269,917 | |
Goodwill | | | 1,900,845 | | | | 1,900,845 | | | | 1,900,845 | | | | 1,900,845 | | | | 1,900,845 | |
Core deposit intangibles, net | | | 32,243 | | | | 33,580 | | | | 35,041 | | | | 36,550 | | | | 38,064 | |
Other real estate | | | 2,100 | | | | 1,325 | | | | 9,193 | | | | 10,386 | | | | 10,758 | |
Fixed assets, net | | | 257,811 | | | | 257,726 | | | | 256,458 | | | | 256,281 | | | | 257,465 | |
Other assets | | | 404,724 | | | | 415,412 | | | | 385,976 | | | | 370,279 | | | | 346,736 | |
Total assets | | $ | 22,541,572 | | | $ | 22,694,006 | | | $ | 22,658,791 | | | $ | 22,619,886 | | | $ | 22,556,501 | |
| | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 5,557,821 | | | $ | 5,785,882 | | | $ | 5,646,183 | | | $ | 5,646,114 | | | $ | 5,510,320 | |
Interest-bearing demand deposits | | | 4,148,377 | | | | 3,720,133 | | | | 3,676,452 | | | | 3,971,356 | | | | 4,392,230 | |
Savings and money market deposits | | | 5,472,789 | | | | 5,382,699 | | | | 5,465,143 | | | | 5,342,323 | | | | 5,478,411 | |
Certificates and other time deposits | | | 2,062,753 | | | | 2,087,871 | | | | 2,055,652 | | | | 2,094,065 | | | | 2,168,951 | |
Total deposits | | | 17,241,740 | | | | 16,976,585 | | | | 16,843,430 | | | | 17,053,858 | | | | 17,549,912 | |
Other borrowings | | | 844,873 | | | | 1,297,917 | | | | 1,447,328 | | | | 1,272,032 | | | | 731,500 | |
Securities sold under repurchase agreements | | | 272,630 | | | | 285,984 | | | | 288,706 | | | | 300,471 | | | | 327,136 | |
Other liabilities | | | 86,868 | | | | 95,124 | | | | 102,092 | | | | 75,161 | | | | 81,414 | |
Shareholders' equity | | | 4,095,461 | | | | 4,038,396 | | | | 3,977,235 | | | | 3,918,364 | | | | 3,866,539 | |
Total liabilities and equity | | $ | 22,541,572 | | | $ | 22,694,006 | | | $ | 22,658,791 | | | $ | 22,619,886 | | | $ | 22,556,501 | |
Page 11 of 15
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
| | Mar 31, 2019 | | | Dec 31, 2018 | | | Sep 30, 2018 | | | Jun 30, 2018 | | | Mar 31, 2018 | |
Period End Balances | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loan Portfolio | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 1,117,753 | | | 10.7 | % | | $ | 1,111,089 | | | 10.7 | % | | $ | 1,159,735 | | | 11.3 | % | | $ | 1,168,892 | | | 11.5 | % | | $ | 1,148,980 | | | 11.5 | % |
Construction, land development and other land loans | | | 1,709,283 | | | 16.4 | % | | | 1,622,289 | | | 15.7 | % | | | 1,560,142 | | | 15.2 | % | | | 1,542,771 | | | 15.2 | % | | | 1,502,393 | | | 15.0 | % |
1-4 family residential | | | 2,444,434 | | | 23.5 | % | | | 2,438,949 | | | 23.5 | % | | | 2,440,157 | | | 23.7 | % | | | 2,418,021 | | | 23.8 | % | | | 2,438,224 | | | 24.4 | % |
Home equity | | | 262,276 | | | 2.5 | % | | | 267,960 | | | 2.6 | % | | | 273,608 | | | 2.7 | % | | | 277,447 | | | 2.7 | % | | | 284,339 | | | 2.8 | % |
Commercial real estate (includes multi-family residential) | | | 3,496,688 | | | 33.6 | % | | | 3,538,557 | | | 34.1 | % | | | 3,507,223 | | | 34.1 | % | | | 3,405,466 | | | 33.6 | % | | | 3,330,860 | | | 33.3 | % |
Agriculture (includes farmland) | | | 708,348 | | | 6.8 | % | | | 729,501 | | | 7.0 | % | | | 705,750 | | | 6.8 | % | | | 709,617 | | | 7.0 | % | | | 671,319 | | | 6.7 | % |
Consumer and other | | | 294,405 | | | 2.8 | % | | | 289,486 | | | 2.8 | % | | | 281,112 | | | 2.7 | % | | | 271,724 | | | 2.7 | % | | | 259,896 | | | 2.6 | % |
Energy | | | 380,835 | | | 3.7 | % | | | 372,482 | | | 3.6 | % | | | 365,119 | | | 3.5 | % | | | 352,627 | | | 3.5 | % | | | 375,405 | | | 3.7 | % |
Total loans | | $ | 10,414,022 | | | | | | $ | 10,370,313 | | | | | | $ | 10,292,846 | | | | | | $ | 10,146,565 | | | | | | $ | 10,011,416 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposit Types | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing DDA | | $ | 5,673,707 | | | 33.0 | % | | $ | 5,666,115 | | | 32.8 | % | | $ | 5,700,242 | | | 34.1 | % | | $ | 5,657,589 | | | 33.3 | % | | $ | 5,707,994 | | | 32.9 | % |
Interest-bearing DDA | | | 3,875,109 | | | 22.5 | % | | | 4,124,412 | | | 23.9 | % | | | 3,551,456 | | | 21.2 | % | | | 3,808,694 | | | 22.4 | % | | | 4,106,255 | | | 23.7 | % |
Money market | | | 3,302,445 | | | 19.2 | % | | | 3,115,531 | | | 18.1 | % | | | 3,100,310 | | | 18.5 | % | | | 3,153,261 | | | 18.6 | % | | | 3,062,999 | | | 17.7 | % |
Savings | | | 2,293,134 | | | 13.3 | % | | | 2,271,170 | | | 13.2 | % | | | 2,291,952 | | | 13.7 | % | | | 2,311,795 | | | 13.6 | % | | | 2,314,112 | | | 13.3 | % |
Certificates and other time deposits | | | 2,053,375 | | | 12.0 | % | | | 2,079,330 | | | 12.0 | % | | | 2,089,804 | | | 12.5 | % | | | 2,047,265 | | | 12.1 | % | | | 2,141,519 | | | 12.4 | % |
Total deposits | | $ | 17,197,770 | | | | | | $ | 17,256,558 | | | | | | $ | 16,733,764 | | | | | | $ | 16,978,604 | | | | | | $ | 17,332,879 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loan to Deposit Ratio | | | 60.6 | % | | | | | | 60.1 | % | | | | | | 61.5 | % | | | | | | 59.8 | % | | | | | | 57.8 | % | | | |
Page 12 of 15
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
Construction Loans
| | Mar 31, 2019 | | | Dec 31, 2018 | | | Sep 30, 2018 | | | Jun 30, 2018 | | | Mar 31, 2018 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Single family residential construction | | $ | 454,041 | | | 26.5 | % | | $ | 441,487 | | | 27.2 | % | | $ | 422,738 | | | 27.1 | % | | $ | 426,767 | | | 27.6 | % | | $ | 417,302 | | | 27.7 | % |
Land development | | | 84,562 | | | 4.9 | % | | | 89,226 | | | 5.5 | % | | | 89,357 | | | 5.7 | % | | | 88,562 | | | 5.7 | % | | | 88,609 | | | 5.9 | % |
Raw land | | | 156,674 | | | 9.2 | % | | | 152,516 | | | 9.4 | % | | | 137,400 | | | 8.8 | % | | | 134,906 | | | 8.7 | % | | | 128,771 | | | 8.5 | % |
Residential lots | | | 119,301 | | | 7.0 | % | | | 124,429 | | | 7.6 | % | | | 122,366 | | | 7.8 | % | | | 118,759 | | | 7.7 | % | | | 113,813 | | | 7.6 | % |
Commercial lots | | | 92,683 | | | 5.4 | % | | | 92,234 | | | 5.7 | % | | | 95,982 | | | 6.1 | % | | | 92,283 | | | 6.0 | % | | | 91,653 | | | 6.1 | % |
Commercial construction and other | | | 802,996 | | | 47.0 | % | | | 723,740 | | | 44.6 | % | | | 693,917 | | | 44.5 | % | | | 683,255 | | | 44.3 | % | | | 664,437 | | | 44.2 | % |
Net unaccreted discount | | | (974 | ) | | | | | | (1,343 | ) | | | | | | (1,618 | ) | | | | | | (1,761 | ) | | | | | | (2,192 | ) | | | |
Total construction loans | | $ | 1,709,283 | | | | | | $ | 1,622,289 | | | | | | $ | 1,560,142 | | | | | | $ | 1,542,771 | | | | | | $ | 1,502,393 | | | | |
Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of March 31, 2019
| Houston | | | Dallas | | | Austin | | | OK City | | | Tulsa | | | Other (O) | | | Total | | |
Collateral Type | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shopping center/retail | $ | 264,388 | | | $ | 80,499 | | | $ | 26,412 | | | $ | 16,140 | | | $ | 31,148 | | | $ | 142,240 | | | $ | 560,827 | | |
Commercial and industrial buildings | | 128,914 | | | | 34,154 | | | | 15,627 | | | | 10,633 | | | | 19,980 | | | | 77,947 | | | | 287,255 | | |
Office buildings | | 98,867 | | | | 118,764 | | | | 25,650 | | | | 45,121 | | | | 11,222 | | | | 69,914 | | | | 369,538 | | |
Medical buildings | | 30,080 | | | | 4,091 | | | | 10,925 | | | | 5,156 | | | | 10,311 | | | | 48,956 | | | | 109,519 | | |
Apartment buildings | | 22,658 | | | | 12,598 | | | | 18,422 | | | | 11,473 | | | | 8,552 | | | | 67,448 | | | | 141,151 | | |
Hotel | | 51,403 | | | | 61,564 | | | | 22,055 | | | | 32,009 | | | | — | | | | 152,230 | | | | 319,261 | | |
Other | | 43,821 | | | | 14,409 | | | | 20,508 | | | | 10,771 | | | | 15,046 | | | | 80,281 | | | | 184,836 | | |
Total | $ | 640,131 | | | $ | 326,079 | | | $ | 139,599 | | | $ | 131,303 | | | $ | 96,259 | | | $ | 639,016 | | | $ | 1,972,387 | | (P) |
Acquired Loans
| | 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, 2018 | | | Balance at Mar 31, 2019 | | | Balance at Acquisition Date | | | Balance at Dec 31, 2018 | | | Balance at Mar 31, 2019 | | | Balance at Acquisition Date | | | Balance at Dec 31, 2018 | | | Balance at Mar 31, 2019 | |
Loan marks: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquired banks (Q) | | $ | 229,080 | | | $ | 14,833 | | | $ | 13,359 | | | $ | 142,128 | | | $ | 2,831 | | | $ | 2,512 | | | $ | 371,208 | | | $ | 17,664 | | | $ | 15,871 | |
Acquired portfolio loan balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquired banks (Q) | | | 5,690,998 | | | | 526,840 | | | | 490,442 | | | | 275,221 | | | | 11,419 | | | | 10,844 | | | | 5,966,219 | | (R) | | 538,259 | | | | 501,286 | |
Acquired portfolio loan balances less loan marks | | $ | 5,461,918 | | | $ | 512,007 | | | $ | 477,083 | | | $ | 133,093 | | | $ | 8,588 | | | $ | 8,332 | | | $ | 5,595,011 | | | $ | 520,595 | | | $ | 485,415 | |
(O) Includes other MSA and non-MSA regions.
(P) Represents a portion of total commercial real estate loans of $3.497 billion as of March 31, 2019.
(Q) Includes Bank of Texas, Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank, The F&M Bank & Trust Company and Tradition Bank.
(R) Actual principal balances acquired.
Page 13 of 15
Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
| Three Months Ended | |
| Mar 31, 2019 | | | Dec 31, 2018 | | | Sep 30, 2018 | | | Jun 30, 2018 | | | Mar 31, 2018 | |
Asset Quality | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans | $ | 37,491 | | | $ | 13,147 | | | $ | 13,399 | | | $ | 20,415 | | | $ | 22,572 | |
Accruing loans 90 or more days past due | | 647 | | | | 4,004 | | | | 2,379 | | | | 854 | | | | 107 | |
Total nonperforming loans | | 38,138 | | | | 17,151 | | | | 15,778 | | | | 21,269 | | | | 22,679 | |
Repossessed assets | | 649 | | | | — | | | | 110 | | | | — | | | | — | |
Other real estate | | 2,096 | | | | 1,805 | | | | 889 | | | | 10,316 | | | | 10,538 | |
Total nonperforming assets | $ | 40,883 | | | $ | 18,956 | | | $ | 16,777 | | | $ | 31,585 | | | $ | 33,217 | |
| | | | | | | | | | | | | | | | | | | |
Nonperforming assets: | | | | | | | | | | | | | | | | | | | |
Commercial and industrial (includes energy) | $ | 17,119 | | | $ | 4,435 | | | $ | 6,620 | | | $ | 12,234 | | | $ | 13,558 | |
Construction, land development and other land loans | | 1,488 | | | | 3,100 | | | | 2,046 | | | | 1,829 | | | | 1,019 | |
1-4 family residential (includes home equity) | | 17,508 | | | | 8,135 | | | | 4,527 | | | | 4,884 | | | | 5,440 | |
Commercial real estate (includes multi-family residential) | | 4,166 | | | | 2,982 | | | | 3,254 | | | | 12,038 | | | | 12,992 | |
Agriculture (includes farmland) | | 542 | | | | 256 | | | | 262 | | | | 519 | | | | 128 | |
Consumer and other | | 60 | | | | 48 | | | | 68 | | | | 81 | | | | 80 | |
Total | $ | 40,883 | | | $ | 18,956 | | | $ | 16,777 | | | $ | 31,585 | | | $ | 33,217 | |
Number of loans/properties | | 84 | | | | 83 | | | | 83 | | | | 90 | | | | 95 | |
Allowance for credit losses at end of period | $ | 86,091 | | | $ | 86,440 | | | $ | 85,996 | | | $ | 84,964 | | | $ | 83,600 | |
| | | | | | | | | | | | | | | | | | | |
Net charge-offs: | | | | | | | | | | | | | | | | | | | |
Commercial and industrial (includes energy) | $ | 1,719 | | | $ | (685 | ) | | $ | 657 | | | $ | 1,047 | | | $ | 8,016 | |
Construction, land development and other land loans | | — | | | | 97 | | | | (1 | ) | | | (1 | ) | | | 123 | |
1-4 family residential (includes home equity) | | (3 | ) | | | 42 | | | | 11 | | | | 114 | | | | 257 | |
Commercial real estate (includes multi-family residential) | | (1 | ) | | | 34 | | | | (10 | ) | | | 986 | | | | 502 | |
Agriculture (includes farmland) | | (1,278 | ) | | | (54 | ) | | | (113 | ) | | | (45 | ) | | | (61 | ) |
Consumer and other | | 612 | | | | 1,122 | | | | 774 | | | | 535 | | | | 604 | |
Total | $ | 1,049 | | | $ | 556 | | | $ | 1,318 | | | $ | 2,636 | | | $ | 9,441 | |
| | | | | | | | | | | | | | | | | | | |
Asset Quality Ratios | | | | | | | | | | | | | | | | | | | |
Nonperforming assets to average interest-earning assets | | 0.21 | % | | | 0.10 | % | | | 0.08 | % | | | 0.16 | % | | | 0.17 | % |
Nonperforming assets to loans and other real estate | | 0.39 | % | | | 0.18 | % | | | 0.16 | % | | | 0.31 | % | | | 0.33 | % |
Net charge-offs to average loans (annualized) | | 0.04 | % | | | 0.02 | % | | | 0.05 | % | | | 0.10 | % | | | 0.38 | % |
Allowance for credit losses to total loans | | 0.83 | % | | | 0.83 | % | | | 0.84 | % | | | 0.84 | % | | | 0.84 | % |
Allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30) (G) | | 0.87 | % | | | 0.88 | % | | | 0.88 | % | | | 0.89 | % | | | 0.90 | % |
Page 14 of 15
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, the tangible equity to tangible assets ratio and the efficiency ratio, excluding net gains and losses on the sale of assets and securities, for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP financial 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 information below relating to these non-GAAP financial measures for the applicable periods presented.
| | Three Months Ended | |
| | Mar 31, 2019 | | | Dec 31, 2018 | | | Sep 30, 2018 | | | Jun 30, 2018 | | | Mar 31, 2018 | |
Reconciliation of return on average common equity to return on average tangible common equity: | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 82,402 | | | $ | 83,331 | | | $ | 82,523 | | | $ | 81,597 | | | $ | 74,361 | |
Average shareholders' equity | | $ | 4,095,461 | | | $ | 4,038,396 | | | $ | 3,977,235 | | | $ | 3,918,364 | | | $ | 3,866,539 | |
Less: Average goodwill and other intangible assets | | | (1,933,088 | ) | | | (1,934,425 | ) | | | (1,935,886 | ) | | | (1,937,395 | ) | | | (1,938,909 | ) |
Average tangible shareholders’ equity | | $ | 2,162,373 | | | $ | 2,103,971 | | | $ | 2,041,349 | | | $ | 1,980,969 | | | $ | 1,927,630 | |
Return on average tangible common equity (F) | | | 15.24 | % | | | 15.84 | % | | | 16.17 | % | | | 16.48 | % | | | 15.43 | % |
| | | | | | | | | | | | | | | | | | | | |
Reconciliation of book value per share to tangible book value per share: | | | | | | | | | | | | | | | | | | | | |
Shareholders’ equity | | $ | 4,109,790 | | | $ | 4,052,824 | | | $ | 3,995,697 | | | $ | 3,935,452 | | | $ | 3,876,145 | |
Less: Goodwill and other intangible assets | | | (1,932,409 | ) | | | (1,933,728 | ) | | | (1,935,140 | ) | | | (1,936,618 | ) | | | (1,938,119 | ) |
Tangible shareholders’ equity | | $ | 2,177,381 | | | $ | 2,119,096 | | | $ | 2,060,557 | | | $ | 1,998,834 | | | $ | 1,938,026 | |
| | | | | | | | | | | | | | | | | | | | |
Period end shares outstanding | | | 69,846 | | | | 69,847 | | | | 69,838 | | | | 69,838 | | | | 69,819 | |
Tangible book value per share: | | $ | 31.17 | | | $ | 30.34 | | | $ | 29.50 | | | $ | 28.62 | | | $ | 27.76 | |
| | | | | | | | | | | | | | | | | | | | |
Reconciliation of equity to assets ratio to period end tangible equity to period end tangible assets ratio: | | | | | | | | | | | | | | | | | | | | |
Tangible shareholders’ equity | | $ | 2,177,381 | | | $ | 2,119,096 | | | $ | 2,060,557 | | | $ | 1,998,834 | | | $ | 1,938,026 | |
Total assets | | $ | 22,354,241 | | | $ | 22,693,402 | | | $ | 22,612,583 | | | $ | 22,570,740 | | | $ | 22,472,314 | |
Less: Goodwill and other intangible assets | | | (1,932,409 | ) | | | (1,933,728 | ) | | | (1,935,140 | ) | | | (1,936,618 | ) | | | (1,938,119 | ) |
Tangible assets | | $ | 20,421,832 | | | $ | 20,759,674 | | | $ | 20,677,443 | | | $ | 20,634,122 | | | $ | 20,534,195 | |
Period end tangible equity to period end tangible assets ratio: | | | 10.66 | % | | | 10.21 | % | | | 9.97 | % | | | 9.69 | % | | | 9.44 | % |
| | | | | | | | | | | | | | | | | | | | |
Reconciliation of allowance for credit losses to total loans to allowance for credit losses to total loans, excluding acquired loans: | | | | | | | | | | | | | | | | | | | | |
Allowance for credit losses | | $ | 86,091 | | | $ | 86,440 | | | $ | 85,996 | | | $ | 84,964 | | | $ | 83,600 | |
Total loans | | $ | 10,414,022 | | | $ | 10,370,313 | | | $ | 10,292,846 | | | $ | 10,146,565 | | | $ | 10,011,416 | |
Less: Fair value of acquired loans (acquired portfolio loan balances less loan marks) | | $ | 485,415 | | | $ | 520,595 | | | $ | 572,095 | | | $ | 622,534 | | | $ | 681,888 | |
Total loans less acquired loans | | $ | 9,928,607 | | | $ | 9,849,718 | | | $ | 9,720,751 | | | $ | 9,524,031 | | | $ | 9,329,528 | |
Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis) | | | 0.87 | % | | | 0.88 | % | | | 0.88 | % | | | 0.89 | % | | | 0.90 | % |
| | | | | | | | | | | | | | | | | | | | |
Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets and securities: | | | | | | | | | | | | | | | | | | | | |
Noninterest expense | | $ | 78,571 | | | $ | 80,804 | | | $ | 81,760 | | | $ | 83,602 | | | $ | 80,054 | |
| | | | | | | | | | | | | | | | | | | | |
Net interest income | | $ | 154,911 | | | $ | 157,248 | | | $ | 157,319 | | | $ | 161,803 | | | $ | 153,223 | |
Noninterest income | | | 28,144 | | | | 29,079 | | | | 30,624 | | | | 28,371 | | | | 27,938 | |
Less: net gain (loss) on sale of assets | | | 58 | | | | (715 | ) | | | 4 | | | | (44 | ) | | | — | |
Less: net loss on sale of securities | | | — | | | | — | | | | — | | | | (13 | ) | | | — | |
Noninterest income excluding net gains and losses on the sale of assets and securities | | | 28,086 | | | | 29,794 | | | | 30,620 | | | | 28,428 | | | | 27,938 | |
Total income excluding net gains and losses on the sale of assets and securities | | $ | 182,997 | | | $ | 187,042 | | | $ | 187,939 | | | $ | 190,231 | | | $ | 181,161 | |
Efficiency ratio, excluding net gains and losses on the sale of assets and securities | | | 42.94 | % | | | 43.20 | % | | | 43.50 | % | | | 43.95 | % | | | 44.19 | % |
Page 15 of 15
