[PROSPERITY BANCSHARES, INC. LOGO]
PRESS RELEASE For more information contact:
David Hollaway
Chief Financial Officer
Prosperity Bancshares, Inc. (SM) 979.543.2200
4295 San Felipe davidhollaway@prosperitybanktx.com
Houston, Texas 77027
Dan Rollins
Senior Vice President
713.693.9300
danrollins@prosperitybanktx.com
FOR IMMEDIATE RELEASE
PROSPERITY BANCSHARES, INC. (SM)
ANNOUNCES RECORD FOURTH QUARTER
AND FULL YEAR 2001 EARNINGS
Q4 Earnings Per Share up 45.5% to $0.48 (Diluted)
Full Year 2001 Operating Earnings up 35.8% to $14.534 million
HOUSTON, January 16, 2002. Prosperity Bancshares, Inc. (SM) (NASDAQ: PRSP), the
holding company for Prosperity Bank (SM), today reported fourth quarter net
income of $3.990 million, an increase of $1.270 million or 46.7 percent,
compared with $2.720 million for the same period in 2000. Diluted earnings per
share increased $0.15 or 45.5 percent to $0.48 for the three months ended
December 31, 2001 compared with $0.33 for the three months ended December 31,
2000. On a cash basis (earnings adjusted for goodwill amortization and related
tax expense) earnings per diluted share was $0.52 compared with $0.37 for the
same period in 2000.
Operating earnings (earnings excluding merger-related expenses) for the year
ended December 31, 2001 were $14.534 million or $1.76 per diluted share compared
with $10.701 million or $1.30 per diluted share for the same period in 2000,
increases of 35.8 percent and 35.4 percent, respectively. Operating earnings on
a cash basis per diluted share were $1.90 compared with $1.45 for the same
period in 2000.
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Prosperity completed its previously announced merger with Commercial Bancshares,
Inc.("Commercial") during the first quarter of 2001. In connection with the
merger, Prosperity incurred approximately $2.425 million in pretax
merger-related expenses and other charges. The transaction was accounted for as
a pooling of interests and therefore the historical financial data of Prosperity
has been restated to include the accounts and operations of Commercial for all
periods prior to the merger date.
"We are immensely pleased to report such positive and consistent financial
results in light of the current volatile financial environment," said David
Zalman, Prosperity's President and Chief Executive Officer. "Our success
reflects the dedication of our team of associates in providing banking solutions
that meet the needs of our customers. As we look forward to 2002, I am confident
that our brand of people to people banking will allow us to continue expanding
our customer base."
"While the events of September 11 will have a long-lasting impact on our
country, the spirit that has been shown by Americans across our nation gives us
all great hope for a prosperous future," commented Ned S. Holmes, Chairman of
the Board. "I am proud that our associates are demonstrating the type of spirit,
leadership and commitment in the home town communities we serve that will ensure
our future."
"As we close out 2001 and look forward to 2002, we intend to continue to
increase our presence in the greater Houston area as appropriate opportunities
arise," added H. E. "Tim" Timanus, Jr., President and Chief Operating Officer of
Prosperity Bank (SM) "Through last year's merger of Heritage Bank and Prosperity
Bank, we have grown from 8 banking centers to 18 banking centers within the
Houston CMSA. These locations provide our bank with an opportunity to leverage
our style of personal-touch service with competitive products and local
expertise to increase our market share."
"Our financial performance in 2001 is reflective of our continued focus on
expanding our customer base while minimizing expenses," remarked David Hollaway,
Chief Financial Officer. "Based on the current interest rate environment and
current economic conditions, we have increased our target range for 2002 to
$2.09 to $2.12 per diluted common share."
Results of Operations for the three months ended December 31, 2001
For the three months ended December 31, 2001, net income was $3.990 million
compared with $2.720 million for the same period in 2000. Net income per diluted
common share was $0.48 for the three months ended December 31, 2001 compared
with $0.33 for the same period in 2000. Return on average assets and average
common shareholders' equity for the three months ended December 31, 2001 was
1.28 percent and 17.64 percent, respectively.
Net interest income (on a tax-equivalent basis) for the quarter ended December
31, 2001 increased 28.4 percent, to $11.908 million from $9.275 million during
the same period in 2000. The increase was attributable to a 13.0 percent
increase in average earning assets and an increase in the net interest margin
from 3.56 percent to 4.05 percent.
Non-interest income increased 13.5 percent to $2.310 million for the three
months ended December
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31, 2001 compared with the same period in 2000. Non-interest expenses increased
$353 thousand or 5.0 percent compared with the fourth quarter of 2000. The
increase in non-interest expenses was attributable primarily to increases in
interest cost associated with trust preferred securities and other expenses,
which include data processing and net occupancy expense. During July 2001,
Prosperity issued an additional $15 million in trust preferred securities.
On a linked quarter basis from September 30, 2001 to December 31, 2001, return
on average assets increased to 1.28 percent from 1.25 percent, return on average
equity increased to 17.64 percent from 17.34 percent and the efficiency ratio on
a cash basis improved to 49.11 percent from 52.05 percent.
Results of Operations Excluding Merger-Related Expenses for the year ended
December 31, 2001
Excluding approximately $2.425 million in pretax merger-related expenses and
other charges, net income for the year ended December 31, 2001 was $14.534
million or $1.76 per diluted common share, compared with $10.701 million or
$1.30 per diluted common share, for the same period in 2000, an increase of 35.8
percent and 35.4 percent, respectively. Prosperity's annualized return on
average assets and return on average common shareholders' equity for the year
ended December 31, 2001 would have been 1.22 percent and 17.04 percent,
respectively. The company's efficiency ratio (on a cash basis) would have been
52.21 percent for the year ended December 31, 2001.
Net interest income on a tax equivalent basis for the year ended December 31,
2001 increased 20.0 percent, to $43.058 million from $35.890 million during
2000. The increase was attributable primarily to a 14.9 percent increase in
average earning assets and an increase in the net interest margin from 3.69
percent to 3.86 percent.
Non-interest income increased 10.7 percent to $8.590 million for the year ended
December 31, 2001 compared with the same period in 2000. Non-interest expenses
(excluding merger-related expenses) increased $1.103 million or 4.1 percent as
compared with 2000. The majority of this increase is attributable to increases
in interest cost associated with trust preferred securities, goodwill
amortization and other expenses, which include data processing and net occupancy
expense.
At December 31, 2001, Prosperity had $1.262 billion in total assets, $424.4
million in loans, $1.123 billion in deposits, and approximately 85,000 deposit
and loan accounts. Assets, loans and deposits at December 31, 2001 grew by 10.1
percent, 3.2 percent and 8.7 percent respectively, compared with their levels at
December 31, 2000.
Loan Growth and Credit Quality
Non-performing assets totaled $1,000 or 0.00 percent of loans at December 31,
2001, compared with $669,000 or 0.16 percent of loans and other real estate at
December 31, 2000. Prosperity reported no other real estate on December 31,
2001. At year end 2001, the reserve for loan losses was 1.41 percent of total
loans, compared to 1.34 percent a year earlier. As anticipated, Prosperity's net
charge-offs and provision for loan losses increased in the fourth quarter. "Our
current assessment of the economic climate indicates that this higher provision
for loan losses is prudent and
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appropriate," said Chief Lending Officer Randy D. Hester. Average loans for the
year increased 9.5 percent or $36.5 million to $419.6 million for 2001 as
compared to $383.1 million for 2000. The provision for loan losses was $700,000
for the fourth quarter.
Conference Call
Prosperity's management team will host a conference call on Wednesday, January
16, 2002 at 11:00 a.m. (Central Time) to discuss the earnings results, business
trends and their outlook for 2002. Individuals and investment professionals may
participate in the call by calling 1-800-621-5346.
Alternatively, individuals may listen to the live webcast of the presentation by
visiting the Prosperity website at www.prosperitybanktx.com. The webcast my be
accessed directly on the Prosperity home page by clicking on the blue telephone
"4th Quarter results and webcast link." Beginning January 17, 2002, listeners
may access an archived version of the presentation located on the "PRSP" page. A
link to the "PRSP" page is found in the header and footer of the Prosperity home
page.
Prosperity Bancshares, Inc.SM, formed in 1983, is a $1.262 billion bank holding
company headquartered in Houston, Texas. Operating under a community banking
philosophy, Prosperity seeks to develop broad customer relationships based on
service and convenience. Prosperity offers a variety of traditional loan and
deposit products to its customers, which consist primarily of consumers and
small and medium sized businesses. In addition to established banking products,
Prosperity offers a complete line of services including: Internet Banking
services at www.prosperitybanktx.com, Trust Services, MasterMoney Debit Cards,
and 24 hour voice response banking. The bank currently operates twenty-nine (29)
full service banking locations in thirteen (13) contiguous counties including
the Greater Houston Metropolitan Area. (Angleton, Bay City, Beeville, Clear
Lake, Cleveland, Cuero, Cypress, East Bernard, Edna, El Campo, Fairfield,
Goliad, Hitchcock, Houston - Bellaire, Houston - Downtown, Houston - Medical
Center, Houston - Post Oak, Houston - River Oaks, Houston - Tanglewood, Houston
- - Waugh Drive, Liberty, Magnolia, Mathis, Needville, Palacios, Sweeny, Victoria,
West Columbia, and Wharton.)
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: The statements contained in this release which are not historical facts
contain forward-looking information with respect to plans, projections or future
performance of Prosperity Bancshares, Inc. (SM) and its subsidiaries.
Forward-looking statements, within the meaning of Section 21E of the Securities
Exchange Act of 1934, may have been made in this document. Prosperity's results
may differ materially from those in the forward-looking statements for a variety
of reasons, including actions of competitors; changes in laws and regulations
(including changes in governmental interpretations of regulations and changes in
accounting standards); customer and consumer demand, including customer and
consumer response to marketing; effectiveness of spending, investments or
programs; fluctuations in the cost and availability of supply chain resources;
economic conditions, including currency rate fluctuations; and weather. These
factors are more fully described in Prosperity Bancshares, Inc.'s filings with
the Securities and Exchange Commission.
Copies of Prosperity Bancshares, Inc.'s (SM) SEC filings may be downloaded from
the Internet at no charge from FreeEDGAR, a real-time access to SEC filings site
located at www.freeedgar.com.
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Prosperity Bancshares, Inc. (SM)
Financial Highlights
(Dollars in thousands)
Three Months Ended Year Ended
Dec 31, 2001 Dec 31, 2000 Dec 31, 2001 Dec 31, 2000
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Balance Sheet Averages
Investment securities $ 746,230 $ 577,482 $ 666,242 $ 550,431
Total loans 417,008 396,356 419,552 383,054
Fed funds sold and
other earning assets 12,643 67,207 30,478 37,929
---------- ---------- ---------- ----------
Total earning assets 1,175,881 1,041,045 1,116,272 971,414
Allowance for credit losses (5,639) (5,478) (5,586) (5,245)
Cash and due from banks 28,003 32,666 28,816 32,084
Goodwill 22,807 23,653 23,229 20,292
Other assets 27,632 26,050 28,459 27,337
---------- ---------- ---------- ----------
Total assets $1,248,684 $1,117,936 $1,191,190 $1,045,882
========== ========== ========== ==========
Non-interest bearing deposits $ 183,784 $ 180,803 $ 181,228 $ 175,194
Interest bearing deposits 923,021 827,569 879,967 745,332
---------- ---------- ---------- ----------
Total deposits 1,106,805 1,008,372 1,061,195 920,526
Fed funds purchased & other
interest bearing liabilities 15,131 14,028 17,219 32,333
Other liabilities 9,266 5,824 8,582 8,071
Company obligated trust
preferred securities of
subsidiary trusts 27,000 12,000 18,875 12,000
Shareholders' equity 90,482 77,712 85,319 72,952
---------- ---------- ---------- ----------
Total liabilities and equity $1,248,684 $1,117,936 $1,191,190 $1,045,882
========== ========== ========== ==========
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Prosperity Bancshares, Inc. (SM)
Financial Highlights
(Dollars in thousands, except per share data)
Three Months Ended Year Ended
Dec 31, 2001 Dec 31, 2000 Dec 31, 2001 Dec 31, 2000
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(Unaudited) (Unaudited) (Unaudited) (Audited)
Income Statement Data
Interest on loans $ 8,153 $ 8,822 $ 34,731 $ 33,599
Interest on securities 10,728 9,062 40,353 33,978
Interest on fed funds
sold and other earning assets 75 1,110 1,436 2,502
------- ------- -------- --------
Total interest income 18,956 18,994 76,520 70,079
Interest expense 7,518 10,176 35,785 35,564
------- ------- -------- --------
Net interest income (A) 11,438 8,818 40,735 34,515
Provision for credit losses 650 50 700 275
------- ------- -------- --------
Net interest income after
provision for loan losses 10,788 8,768 40,035 34,240
Service charges on
deposit accounts 2,029 1,684 7,530 6,384
Other income 281 352 1,060 1,376
------- ------- -------- --------
Total non-interest income 2,310 2,036 8,590 7,760
Salaries and benefits 3,196 3,337 12,955 12,931
Goodwill 341 332 1,363 1,160
One time merger
related expenses 0 0 2,425 0
Minority interest trust
preferred securities 529 288 1,580 1,151
Other expenses 3,295 3,051 11,972 11,525
------- ------- -------- --------
Total non-interest expenses 7,361 7,008 30,295 26,767
Net earnings before taxes 5,737 3,796 18,330 15,233
Federal income taxes 1,747 1,076 5,372 4,532
------- ------- -------- --------
Net earnings available
to common shareholders $ 3,990 $ 2,720 $ 12,958(B) $ 10,701
======= ======= ======== ========
Basic earnings per share $0.49 $0.34 $1.60 $1.33
Diluted earnings per share $0.48 $0.33 $1.57(B) $1.30
(A) Net interest income on a tax equivalent basis would be $11,908 and $9,275
for the three months ended December 31, 2001 and December 31, 2000,
respectively and $43,058 and $35,890 for the year ended December 31, 2001
and December 31, 2000, respectively.
(B) Excluding merger-related expenses, net earnings available to common
shareholders would have been $14,534 or $1.76 per diluted common share for
the year ended December 31, 2001.
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Prosperity Bancshares, Inc. (SM)
Financial Highlights
(Dollars and share amounts in thousands, except per share data)
Three Months Ended Year Ended
Dec 31, 2001 Dec 31, 2000 Dec 31, 2001 Dec 31, 2000
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Common Share and
Other Data
Employees - FTE 312 348 312 348
Book value per share $10.95 $ 9.95 $10.95 $ 9.95
Tangible book value per share $ 8.15 $ 6.98 $ 8.15 $ 6.98
Period end shares outstanding 8,105 8,072 8,105 8,072
Weighted average shares
outstanding (basic) 8,101 8,060 8,086 8,032
Weighted average shares
outstanding (diluted) 8,266 8,246 8,249 8,227
Non-accrual loans $ 1 $ 10 $ 1 $ 10
Restructured loans 0 114 0 114
------ ------ ------ ------
Total non-performing loans 1 124 1 124
Other real estate 0 545 0 545
------ ------ ------ ------
Total non-performing assets $ 1 $ 669 $ 1 $ 669
Accruing loans 90 days or
more days past due $ 0 $ 780 $ 0 $ 780
Allowance for credit losses at
end of period $5,985 $5,523 $5,985 $5,523
Net charge-offs/(recoveries) $ 183 $ (14) $ 239 $ (172)
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Prosperity Bancshares, Inc. (SM)
Financial Highlights
Three Months Ended Year Ended
Dec 31, 2001 Dec 31, 2000 Dec 31, 2001 Dec 31, 2000
----------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Performance Ratios
Return on average
assets (annualized) 1.28% 0.97% 1.09%(C) 1.02%
Return on average
common equity (annualized) 17.64% 14.00% 15.19%(C) 14.67%
Net interest margin
(tax equivalent) (annualized) 4.05% 3.56% 3.86% 3.69%
Efficiency ratio (D) 51.69% 63.60% 60.14%(C) 62.29%
Diluted earnings per share $0.48 $ 0.33 $ 1.57 (C) $ 1.30
Asset Quality Ratios
Non-performing assets to loans
and other real estate 0.00% 0.16% 0.00% 0.16%
Net charge-offs (recoveries)
to average loans 0.04% (0.02)% 0.06% (0.04%)
Allowance for credit losses to
total loans 1.41% 1.34% 1.41% 1.34%
Common Stock Market Price
High $27.74 $20.00 $27.87 $20.00
Low $21.50 $17.14 $17.50 $12.88
Period end market price $26.99 $19.75 $26.99 $19.75
(C) Excluding merger-related expenses, ROAA, ROAE, Efficiency Ratio, and
Diluted Earnings Per Share, would have been 1.22%, 17.04%, 55.06% and
$1.76, respectively, for the year ended December 31, 2001.
(D) Calculated by dividing total non-interest expense (excluding securities
losses and credit loss provisions) by net interest income plus non-interest
income. Note: The trust preferred securities expense is treated as interest
expense for this calculation. Additionally, taxes are not part of this
calculation.
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Prosperity Bancshares, Inc. (SM)
Financial Highlights
(Dollars in thousands)
Dec 31, 2001 Sep 30, 2001 Dec 31, 2000 Dec 31, 1999
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(Unaudited) (Unaudited) (Audited) (Audited)
Balance Sheet Data (at period end)
Investment securities $ 752,149 $ 725,034 $ 588,278 $ 514,983
Total loans 424,400 419,557 411,203 366,803
Fed funds sold and
other earning assets 913 12,883 63,454 56,385
---------- ---------- ---------- ----------
Total earning assets 1,177,462 1,157,474 1,062,935 938,171
Allowance for credit losses (5,985) (5,518) (5,523) (5,031)
Cash and due from banks 41,005 28,066 35,709 39,731
Goodwill 22,641 22,981 24,003 19,795
Other real estate 0 0 545 500
Other assets 27,029 28,980 28,471 34,465
---------- ---------- ---------- ----------
Total assets $1,262,152 $1,231,983 $1,146,140 $1,027,631
========== ========== ========== ==========
Demand deposits $ 188,832 $ 182,347 $ 187,959 $ 173,798
Interest bearing deposits 934,565 909,314 845,587 704,791
---------- ---------- ---------- ----------
Total deposits 1,123,397 1,091,661 1,033,546 878,589
Fed funds purchased and other
interest bearing liabilities 18,080 13,465 13,931 63,119
Other liabilities 5,063 10,854 6,330 4,898
Company obligated trust
preferred securities of
subsidiary trusts 27,000 27,000 12,000 12,000
Shareholders' equity 88,612 89,003 80,333 69,025
---------- ---------- ---------- ----------
Total liabilities and equity $1,262,152 $1,231,983 $1,146,140 $1,027,631
========== ========== ========== ==========
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Prosperity Bancshares, Inc. (SM)
Financial Highlights
Three Months Ended Year Ended
Dec 31, 2001 Dec 31, 2000 Dec 31, 2001 Dec 31, 2000
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash Basis Data
(Excluding goodwill amortization &
related tax expense)
Return on average
assets (annualized) 1.37% 1.07% 1.18%(F) 1.12%
Return on average common
equity (annualized) 18.92% 15.46% 16.54%(F) 16.08%
Efficiency Ratio(E) 49.11% 60.46% 57.29%(F) 59.47%
Diluted cash earnings per share $ 0.52 $ 0.37 $ 1.71 (F) $ 1.45
(E) Efficiency Ratio adjusted for goodwill amortization expense only.
(F) Excluding merger-related expenses, ROAA (cash basis), ROAE (cash basis),
Efficiency Ratio (cash basis), and Diluted Earnings Per Share (cash basis),
would have been 1.32%, 18.39%, 52.21% and $1.90, respectively, for the year
ended December 31, 2001.
Three Months Ended
Dec 31, 2001 Sep 30, 2001 Jun 30, 2001 Mar 31, 2001
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(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Comparative Quarterly
Performance Ratios
Return on average
assets (annualized) 1.28% 1.25% 1.22% 1.12%(G)
Return on average
common equity (annualized) 17.64% 17.34% 17.30% 15.79%(G)
Net interest margin
(tax equivalent) (annualized) 4.05% 3.84% 3.74% 3.65%
Efficiency ratio 51.69% 55.07% 56.05% 58.07%(G)
Efficiency ratio (cash basis) 49.11% 52.05% 53.09% 54.99%(G)
(G) Excluding merger-related expenses.
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