EXHIBIT 99.1
[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)
TO ACQUIRE
PARADIGM BANCORPORATION, INC.
Prosperity Bank to increase presence in Houston
Will have 29 locations in Houston CMSA
HOUSTON, May 2, 2002. Prosperity Bancshares, Inc. (Prosperity) (Nasdaq: PRSP)
and Paradigm Bancorporation, Inc., Houston, Texas (Paradigm) announced today
that they have signed a definitive agreement pursuant to which Paradigm will be
merged into Prosperity. The transaction solidifies Prosperity's presence in the
Houston metropolitan market, and is a logical extension of Prosperity's
geographic franchise across Southeast Texas.
Paradigm is privately held and is the bank holding company of Paradigm Bank
Texas, which operates a total of eleven (11) banking offices - six (6) in
metropolitan Houston and five (5) in the
nearby Southeast Texas cities of Dayton, Galveston, Mont Belvieu, and Winnie. As
of December 31, 2001, Paradigm had total assets of $259.3 million, loans of
$170.8 million, deposits of $232.4 million and shareholders' equity of $18.1
million.
Under terms of the agreement, Prosperity will issue approximately 1.29 million
shares of its common stock for all outstanding shares of Paradigm. Based on the
closing price of Prosperity's stock on Wednesday, May 1, 2002 of $32.09, the
transaction values Paradigm at $41.4 million.
The merger, which is expected to be tax-free to Paradigm shareholders, has been
approved by the Board of Directors of both companies. The transaction is
expected to close before September 30, 2002 and is subject to approval by
Paradigm shareholders, as well as customary regulatory approvals. Operational
integration is anticipated to begin during the fourth quarter of 2002.
Prosperity expects that the merger will be accretive to earnings one year after
operational integration. This estimate does not consider any anticipated revenue
enhancements that may be realized from the merger.
"This merger continues our string of material acquisitions and the combination
will create a $1.6 billion regional community bank with market capitalization of
approximately $300 million. It significantly increases our asset base in
metropolitan Houston - one of the fastest growing metropolitan areas in the
nation, and provides us with an opportunity to enhance our revenues and earnings
over the next several years," commented David Zalman, Chief Executive Officer
and President of Prosperity.
"Paradigm Bank Texas has a formidable presence in the fast growing markets of
north Houston. This merger is an excellent geographic fit with our existing
franchise and will increase our ability to provide our style of people-to-people
banking within the Houston market," commented Zalman. "As we continue to strive
to build our loan to deposit ratio, the addition of over 10 experienced lenders
to our team should prove to be advantageous for our bank."
"The combination of our organizations will further our strategic goals of
maintaining consistently strong earnings growth by leveraging our product and
service capabilities over an expanded customer base," added David Hollaway,
Prosperity's Chief Financial Officer. "Together, we service over 100,000 deposit
accounts which will provide us additional opportunities in the future."
Ned Holmes, Chairman of the Board of Prosperity, said, "We have continued to
look for opportunities to expand our presence within Houston and believe that
this acquisition will provide significant value to our shareholders, our
customers, our associates, and the communities we serve. Together, our combined
organization will be able to offer our customers a broader and more
sophisticated array of products and services, while continuing to provide the
highest level of customer and community service."
Peter E. Fisher, President and Chief Executive Officer of Paradigm added, "We
are excited and
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pleased to be joining forces with Prosperity. Local decision making, outstanding
customer service and improved products and services make this merger a good fit
for our customers, employees and shareholders. We look forward to joining the
Prosperity team and building on their track record of customer focused products
with local decision makers." Fisher will serve as Vice Chairman of the Board of
Prosperity Bank upon consummation of the merger.
Following the merger, Prosperity will have forty (40) banking centers in Houston
and the fifteen (15) surrounding counties with over $1.4 billion in deposits,
approximately $650 million in loans and over $1.6 billion in assets. With the
addition of Paradigm's loans, Prosperity's loan to deposit ratio will increase
from 36.8 percent to approximately 46 percent.
Upon completion of the transaction, Prosperity will add Charles J. Howard M.D.
and William H. Fagan M.D. as new Directors. Peter E. Fisher and Leah
Huffmeister-Henderson will join the Board of Directors of Prosperity Bank.
Charles J. Howard, M.D. has served as Chairman of Paradigm Bancorporation since
its inception in 1996 and was a founding director of Paradigm Bank Texas. He has
been a director of the Vail Valley (Colorado) Medical Center since 1985 and
served as chairman from 1992 thru 1996. Dr. Howard retired from the general
practice of medicine in 1983. He is a licensed airline transport pilot and is an
active investor in numerous aviation-related businesses, including the only
fixed base operation in Aspen, Colorado. He was a founding member the Northwest
Medical Center-Hospital, the Cypress-Fairbanks Medical Center-Hospital, and the
Northeast Medical Center.
William H. Fagan, M.D. began his banking experience in 1965 when he joined the
board of directors of Channelview State Bank, which later became Prime Bank. He
served on the board until 1980, when he resigned to become an organizing
director of Paradigm Bank Texas. Dr. Fagan became chairman of Paradigm Bank
Texas in 1996. Dr. Fagan retired from the active practice of medicine in 1987.
He was a co-founder of the Houston Northwest Medical Center-Hospital, the
Northeast Medical Center, and the Cypress-Fairbanks Medical Center-Hospital. He
served as Chairman of the Board of both the Northwest Medical Center and the
Cypress-Fairbanks Medical Center.
Leah Huffmeister-Henderson has been a director of Paradigm Bancorporation and
Paradigm Bank Texas since 1997. She is Senior Vice President of sales and
business development for PULSE EFT Association in Houston where she has been
employed for more than eleven years. Ms. Huffmeister-Henderson received her
bachelor of business administration from Stephen F. Austin State University.
Peter E. Fisher joined Paradigm Bancorporation as president in 1997 and became
chief executive officer in 1999. With the consolidation of Paradigm Bank Texas
and Dayton State Bank, Mr. Fisher became president and chief executive officer
of Paradigm Bank Texas in December of 2000. Prior to joining Paradigm, Mr.
Fisher was president of Charter Bank Houston until it was sold to Bank of
America. He then became executive vice president of American Bank where he also
served on their board. Mr. Fisher is a licensed attorney in both Texas and
Illinois. He is active in numerous charitable organizations and sits on the
board of trustees of both the Gulf Coast Regional Blood Center and the Houston
Community College Foundation.
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Strategic Rationale and Economics
. Financially & strategically attractive
. Quality management team
. Increases pro forma capital
. Market expansion opportunity for Prosperity Bank
. Attractive core deposit franchise; provides platform for growth
. Paradigm loan to deposit ratio of 73.5%
. Paradigm efficiency ratio of 83.8% makes expense saves reasonable
. Transaction Details
. Share exchange ratio: 0.54329 shares of PRSP to each
Paradigm common share
. Cost Savings: 18% of Paradigm expense base
. Accounting Treatment: Purchase Accounting
. Expected closing: 3Q 2002
. Integration completion: 4Q 2002
. Valuation (using Prosperity's closing stock price on 5/1/02 of $32.09)
. Price/book: 2.29x
. Price/tangible Book: 2.80x
. Price to 2000 earnings: 18.56x
. Price to 2001 earnings: 36.74x
. Price to 2002 est. earnings: 20.91x
. Price/assets 15.97%
. Deposit premium: 9.95%
Acquisition of Texas Guaranty Bank, N.A.
On February 22, 2002, Prosperity announced the signing of a definitive agreement
with American Bancorp of Oklahoma, Inc. to acquire its wholly-owned subsidiary,
Texas Guaranty Bank, N.A., for $11.8 million in cash.
"Our previously announced acquisition of Texas Guaranty Bank and the integration
of their three locations into our operations is progressing on schedule. We have
received final regulatory approval and anticipate consummating the transaction
within the next few weeks," added H. E. "Tim" Timanus, Jr., President and Chief
Operating Officer of Prosperity Bank(SM)
Texas Guaranty Bank, N.A. operates three (3) offices in Houston, Texas, all of
which will become full service banking centers of Prosperity Bank when the
acquisition is completed. On December 31, 2001, Texas Guaranty Bank, N.A.
reported total assets of $82.2 million, total deposits of $62.9 million and
total loans of $59.7 million.
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Acquisition of The First State Bank
On April 26, 2002, Prosperity announced the signing of a definitive agreement to
acquire The First State Bank, Needville Texas in a cash transaction. The
proposed transaction is subject to certain conditions and approval by
regulators.
The First State Bank operates one (1) office in Needville, Texas, which will be
consolidated (upon completion of the transaction) with Prosperity Bank's full
service banking center in Needville. On December 31, 2001, The First State Bank
reported total assets of $17.8 million, total deposits of $15.4 million and
total loans of $4.9 million.
Prosperity Bancshares, Inc.(SM), formed in 1983, is a $1.290 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 and Investment Services,
MasterMoney Debit Cards, and 24 hour voice response banking. The bank currently
operates twenty-nine (29) full service banking locations in fourteen (14)
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.
In connection with the proposed merger, Prosperity will file a proxy
statement/prospectus with the Securities and Exchange Commission. INVESTORS AND
SECRUITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN
IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors
and security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other documents filed by Prosperity
with the Securities and Exchange Commission at its website, http://www.sec.gov.
Free copies of the proxy statement/prospectus, once available, and Prosperity's
other filings with the Securities and Exchange Commission may also be obtained
from Prosperity by contacting Investor Relations at (713) 693-9300.
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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