HOUSTON, April 24, 2013 /PRNewswire/ -- Prosperity Bancshares, Inc.^® NYSE: (PB), the parent company of Prosperity Bank^®, reported net income for the quarter ended March 31, 2013, of $49.305 million or $0.86 per diluted common share, an increase in net income of $12.818 million or 35.1%, compared with $36.487 million and an increase in diluted earnings per share of 11.7% compared with $0.77 per diluted common share for the same period in 2012.

"Again I am delighted to be able to announce record earnings of $49.305 million, as well as record earnings per diluted share of $0.86. Over the last year, our bank has experienced significant growth. In fact, our assets increased $4.191 billion, or 38%, when compared with the same quarter last year," said David Zalman, Prosperity's Chairman and Chief Executive Officer.

"In addition to a number of other honors we have received over the years, we were recently recognized by SNL, a prestigious provider of bank information and data, as the 2nd best Regional Bank in the nation based on their research. Honors like these could not be achieved without everyone working toward the same goal and for that I appreciate all the hard work by our associates and directors," said Zalman.

"We are very fortunate to be located in a part of the country that has population and job growth occurring at higher rates than many other areas. The unemployment rate in March for Texas was 6.4% and in the Permian Basin area in West Texas, it was below 4.0%. This is compared to the National jobless rate of 7.6%. The Oklahoma area is also doing very well with low unemployment rates, growing population and an overall positive business climate," added Zalman.

"Our goal is to continue to take care of our customers with new and innovative products at fair prices that benefit our customers and help make their life easier," concluded Zalman.

Prosperity's management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30). Prosperity has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented. Please refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.

Results of operations for the three months ended March 31, 2013

For the three months ended March 31, 2013, net income was $49.305 million compared with $36.487 million for the same period in 2012. Net income per diluted common share was $0.86 for the three months ended March 31, 2013 compared with $0.77 for the same period in 2012. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2013 were 1.33%, 9.23% and 22.30%, respectively. Prosperity's efficiency ratio (excluding, credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 42.40% for the three months ended March 31, 2013.

Net interest income before provision for credit losses for the quarter ended March 31, 2013, increased 32.1% to $108.082 million compared with $81.846 million during the same period in 2012. The increase is primarily due to a 42.9% increase in average interest earning assets for the same period. Linked quarter net interest income before provision for credit losses decreased 0.2% or $219,000 compared with $108.301 million during the three months ended December 31, 2012. The net interest margin on a tax equivalent basis decreased to 3.42% for the three months ended March 31, 2013, compared with 3.64% for the same period in 2012 and decreased 11 basis points from 3.53% for the three months ended December 31, 2012.

Non-interest income increased $9.496 million or 68.1% to $23.441 million for the three months ended March 31, 2013, compared with $13.945 million for the same period in 2012. The increase was primarily due to the acquisition of American State Financial Corporation ("ASB") on July 1, 2012. Through ASB, Prosperity acquired additional services and products including trust, credit cards and mortgage lending operations. On a linked quarter basis, non-interest income decreased 2.8% or $665,000.

Non-interest expense increased $15.308 million or 37.8% to $55.767 million for the three months ended March 31, 2013, compared with $40.459 million for the same period in 2012. The increase is primarily due to additional non-interest expenses associated with ASB. Additionally, total non-interest expense for the three months ended March 31, 2013 included one-time pre-tax merger expenses of $252,000. On a linked quarter basis, non-interest expense decreased 2.1% or $1.201 million.

Average loans increased 37.8% or $1.445 billion to $5.264 billion for the quarter ended March 31, 2013, compared with $3.819 billion for the same period in 2012. On a linked quarter basis, average loans increased 2.4% or $123.621 million from $5.140 billion at December 31, 2012. Average deposits increased 39.5% to $11.760 billion for the quarter ended March 31, 2013, compared with $8.429 billion for the same period of 2012. On a linked quarter basis, average deposits increased 4.4% or $500.794 million from $11.259 billion at December 31, 2012.

Loans at March 31, 2013 were $5.263 billion, an increase of $1.388 billion or 35.8%, compared with $3.875 billion at March 31, 2012. On a linked quarter basis, loans increased $83.084 million or 1.6% (6.4% annualized) from $5.180 billion at December 31, 2012. Deposits at March 31, 2013 were $11.713 billion, an increase of $3.169 billion or 37.1% compared with $8.544 billion at March 31, 2012. On a linked quarter basis, deposits increased $71.623 million or 0.6% (2.4% annualized) from $11.642 billion at December 31, 2012.

The table below provides detail on loans acquired and deposits assumed in the Texas Bankers, Inc., The Bank Arlington, ASB, Community National Bank ("Community National"), and East Texas Financial Services transactions completed on January 1, 2012, April 1, 2012, July 1, 2012, October 1, 2012 and January 1, 2013, respectively:

As reflected in the table above, loan and deposit growth was impacted by the acquisitions of Texas Bankers, Inc., The Bank Arlington, ASB, Community National and East Texas Financial Services. Excluding loans acquired in these acquisitions and new production at the acquired banking centers since the respective acquisition dates, loans at March 31, 2013 grew 5.5% compared with March 31, 2012 and 1.5% (6.0% annualized) on a linked quarter basis. Excluding deposits assumed in these acquisitions and new deposits generated at the acquired banking centers since the respective acquisition dates, deposits at March 31, 2013 grew 5.0% compared with March 31, 2012 and 0.3% (1.2% annualized) on a linked quarter basis.

At March 31, 2013, Prosperity had $15.081 billion in total assets, $5.263 billion in loans and $11.713 billion in deposits. Assets, loans and deposits at March 31, 2013 increased by 38.5%, 35.8% and 37.1%, respectively, compared with their respective levels at March 31, 2012.

Asset Quality

Non-performing assets totaled $18.133 million or 0.14% of quarterly average earning assets at March 31, 2013, compared with $14.873 million or 0.16% of quarterly average earning assets at March 31, 2012, and $13.015 million or 0.10% of quarterly average earnings assets at December 31, 2012. The allowance for credit losses was 1.05% of total loans at March 31, 2013, 1.33% of total loans at March 31, 2012 and 1.01% of total loans at December 31, 2012. Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.25% and 1.22% of remaining loans as of March 31, 2013 and December 31, 2012, respectively. Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure.

The provision for credit losses was $2.800 million for the three months ended March 31, 2013 compared to $3.550 million for the linked quarter and $150,000 for the three months ended March 31, 2012. Net charge offs were $315,000 for the three months ended March 31, 2013 compared to $1.913 million for the linked quarter and $102,000 for the three months ended March 31, 2012.

Conference Call

Prosperity's management team will host a conference call on Wednesday, April 24, 2013 at 10:30 a.m. Eastern Standard Time (9:30 a.m. Central Standard Time) to discuss Prosperity's first quarter 2013 earnings. Individuals and investment professionals may participate in the call by dialing 866-952-1907, the reference code is PBTX.

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 directly from Prosperity's home page by clicking the "About Us" tab and then the "Presentations & Calls" link.

Acquisition of Coppermark Bancshares, Inc.

On April 1, 2013, Prosperity completed the previously announced acquisition of Coppermark Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank ("Coppermark") headquartered in Oklahoma City, Oklahoma. Coppermark operated nine (9) full-service banking offices; six (6) in Oklahoma City, Oklahoma and surrounding areas and three (3) in the Dallas, Texas area. As of March 31, 2013, Coppermark reported, on a consolidated basis, total assets of $1.2 billion, total loans of $847.6 million and total deposits of $1.1 billion.

Pursuant to the terms of the acquisition agreement, Prosperity issued 3,258,718 shares of Prosperity common stock plus $60.0 million in cash for all outstanding shares of Coppermark Bancshares capital stock, which resulted in a premium of $91.7 million.

Acquisition of East Texas Financial Services, Inc.

On January 1, 2013, Prosperity completed the previously announced acquisition of East Texas Financial Services, Inc. (OTC BB: FFBT) and its wholly-owned subsidiary, First Federal Bank Texas ("Firstbank"). Firstbank operated four (4) banking offices in the Tyler MSA, including three locations in Tyler, Texas and one location in Gilmer, Texas. As of December 31, 2012, East Texas Financial Services reported, on a consolidated basis, total assets of $165.0 million, total loans of $129.3 million and total deposits of $112.3 million.

Pursuant to the terms of the acquisition agreement, Prosperity issued 530,940 shares of Prosperity common stock for all outstanding shares of East Texas Financial Services capital stock, which resulted in a premium of $7.0 million.

Acquisition of Community National Bank

On October 1, 2012, Prosperity completed the previously announced acquisition of Community National Bank, Bellaire, Texas. Community National operated one (1) banking office in Bellaire, Texas, in the Houston Metropolitan Area. As of September 30, 2012, Community National reported total assets of $183.0 million, total loans of $68.0 million and total deposits of $164.6 million.

Pursuant to the terms of the acquisition agreement, Prosperity issued 372,282 shares of Prosperity common stock plus $11.4 million in cash for all outstanding shares of Community National capital stock, which resulted in a premium of $10.6 million.

Acquisition of American State Financial Corporation

On July 1, 2012, Prosperity completed the previously announced acquisition of American State Financial Corporation and its wholly-owned subsidiary American State Bank. American State Bank operated thirty-seven (37) full-service banking offices in eighteen (18) counties across West Texas. As of June 30, 2012, ASB, on a consolidated basis, reported total assets of $3.2 billion, total loans of $1.2 billion and total deposits of $2.5 billion.

Pursuant to the terms of the acquisition agreement, Prosperity issued 8,524,835 shares of Prosperity common stock plus $178.5 million in cash for all outstanding shares of American State Financial Corporation capital stock, which resulted in a premium of $240.4 million.

Acquisition of The Bank Arlington

On April 1, 2012, Prosperity completed the previously announced acquisition of The Bank Arlington. The Bank Arlington operated one (1) banking office in Arlington, Texas, in the Dallas/Fort Worth CMSA. As of March 31, 2012, The Bank Arlington reported total assets of $37.3 million, total loans of $22.8 million and total deposits of $33.2 million.

Pursuant to the terms of the acquisition agreement, Prosperity issued 135,389 shares of Prosperity common stock for all outstanding shares of The Bank Arlington capital stock, which resulted in a premium of $2.8 million.

Acquisition of Texas Bankers, Inc.

On January 1, 2012, Prosperity completed the previously announced acquisition of Texas Bankers, Inc. and its wholly-owned subsidiary, Bank of Texas, Austin, Texas. The three (3) Bank of Texas banking offices in the Austin, Texas CMSA consisted of a location in Rollingwood, which was consolidated with Prosperity's Westlake location and remains in Bank of Texas' Rollingwood banking office; one banking center in downtown Austin, which was consolidated into Prosperity's downtown Austin location; and another banking center in Thorndale. Prosperity now operates thirty-four (34) banking centers in the Central Texas area including Austin and San Antonio. Texas Bankers, Inc. reported, on a consolidated basis, total assets of $77.0 million, total loans of $27.6 million and total deposits of $70.4 million as of December 31, 2011.

Pursuant to the terms of the acquisition agreement, Prosperity issued 314,953 shares of Prosperity common stock for all outstanding shares of Texas Bankers capital stock which resulted in a premium of $5.2 million.

Prosperity Bancshares, Inc. ^®

Prosperity Bancshares Inc. ^® is a $15.1 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 http://www.prosperitybankusa.com, Retail Brokerage Services, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management; and Mobile Banking. Since completing the merger with Coppermark, Prosperity now operates two hundred twenty-four (224) full service banking locations; fifty-nine (59) in the Houston area; twenty (20) in the South Texas area including Corpus Christi and Victoria; thirty-eight (38) in the Dallas/Fort Worth area; twenty-three (23) in the East Texas area; thirty-four (34) in the Central Texas area including Austin and San Antonio; thirty-four (34) in the West Texas area including Lubbock, Midland-Odessa and Abilene; ten (10) in the Bryan/College Station area and six (6) in the Central Oklahoma area.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the securities laws that are based on current expectations, assumptions, estimates and projections about Prosperity and its subsidiaries. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate fluctuations and interest rate fluctuations; and weather. These and various other factors are discussed in Prosperity's Annual Report on Form 10-K for the year ended December 31, 2012 and other reports and statements Prosperity has filed with the SEC. Copies of the SEC filings for Prosperity Bancshares^® may be downloaded from the Internet at no charge from www.prosperitybankusa.com.