Exhibit 99.1

 

 

PRESS RELEASE	For more information contact:
Prosperity Bancshares, Inc.®	David Zalman
Prosperity Bank Plaza	Chairman and Chief Executive Officer
4295 San Felipe	281.269.7199
Houston, Texas 77027	david.zalman@prosperitybankusa.com

 

FOR IMMEDIATE RELEASE

 

Prosperity Bancshares, Inc.^®

REPORTS RECORD FOURTH QUARTER

2014 EARNINGS

 

●

Fourth quarter 2014 earnings per share (diluted) increased 14.3% to $1.12 compared with the fourth quarter 2013

●

Net income increased $15.257 million or 24.2% compared with the fourth quarter 2013

●

Nonperforming assets remain low at 0.20% of fourth quarter average earning assets

●

2014 earnings per share (diluted) increased 18.4% to $4.32 compared with 2013

●

Loans increased $1.469 billion or 18.9% compared with 2013

●

Deposits increased $2.402 billion or 15.7% compared with 2013

 

HOUSTON, January 23, 2015. Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, “Prosperity”), reported net income for the quarter ended December 31, 2014 of $78.228 million, an increase in net income of $15.257 million or 24.2%, compared with $62.971 million for the quarter ended December 31, 2013. Additionally, diluted earnings per share increased 14.3% to $1.12 per diluted common share for the quarter ended December 31, 2014 compared with $0.98 per diluted common share for the same period in 2013. Prosperity also reported net income for the year ended December 31, 2014 of $297.441 million or $4.32 per diluted common share, an increase of 34.3% from 2013 net income of $221.398 million and up 18.4% from 2013 diluted earnings per common share of $3.65.

 

“Prosperity continues to show strong fundamental results and is proud to announce another record year of earnings. Earnings per diluted share for the fourth quarter of 2014 increased 14.3% compared with the fourth quarter of 2013 and earnings per diluted share for the full year 2014 increased 18.4% compared with the full year 2013. We continue to show strong organic loan growth. Excluding loans acquired in acquisitions during the last five quarters and new production at the acquired banking centers since the respective acquisition dates, loans at December 31, 2014 grew $549.523 million or 8.9% compared with December 31, 2013 and increased $148.230 million or 2.2% (9.0% annualized) on a linked quarter basis. While we saw loans decrease at the acquired banks, it is not unusual for Prosperity to move out certain loans that do not necessarily fit our risk appetite. We also saw strong organic deposit growth. Excluding deposits assumed in acquisitions and new deposits generated at the acquired banking centers since the respective acquisition dates, deposits at December 31, 2014 grew $461.751 million or 3.5% compared with December 31, 2013 and increased $507.535 million or 3.9% (15.6% annualized) on a linked quarter basis,” said David Zalman, Prosperity’s Chairman and Chief Executive Officer.

  

 

“Although our fundamentals are strong, our stock price has languished recently. We believe the stock price decline is due to investor sentiment regarding the decrease in crude oil prices. We have reviewed our energy credits and have not seen any negative effects in the loan portfolio to date, although we expect it may take 6 to 9 months to feel the impact of lower oil prices. Our management team has been in banking since the 1980’s and is familiar lending to the energy industry and in Texas and Oklahoma,” continued Zalman.

 

“Texas and Oklahoma currently have low unemployment numbers and more diverse employment opportunities than they have in the past.  While we expect growth in jobs will be impacted by lower oil prices, we believe that the Texas and Oklahoma economies are in a better position to weather such an impact,” added Zalman.

 

“I would like to thank all of our associates, directors and customers for all their help and support in making our company the success it is,” 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. As a result of acquisitions, and thus purchase accounting adjustments, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under FASB Accounting Standards Codification (“ASC”) Topics 310-20, “Receivables-Nonrefundable Fees and Other Costs” and 310-30, “Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality”). Prosperity has included in this Earnings Release information related 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 December 31, 2014

 

For the three months ended December 31, 2014, net income was $78.228 million compared with $62.971 million for the same period in 2013. Net income per diluted common share was $1.12 for the three months ended December 31, 2014 compared with $0.98 for the same period in 2013. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended December 31, 2014 were 1.48%, 9.70% and 23.87%, respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 40.78% for the three months ended December 31, 2014.

 

Net interest income before provision for credit losses for the quarter ended December 31, 2014, increased 22.2% to $177.751 million compared with $145.469 million during the same period in 2013. The increase was primarily due to a 19.4% increase in average interest-earning assets for the same period. Linked quarter net interest income before provision for credit losses increased $2.094 million or 1.2% to $177.751 million compared with $175.657 million during the three months ended September 30, 2014. This increase was primarily due to a credit to interest expense of $2.428 million. More specifically, during the fourth quarter, Prosperity finalized the fair value adjustments for certificates of deposit acquired from F&M Bancorporation Inc. and its wholly-owned subsidiary, The F&M Bank & Trust Company (collectively, “F&M”), and FVNB Corp. and its wholly-owned subsidiary, First Victoria National Bank (collectively, “FVNB”), and recorded the total 2014 premium amortization for the acquired banks in the fourth quarter. The net interest margin on a tax equivalent basis increased to 3.89% for the three months ended December 31, 2014, compared with 3.82% for the same period in 2013 and 3.85% for the three months ended September 30, 2014. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis decreased on a linked quarter basis from 3.26% for the quarter ended September 30, 2014 to 3.25% for the quarter ended December 31, 2014.

 

Noninterest income increased $4.948 million or 19.7% to $30.106 million for the three months ended December 31, 2014, compared with $25.158 million for the same period in 2013. This increase was primarily due to an increase in service charges and credit, debit and ATM card income as a result of the additional accounts acquired from F&M and FVNB. Additionally, trust and brokerage income increased as a result of the additional products and services acquired through the acquisition of FVNB in the fourth quarter 2013. On a linked quarter basis, noninterest income decreased $55 thousand or 0.2% compared with the quarter ended September 30, 2014.

 

Noninterest expense increased $16.170 million or 23.6% to $84.762 million for the three months ended December 31, 2014, compared with $68.592 million for the same period in 2013. This increase was primarily due to increased salary and benefits expense and additional operational expenses associated with the acquisitions of FVNB and F&M. On a linked quarter basis, noninterest expense decreased $748 thousand or 0.9%, compared with the quarter ended September 30, 2014.

 

Loans at December 31, 2014 were $9.244 billion, an increase of $1.469 billion or 18.9%, compared with $7.775 billion at December 31, 2013, primarily due to the acquisition of F&M. Linked quarter loans decreased $124.705 million or 1.3% from $9.369 billion at September 30, 2014.

 

Deposits at December 31, 2014 were $17.693 billion, an increase of $2.402 billion or 15.7% compared with $15.291 billion at December 31, 2013, primarily due to the acquisition of F&M. Linked quarter deposits increased $679.131 million or 4.0% from $17.014 billion at September 30, 2014.

  

 

Average loans increased $2.087 billion or 28.8% to $9.325 billion for the quarter ended December 31, 2014, compared with $7.238 billion for the same period in 2013. On a linked quarter basis, average loans decreased $55.918 million or 0.6% from $9.381 billion for the quarter ended September 30, 2014. Average deposits increased $2.927 billion or 20.6% to $17.118 billion for the quarter ended December 31, 2014, compared with $14.191 billion for the same period of 2013. On a linked quarter basis, average deposits increased $40.983 million or 0.2% from $17.077 billion for the quarter ended September 30, 2014.

 

 

Results of operations for the year ended December 31, 2014

 

For the year ended December 31, 2014, net income was $297.441 million compared with $221.398 million for the same period in 2013. Net income per diluted common share was $4.32 for the year ended December 31, 2014, compared with $3.65 for the same period in 2013. Returns on average assets, average common equity and average tangible common equity for the year ended December 31, 2014 were 1.44%, 9.66%, and 24.24%, respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 41.81% for the year ended December 31, 2014.

 

Net interest income before provision for credit losses for the year ended December 31, 2014 increased $172.328 million or 34.5% to $671.154 million compared with $498.826 million during the same period in 2013. The increase was primarily due to a 25.9% increase in average interest-earning assets over the same period. The net interest margin on a tax equivalent basis for the year ended December 31, 2014 increased to 3.80%, compared with 3.58% for the same period in 2013. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis increased to 3.29% for the year ended December 31, 2014 from 3.20% for the same period in 2013.

 

Noninterest income increased $27.445 million or 28.8% to $122.872 million for the year ended December 31, 2014 compared with $95.427 million for the same period in 2013. This increase was primarily due to the effects of the additional accounts acquired in the acquisitions of FVNB and F&M completed in 2013 and 2014. Trust and brokerage income increased as a result of the additional products and services acquired through the FVNB acquisition. In addition, gain on the sale of assets increased $4.671 million during the year ended December 31, 2014 compared with the same period in 2013. This increase was primarily due to a $2.224 million gain that was recorded during the first quarter of 2014 on the sale of the agent bank credit card and agent bank merchant processing business of Bankers Credit Card Services, Inc., a subsidiary acquired as part of the acquisition of Coppermark Bancshares, Inc. and its wholly-owned subsidiary, Coppermark Bank.

 

Noninterest expense increased $82.806 million or 33.5% to $330.002 million for the year ended December 31, 2014 compared with $247.196 million for the same period in 2013. This increase was primarily due to additional operational expenses associated with the acquisitions of FVNB and F&M. Additionally, total noninterest expense for the year ended December 31, 2014 included one-time pre-tax merger expenses of $3.114 million related to the F&M and FVNB acquisitions compared with one-time pre-tax merger expenses of $3.203 million for the year ended December 31, 2013 related to prior acquisitions.

 

Average loans increased $2.785 billion or 44.9% to $8.988 billion for the year ended December 31, 2014, compared with $6.203 billion for the same period in 2013. Average deposits increased $3.926 billion or 30.8% to $16.690 billion for the year ended December 31, 2014, compared with $12.764 billion for the same period in 2013.

  

 

The table below provides detail on loans acquired and deposits assumed in the acquisitions of FVNB and F&M completed on November 1, 2013 and April 1, 2014, respectively:

 

Balance Sheet Data (at period end)

(In thousands) 

		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Loans acquired (including new production since respective acquisition dates):
FVNB		$	1,283,179			$	1,329,537			$	1,424,395			$	1,509,927			$	1,588,238
F&M			1,224,498				1,451,075				1,502,836				-				-
All other loans			6,736,506				6,588,276				6,380,931				6,242,473				6,186,983
Total loans		$	9,244,183			$	9,368,888			$	9,308,162			$	7,752,400			$	7,775,221
Deposits assumed (including new deposits since respective acquisition dates):
FVNB		$	2,116,322			$	2,102,722			$	2,105,120			$	2,164,824			$	2,239,415
F&M			2,063,229				1,905,233				2,090,468				-				-
All other deposits			13,513,607				13,006,072				13,085,467				13,295,233				13,051,856
Total deposits		$	17,693,158			$	17,014,027			$	17,281,055			$	15,460,057			$	15,291,271

 

 

As reflected in the table above, loan and deposit growth was impacted by the acquisitions of FVNB and F&M. Excluding loans acquired in these acquisitions and new production at the acquired banking centers since the respective acquisition dates, loans at December 31, 2014 grew $549.523 million or 8.9% compared with December 31, 2013 and increased $148.230 million or 2.2% (9.0% 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 December 31, 2014 grew $461.751 million or 3.5% compared with December 31, 2013 and increased $507.535 million or 3.9% (15.6% annualized) on a linked quarter basis.

 

At December 31, 2014, Prosperity had $21.508 billion in total assets, $9.244 billion in loans and $17.693 billion in deposits. Assets, loans and deposits at December 31, 2014 increased by 15.4%, 18.9% and 15.7%, respectively, compared with their respective levels at December 31, 2013.

 

Asset Quality

 

Nonperforming assets totaled $36.919 million or 0.20% of quarterly average earning assets at December 31, 2014, compared with $22.504 million or 0.15% of quarterly average earning assets at December 31, 2013, and $50.082 million or 0.27% of quarterly average earning assets at September 30, 2014. The allowance for credit losses was 0.87% of total loans at

December 31, 2014 and 2013, and 0.83% of total loans at September 30, 2014. Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.14% of remaining loans as of December 31, 2014, compared with 1.25% at December 31, 2013 and 1.14% at September 30, 2014. 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 $6.350 million for the three months ended December 31, 2014 compared with $7.865 million for the three months ended December 31, 2013 and $5.000 million for the three months ended September 30, 2014. The provision for credit losses was $18.275 million for the year ended December 31, 2014 compared with $17.240 million for the year ended December 31, 2013.

 

Net charge offs were $3.201 million for the three months ended December 31, 2014, primarily due to one acquired loan made to a company that filed bankruptcy and subsequently sold the collateral, compared with $496 thousand for the three months ended December 31, 2013 and $653 thousand for the three months ended September 30, 2014. Net charge offs were $4.795 million for the year ended December 31, 2014 compared with $2.522 million for the year ended December 31, 2013.

  

 

Conference Call

 

Prosperity’s management team will host a conference call on Friday, January 23, 2015 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity’s fourth quarter 2014 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383. The elite entry number is 6646422.

 

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity’s website at http://www.prosperitybankusa.com. The webcast may be accessed directly from Prosperity’s home page by clicking the “Investor Relations” tab and then the “Presentations & Calls” link.

 

Redemption of Outstanding Trust Preferred Securities (“TRUPS”)

 

As of December 31, 2014, all of the $167.531 million of outstanding TRUPS of Prosperity Bancshares, Inc. (“Bancshares”) were counted as Tier 1 capital. Under the new Basel III capital regulations, 75% of TRUPS will be eliminated from Tier 1 capital beginning on March 31, 2015 and fully eliminated by the end of 2016. Although the TRUPS are includable as Tier 2 capital, Bancshares redeemed one issue of TRUPS in early January 2015 and intends to redeem the remaining 11 issues of TRUPS by the end of the first quarter of 2015. Bancshares notified the Federal Reserve of its redemption intent and timing, and the Federal Reserve had no objections to these redemptions. Bancshares intends to fund the redemption of the TRUPS through dividends from Prosperity Bank.

 

Acquisition of F&M Bancorporation Inc.

 

On April 1, 2014, Prosperity completed the acquisition of F&M Bancorporation Inc. (“FMBC”) and its wholly-owned subsidiary, The F&M Bank & Trust Company (“F&M Bank”) headquartered in Tulsa, Oklahoma. F&M Bank operated 13 banking offices: 9 in Tulsa, Oklahoma and surrounding areas; 3 in Dallas, Texas; and 1 loan production office in Oklahoma City, Oklahoma. As of March 31, 2014, FMBC, on a consolidated basis, reported total assets of $2.412 billion, total loans of $1.738 billion and total deposits of $2.267 billion.

 

Pursuant to the terms of the acquisition agreement, Prosperity issued 3,298,022 shares of Prosperity common stock plus $34.240 million in cash for all outstanding shares of FMBC capital stock, which resulted in goodwill of $198.245 million as of December 31, 2014. Additionally, Prosperity recognized $27.140 million of core deposit intangibles as of December 31, 2014. The goodwill balance as of December 31, 2014 does not include subsequent fair value adjustments that are still being finalized.

 

Acquisition of FVNB Corp.

 

On November 1, 2013, Prosperity completed the acquisition of FVNB Corp. and its wholly-owned subsidiary, First Victoria National Bank headquartered in Victoria, Texas. First Victoria National Bank operated 33 banking offices: 4 in Victoria, Texas; 7 in the South Texas area including Corpus Christi; 6 in the Bryan/College Station area; 5 in the Central Texas area including New Braunfels; and 11 in the Houston area including The Woodlands and Huntsville. As of September 30, 2013, FVNB Corp., on a consolidated basis, reported total assets of $2.473 billion, total loans of $1.648 billion and total deposits of $2.195 billion.

 

Pursuant to the terms of the acquisition agreement, Prosperity issued 5,570,667 shares of Prosperity common stock plus $91.250 million in cash for all outstanding shares of FVNB Corp. capital stock, which resulted in goodwill of $327.349 million as of December 31, 2014. Additionally, Prosperity recognized $18.411 million of core deposit intangibles as of December 31, 2014.

  

 

Prosperity Bancshares, Inc. ^®

 

As of December 31, 2014, Prosperity Bancshares Inc. ^® is a $21.508 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, Credit Cards, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management, Mortgage Services and Mobile Banking.

 

Prosperity currently operates 244 full-service banking locations: 61 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 36 in the Dallas/Fort Worth area; 22 in the East Texas area; 30 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area, 6 in the Central Oklahoma area and 9 in the Tulsa, Oklahoma area.

 

 

Bryan/College Station Area -	Sachse	Sugar Land	Sinton
Bryan	The Colony	SW Medical Center	Taft
Bryan-29th Street	Turtle Creek	Tanglewood	Victoria
Bryan-East	Westmoreland	Uptown	Victoria-Navarro
Bryan-North		Waugh Drive	Victoria-North
Caldwell	Fort Worth -	Westheimer	Yoakum
College Station	Haltom City	West University	Yorktown
Crescent Point	Keller	Woodcreek
Hearne	Roanoke		West Texas Area -
Huntsville	Stockyards	Other Houston Area	Abilene -
Madisonville		Locations -	Antilley Road
Navasota	Other Dallas/Fort Worth Locations -	Angleton	Barrow Street
New Waverly	Arlington	Bay City	Cypress Street
Rock Prairie	Azle	Beaumont	Judge Ely
Southwest Parkway	Ennis	Cinco Ranch	Mockingbird
Tower Point	Gainesville	Cleveland
Wellborn Road	Glen Rose	East Bernard	Lubbock -
	Granbury	El Campo	4th Street
Central Texas Area -	Mesquite	Dayton	66th Street
Austin -	Muenster	Galveston	82nd Street
183	Sanger	Groves	86th Street
Allandale	Waxahachie	Hempstead	98th Street
Cedar Park	Weatherford	Hitchcock	Avenue Q
Congress		Katy	North University
Lakeway	East Texas Area -	Katy-Spring Green	Texas Tech Student Union
Liberty Hill	Athens	Liberty
Northland	Blooming Grove	Magnolia	Midland -
Oak Hill	Canton	Magnolia Parkway	Wadley
Research Blvd	Carthage	Mont Belvieu	Wall Street
Westlake	Corsicana	Nederland
	Crockett	Needville	Odessa -
Other Central Texas Locations -	Eustace	Rosenberg	Grandview
Bastrop	Gilmer	Shadow Creek	Grant
Canyon Lake	Grapeland	Spring	Kermit Highway
Dime Box	Gun Barrel City	Sweeny	Parkway
Dripping Springs	Jacksonville	The Woodlands-I-45
Elgin	Kerens	The Woodlands-Research Forest	Other West Texas Locations -
Flatonia	Longview	Tomball	Big Spring
Georgetown	Mount Vernon	Waller	Brownfield
Gruene	Palestine	West Columbia	Brownwood
Kingsland	Rusk	Wharton	Cisco
La Grange	Seven Points	Winnie	Comanche
Lexington	Teague	Wirt	Early
New Braunfels	Tyler-Beckham		Floydada
Pleasanton	Tyler-South Broadway	South Texas Area -	Gorman
Round Rock	Tyler-University	Corpus Christi -	Levelland
San Antonio	Winnsboro	Airline	Littlefield
Schulenburg		Calallen	Merkel
Seguin	Houston Area -	Carmel	Plainview
Smithville	Houston -	Northwest	San Angelo
Thorndale	Aldine	Saratoga	Slaton
Weimar	Bellaire	Timbergate	Snyder
	Beltway	Water Street
Dallas/Fort Worth Area -	Clear Lake		Oklahoma
Dallas -	Copperfield	Other South Texas	Central Oklahoma-
Abrams Centre	Cypress	Locations -	23rd Street
Balch Springs	Downtown	Alice	Edmond
Camp Wisdom	Eastex	Aransas Pass	Expressway
Cedar Hill	Fairfield	Beeville	I-240
Dallas – Central Expressway	First Colony	Colony Creek	Memorial
Forest Park	Gessner	Cuero	Norman
Frisco	Gladebrook	Edna
Frisco-West	Heights	Goliad	Tulsa-
Kiest	Highway 6 West	Gonzales	Garnett
McKinney	Little York	Hallettsville	Harvard
McKinney-Stonebridge	Medical Center	Kingsville	Memorial
Midway	Memorial Drive	Mathis	Owasso
Northwest Highway	Northside	Padre Island	Sheridan
Plano	Pasadena	Palacios	S. Harvard
Preston Forest	Pecan Grove	Port Lavaca	Utica Square
Preston Road	River Oaks	Portland	Utica Tower
Red Oak		Rockport	Yale

 

- - -

 

  

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity’s management on the conference call may contain, forward-looking statements within the meaning of the securities laws that are based on current expectations, assumptions, estimates and projections about Prosperity and its subsidiaries. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity’s control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity’s securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate fluctuations and interest rate fluctuations; and weather. These and various other factors are discussed in Prosperity’s Annual Report on Form 10-K for the year ended December 31, 2013 and other reports and statements Prosperity has filed with the SEC. Copies of the SEC filings for Prosperity Bancshares^® may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

  

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(In thousands)

 

		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013
Balance Sheet Data
(at period end)
Total loans		$	9,244,183			$	9,368,888			$	9,308,162			$	7,752,400			$	7,775,221
Investment securities(A)			9,045,776				8,845,909				8,851,235				8,561,337				8,224,448
Federal funds sold			569				484				3,630				382				400
Allowance for credit losses			(80,762	)			(77,613	)			(73,266	)			(67,096	)			(67,282	)
Cash and due from banks			677,285				330,952				509,853				349,860				380,990
Goodwill			1,874,191				1,892,255				1,894,270				1,672,004				1,674,209
Core deposit intangibles, net			58,947				34,474				37,072				39,702				37,912
Other real estate owned			3,237				5,504				5,093				7,372				7,299
Fixed assets, net			281,549				283,011				285,751				280,812				282,925
Other assets			402,758				433,450				426,306				316,360				325,906
Total assets		$	21,507,733			$	21,117,314			$	21,248,106			$	18,913,133			$	18,642,028
Noninterest-bearing deposits		$	4,936,420			$	4,968,867			$	4,921,398			$	4,142,042			$	4,108,835
Interest-bearing deposits			12,756,738				12,045,160				12,359,657				11,318,015				11,182,436
Total deposits			17,693,158				17,014,027				17,281,055				15,460,057				15,291,271
Other borrowings			8,724				289,972				200,210				40,451				10,689
Securities sold under repurchase agreements			315,523				358,053				388,342				349,074				364,357
Junior subordinated debentures			167,531				167,531				167,531				124,231				124,231
Other liabilities			77,971				104,781				90,374				98,566				64,662
Total liabilities			18,262,907				17,934,364				18,127,512				16,072,379				15,855,210
Shareholders' equity(B)			3,244,826				3,182,950				3,120,594				2,840,754				2,786,818
Total liabilities and equity		$	21,507,733			$	21,117,314			$	21,248,106			$	18,913,133			$	18,642,028

 

(A) Includes $5,737, $5,756, $6,706, $7,023 and $7,512 in unrealized gains on available for sale securities for the quarterly periods ending December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013, respectively.

(B) Includes $3,729, $3,741, $4,359, $4,565 and $4,883 in after-tax unrealized gains on available for sale securities for the quarterly periods ending December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013, respectively.

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(In thousands)

 

		Three Months Ended																				Year Ended
		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec 31, 2014				Dec 31, 2013
Income Statement Data
Interest income:
Loans		$	139,396			$	140,521			$	138,655			$	107,144			$	110,575			$	525,716			$	376,117
Securities(C)			47,108				46,910				47,670				47,056				45,100				188,744				162,993
Federal funds sold and other earning assets			74				35				178				48				76				335				187
Total interest income			186,578				187,466				186,503				154,248				155,751				714,795				539,297
Interest expense:
Deposits			7,326				10,240				10,918				9,387				9,048				37,871				35,222
Other borrowings			200				225				189				158				224				772				1,497
Securities sold under repurchase agreements			202				245				254				237				280				938				1,201
Junior subordinated debentures			1,099				1,099				1,087				775				730				4,060				2,551
Total interest expense			8,827				11,809				12,448				10,557				10,282				43,641				40,471
Net interest income			177,751				175,657				174,055				143,691				145,469				671,154				498,826
Provision for credit losses			6,350				5,000				6,325				600				7,865				18,275				17,240
Net interest income after provision for credit losses			171,401				170,657				167,730				143,091				137,604				652,879				481,586
Noninterest income:
Nonsufficient funds (NSF) fees			9,345				9,734				9,099				8,870				9,669				37,048				35,173
Credit card, debit card and ATM card income			5,786				5,921				6,030				5,152				4,662				22,889				22,463
Service charges on deposit accounts			4,263				4,255				4,325				3,609				3,460				16,452				12,864
Trust income			2,165				2,099				2,044				1,800				1,542				8,108				4,356
Mortgage income			1,049				1,414				1,208				593				549				4,264				4,038
Brokerage income			1,455				1,743				1,401				1,269				719				5,868				1,518
Bank owned life insurance income			1,392				1,404				1,365				1,028				1,011				5,189				3,635
Net gain (loss) on sale of assets			24				23				1,301				3,310				40				4,658				(13	)
Net gain (loss) on sale of other real estate			726				(30	)			1,404				(60	)			196				2,040				(536	)
Other noninterest income			3,901				3,598				5,824				3,033				3,310				16,356				11,929
Total noninterest income			30,106				30,161				34,001				28,604				25,158				122,872				95,427
Noninterest expense:
Salaries and benefits			49,557				52,179				54,126				43,408				40,633				199,270				148,494
Net occupancy and equipment			6,620				6,801				5,996				5,339				4,893				24,756				18,934
Debit card, data processing and software amortization			4,553				4,044				4,009				3,184				3,333				15,790				11,908
Regulatory assessments and FDIC insurance			4,354				4,051				3,886				2,726				2,771				15,017				10,261
Core deposit intangibles amortization			2,667				2,598				2,630				2,045				1,594				9,940				6,145
Depreciation			3,491				3,516				3,522				3,201				3,072				13,730				10,593
Communications			2,993				2,960				2,919				2,737				2,468				11,609				9,471
Other real estate expense			363				72				188				396				176				1,019				711
Other noninterest expense			10,164				9,289				11,420				7,998				9,652				38,871				30,679
Total noninterest expense			84,762				85,510				88,696				71,034				68,592				330,002				247,196
Income before income taxes			116,745				115,308				113,035				100,661				94,170				445,749				329,817
Provision for income taxes			38,517				38,738				37,529				33,524				31,199				148,308				108,419
Net income available to common shareholders		$	78,228			$	76,570			$	75,506			$	67,137			$	62,971			$	297,441			$	221,398

 

(C) Interest income on securities was reduced by net premium amortization of $13,031, $13,531, $12,837, $12,280 and $12,017 for the three month periods ended December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013, respectively, and $51,679 and $68,701 for the years ended December 31, 2014 and 2013, respectively.

 

 

Prosperity Bancshares, Inc. ^®

Financial Highlights (Unaudited)

(Dollars and share amounts in thousands, except per share data and market prices)

 

		Three Months Ended																				Year Ended
		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec 31, 2014				Dec 31, 2013
Profitability
Net income		$	78,228			$	76,570			$	75,506			$	67,137			$	62,971			$	297,441			$	221,398
Basic earnings per share		$	1.12			$	1.10			$	1.08			$	1.01			$	0.98			$	4.32			$	3.66
Diluted earnings per share		$	1.12			$	1.10			$	1.08			$	1.01			$	0.98			$	4.32			$	3.65
Return on average assets (D)			1.48	%			1.45	%			1.42	%			1.43	%			1.42	%			1.44	%			1.36	%
Return on average common equity (D)			9.70	%			9.69	%			9.75	%			9.52	%			9.53	%			9.66	%			9.31	%
Return on average tangible common equity (D) (E)			23.87	%			24.84	%			24.06	%			24.23	%			23.97	%			24.24	%			22.52	%
Tax equivalent net interest margin (F)			3.89	%			3.85	%			3.83	%			3.62	%			3.82	%			3.80	%			3.58	%
Efficiency ratio(G)			40.78	%			41.55	%			42.90	%			42.04	%			40.21	%			41.81	%			41.60	%
Liquidity and Capital Ratios
Equity to assets			15.09	%			15.07	%			14.69	%			15.02	%			14.95	%			15.09	%			14.95	%
Tier 1 risk-based capital			13.80	%			13.18	%			12.50	%			13.85	%			13.29	%			13.80	%			13.29	%
Total risk-based capital			14.56	%			13.90	%			13.18	%			14.59	%			14.03	%			14.56	%			14.03	%
Tier 1 leverage capital			7.69	%			7.40	%			6.98	%			7.30	%			7.44	%			7.69	%			7.44	%
Tangible equity to tangible assets(E)			6.70	%			6.55	%			6.16	%			6.56	%			6.35	%			6.70	%			6.35	%
Other Data
Shares used in computed earnings per share
Basic			69,768				69,751				69,667				66,186				64,024				68,855				60,421
Diluted			69,796				69,791				69,728				66,280				64,173				68,911				60,578
Period end shares outstanding			69,780				69,756				69,744				66,261				66,048				69,780				66,048
Cash dividends paid per common share		$	0.273			$	0.240			$	0.240			$	0.240			$	0.240			$	0.993			$	0.885
Book value per share		$	46.50			$	45.63			$	44.74			$	42.87			$	42.19			$	46.50			$	42.19
Tangible book value per share(E)		$	18.80			$	18.01			$	17.05			$	17.04			$	16.27			$	18.80			$	16.27
Common Stock Market Price
High		$	61.15			$	63.73			$	67.49			$	67.68			$	65.49			$	67.68			$	65.07
Low			52.62				55.99				56.04				59.75				61.18				52.62				42.38
Period end closing price			55.36				57.17				62.60				66.15				63.39				55.36				63.39
Employees – FTE			3,096				3,057				3,199				2,888				2,995				3,096				2,995
Number of banking centers			245				245				247				236				238				245				238

 

(D) Interim periods annualized.

(E) Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconcilation of this non-GAAP financial measure.

(F) Net interest margin for all periods presented is calculated on an actual 365 day basis.

(G) Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale of assets and securities. Additionally, taxes are not part of this calculation.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

YIELD ANALYSIS		Three Months Ended
		Dec 31, 2014													Sep 30, 2014													Dec 31, 2013
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate					Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate					Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
Interest-Earning Assets:
Loans		$	9,325,330			$	139,396				5.93	%			$	9,381,248			$	140,521				5.94	%			$	7,238,438			$	110,575				6.06	%
Investment securities			8,835,176				47,108				2.12	%	(H)			8,836,309				46,910				2.11	%	(H)			7,992,673				45,100				2.24	%	(H)
Federal funds sold and other earning assets			143,705				74				0.20	%				95,378				35				0.15	%				103,413				76				0.29	%
Total interest-earning assets			18,304,211			$	186,578				4.04	%				18,312,935			$	187,466				4.06	%				15,334,524			$	155,751				4.03	%
Allowance for credit losses			(76,948	)												(73,977	)												(60,170	)
Noninterest-earning assets			2,883,029													2,881,762													2,502,276
Total assets		$	21,110,292												$	21,120,720												$	17,776,630
Interest-Bearing Liabilities:
Interest-bearing demand deposits		$	3,546,825			$	2,068				0.23	%			$	3,399,655			$	2,089				0.24	%			$	2,963,899			$	1,899				0.25	%
Savings and money market deposits			5,442,568				3,301				0.24	%				5,502,326				3,400				0.25	%				4,654,044				3,049				0.26	%
Certificates and other time deposits			3,083,047				1,957				0.25	%				3,235,185				4,751				0.58	%				2,712,699				4,100				0.60	%
Other borrowings			168,167				200				0.47	%				215,222				225				0.42	%				210,492				224				0.42	%
Securities sold under repurchase agreements			323,882				202				0.25	%				389,726				245				0.25	%				398,100				280				0.28	%
Junior subordinated debentures			167,531				1,099				2.60	%				167,531				1,099				2.60	%				111,172				730				2.61	%
Total interest-bearing liabilities			12,732,020				8,827				0.28	%	(I)			12,909,645				11,809				0.36	%	(I)			11,050,406				10,282				0.37	%	(I)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			5,045,097													4,939,388													3,860,296
Other liabilities			106,222													109,287													223,394
Total liabilities			17,883,339													17,958,320													15,134,096
Shareholders' equity			3,226,953													3,162,400													2,642,534
Total liabilities and shareholders' equity		$	21,110,292												$	21,120,720												$	17,776,630
Net interest income and margin						$	177,751				3.85	%							$	175,657				3.81	%							$	145,469				3.76	%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							1,836													1,997													2,152
Net interest income and margin (tax equivalent basis)						$	179,587				3.89	%							$	177,654				3.85	%							$	147,621				3.82	%

 

(H) Yield on securities was impacted by net premium amortization of $13,031, $13,531 and $12,017 for the three month periods ended December 31, 2014, September 30, 2014 and December 31, 2013, respectively.

(I) Total cost of funds, including noninterest bearing deposits, was 0.20%, 0.26% and 0.27% for the three months ended December 31, 2014, September 30, 2014 and December 31, 2013, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

YIELD ANALYSIS		Year Ended
		2014													2013
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate					Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
Interest-Earning Assets:
Loans		$	8,988,069			$	525,716				5.85	%			$	6,202,897			$	376,117				6.06	%
Investment securities			8,723,011				188,744				2.16	%	(J)			7,932,782				162,993				2.05	%	(J)
Federal funds sold and other earning assets			143,754				335				0.23	%				50,318				187				0.37	%
Total interest-earning assets			17,854,834			$	714,795				4.00	%				14,185,997			$	539,297				3.80	%
Allowance for credit losses			(72,714	)												(57,001	)
Noninterest-earning assets			2,814,809													2,126,918
Total assets		$	20,596,929												$	16,255,914
Interest-Bearing Liabilities:
Interest-bearing demand deposits		$	3,516,987			$	8,561				0.24	%			$	2,651,320			$	7,917				0.30	%
Savings and money market deposits			5,355,967				13,406				0.25	%				4,237,323				11,961				0.28	%
Certificates and other time deposits			3,129,710				15,904				0.51	%				2,530,065				15,344				0.61	%
Other borrowings			144,570				772				0.53	%				470,854				1,497				0.32	%
Securities sold under repurchase agreements			361,025				938				0.26	%				443,231				1,201				0.27	%
Junior subordinated debentures			154,902				4,060				2.62	%				91,584				2,551				2.79	%
Total interest-bearing liabilities			12,663,161				43,641				0.34	%	(K)			10,424,377				40,471				0.39	%	(K)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			4,687,680													3,345,594
Other liabilities			165,764													107,709
Total liabilities			17,516,605													13,877,680
Shareholders' equity			3,080,324													2,378,234
Total liabilities and shareholders' equity		$	20,596,929												$	16,255,914
Net interest income and margin						$	671,154				3.76	%							$	498,826				3.52	%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							7,968													8,368
Net interest income and margin (tax equivalent basis)						$	679,122				3.80	%							$	507,194				3.58	%

 

(J) Yield on securities was impacted by net premium amortization of $51,679 and $68,701 for the years ended December 31, 2014 and 2013, respectively.                          

(K) Total cost of funds, including noninterest bearing deposits, was 0.25% and 0.29% for the years ended December 31, 2014 and 2013, respectively.                          

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended																				Year Ended
		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec 31, 2014				Dec 31, 2013
Adjustment to Loan Yield (L)
Interest on loans, as reported		$	139,396			$	140,521			$	138,655			$	107,144			$	110,575			$	525,716			$	376,117
Purchase accounting adjustment- loan discount accretion			(28,590	)			(28,458	)			(25,352	)			(13,475	)			(19,979	)			(95,875	)			(62,723	)
Interest on loans without discount accretion		$	110,806			$	112,063			$	113,303			$	93,669			$	90,596			$	429,841			$	313,394
Average loans		$	9,325,330			$	9,381,248			$	9,468,136			$	7,755,997			$	7,238,438			$	8,988,069			$	6,202,897
Loan yield without purchase accounting adjustment			4.71	%			4.74	%			4.80	%			4.90	%			4.97	%			4.78	%			5.05	%
Loan yield, as reported			5.93	%			5.94	%			5.87	%			5.60	%			6.06	%			5.85	%			6.06	%
Adjustment to Securities Yield (L)
Interest on securities, as reported		$	47,108			$	46,910			$	47,670			$	47,056			$	45,100			$	188,744			$	162,993
Purchase accounting adjustment- securities amortization			1,590				1,466				1,570				1,964				1,892				6,590				9,872
Interest on securities without amortization		$	48,698			$	48,376			$	49,240			$	49,020			$	46,992			$	195,334			$	172,865
Average securities		$	8,835,176			$	8,836,309			$	8,748,322			$	8,466,946			$	7,992,673			$	8,723,011			$	7,932,782
Securities yield without purchase accounting adjustment			2.19	%			2.17	%			2.26	%			2.35	%			2.33	%			2.24	%			2.18	%
Securities yield, as reported			2.12	%			2.11	%			2.19	%			2.25	%			2.24	%			2.16	%			2.05	%
Adjustment to Time Deposits Yield (L)
Interest on time deposits, as reported		$	1,957			$	4,751			$	5,096			$	4,100			$	4,100			$	15,904			$	15,344
Purchase accounting adjustment- time deposit amortization			2,443				16				16				81				112				2,556				389
Interest on time deposits without amortization		$	4,400			$	4,767			$	5,112			$	4,181			$	4,212			$	18,460			$	15,733
Average time deposits		$	3,083,047			$	3,235,185			$	3,379,819			$	2,816,701			$	2,712,699			$	3,129,710			$	2,530,065
Time deposits yield without purchase accounting adjustment			0.57	%			0.58	%			0.61	%			0.60	%			0.62	%			0.59	%			0.62	%
Time deposits yield, as reported			0.25	%			0.58	%			0.60	%			0.59	%			0.60	%			0.51	%			0.61	%
Net Interest Margin (tax equivalent basis, excluding purchase accounting adjustments to yield)			3.25	%			3.26	%			3.31	%			3.33	%			3.35	%			3.29	%			3.20	%
Net Interest Margin (tax equivalent basis), as reported			3.89	%			3.85	%			3.83	%			3.62	%			3.82	%			3.80	%			3.58	%
Net income available to common shareholders, as reported		$	78,228			$	76,570			$	75,506			$	67,137			$	62,971			$	297,441			$	221,398
Less: Purchase accounting adjustments, net of tax (M)			(19,729	)			(17,935	)			(15,897	)			(7,731	)			(12,170	)			(61,284	)			(35,739	)
Net income available to common shareholders, adjusted		$	58,499			$	58,635			$	59,609			$	59,406			$	50,801			$	236,157			$	185,659

 

		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 Sep 30, 2014				Balance at Dec 31, 2014				Balance at Acquisition Date				Balance at Sep 30, 2014				Balance at Dec 31, 2014				Balance at Acquisition Date					Balance at Sep 30, 2014				Balance at Dec 31, 2014
Loan marks:
Previously acquired banks (N)		$	159,627			$	59,738			$	52,886			$	63,547			$	31,180			$	26,862			$	223,174				$	90,918			$	79,748
2014 acquisition (O)			65,962				44,458				36,219				68,359				59,514				45,408				134,321					103,972				81,627
Total			225,589				104,196				89,105				131,906				90,694				72,270				357,495					194,890				161,375
Acquired portfolio loan balances:
Previously acquired banks (N)			3,839,647				1,628,791				1,470,136				135,279				65,880				57,688				3,974,926					1,694,671				1,527,824
2014 acquisition (O)			1,617,287				940,532				715,975				120,567				96,120				71,724				1,737,854					1,036,652				787,699
Total			5,456,934				2,569,323				2,186,111				255,846				162,000				129,412				5,712,780		(P)			2,731,323				2,315,523
Acquired portfolio loan balances less loan marks		$	5,231,345			$	2,465,128			$	2,097,006			$	123,940			$	71,306			$	57,142			$	5,355,285				$	2,536,433			$	2,154,148

 

(L) Non-GAAP financial measure.

(M) Using effective tax rate of 33.0%, 33.6%, 33.2%, 33.3%, and 33.1% for the three month periods ended December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013 respectively, and 33.3% and 32.9% for the years ended December 31, 2014 and 2013, respectively.

(N) Includes Bank of Texas, Bank Arlington, American State Bank, Community National Bank, East Texas Financial Services, Coppermark and FVNB.

(O) F&M was acquired on April 1, 2014. During the second quarter of 2014, the acquisition of F&M added $1.738 billion in loans with related purchase accounting adjustments of $134.321 million at acquisition date.

(P) Actual principal balances acquired.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013
YIELD TREND
Interest-Earning Assets:
Loans			5.93	%			5.94	%			5.87	%			5.60	%			6.06	%
Investment securities (Q)			2.12	%			2.11	%			2.19	%			2.25	%			2.24	%
Federal funds sold and other earning assets			0.20	%			0.15	%			0.30	%			0.19	%			0.29	%
Total interest-earning assets			4.04	%			4.06	%			4.05	%			3.83	%			4.03	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits			0.23	%			0.24	%			0.26	%			0.24	%			0.25	%
Savings and money market deposits			0.24	%			0.25	%			0.26	%			0.26	%			0.26	%
Certificates and other time deposits			0.25	%			0.58	%			0.60	%			0.59	%			0.60	%
Other borrowings			0.47	%			0.42	%			0.54	%			1.23	%			0.42	%
Securities sold under repurchase agreements			0.25	%			0.25	%			0.27	%			0.28	%			0.28	%
Junior subordinated debentures			2.60	%			2.60	%			2.60	%			2.53	%			2.61	%
Total interest-bearing liabilities			0.28	%			0.36	%			0.38	%			0.36	%			0.37	%
Net Interest Margin			3.85	%			3.81	%			3.78	%			3.57	%			3.76	%
Net Interest Margin (tax equivalent)			3.89	%			3.85	%			3.83	%			3.62	%			3.82	%

 

(Q) Yield on securities was impacted by net premium amortization of $13,031, $13,531, $12,837, $12,280, and $12,017 for the three month periods ended December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014, and December 31, 2013, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013
Balance Sheet Averages
Total loans		$	9,325,330			$	9,381,248			$	9,468,136			$	7,755,997			$	7,238,438
Investment securities			8,835,176				8,836,309				8,748,322				8,466,946				7,992,673
Federal funds sold and other earning assets			143,705				95,378				234,302				101,700				103,413
Total interest-earning assets			18,304,211				18,312,935				18,450,760				16,324,643				15,334,524
Allowance for credit losses			(76,948	)			(73,977	)			(72,587	)			(67,222	)			(60,170	)
Cash and due from banks			273,503				267,389				284,432				255,297				232,666
Goodwill			1,883,654				1,893,667				1,803,534				1,673,216				1,560,905
Core deposit intangibles, net			43,157				35,753				38,469				38,754				30,641
Other real estate			4,843				5,405				8,562				7,885				7,254
Fixed assets, net			282,827				285,039				292,075				282,411				251,688
Other assets			395,045				394,509				512,303				293,330				419,122
Total assets		$	21,110,292			$	21,120,720			$	21,317,548			$	18,808,314			$	17,776,630
Noninterest-bearing deposits		$	5,045,097			$	4,939,388			$	4,735,575			$	4,018,094			$	3,860,296
Interest-bearing demand deposits			3,546,825				3,399,655				3,568,475				3,554,366				2,963,899
Savings and money market deposits			5,442,568				5,502,326				5,479,978				4,992,442				4,654,044
Certificates and other time deposits			3,083,047				3,235,185				3,379,819				2,816,701				2,712,699
Total deposits			17,117,537				17,076,554				17,163,847				15,381,603				14,190,938
Other borrowings			168,167				215,222				140,906				51,932				210,492
Securities sold under repurchase agreements			323,882				389,726				382,692				347,747				398,100
Junior subordinated debentures			167,531				167,531				167,531				124,231				111,172
Other liabilities			106,222				109,287				365,169				82,288				223,394
Shareholders' equity			3,226,953				3,162,400				3,097,403				2,820,513				2,642,534
Total liabilities and equity		$	21,110,292			$	21,120,720			$	21,317,548			$	18,808,314			$	17,776,630

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Dec 31, 2014								Sep 30, 2014								Jun 30, 2014								Mar 31, 2014								Dec 31, 2013
Period End Balances
Loan Portfolio
Commercial and other		$	1,952,945				21.1	%		$	2,058,217				22.0	%		$	2,139,983				23.0	%		$	1,312,405				16.9	%		$	1,322,975				17.0	%
Construction			1,026,475				11.1	%			1,041,300				11.1	%			1,005,099				10.8	%			888,985				11.5	%			865,511				11.1	%
1-4 family residential			2,250,251				24.4	%			2,210,141				23.6	%			2,153,801				23.1	%			1,906,480				24.7	%			1,870,365				24.2	%
Home equity			271,930				2.9	%			269,850				2.9	%			267,759				2.9	%			263,966				3.4	%			261,355				3.4	%
Commercial real estate			3,030,340				32.8	%			3,091,090				33.1	%			3,027,945				32.6	%			2,709,386				34.9	%			2,753,797				35.3	%
Agriculture (includes farmland)			551,646				6.0	%			534,672				5.7	%			542,360				5.8	%			512,857				6.6	%			531,258				6.8	%
Consumer			160,596				1.7	%			163,618				1.7	%			171,215				1.8	%			158,321				2.0	%			169,960				2.2	%
Total loans		$	9,244,183							$	9,368,888							$	9,308,162							$	7,752,400							$	7,775,221
Deposit Types
Noninterest-bearing DDA		$	4,936,420				27.9	%		$	4,968,867				29.2	%		$	4,921,398				28.5	%		$	4,142,042				26.9	%		$	4,108,835				26.9	%
Interest-bearing DDA			4,260,038				24.1	%			3,359,606				19.7	%			3,467,826				20.1	%			3,446,375				22.3	%			3,470,316				22.7	%
Money market			3,680,711				20.8	%			3,788,358				22.3	%			3,861,339				22.3	%			3,468,016				22.4	%			3,320,062				21.7	%
Savings			1,784,889				10.1	%			1,728,676				10.2	%			1,707,645				9.9	%			1,630,395				10.5	%			1,571,504				10.3	%
Certificates and other time deposits			3,031,100				17.1	%			3,168,520				18.6	%			3,322,847				19.2	%			2,773,229				17.9	%			2,820,554				18.4	%
Total deposits		$	17,693,158							$	17,014,027							$	17,281,055							$	15,460,057							$	15,291,271
Loan to Deposit Ratio			52.2	%							55.1	%							53.9	%							50.1	%							50.8	%
Construction Loans
Single family residential construction		$	329,797				32.0	%		$	317,307				30.3	%		$	316,579				31.2	%		$	292,137				32.6	%		$	271,491				30.9	%
Land development			84,051				8.2	%			89,553				8.5	%			88,947				8.8	%			73,974				8.2	%			83,820				9.6	%
Raw land			106,058				10.3	%			83,013				7.9	%			62,731				6.2	%			55,384				6.2	%			48,996				5.6	%
Residential lots			148,763				14.4	%			154,027				14.7	%			138,769				13.7	%			118,733				13.2	%			122,449				14.0	%
Commercial lots			89,565				8.7	%			86,991				8.3	%			93,200				9.2	%			99,300				11.1	%			103,878				11.9	%
Commercial construction and other			272,723				26.5	%			317,355				30.3	%			312,870				30.9	%			257,942				28.7	%			244,124				28.0	%
Net unaccreted discount			(4,482	)							(6,946	)							(7,997	)							(8,485	)							(9,247	)
Total construction loans		$	1,026,475							$	1,041,300							$	1,005,099							$	888,985							$	865,511

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended																				Year-to-Date
		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec 31, 2014				Dec 31, 2013
Asset Quality
Nonaccrual loans		$	31,422			$	26,804			$	23,082			$	7,714			$	10,231			$	31,422			$	10,231
Accruing loans 90 or more days past due			2,193				17,753				335				3,519				4,947				2,193				4,947
Total nonperforming loans			33,615				44,557				23,417				11,233				15,178				33,615				15,178
Repossessed assets			67				21				11				91				27				67				27
Other real estate			3,237				5,504				5,093				7,372				7,299				3,237				7,299
Total nonperforming assets		$	36,919			$	50,082			$	28,521			$	18,696			$	22,504			$	36,919			$	22,504
Nonperforming assets:
Commercial and industrial		$	21,418			$	26,172			$	14,434			$	4,748			$	3,153			$	21,418			$	3,153
Construction, land development and other land loans			1,893				5,998				2,449				4,053				4,558				1,893				4,558
1-4 family residential (including home equity)			5,232				7,559				6,909				5,435				6,279				5,232				6,279
Commercial real estate (including multi-family residential)			6,695				9,686				3,970				4,196				8,033				6,695				8,033
Agriculture (including farmland)			473				182				140				104				279				473				279
Consumer and other			1,208				485				619				160				202				1,208				202
Total		$	36,919			$	50,082			$	28,521			$	18,696			$	22,504			$	36,919			$	22,504
Number of loans/properties			169				194				179				164				203				169				203
Allowance for credit losses at end of period		$	80,762			$	77,613			$	73,266			$	67,096			$	67,282			$	80,762			$	67,282
Net charge-offs:
Commercial and industrial		$	318			$	17			$	(64	)		$	81			$	7			$	352			$	333
Construction, land development and other land loans			(1	)			(28	)			115				(17	)			(12	)			69				26
1-4 family residential (including home equity)			420				70				406				131				21				1,027				173
Commercial real estate (including multi-family residential)			1,732				(6	)			5				60				(311	)			1,791				(38	)
Agriculture (including farmland)			(13	)			(53	)			(843	)			(81	)			(85	)			(990	)			(66	)
Consumer and other			745				653				536				612				876				2,546				2,094
Total		$	3,201			$	653			$	155			$	786			$	496			$	4,795			$	2,522
Asset Quality Ratios
Nonperforming assets to average earning assets			0.20	%			0.27	%			0.15	%			0.11	%			0.15	%			0.21	%			0.16	%
Nonperforming assets to loans and other real estate			0.40	%			0.53	%			0.31	%			0.24	%			0.29	%			0.40	%			0.29	%
Net charge-offs to average loans (annualized)			0.14	%			0.03	%			0.01	%			0.04	%			0.03	%			0.05	%			0.04	%
Allowance for credit losses to total loans			0.87	%			0.83	%			0.79	%			0.87	%			0.87	%			0.87	%			0.87	%
Allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30) (E)			1.14	%			1.14	%			1.15	%			1.18	%			1.25	%			1.14	%			1.25	%

 

 

Prosperity Bancshares, Inc.^®

Notes to Selected Financial Data (Unaudited)

(Dollars and share amounts in thousands, except per share data)

 

Consolidated Financial Highlights

 

NOTES TO SELECTED FINANCIAL DATA

 

Prosperity’s management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30). Prosperity has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity’s financial results and Prosperity believes that its presentation, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Prosperity’s business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

 

		Three Months Ended																				Year Ended
		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec 31, 2014				Dec 31, 2013
Return on average tangible common equity:
Net income		$	78,228			$	76,570			$	75,506			$	67,137			$	62,971			$	297,441			$	221,398
Average shareholders' equity		$	3,226,953			$	3,162,400			$	3,097,403			$	2,820,513			$	2,642,534			$	3,080,324			$	2,378,234
Less: Average goodwill and other intangible assets			(1,926,811	)			(1,929,420	)			(1,842,003	)			(1,711,970	)			(1,591,546	)			(1,853,350	)			(1,395,323	)
Average tangible shareholders’ equity		$	1,300,142			$	1,232,980			$	1,255,400			$	1,108,543			$	1,050,988			$	1,226,974			$	982,911
Return on average tangible common equity:			23.87	%			24.84	%			24.06	%			24.23	%			23.97	%			24.24	%			22.52	%
Tangible book value per share:
Shareholders’ equity		$	3,244,826			$	3,182,950			$	3,120,594			$	2,840,754			$	2,786,818			$	3,244,826			$	2,786,818
Less: Goodwill and other intangible assets			(1,933,138	)			(1,926,729	)			(1,931,342	)			(1,711,706	)			(1,712,121	)			(1,933,138	)			(1,712,121	)
Tangible shareholders’ equity		$	1,311,688			$	1,256,221			$	1,189,252			$	1,129,048			$	1,074,697			$	1,311,688			$	1,074,697
Period end shares outstanding			69,780				69,756				69,744				66,261				66,048				69,780				66,048
Tangible book value per share:		$	18.80			$	18.01			$	17.05			$	17.04			$	16.27			$	18.80			$	16.27
Tangible equity to tangible assets ratio:
Tangible shareholders’ equity		$	1,311,688			$	1,256,221			$	1,189,252			$	1,129,048			$	1,074,697			$	1,311,688			$	1,074,697
Total assets		$	21,507,733			$	21,117,314			$	21,248,106			$	18,913,133			$	18,642,028			$	21,507,733			$	18,642,028
Less: Goodwill and other intangible assets			(1,933,138	)			(1,926,729	)			(1,931,342	)			(1,711,706	)			(1,712,121	)			(1,933,138	)			(1,712,121	)
Tangible assets		$	19,574,595			$	19,190,585			$	19,316,764			$	17,201,427			$	16,929,907			$	19,574,595			$	16,929,907
Tangible equity to tangible assets ratio:			6.70	%			6.55	%			6.16	%			6.56	%			6.35	%			6.70	%			6.35	%

 

 

Prosperity Bancshares, Inc.^®

Notes to Selected Financial Data (Unaudited)

(Dollars in thousands)

 

		Three Months Ended																				Year Ended
		Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec 31, 2014				Dec 31, 2013
Allowance for credit losses to total loans, excluding acquired loans:
Allowance for credit losses		$	80,762			$	77,613			$	73,266			$	67,096			$	67,282			$	80,762			$	67,282
Total loans		$	9,244,183			$	9,368,888			$	9,308,162			$	7,752,400			$	7,775,221			$	9,244,183			$	7,775,221
Less: Fair value of acquired loans (acquired portfolio loan balances less loan marks)		$	2,154,148			$	2,536,433			$	2,948,999			$	2,086,744			$	2,412,660			$	2,154,148			$	2,412,660
Total loans less acquired loans		$	7,090,035			$	6,832,455			$	6,359,163			$	5,665,656			$	5,362,561			$	7,090,035			$	5,362,561
Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis)			1.14	%			1.14	%			1.15	%			1.18	%			1.25	%			1.14	%			1.25	%

 

 

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