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 SECOND QUARTER

2015 EARNINGS

 

 

	●	Second quarter 2015 earnings per share (diluted) of $1.03

	●	Second quarter net income of $71.932 million

	●	Nonperforming assets remain low at 0.19% of second quarter average earning assets

	●	Return on second quarter average assets of 1.33%

●

Second quarter efficiency ratio of 42.35%

 

HOUSTON, July 24, 2015. Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, “Prosperity”), reported net income for the quarter ended June 30, 2015 of $71.932 million or $1.03 per diluted common share. Additionally, nonperforming assets remain low at 0.19% of second quarter average earning assets with return on second quarter average assets of 1.33%.

 

“Texas, which has been the top state in job creation for the past decade, continues to produce opportunities and growth in employment despite the struggling oil and gas industry. Texas payrolls increased by 16,700 workers in June, while unemployment fell to 4.2%. Refining, petrochemicals and service industries are offsetting job losses in the oil industry. Employment in the health services and education sectors has been strong as well. Austin continues to boom with an annual job growth rate of 6.6%. Texas is now America’s top technology exporter, surpassing longtime leader California. The Texas strategy of avoiding burdensome taxation and regulation continues to attract growing businesses and has resulted in economic diversification,” said David Zalman, Prosperity’s Chairman and Chief Executive Officer.

 

“During the second quarter of 2015, our bank continued to see growth in loans and deposits compared to the same quarter a year ago, excluding the F&M acquisition. In our experience, most of the banks we have acquired go through a transition period during which we anticipate loans and deposits to decrease. We continue to see opportunities in the markets we serve and are optimistic about the potential business possibilities that are being presented to us,” continued Zalman.

 

“We continue to grow core earnings. Net income for the quarter ended June 30, 2015 (excluding purchase accounting adjustments) was $63.800 million, an increase of $4.191 million or 7.0%, compared with $59.609 million in net income (excluding purchase accounting adjustments) for the quarter ended June 30, 2014,” added Zalman.

 

“I would like to thank our associates and directors for all of their hard work and dedication and give a special thank you to all of our customers for their continued business and loyalty,” concluded Zalman.

 

 

Results of operations for the three months ended June 30, 2015

 

Net income was $71.932 million for the three months ended June 30, 2015 compared with $75.506 million for the same period in 2014. Net income per diluted common share was $1.03 for the three months ended June 30, 2015 compared with $1.08 for the same period in 2014. Net income (excluding purchase accounting adjustments) was $63.800 million for the quarter ended June 30, 2015 compared with $59.609 million for the quarter ended June 30, 2014. Net income per diluted common share (excluding purchase accounting adjustments) was $0.91 for the three months ended June 30, 2015 compared with $0.85 for the three months ended June 30, 2014. The reconciliation of these non-GAAP financial measures is shown on page 12. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2015 were 1.33%, 8.61% and 20.49%, respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and taxes) was 42.35% for the three months ended June 30, 2015.

 

Net interest income before provision for credit losses for the quarter ended June 30, 2015 was $158.239 million compared with $174.055 million during the same period in 2014. This change was primarily due to a decrease in loan discount accretion of $11.750 million for the quarter ended June 30, 2015 compared with the quarter ended June 30, 2014. Linked quarter net interest income before provision for credit losses was $158.239 million compared with $162.905 million during the three months ended March 31, 2015. This change was primarily due to a decrease in loan discount accretion of $6.045 million for the quarter ended June 30, 2015 compared with the quarter ended March 31, 2015. The net interest margin on a tax equivalent basis decreased to 3.39% for the three months ended June 30, 2015, compared with 3.83% for the same period in 2014 and 3.57% for the three months ended March 31, 2015. This was primarily due to the decrease in loan discount accretion and lower yields on average interest earning assets partially offset by lower rates paid on average interest bearing liabilities for the quarter ended June 30, 2015. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis was 3.13% for the three months ended June 30, 2015, compared with 3.31% for the same period in 2014 and 3.17% for the three months ended March 31, 2015.

 

Noninterest income was $30.297 million for the three months ended June 30, 2015 compared with $32.597 million for the same period in 2014. This change was primarily due to a decrease in net gain on sale of assets and NSF fees. On a linked quarter basis, noninterest income increased $1.876 million or 6.6% compared with the quarter ended March 31, 2015. This was primarily due to an increase in other noninterest income resulting from a merchant incentive payment of $1.5 million recorded during the second quarter of 2015.

 

Noninterest expense was $79.735 million for the three months ended June 30, 2015 compared with $87.292 million for the same period in 2014. This change was primarily due to a decrease in salary and benefits expense. On a linked quarter basis, noninterest expense increased $273 thousand or 0.3% compared with the quarter ended March 31, 2015.

 

Results of operations for the six months ended June 30, 2015

 

Net income was $145.573 million for the six months ended June 30, 2015 compared with $142.643 million for the same period in 2014. Net income per diluted common share was $2.08 for the six months ended June 30, 2015 compared with $2.10 for the same period in 2014. Net income (excluding purchase accounting adjustments) was $125.183 million for the six months ended June 30, 2015 compared with $119.020 million for the six months ended June 30, 2014. Net income per diluted common share (excluding purchase accounting adjustments) was $1.79 for the six months ended June 30, 2015 compared with $1.75 for the six months ended June 30, 2014. The reconciliation of these non-GAAP financial measures is shown on page 12. Returns on average assets, average common equity and average tangible common equity, each on an annualized basis, for the six months ended June 30, 2015 were 1.35%, 8.80% and 21.16%, respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 42.09% for the six months ended June 30, 2015.

 

Net interest income before provision for credit losses for the six months ended June 30, 2015, increased $3.398 million to $321.144 million compared with $317.746 million during the same period in 2014. The increase was primarily due to an 8.1% increase in average interest earning assets and a decrease in average rate paid on interest bearing liabilities, partially offset by a decrease in average yield on interest earning assets and a $5.578 million decrease in loan discount accretion. The net interest margin on a tax equivalent basis for the six months ended June 30, 2015 decreased to 3.48% compared with 3.73% for the same period in 2014. This was primarily due to lower yields on average interest earning assets and the decrease in loan discount accretion, partially offset by lower rates paid on interest bearing liabilities for the six months ended June 30, 2015. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis decreased to 3.15% for the six months ended June 30, 2015 from 3.32% for the same period in 2014.

 

Noninterest income was $58.718 million for the six months ended June 30, 2015 compared with $61.261 million for the same period in 2014. This change was primarily due to a decrease in gain on sale of assets and NSF fees, partially offset by an increase in mortgage income. Noninterest expense was $159.197 million for the six months ended June 30, 2015 compared with $158.386 million for the same period in 2014.

 

 

The table below provides detail on total loans and deposits including loans acquired and deposits assumed in the acquisition of F&M completed on April 1, 2014:

 

Balance Sheet Data (at period end)
(In thousands)
		Jun 30, 2015				Mar 31, 2015				Dec 31, 2014				Sep 30, 2014					Jun 30, 2014
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)					(Unaudited)
Loans acquired (including new production since acquisition date):
F&M		$	1,080,439			$	1,139,849			$	1,224,498			$	1,451,075				$	1,502,836
All other loans			8,033,896				8,026,156				8,019,685				7,917,813					7,805,326
Total loans		$	9,114,335			$	9,166,005			$	9,244,183			$	9,368,888				$	9,308,162
Deposits assumed (including new deposits since acquisition date):
F&M		$	1,548,817			$	1,705,203			$	2,063,229			$	1,905,233				$	2,090,468
All other deposits			15,452,847				15,856,149				15,629,929				15,108,794					15,190,587
Total deposits		$	17,001,664			$	17,561,352			$	17,693,158			$	17,014,027				$	17,281,055

 

 

Loans at June 30, 2015 were $9.114 billion, a decrease of $193.827 million or 2.1%, compared with $9.308 billion at June 30, 2014. Linked quarter loans decreased $51.670 million or 0.6% from $9.166 billion at March 31, 2015. Excluding loans acquired in the F&M acquisition and new production at the acquired banking centers since the acquisition date, loans at June 30, 2015 increased $228.570 million or 2.9% compared with June 30, 2014 and increased $7.740 million or 0.1% on a linked quarter basis.

 

Deposits at June 30, 2015 were $17.002 billion, a decrease of $279.391 million or 1.6%, compared with $17.281 billion at June 30, 2014. Linked quarter deposits decreased $559.688 million or 3.2% from $17.561 billion at March 31, 2015. Excluding deposits assumed in the F&M acquisition and new deposits generated at the acquired banking centers since the acquisition date, deposits at June 30, 2015 increased $262.260 million or 1.7% compared with June 30, 2014 and decreased $403.302 million or 2.5% on a linked quarter basis, primarily due to seasonality.

 

At June 30, 2015, Prosperity had $21.686 billion in total assets, $9.114 billion in loans and $17.002 billion in deposits. At June 30, 2015 assets increased by 2.1%, loans decreased by 2.1% and deposits decreased by 1.6%, compared with their respective levels at June 30, 2014.

 

Asset Quality

 

Nonperforming assets totaled $35.119 million or 0.19% of quarterly average earning assets at June 30, 2015, compared with $28.521 million or 0.15% of quarterly average earning assets at June 30, 2014, and $35.376 million or 0.19% of quarterly average earning assets at March 31, 2015. The allowance for credit losses was 0.89% of total loans at June 30, 2015, 0.79% of total loans at June 30, 2014 and 0.88% of total loans at March 31, 2015. Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.09% of remaining loans as of June 30, 2015, compared with 1.15% at June 30, 2014 and 1.12% at March 31, 2015. 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 $500 thousand for the three months ended June 30, 2015 compared with $6.325 million for the three months ended June 30, 2014 and $1.250 million for the three months ended March 31, 2015. The provision for credit losses was $1.750 million for the six months ended June 30, 2015 compared with $6.925 million for the six months ended June 30, 2014.

 

Net charge offs were $491 thousand for the three months ended June 30, 2015 compared with $155 thousand for the three months ended June 30, 2014 and $1.049 million for the three months ended March 31, 2015. Net charge offs were $1.540 million for the six months ended June 30, 2015 compared with $941 thousand for the six months ended June 30, 2014.

 

Conference Call

 

Prosperity’s management team will host a conference call on Friday, July 24, 2015 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity’s second quarter 2015 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383. The elite entry number is 8652160.

 

 

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 “Investor Relations” tab and then the “Presentations & Calls” link.

 

Non-GAAP Financial Measures

 

Prosperity’s management uses certain non−GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets. Further, as a result of acquisitions, and the related purchase accounting adjustments, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its net income and earnings per share (excluding purchase accounting adjustments) and 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.

 

Dividend

 

Prosperity Bancshares, Inc. (“Bancshares”) declared a third quarter cash dividend of $0.2725 per share, to be paid on October 1, 2015 to all shareholders of record as of September 18, 2015.

 

Capital Management

 

The Basel III Capital Rules adopted by the federal regulatory authorities in 2013 substantially revised the risk-based capital requirements applicable to Bancshares and Prosperity Bank. The Basel III Capital Rules became effective for Prosperity on January 1, 2015, subject to a phase-in period for certain provisions. Among other things, the Basel III Capital Rules introduced a new capital measure called “Common Equity Tier 1,” which is a comparison of the sum of certain equity capital components to total risk-weighted assets, and revised the risk-weighting approach of the capital ratios with a more risk-sensitive approach that expanded the risk-weighting categories from the previous Basel I derived categories to a much larger and more risk-sensitive number of categories, depending on the nature of the assets. Prosperity’s capital ratios as of June 30, 2015 reflect the phase-in provisions of the new Basel III Capital Rules.

 

 

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”) headquartered in Tulsa, Oklahoma. F&M 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 $206.010 million as of June 30, 2015. Additionally, Prosperity recognized $27.140 million of core deposit intangibles as of June 30, 2015.

 

Prosperity Bancshares, Inc. ^®

 

As of June 30, 2015, Prosperity Bancshares Inc. ^® is a $21.686 billion Houston, Texas based regional financial holding company, formed in 1983. Operating under a community banking philosophy and seeking to develop broad customer relationships based on service and convenience, Prosperity offers a variety of traditional loan and deposit products to its customers, which consist primarily of small and medium sized businesses and consumers. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services at www.prosperitybankusa.com, Retail Brokerage Services, Credit Cards, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management, Mortgage Services and Mobile Banking.

 

Prosperity currently operates 245 full-service banking locations: 61 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 37 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
Bryan		The Colony		Sugar Land		Sinton
Bryan-29th Street		Turtle Creek		SW Medical Center		Taft
Bryan-East		Turtle Creek Loan Office		Tanglewood		Victoria
Bryan-North		Westmoreland		Uptown		Victoria-Navarro
Caldwell				Waugh Drive		Victoria-North
College Station		Fort Worth -		Westheimer		Yoakum
Crescent Point		Haltom City		West University		Yorktown
Hearne		Keller		Woodcreek
Huntsville		Roanoke				West Texas Area -
Madisonville		Stockyards		Other Houston Area		Abilene -
Navasota				Locations -		Antilley Road
New Waverly		Other Dallas/Fort Worth		Angleton		Barrow Street
Rock Prairie		Locations -		Bay City		Cypress Street
Southwest Parkway		Arlington		Beaumont		Judge Ely
Tower Point		Azle		Cinco Ranch		Mockingbird
Wellborn Road		Ennis		Cleveland
		Gainesville		East Bernard		Lubbock -
Central Texas Area -		Glen Rose		El Campo		4th Street
Austin -		Granbury		Dayton		66th Street
183		Mesquite		Galveston		82nd Street
Allandale		Muenster		Groves		86th Street
Cedar Park		Sanger		Hempstead		98th Street
Congress		Waxahachie		Hitchcock		Avenue Q
Lakeway		Weatherford		Katy		North University
Liberty Hill				Katy-Spring Green		Texas Tech Student Union
Northland		East Texas Area -		Liberty
Oak Hill		Athens		Magnolia		Midland -
Research Blvd		Blooming Grove		Magnolia Parkway		Wadley
Westlake		Canton		Mont Belvieu		Wall Street
		Carthage		Nederland
Other Central Texas Locations -		Corsicana		Needville		Odessa -
Bastrop		Crockett		Rosenberg		Grandview
Canyon Lake		Eustace		Shadow Creek		Grant
Dime Box		Gilmer		Spring		Kermit Highway
Dripping Springs		Grapeland		Sweeny		Parkway
Elgin		Gun Barrel City		The Woodlands-I-45
Flatonia		Jacksonville		The Woodlands-Research Forest		Other West Texas Locations -
Georgetown		Kerens		Tomball		Big Spring
Gruene		Longview		Waller		Brownfield
Kingsland		Mount Vernon		West Columbia		Brownwood
La Grange		Palestine		Wharton		Cisco
Lexington		Rusk		Winnie		Comanche
New Braunfels		Seven Points		Wirt		Early
Pleasanton		Teague				Floydada
Round Rock		Tyler-Beckham		South Texas Area -		Gorman
San Antonio		Tyler-South Broadway		Corpus Christi -		Levelland
Schulenburg		Tyler-University		Airline		Littlefield
Seguin		Winnsboro		Calallen		Merkel
Smithville				Carmel		Plainview
Thorndale		Houston Area -		Northwest		San Angelo
Weimar		Houston -		Saratoga		Slaton
		Aldine		Timbergate		Snyder
Dallas/Fort Worth Area -		Bellaire		Water Street
Dallas -		Beltway				Oklahoma
Abrams Centre		Clear Lake		Other South Texas		Central Oklahoma-
Balch Springs		Copperfield		Locations -		23rd Street
Camp Wisdom		Cypress		Alice		Edmond
Cedar Hill		Downtown		Aransas Pass		Expressway
Dallas – Central Expressway		Eastex		Beeville		I-240
Forest Park		Fairfield		Colony Creek		Memorial
Frisco		First Colony		Cuero		Norman
Frisco-West		Gessner		Edna
Kiest		Gladebrook		Goliad		Tulsa-
McKinney		Heights		Gonzales		Garnett
McKinney-Stonebridge		Highway 6 West		Hallettsville		Harvard
Midway		Little York		Kingsville		Memorial
Northwest Highway		Medical Center		Mathis		Owasso
Plano		Memorial Drive		Padre Island		Sheridan
Preston Forest		Northside		Palacios		S. Harvard
Preston Road		Pasadena		Port Lavaca		Utica Square
Red Oak		Pecan Grove		Portland		Utica Tower
		River Oaks		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, 2014 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)

 

		June 30, 2015				Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014
Balance Sheet Data
(at period end)
Total loans		$	9,114,335			$	9,166,005			$	9,244,183			$	9,368,888			$	9,308,162
Investment securities(A)			9,698,079				9,579,496				9,045,776				8,845,909				8,851,235
Federal funds sold			1,451				1,639				569				484				3,630
Allowance for credit losses			(80,972	)			(80,963	)			(80,762	)			(77,613	)			(73,266	)
Cash and due from banks			353,047				352,642				677,285				330,952				509,853
Goodwill			1,881,955				1,881,955				1,874,191				1,892,255				1,894,270
Core deposit intangibles, net			54,068				56,458				58,947				34,474				37,072
Other real estate owned			2,806				3,010				3,237				5,504				5,093
Fixed assets, net			275,347				276,468				281,549				283,011				285,751
Other assets			386,171				370,149				402,758				433,450				426,306
Total assets		$	21,686,287			$	21,606,859			$	21,507,733			$	21,117,314			$	21,248,106
Noninterest-bearing deposits		$	5,040,628			$	5,038,436			$	4,936,420			$	4,968,867			$	4,921,398
Interest-bearing deposits			11,961,036				12,522,916				12,756,738				12,045,160				12,359,657
Total deposits			17,001,664				17,561,352				17,693,158				17,014,027				17,281,055
Other borrowings			886,741				331,914				8,724				289,972				200,210
Securities sold under repurchase agreements			334,189				318,418				315,523				358,053				388,342
Junior subordinated debentures			-				-				167,531				167,531				167,531
Other liabilities			106,408				93,314				77,971				104,781				90,374
Total liabilities			18,329,002				18,304,998				18,262,907				17,934,364				18,127,512
Shareholders' equity(B)			3,357,285				3,301,861				3,244,826				3,182,950				3,120,594
Total liabilities and equity		$	21,686,287			$	21,606,859			$	21,507,733			$	21,117,314			$	21,248,106

 

(A) Includes $4,655, $5,296, $5,737, $5,756 and $6,706 in unrealized gains on available for sale securities for the quarterly periods ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively. 

(B) Includes $3,026, $3,442, $3,729, $3,741 and $4,359 in after-tax unrealized gains on available for sale securities for the quarterly periods ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively.                    

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(In thousands)

 

		Three Months Ended																				Year-to-Date
		Jun 30, 2015				Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Jun 30, 2015				Jun 30, 2014
Income Statement Data
Interest income:
Loans		$	119,404			$	124,878			$	139,396			$	140,521			$	138,655			$	244,282			$	245,799
Securities(C)			48,530				48,562				47,108				46,910				47,670				97,092				94,726
Federal funds sold and other earning assets			47				165				74				35				178				212				226
Total interest income			167,981				173,605				186,578				187,466				186,503				341,586				340,751
Interest expense:
Deposits			9,169				9,577				7,326				10,240				10,918				18,746				20,305
Other borrowings			365				129				200				225				189				494				347
Securities sold under repurchase agreements			208				203				202				245				254				411				491
Junior subordinated debentures			-				791				1,099				1,099				1,087				791				1,862
Total interest expense			9,742				10,700				8,827				11,809				12,448				20,442				23,005
Net interest income			158,239				162,905				177,751				175,657				174,055				321,144				317,746
Provision for credit losses			500				1,250				6,350				5,000				6,325				1,750				6,925
Net interest income after provision for credit losses			157,739				161,655				171,401				170,657				167,730				319,394				310,821
Noninterest income:
Nonsufficient funds (NSF) fees			8,310				7,918				9,345				9,734				9,099				16,228				17,969
Credit card, debit card and ATM card income			6,003				5,638				5,786				5,921				6,030				11,641				11,182
Service charges on deposit accounts			4,189				4,179				4,263				4,255				4,325				8,368				7,934
Trust income			2,047				2,009				2,165				2,099				2,044				4,056				3,844
Mortgage income			1,513				1,148				1,049				1,414				1,208				2,661				1,801
Brokerage income			1,541				1,409				1,455				1,743				1,401				2,950				2,670
Bank owned life insurance income			1,390				1,380				1,392				1,404				1,365				2,770				2,393
Net gain on sale of assets			270				1,379				24				23				1,301				1,649				4,611
Other noninterest income			5,034				3,361				3,901				3,598				5,824				8,395				8,857
Total noninterest income			30,297				28,421				29,380				30,191				32,597				58,718				61,261
Noninterest expense:
Salaries and benefits			47,819				49,966				49,557				52,179				54,126				97,785				97,534
Net occupancy and equipment			5,812				5,964				6,620				6,801				5,996				11,776				11,335
Debit card, data processing and software amortization			4,045				3,817				4,553				4,044				4,009				7,862				7,193
Regulatory assessments and FDIC insurance			4,253				4,354				4,354				4,051				3,886				8,607				6,612
Core deposit intangibles amortization			2,390				2,489				2,667				2,598				2,630				4,879				4,675
Depreciation			3,420				2,916				3,491				3,516				3,522				6,336				6,723
Communications			2,835				2,809				2,993				2,960				2,919				5,644				5,656
Other real estate expense			129				132				363				72				188				261				584
Net (gain) loss on sale of other real estate			(32	)			14				(726	)			30				(1,404	)			(18	)			(1,344	)
Other noninterest expense			9,064				7,001				10,164				9,289				11,420				16,065				19,418
Total noninterest expense			79,735				79,462				84,036				85,540				87,292				159,197				158,386
Income before income taxes			108,301				110,614				116,745				115,308				113,035				218,915				213,696
Provision for income taxes			36,369				36,973				38,517				38,738				37,529				73,342				71,053
Net income available to common shareholders		$	71,932			$	73,641			$	78,228			$	76,570			$	75,506			$	145,573			$	142,643

 

(C) Interest income on securities was reduced by net premium amortization of $15,466, $14,144, $13,031, $13,531 and $12,837 for the three month periods ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively, and $29,610 and $25,117 for the six month periods ended June 30, 2015 and June 30, 2014, respectively.

 

 

Prosperity Bancshares, Inc. ^®

Financial Highlights (Unaudited)

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

 

		Three Months Ended																						Year-to-Date
		Jun 30, 2015					Mar 31, 2015					Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Jun 30, 2015					Jun 30, 2014
Profitability
Net income		$	71,932				$	73,641				$	78,228			$	76,570			$	75,506			$	145,573				$	142,643
Basic earnings per share		$	1.03				$	1.05				$	1.12			$	1.10			$	1.08			$	2.08				$	2.10
Diluted earnings per share		$	1.03				$	1.05				$	1.12			$	1.10			$	1.08			$	2.08				$	2.10
Return on average assets (D)			1.33	%				1.37	%				1.48	%			1.45	%			1.42	%			1.35	%				1.43	%
Return on average common equity (D)			8.61	%				8.98	%				9.70	%			9.69	%			9.75	%			8.80	%				9.72	%
Return on average tangible common equity (D) (E)			20.49	%				21.84	%				23.87	%			24.84	%			24.06	%			21.16	%				24.12	%
Tax equivalent net interest margin (F)			3.39	%				3.57	%				3.89	%			3.85	%			3.83	%			3.48	%				3.73	%
Efficiency ratio(G)			42.35	%				41.83	%				40.78	%			41.55	%			42.90	%			42.09	%				42.51	%
Liquidity and Capital Ratios
Equity to assets			15.48	%				15.28	%				15.09	%			15.07	%			14.69	%			15.48	%				14.69	%
Common equity tier 1 capital(H)			12.91	%				12.40	%			N/A				N/A				N/A					12.91	%			N/A
Tier 1 risk-based capital			12.91	%	(I)			12.40	%	(I)			13.80	%			13.18	%			12.50	%			12.91	%	(I)			12.50	%
Total risk-based capital			13.63	%	(I)			13.14	%	(I)			14.56	%			13.90	%			13.18	%			13.63	%	(I)			13.18	%
Tier 1 leverage capital			7.35	%	(I)			6.96	%	(I)			7.69	%			7.40	%			6.98	%			7.35	%	(I)			6.98	%
Period end tangible equity to period end tangible assets(E)			7.20	%				6.93	%				6.70	%			6.55	%			6.16	%			7.20	%				6.16	%
Other Data
Shares used in computed earnings per share
Basic			70,037					70,034					69,768				69,751				69,667				70,035					67,936
Diluted			70,053					70,055					69,796				69,791				69,728				70,054					68,014
Period end shares outstanding			70,040					70,024					69,780				69,756				69,744				70,040					69,744
Cash dividends paid per common share		$	0.2725				$	0.2725				$	0.2725			$	0.2400			$	0.2400			$	0.5450				$	0.4800
Book value per share		$	47.93				$	47.15				$	46.50			$	45.63			$	44.74			$	47.93				$	44.74
Tangible book value per share(E)		$	20.29				$	19.47				$	18.80			$	18.01			$	17.05			$	20.29				$	17.05
Common Stock Market Price
High		$	59.30				$	55.88				$	61.15			$	63.73			$	67.49			$	59.30				$	67.68
Low			50.91					45.01					52.62				55.99				56.04				45.01					56.04
Period end closing price			57.74					52.48					55.36				57.17				62.60				57.74					62.60
Employees – FTE			3,065					3,081					3,096				3,057				3,199				3,065					3,199
Number of banking centers			245					244					245				245				247				245					247

 

(D) Interim periods annualized.

(E) Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation 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. Additionally, taxes are not part of this calculation.

(H) Common equity tier 1 capital ratio is a new ratio required under the Basel III Capital Rules effective January 1, 2015.

(I) Calculated pursuant to the phase-in provisions of the Basel III Capital Rules.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

YIELD ANALYSIS		Three Months Ended
		Jun 30, 2015													Mar 31, 2015													Jun 30, 2014
		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		$	9,133,625			$	119,404				5.24	%			$	9,189,380			$	124,878				5.51	%			$	9,468,136			$	138,655				5.87	%
Investment securities			9,688,961				48,530				2.01	%	(J)			9,241,434				48,562				2.13	%	(J)			8,748,322				47,670				2.19	%	(J)
Federal funds sold and other earning assets			79,659				47				0.24	%				267,672				165				0.25	%				234,302				178				0.30	%
Total interest-earning assets			18,902,245			$	167,981				3.56	%				18,698,486			$	173,605				3.77	%				18,450,760			$	186,503				4.05	%
Allowance for credit losses			(80,868	)												(80,681	)												(72,587	)
Noninterest-earning assets			2,817,644													2,871,702													2,939,375
Total assets		$	21,639,021												$	21,489,507												$	21,317,548
Interest-Bearing Liabilities:
Interest-bearing demand deposits		$	3,891,682			$	2,227				0.23	%			$	4,178,883			$	2,583				0.25	%			$	3,568,475			$	2,272				0.26	%
Savings and money market deposits			5,476,931				3,374				0.25	%				5,542,081				3,405				0.25	%				5,479,978				3,550				0.26	%
Certificates and other time deposits			2,821,058				3,568				0.51	%				2,956,038				3,589				0.49	%				3,379,819				5,096				0.60	%
Other borrowings			684,371				365				0.21	%				72,118				129				0.73	%				140,906				189				0.54	%
Securities sold under repurchase agreements			333,220				208				0.25	%				340,469				203				0.24	%				382,692				254				0.27	%
Junior subordinated debentures			-				-				—					119,408				791				2.69	%				167,531				1,087				2.60	%
Total interest-bearing liabilities			13,207,262				9,742				0.30	%	(K)			13,208,997				10,700				0.33	%	(K)			13,119,401				12,448				0.38	%	(K)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			4,992,301													4,899,279													4,735,575
Other liabilities			98,133													100,648													365,169
Total liabilities			18,297,696													18,208,924													18,220,145
Shareholders' equity			3,341,325													3,280,583													3,097,403
Total liabilities and shareholders' equity		$	21,639,021												$	21,489,507												$	21,317,548
Net interest income and margin						$	158,239				3.36	%							$	162,905				3.53	%							$	174,055				3.78	%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							1,563													1,664													2,083
Net interest income and margin (tax equivalent basis)						$	159,802				3.39	%							$	164,569				3.57	%							$	176,138				3.83	%

 

(J) Yield on securities was impacted by net premium amortization of $15,466, $14,144 and $12,837 for the three month periods ended June 30, 2015, March 31, 2015 and June 30, 2014, respectively.

(K) Total cost of funds, including noninterest bearing deposits, was 0.21%, 0.24%and 0.28% for the three months ended June 30, 2015, March 31, 2015 and June 30, 2014, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

YIELD ANALYSIS		Year-to-Date
		2015												2014
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate				Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate
Interest-Earning Assets:
Loans		$	9,161,349			$	244,282				5.38	%		$	8,616,796			$	245,799				5.75	%
Investment securities			9,466,434				97,092				2.07	%  (L)			8,608,411				94,726				2.22	%  (L)
Federal funds sold and other earning assets			173,147				212				0.25	%			168,368				226				0.27	%
Total interest-earning assets			18,800,930			$	341,586				3.66	%			17,393,575			$	340,751				3.95	%
Allowance for credit losses			(80,775	)											(69,919	)
Noninterest-earning assets			2,843,739												2,746,112
Total assets		$	21,563,894											$	20,069,768
Interest-Bearing Liabilities:
Interest-bearing demand deposits		$	4,034,489			$	4,810				0.24	%		$	3,561,460			$	4,404				0.25	%
Savings and money market deposits			5,509,326				6,779				0.25	%			5,237,557				6,705				0.26	%
Certificates and other time deposits			2,888,176				7,157				0.50	%			3,099,815				9,196				0.60	%
Other borrowings			379,936				494				0.26	%			96,666				347				0.72	%
Securities sold under repurchase agreements			336,824				411				0.25	%			365,316				491				0.27	%
Junior subordinated debentures			59,374				791				2.69	%			145,881				1,862				2.57	%
Total interest-bearing liabilities			13,208,125				20,442				0.31	%  (M)			12,506,695				23,005				0.37	%  (M)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			4,946,138												4,378,471
Other liabilities			99,375												224,497
Total liabilities			18,253,638												17,109,663
Shareholders' equity			3,310,256												2,960,105
Total liabilities and shareholders' equity		$	21,563,894											$	20,069,768
Net interest income and margin						$	321,144				3.44	%						$	317,746				3.68	%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							3,227												4,135
Net interest income and margin (tax equivalent basis)						$	324,371				3.48	%						$	321,881				3.73	%

 

(L) Yield on securities was impacted by net premium amortization of $29,610 and $25,117 for the six month periods ended June 30, 2015 and 2014, respectively.

(M) Total cost of funds, including noninterest bearing deposits, was 0.23% and 0.27% for the six month periods ended June 30, 2015 and 2014, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended																				Year -to-Date
		Jun 30, 2015				Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Jun 30, 2015				Jun 30, 2014
Adjustment to Loan Yield (N)
Interest on loans, as reported		$	119,404			$	124,878			$	139,396			$	140,521			$	138,655			$	244,282			$	245,799
Purchase accounting adjustment- loan discount accretion			(13,602	)			(19,647	)			(28,590	)			(28,458	)			(25,352	)			(33,249	)			(38,827	)
Interest on loans without discount accretion		$	105,802			$	105,231			$	110,806			$	112,063			$	113,303			$	211,033			$	206,972
Average loans		$	9,133,625			$	9,189,380			$	9,325,330			$	9,381,248			$	9,468,136			$	9,161,349			$	8,616,796
Loan yield without purchase accounting adjustment			4.65	%			4.64	%			4.71	%			4.74	%			4.80	%			4.65	%			4.84	%
Loan yield, as reported			5.24	%			5.51	%			5.93	%			5.94	%			5.87	%			5.38	%			5.75	%
Adjustment to Securities Yield (N)
Interest on securities, as reported		$	48,530			$	48,562			$	47,108			$	46,910			$	47,670			$	97,092			$	94,726
Purchase accounting adjustment- securities amortization			1,579				1,647				1,590				1,466				1,570				3,226				3,534
Interest on securities without amortization		$	50,109			$	50,209			$	48,698			$	48,376			$	49,240			$	100,318			$	98,260
Average securities		$	9,688,961			$	9,241,434			$	8,835,176			$	8,836,309			$	8,748,322			$	9,466,434			$	8,608,411
Securities yield without purchase accounting adjustment			2.07	%			2.20	%			2.19	%			2.17	%			2.26	%			2.14	%			2.30	%
Securities yield, as reported			2.01	%			2.13	%			2.12	%			2.11	%			2.19	%			2.07	%			2.22	%
Adjustment to Time Deposits Yield (N)
Interest on time deposits, as reported		$	3,568			$	3,589			$	1,957			$	4,751			$	5,096			$	7,157			$	9,196
Purchase accounting adjustment- time deposit amortization			220				420				2,443				16				16				640				97
Interest on time deposits without amortization		$	3,788			$	4,009			$	4,400			$	4,767			$	5,112			$	7,797			$	9,293
Average time deposits		$	2,821,058			$	2,956,038			$	3,083,047			$	3,235,185			$	3,379,819			$	2,888,176			$	3,099,815
Time deposits yield without purchase accounting adjustment			0.54	%			0.55	%			0.57	%			0.58	%			0.61	%			0.54	%			0.60	%
Time deposits yield, as reported			0.51	%			0.49	%			0.25	%			0.58	%			0.60	%			0.50	%			0.60	%
Net Interest Margin (tax equivalent basis, excluding purchase accounting adjustments to yield)			3.13	%			3.17	%			3.25	%			3.26	%			3.31	%			3.15	%			3.32	%
Net Interest Margin (tax equivalent basis), as reported			3.39	%			3.57	%			3.89	%			3.85	%			3.83	%			3.48	%			3.73	%
Net income available to common shareholders, as reported		$	71,932			$	73,641			$	78,228			$	76,570			$	75,506			$	145,573			$	142,643
Less: Purchase accounting adjustments, net of tax (O)			(8,132	)			(12,263	)			(19,729	)			(17,935	)			(15,897	)			(20,390	)			(23,623	)
Net income available to common shareholders, adjusted		$	63,800			$	61,378			$	58,499			$	58,635			$	59,609			$	125,183			$	119,020
Basic earnings per share, adjusted (N)		$	0.91			$	0.88			$	0.84			$	0.84			$	0.86			$	1.79			$	1.75
Diluted earnings per share, adjusted (N)		$	0.91			$	0.88			$	0.84			$	0.84			$	0.85			$	1.79			$	1.75

 

 

		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 Mar 31, 2015				Balance at Jun 30, 2015				Balance at Acquisition Date				Balance at Mar 31, 2015				Balance at Jun 30, 2015				Balance at Acquisition Date					Balance at Mar 31, 2015				Balance at Jun 30, 2015
Loan marks:
Acquired banks (P)		$	225,589			$	78,289			$	67,895			$	131,906			$	51,647			$	48,277			$	357,495				$	129,936			$	116,172
Acquired portfolio loan balances:
Acquired banks (P)			5,456,934				1,939,609				1,727,123				255,846				100,973				94,601				5,712,780		(Q)			2,040,582				1,821,724
Acquired portfolio loan balances less loan marks		$	5,231,345			$	1,861,320			$	1,659,228			$	123,940			$	49,326			$	46,324			$	5,355,285				$	1,910,646			$	1,705,552

 

(N) Non-GAAP financial measure.

(O) Using effective tax rate of 33.6%, 33.4%, 33.0%, 33.6% and 33.2% for the three month periods ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively, and 33.5% and 33.2% for the six month periods ended June 30, 2015 and 2014, respectively.

(P) Includes Bank of Texas, Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank and F&M Bank.

(Q) Actual principal balances acquired.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Jun 30, 2015				Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014
YIELD TREND
Interest-Earning Assets:
Loans			5.24	%			5.51	%			5.93	%			5.94	%			5.87	%
Investment securities (R)			2.01	%			2.13	%			2.12	%			2.11	%			2.19	%
Federal funds sold and other earning assets			0.24	%			0.25	%			0.20	%			0.15	%			0.30	%
Total interest-earning assets			3.56	%			3.77	%			4.04	%			4.06	%			4.05	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits			0.23	%			0.25	%			0.23	%			0.24	%			0.26	%
Savings and money market deposits			0.25	%			0.25	%			0.24	%			0.25	%			0.26	%
Certificates and other time deposits			0.51	%			0.49	%			0.25	%			0.58	%			0.60	%
Other borrowings			0.21	%			0.73	%			0.47	%			0.42	%			0.54	%
Securities sold under repurchase agreements			0.25	%			0.24	%			0.25	%			0.25	%			0.27	%
Junior subordinated debentures			—				2.69	%			2.60	%			2.60	%			2.60	%
Total interest-bearing liabilities			0.30	%			0.33	%			0.28	%			0.36	%			0.38	%
Net Interest Margin			3.36	%			3.53	%			3.85	%			3.81	%			3.78	%
Net Interest Margin (tax equivalent)			3.39	%			3.57	%			3.89	%			3.85	%			3.83	%

 

 

(R) Yield on securities was impacted by net premium amortization of $15,466, $14,144, $13,031, $13,531 and $12,837 for the three month periods ended June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014 and June 30, 2014, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Jun 30, 2015				March 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014
Balance Sheet Averages
Total loans		$	9,133,625			$	9,189,380			$	9,325,330			$	9,381,248			$	9,468,136
Investment securities			9,688,961				9,241,434				8,835,176				8,836,309				8,748,322
Federal funds sold and other earning assets			79,659				267,672				143,705				95,378				234,302
Total interest-earning assets			18,902,245				18,698,486				18,304,211				18,312,935				18,450,760
Allowance for credit losses			(80,868	)			(80,681	)			(76,948	)			(73,977	)			(72,587	)
Cash and due from banks			241,110				284,395				273,503				267,389				284,432
Goodwill			1,881,955				1,874,274				1,883,654				1,893,667				1,803,534
Core deposit intangibles, net			55,245				57,687				43,157				35,753				38,469
Other real estate			2,972				3,536				4,843				5,405				8,562
Fixed assets, net			276,761				280,515				282,827				285,039				292,075
Other assets			359,601				371,295				395,045				394,509				512,303
Total assets		$	21,639,021			$	21,489,507			$	21,110,292			$	21,120,720			$	21,317,548
Noninterest-bearing deposits		$	4,992,301			$	4,899,279			$	5,045,097			$	4,939,388			$	4,735,575
Interest-bearing demand deposits			3,891,682				4,178,883				3,546,825				3,399,655				3,568,475
Savings and money market deposits			5,476,931				5,542,081				5,442,568				5,502,326				5,479,978
Certificates and other time deposits			2,821,058				2,956,038				3,083,047				3,235,185				3,379,819
Total deposits			17,181,972				17,576,281				17,117,537				17,076,554				17,163,847
Other borrowings			684,371				72,118				168,167				215,222				140,906
Securities sold under repurchase agreements			333,220				340,469				323,882				389,726				382,692
Junior subordinated debentures			-				119,408				167,531				167,531				167,531
Other liabilities			98,133				100,648				106,222				109,287				365,169
Shareholders' equity			3,341,325				3,280,583				3,226,953				3,162,400				3,097,403
Total liabilities and equity		$	21,639,021			$	21,489,507			$	21,110,292			$	21,120,720			$	21,317,548

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

 

		Jun 30, 2015								Mar 31, 2015								Dec 31, 2014								Sep 30, 2014								Jun 30, 2014
Period End Balances
Loan Portfolio
Commercial and other		$	1,774,652				19.5	%		$	1,851,906				20.2	%		$	1,952,945				21.1	%		$	2,058,217				22.0	%		$	2,139,983				23.0	%
Construction			1,068,056				11.7	%			1,040,845				11.3	%			1,026,475				11.1	%			1,041,300				11.1	%			1,005,099				10.8	%
1-4 family residential			2,289,114				25.1	%			2,272,788				24.8	%			2,250,251				24.4	%			2,210,141				23.6	%			2,153,801				23.1	%
Home equity			273,538				3.0	%			269,894				2.9	%			271,930				2.9	%			269,850				2.9	%			267,759				2.9	%
Commercial real estate			2,958,239				32.5	%			3,021,656				33.0	%			3,030,340				32.8	%			3,091,090				33.0	%			3,027,945				32.6	%
Agriculture (includes farmland)			600,745				6.6	%			556,839				6.1	%			551,646				6.0	%			534,672				5.7	%			542,360				5.8	%
Consumer			149,991				1.6	%			152,077				1.7	%			160,596				1.7	%			163,618				1.7	%			171,215				1.8	%
Total loans		$	9,114,335							$	9,166,005							$	9,244,183							$	9,368,888							$	9,308,162
Deposit Types
Noninterest-bearing DDA		$	5,040,628				29.7	%		$	5,038,436				28.7	%		$	4,936,420				27.9	%		$	4,968,867				29.2	%		$	4,921,398				28.5	%
Interest-bearing DDA			3,746,939				22.0	%			4,038,690				23.0	%			4,260,038				24.1	%			3,359,606				19.7	%			3,467,826				20.1	%
Money market			3,607,000				21.2	%			3,773,011				21.5	%			3,680,711				20.8	%			3,788,358				22.3	%			3,861,339				22.3	%
Savings			1,853,322				10.9	%			1,828,790				10.4	%			1,784,889				10.1	%			1,728,676				10.2	%			1,707,645				9.9	%
Certificates and other time deposits			2,753,775				16.2	%			2,882,425				16.4	%			3,031,100				17.1	%			3,168,520				18.6	%			3,322,847				19.2	%
Total deposits		$	17,001,664							$	17,561,352							$	17,693,158							$	17,014,027							$	17,281,055
Loan to Deposit Ratio			53.6	%							52.2	%							52.2	%							55.1	%							53.9	%
Construction Loans
Single family residential construction		$	354,211				33.0	%		$	356,081				34.1	%		$	329,797				32.0	%		$	317,307				30.3	%		$	316,579				31.2	%
Land development			84,864				7.9	%			89,403				8.5	%			84,051				8.2	%			89,553				8.5	%			88,947				8.8	%
Raw land			145,885				13.6	%			129,470				12.4	%			106,058				10.3	%			83,013				7.9	%			62,731				6.2	%
Residential lots			127,671				11.9	%			128,064				12.2	%			148,763				14.4	%			154,027				14.7	%			138,769				13.7	%
Commercial lots			87,719				8.2	%			92,677				8.9	%			89,565				8.7	%			86,991				8.3	%			93,200				9.2	%
Commercial construction and other			271,833				25.4	%			249,504				23.9	%			272,723				26.4	%			317,355				30.3	%			312,870				30.9	%
Net unaccreted discount			(4,127	)							(4,354	)							(4,482	)							(6,946	)							(7,997	)
Total construction loans		$	1,068,056							$	1,040,845							$	1,026,475							$	1,041,300							$	1,005,099

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended																				Year-to-Date
		Jun 30, 2015				Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Jun 30, 2015				Jun 30, 2014
Asset Quality
Nonaccrual loans		$	31,987			$	29,252			$	31,422			$	26,804			$	23,082			$	31,987			$	23,082
Accruing loans 90 or more days past due			153				2,968				2,193				17,753				335				153				335
Total nonperforming loans			32,140				32,220				33,615				44,557				23,417				32,140				23,417
Repossessed assets			173				146				67				21				11				173				11
Other real estate			2,806				3,010				3,237				5,504				5,093				2,806				5,093
Total nonperforming assets		$	35,119			$	35,376			$	36,919			$	50,082			$	28,521			$	35,119			$	28,521
Nonperforming assets:
Commercial and industrial		$	20,295			$	16,830			$	21,418			$	26,172			$	14,434			$	20,295			$	14,434
Construction, land development and other land loans			813				3,023				1,893				5,998				2,449				813				2,449
1-4 family residential (including home equity)			5,124				5,087				5,232				7,559				6,909				5,124				6,909
Commercial real estate (including multi-family residential)			7,939				9,736				6,695				9,686				3,970				7,939				3,970
Agriculture (including farmland)			605				281				473				182				140				605				140
Consumer and other			343				419				1,208				485				619				343				619
Total		$	35,119			$	35,376			$	36,919			$	50,082			$	28,521			$	35,119			$	28,521
Number of loans/properties			161				166				169				194				179				161				179
Allowance for credit losses at end of period		$	80,972			$	80,963			$	80,762			$	77,613			$	73,266			$	80,972			$	73,266
Net charge-offs:
Commercial and industrial		$	(28	)		$	504			$	318			$	17			$	(64	)		$	476			$	17
Construction, land development and other land loans			(2	)			145				(1	)			(28	)			115				143				98
1-4 family residential (including home equity)			12				86				420				70				406				98				537
Commercial real estate (including multi-family residential)			114				33				1,732				(6	)			5				147				65
Agriculture (including farmland)			(65	)			(78	)			(13	)			(53	)			(843	)			(143	)			(924	)
Consumer and other			460				359				745				653				536				819				1,148
Total		$	491			$	1,049			$	3,201			$	653			$	155			$	1,540			$	941
Asset Quality Ratios
Nonperforming assets to average earning assets			0.19	%			0.19	%			0.20	%			0.27	%			0.15	%			0.19	%			0.16	%
Nonperforming assets to loans and other real estate			0.39	%			0.39	%			0.40	%			0.53	%			0.31	%			0.39	%			0.31	%
Net charge-offs to average loans (annualized)			0.02	%			0.05	%			0.14	%			0.03	%			0.01	%			0.03	%			0.02	%
Allowance for credit losses to total loans			0.89	%			0.88	%			0.87	%			0.83	%			0.79	%			0.89	%			0.79	%
Allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30) (E)			1.09	%			1.12	%			1.14	%			1.14	%			1.15	%			1.09	%			1.15	%

 

 

Prosperity Bancshares, Inc.^®

Notes to Selected Financial Data (Unaudited)

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

 

Consolidated Financial Highlights

 

NOTES TO SELECTED FINANCIAL DATA

 

Prosperity’s management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity 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 net income and earnings per share (each excluding purchase accounting adjustments) and its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30). Prosperity has included information below and on page 12 of this Earnings Release 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-to-Date
		Jun 30, 2015				Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Jun 30, 2015				Jun 30, 2014
Return on average tangible common equity:
Net income		$	71,932			$	73,641			$	78,228			$	76,570			$	75,506			$	145,573			$	142,643
Average shareholders' equity		$	3,341,325			$	3,280,583			$	3,226,953			$	3,162,400			$	3,097,403			$	3,310,256			$	2,960,105
Less: Average goodwill and other intangible assets			(1,937,200	)			(1,931,961	)			(1,926,811	)			(1,929,420	)			(1,842,003	)			(1,934,595	)			(1,777,346	)
Average tangible shareholders’ equity		$	1,404,125			$	1,348,622			$	1,300,142			$	1,232,980			$	1,255,400			$	1,375,661			$	1,182,759
Return on average tangible common equity:			20.49	%			21.84	%			23.87	%			24.84	%			24.06	%			21.16	%			24.12	%
Tangible book value per share:
Shareholders’ equity		$	3,357,285			$	3,301,861			$	3,244,826			$	3,182,950			$	3,120,594			$	3,357,285			$	3,120,594
Less: Goodwill and other intangible assets			(1,936,023	)			(1,938,413	)			(1,933,138	)			(1,926,729	)			(1,931,342	)			(1,936,023	)			(1,931,342	)
Tangible shareholders’ equity		$	1,421,262			$	1,363,448			$	1,311,688			$	1,256,221			$	1,189,252			$	1,421,262			$	1,189,252
Period end shares outstanding			70,040				70,024				69,780				69,756				69,744				70,040				69,744
Tangible book value per share:		$	20.29			$	19.47			$	18.80			$	18.01			$	17.05			$	20.29			$	17.05
Period end tangible equity to period end tangible assets ratio:
Tangible shareholders’ equity		$	1,421,262			$	1,363,448			$	1,311,688			$	1,256,221			$	1,189,252			$	1,421,262			$	1,189,252
Total assets		$	21,686,287			$	21,606,859			$	21,507,733			$	21,117,314			$	21,248,106			$	21,686,287			$	21,248,106
Less: Goodwill and other intangible assets			(1,936,023	)			(1,938,413	)			(1,933,138	)			(1,926,729	)			(1,931,342	)			(1,936,023	)			(1,931,342	)
Tangible assets		$	19,750,264			$	19,668,446			$	19,574,595			$	19,190,585			$	19,316,764			$	19,750,264			$	19,316,764
Period end tangible equity to period end tangible assets ratio:			7.20	%			6.93	%			6.70	%			6.55	%			6.16	%			7.20	%			6.16	%

 

 

Prosperity Bancshares, Inc.^®

Notes to Selected Financial Data (Unaudited)

(Dollars in thousands)

 

		Three Months Ended																				Year-to-Date
		Jun 30, 2015				Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Jun 30, 2015				Jun 30, 2014
Allowance for credit losses to total loans, excluding acquired loans:
Allowance for credit losses		$	80,972			$	80,963			$	80,762			$	77,613			$	73,266			$	80,972			$	73,266
Total loans		$	9,114,335			$	9,166,005			$	9,244,183			$	9,368,888			$	9,308,162			$	9,114,335			$	9,308,162
Less: Fair value of acquired loans (acquired portfolio loan balances less loan marks)		$	1,705,552			$	1,910,646			$	2,154,148			$	2,536,433			$	2,948,999			$	1,705,552			$	2,948,999
Total loans less acquired loans		$	7,408,783			$	7,255,358			$	7,090,035			$	6,832,455			$	6,359,163			$	7,408,783			$	6,359,163
Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis)			1.09	%			1.12	%			1.14	%			1.14	%			1.15	%			1.09	%			1.15	%

 

 

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