PROSPERITY BANCSHARES, INC. 
By HOUSTON, Jan. 20, 2012 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank®, reported net income for the quarter ended December 31, 2011 of $36.406 million or $0.77 per diluted common share, an increase in net income of $3.608 million or 11.0%, compared with $32.798 million or $0.70 per diluted common share for the same period in 2010. Prosperity also reported net income for the year ended December 31, 2011 of $141.749 million or $3.01 per diluted common share, up 11.0% from 2010 net income of $127.708 million and up 10.3% from 2010 diluted earnings per common share of $2.73.
"We are proud of our performance in 2011. We finished the year with record net income of $141.749 million, an 11.0% increase over 2010. For the full year, our loans increased 8.1% or $280.883 million while our deposits also increased 8.1% or $605.334 million," said David Zalman, Prosperity's Chairman and Chief Executive Officer. "Our entire team is honored to have been recognized by Forbes as the 'Best Bank in America' in their 2012 rankings. This recognition is the result of all of our associates hard work and dedication and reflects our industry leading asset quality, our strong earnings, and our continued focus on building shareholder value," 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. Prosperity has included in this Earnings Release information relating to these non-GAAP financial measures for the applicable periods presented. Please refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.
Results of operations for the three months ended December 31, 2011
For the three months ended December 31, 2011, net income was $36.406 million compared with $32.798 million for the same period in 2010. Net income per diluted common share was $0.77 for the three months ended December 31, 2011 compared with $0.70 for the same period in 2010. Returns on average assets, average common equity and average tangible common equity for the three months ended December 31, 2011 were 1.50%, 9.35% and 23.86%, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale of assets) was 40.77% for the three months ended December 31, 2011.
Net interest income before provision for credit losses for the quarter ended December 31, 2011 increased 0.7% to $80.087 million compared with $79.509 million during the same period in 2010 and decreased 3.0% or $2.451 million compared with $82.538 million during the three months ended September 30, 2011. The net interest margin on a tax equivalent basis decreased to 3.82% for the three months ended December 31, 2011 compared with 3.99% for the same period in 2010 and decreased 20 basis points from 4.02% for the three months ended September 30, 2011. The 20 basis point linked quarter decrease was impacted by increased amortization expense from the securities portfolio. Amortization expense for the three months ended December 31, 2011 increased $2.086 million on a linked quarter basis to $9.670 million. At December 31, 2011, the Company had $68.194 million in premium remaining on its securities portfolio.
Non-interest income increased $160 thousand or 1.2% to $14.065 million for the three months ended December 31, 2011 compared with $13.905 million for the same period in 2010. The increase was mainly attributable to an increase in debit card and ATM card income, partially offset by a decrease NSF fees.
Non-interest expense decreased $2.842 million or 6.9% to $38.385 million for the three months ended December 31, 2011 compared with $41.227 million during the same period in 2010. The decrease was mainly attributable to a decrease in ORE expenses and reduced FDIC assessments.
Loans at December 31, 2011 were $3.766 billion, an increase of $280.883 million or 8.1%, compared with $3.485 billion at December 31, 2010. Loans increased 0.8% (3.0% annualized) or $28.276 million on a linked quarter basis compared with loans of $3.737 billion at September 30, 2011.
Deposits at December 31, 2011 were $8.060 billion, an increase of $605.334 million or 8.1% compared with $7.455 billion at December 31, 2010. Linked quarter deposits increased $261.515 million or 3.4% (13.4% annualized) from $7.799 billion at September 30, 2011.
Average loans increased 9.6% or $328.225 million to $3.750 billion for the quarter ended December 31, 2011 compared with $3.422 billion for the same period of 2010. Linked quarter average loans increased 1.5% or $55.884 million from $3.694 billion at September 30, 2011. Average deposits increased 6.0% to $7.899 billion for the quarter ended December 31, 2011 compared with $7.453 billion for the same period of 2010. Linked quarter average deposits increased 3.2% or $246.534 million from $7.653 billion at September 30, 2011.
At December 31, 2011, construction loans totaled $482.140 million, consisting of approximately $136 million of single family residential construction loans; $43 million of land development loans; $61 million of raw land loans; $87 million of residential lot loans; $50 million of commercial lot loans; and $105 million of commercial construction and other construction loans. This is a decrease of $8.053 million from construction loans at September 30, 2011.
At December 31, 2011, Prosperity had $9.823 billion in total assets, $3.766 billion in loans and $8.060 billion in deposits. Assets, loans and deposits at December 31, 2011 increased by 3.7%, 8.1% and 8.1%, respectively, compared with their level at December 31, 2010.
Asset Quality
Non-performing assets totaled $12.052 million or 0.14% of quarterly average earning assets at December 31, 2011 compared with $15.842 million or 0.20% of quarterly average earning assets at December 31, 2010 and $13.363 million or 0.16% of quarterly average earnings assets at September 30, 2011. The allowance for credit losses was 1.37% of total loans at December 31, 2011, 1.40% at September 30, 2011 and 1.48% of total loans at December 31, 2010.
The provision for credit losses was $1.150 million for the three months ended December 31, 2011 and $2.900 million for the three months ended December 31, 2010. Net charge offs were $2.069 million for the three months ended December 31, 2011 and $2.670 million for the three months ended December 31, 2010.
Non-performing
assets Dec 31, 2011 Sept 30, 2011 Dec 31, 2010
(In thousands)
Amount # Amount # Amount #
------ --- ------ --- ------ ---
(Unaudited) (Unaudited) (Unaudited)
Commercial $767 17 $1,440 17 $1,317 17
Construction 4,649 28 5,042 30 8,469 46
1-4 family
(including home
equity) 3,689 38 3,894 38 3,933 38
Commercial real
estate
(including
multi-family) 2,877 9 2,885 11 2,022 6
Agriculture 49 3 51 3 11 1
Consumer 21 4 51 4 90 13
--- --- --- --- --- ---
Total $12,052 99 $13,363 103 $15,842 121
======= === ======= === ======= ===
Net Charge-
offs Three Months Ended Three Months Ended Three Months Ended
(In
thousands) Dec 31, 2011 Sept 30, 2011 Dec 31, 2010
------------ ------------- ------------
(Unaudited) (Unaudited) (Unaudited)
Commercial $676 $7 $855
Construction 153 (197) 1,014
1-4 family
(including
home
equity) 843 134 314
Commercial
real
estate
(including
multi-
family) 218 271 285
Agriculture -- -- --
Consumer 179 153 202
--- --- ---
Total $2,069 $368 $2,670
====== ==== ======
The provision for credit losses was $5.200 million for the twelve months ended December 31, 2011; a decrease of $8.385 million compared with $13.585 million for the twelve months ended December 31, 2010. Net charge offs were $5.190 million for the twelve months ended December 31, 2011 and $13.864 million for the twelve months ended December 31, 2010.
Results of operations for the twelve months ended December 31, 2011
For the twelve months ended December 31, 2011, net income was $141.749 million compared with $127.708 million for the same period in 2010. Net income per diluted common share was $3.01 for the twelve months ended December 31, 2011 compared with $2.73 for the same period in 2010.
Returns on average assets, average common equity and average tangible common equity for the twelve months ended December 31, 2011 were 1.47%, 9.36% and 25.11%, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale of assets) was 42.76% for the twelve months ended December 31, 2011.
Net interest income before provision for credit losses for the twelve months ended December 31, 2011 increased $8.520 million or 2.7%, to $326.668 million compared with $318.148 million during the same period in 2010. The net interest margin on a tax equivalent basis decreased to 3.98% for the twelve months ended December 31, 2011 compared with 4.04% for the same period in 2010.
Non-interest income increased $2.210 million or 4.1% to $56.043 million for the twelve months ended December 31, 2011 compared with $53.833 million for the same period in 2010. The increase was mainly attributable to an increase in debit card and ATM card income and a decrease in loss on sale of ORE, partially offset by a decrease NSF fees.
Non-interest expense decreased $2.849 million or 1.7% to $163.745 million for the twelve months ended December 31, 2011 compared with $166.594 million for the same period in 2010. The decrease was due primarily to decreases in FDIC assessments, CDI amortization, ORE expenses and other non-interest expenses partially offset by an increase in salaries and benefits expense.
Conference Call
Prosperity's management team will host a conference call on Friday, January 20, 2012 at 10:30 a.m. Eastern Standard Time (9:30 a.m. Central Standard Time) to discuss Prosperity's fourth quarter and full year 2011 earnings. Individuals and investment professionals may participate in the call by dialing 800-862-9098, the reference code is PBTX.
Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at www.prosperitybanktx.com. The webcast may be accessed directly from Prosperity's Investor Relations page by clicking on the "4(th) Quarter Results and Webcast" link.
Prosperity Transfers Listing to NYSE Under Symbol "PB"
Prosperity transferred the listing of its common stock from the NASDAQ Global Select Market to the New York Stock Exchange (NYSE). The Company began trading, under the new ticker symbol "PB" on the NYSE on December 28, 2011.
Acquisition of The Bank Arlington
On January 19, 2012, Prosperity announced the signing of a definitive agreement to acquire The Bank Arlington. The Bank Arlington operates one (1) banking office in Arlington, Texas, in the Dallas/Fort Worth CMSA. As of December 31, 2011, The Bank Arlington reported total assets of $37.3 million, total loans of $21.3 million and total deposits of $32.8 million.
Under the terms of the definitive agreement, Prosperity will issue up to 138,600 shares of Prosperity common stock for all outstanding shares of The Bank Arlington capital stock, subject to certain conditions and potential adjustments.
Acquisition of East Texas Financial Services, Inc.
On December 9, 2011, Prosperity announced the signing of a definitive agreement to acquire East Texas Financial Services, Inc. (OTC BB: FFBT) and its wholly-owned subsidiary, First Federal Bank Texas ("Firstbank").
East Texas Financial Services operates four (4) banking offices in the Tyler MSA, including three (3) locations in Tyler, Texas and one (1) location in Gilmer, Texas. As of December 31, 2011, First Federal Bank reported total assets of $199.0 million, total loans of $163.1 million and total deposits of $126.7 million.
Under the terms of the definitive agreement, Prosperity will issue up to 531,000 shares of Prosperity common stock for all outstanding shares of East Texas Financial Services capital stock, subject to certain conditions and potential adjustments.
Acquisition of Texas Bankers, Inc.
On January 1, 2012, Prosperity completed the previously announced acquisition of Texas Bankers, Inc. and its wholly-owned subsidiary, Bank of Texas, Austin, Texas. The transaction continues Prosperity's strategic growth and expansion of the franchise in Central Texas.
The three (3) Bank of Texas banking offices in the Austin, Texas CMSA consist of a location in Rollingwood, which upon operational integration will be consolidated with Prosperity's Westlake location and remain in Bank of Texas' Rollingwood banking office; one banking center in downtown Austin, which upon operational integration will be consolidated into Prosperity's downtown Austin location; and another banking center in Thorndale. Prosperity now operates thirty-four (34) banking centers in the Central Texas area including Austin and San Antonio.
Texas Bankers, Inc. reported total assets of $77.0 million, total loans of $27.6 million and total deposits of $70.4 million on December 31, 2011.
Under the terms of the agreement, Prosperity issued 314,953 shares of Prosperity common stock for all outstanding shares of Texas Bankers capital stock which resulted in a premium of $5.2 million.
Prosperity Bancshares, Inc.®
Prosperity Bancshares Inc.®, recently named "America's Best Bank" by Forbes is a $9.8 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.prosperitybanktx.com, Retail Brokerage Services, MasterMoney Debit Cards, and 24 hour voice response banking. Prosperity currently operates one hundred seventy five (175) full service banking locations; fifty-nine (59) in the Houston area; twenty (20) in the South Texas area including Corpus Christi and Victoria; thirty-one (31) in the Dallas/Fort Worth area; twenty-one (21) in the East Texas area; thirty-four (34) in the Central Texas area including Austin and San Antonio; and ten (10) in the Bryan/College Station area.
Bryan/College
Station Area - Dallas/Fort Worth Area - Mount Vernon Cleveland
Dallas - Abrams CentreBalch
SpringsCamp WisdomCedar HillCentral
ExpresswayEast RennerFriscoFrisco-
West
IndependenceKiestMcKinneyMcKinney-
StonebridgeMidwayPreston
ForestPreston RoadRed OakSachse The
Colony Turtle CreekWestmoreland Fort
Worth -Haltom
CityKellerRoanokeStockyards Other
Dallas/Fort Worth Locations -
AzleEnnisGainesvilleMesquiteMuensterSangerWaxahachie
East Texas Area - AthensAthens-
SouthBlooming
GroveCantonCarthageCorsicanaCrockettEustaceGrapelandGun
Barrel
Bryan CityJacksonvilleKerensLongview Palestine East Bernard
Bryan-East Rusk El Campo
Bryan-North Seven Points Dayton
Caldwell Teague Galveston
College Station Tyler Groves
Greens Prairie Tyler-University Hempstead
Madisonville Winnsboro Hitchcock
Navasota Katy
Rock Prairie Houston Area - Liberty
Wellborn Road Magnolia
Mont Belvieu
Central Texas Area - Houston - Nederland
Aldine Needville
Austin - Allen Parkway Shadow Creek
183 Bellaire Sweeny
Allandale Beltway Tomball
Cedar Park Clear Lake Waller
Congress Copperfield West Columbia
Lakeway Cypress Wharton
Liberty Hill Downtown Winnie
Northland Eastex Wirt
Oak Hill Fairfield
Parmer Lane First Colony
Research Blvd Gessner
Westlake Gladebrook
Harrisburg South Texas Area -
Heights
Other Central Texas Highway 6 West Corpus Christi -
Locations - Hillcroft Airline
Bastrop Little York Carmel
Cuero Medical Center Northwest
Dime Box Memorial Drive Saratoga
Dripping Springs Northside Water Street
Elgin Pasadena
Flatonia Pecan Grove
Georgetown Piney Point Other South Texas
Gonzales River Oaks Locations -
Hallettsville Royal Oaks Alice
Kingsland Sugar Land Aransas Pass
La Grange SW Medical Center Beeville
Lexington Tanglewood Edna
New Braunfels Uptown Goliad
Pleasanton Waugh Drive Kingsville
Round Rock West University Mathis
San Antonio Woodcreek Padre Island
Schulenburg Palacios
Seguin Port Lavaca
Smithville Other Houston Area Portland
Thorndale Locations - Rockport
Weimar Angleton Sinton
Yoakum Bay City Victoria
Yorktown Beaumont Victoria-North
Cinco Ranch
In connection with the proposed merger of East Texas Financial Services, Inc. into Prosperity, Prosperity has filed with the Securities and Exchange Commission a registration statement on Form S-4 to register the shares of Prosperity's common stock to be issued to the stockholders of East Texas Financial Services. The registration statement includes a proxy statement/prospectus which will be sent to the stockholders of East Texas Financial Services seeking their approval of the proposed transaction.
WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY, EAST TEXAS FINANCIAL SERVICES AND THE PROPOSED TRANSACTION.
In connection with the proposed merger of The Bank Arlington into Prosperity Bank, Prosperity will file with the Securities and Exchange Commission a registration statement on Form S-4 to register the shares of Prosperity's common stock to be issued to the shareholders The Bank Arlington. The registration statement will include a proxy statement/prospectus which will be sent to the shareholders of The Bank Arlington seeking their approval of the proposed transaction.
WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY, THE BANK ARLINGTON AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain free copies of these documents through the website maintained by the Securities and Exchange Commission at http://www.sec.gov. Documents filed with the SEC by Prosperity will be available free of charge by directing a request by telephone or mail to Prosperity Bancshares, Inc., Prosperity Bank Plaza, 4295 San Felipe, Houston, Texas 77027 Attn: Investor Relations. Prosperity's telephone number is (281) 269-7199.
"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; weather; and the stock price volatility associated with "small-cap" companies. These and various other factors are discussed in Prosperity's Annual Report on Form 10-K for the year ended December 31, 2010 and other reports and statements Prosperity has filed with the SEC. Copies of the SEC filings for Prosperity Bancshares'® may be downloaded from the Internet at no charge from www.prosperitybanktx.com.
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars and share amounts in thousands, except per share data)
Three Months Ended Twelve Months Ended
Dec 31, 2011 Dec 31, 2010 Dec 31, 2011 Dec 31, 2010
------------ ------------ ------------ ------------
Selected Earnings and Per (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Share Data
Total interest income $89,658 $92,436 $371,908 $384,537
Total interest expense 9,571 12,927 45,240 66,389
----- ------ ------ ------
Net interest income 80,087 79,509 326,668 318,148
Provision for credit losses 1,150 2,900 5,200 13,585
----- ----- ----- ------
Net interest income after
provision for credit losses 78,937 76,609 321,468 304,563
Total non-interest income 14,065 13,905 56,043 53,833
Total non-interest expense 38,385 41,227 163,745 166,594
------ ------ ------- -------
Net income before taxes 54,617 49,287 213,766 191,802
Federal income taxes 18,211 16,489 72,017 64,094
------ ------ ------ ------
Net income $36,406 $32,798 $141,749 $127,708
======= ======= ======== ========
Basic earnings per share $0.78 $0.70 $3.03 $2.74
Diluted earnings per share $0.77 $0.70 $3.01 $2.73
Period end shares outstanding 46,910 46,684 46,910 46,684
Weighted average shares
outstanding (basic) 46,893 46,671 46,846 46,621
Weighted average shares
outstanding (diluted) 47,028 46,818 47,017 46,832
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars in thousands)
Three Months Ended Twelve Months Ended
Dec 31, 2011 Dec 31, 2010 Dec 31, 2011 Dec 31, 2010
------------ ------------ ------------ ------------
Balance Sheet Averages (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Total loans $3,749,923 $3,421,698 $3,648,701 $3,394,502
Investment securities 4,596,017 4,542,433 4,625,833 4,508,918
Federal funds sold and
other earning assets 62,035 14,305 26,879 48,944
------ ------ ------ ------
Total earning assets 8,407,975 7,978,436 8,301,413 7,952,364
Allowance for credit losses (51,713) (51,551) (51,871) (52,151)
Cash and due from banks 136,856 133,620 131,374 130,554
Goodwill 924,537 923,687 924,506 907,548
Core Deposit Intangibles (CDI) 21,890 29,822 24,767 32,532
Other real estate 9,803 13,121 10,220 14,490
Fixed assets, net 160,261 160,177 159,983 158,667
Other assets 119,870 133,839 128,492 134,376
------- ------- ------- -------
Total assets $9,729,479 $9,321,151 $9,628,884 $9,278,380
========== ========== ========== ==========
Non-interest bearing deposits $1,924,037 $1,661,448 $1,800,102 $1,567,676
Interest bearing deposits 5,975,081 5,791,726 5,951,094 5,965,063
--------- --------- --------- ---------
Total deposits 7,899,118 7,453,174 7,751,196 7,532,739
Securities sold under
repurchase agreements 60,999 77,759 68,049 81,623
Federal funds purchased and
other borrowings 66,834 198,677 152,716 109,260
Junior subordinated
debentures 85,055 92,265 86,557 92,265
Other liabilities 60,628 54,429 56,617 56,334
Shareholders' equity(A) 1,556,845 1,444,847 1,513,749 1,406,159
--------- --------- --------- ---------
Total liabilities and equity $9,729,479 $9,321,151 $9,628,884 $9,278,380
========== ========== ========== ==========
(A) Includes $14,515 and $17,516,
in after-tax unrealized gains on
available for sale securities for
the three month periods ending
December 31, 2011 and December
31, 2010, respectively, and
$14,680 and $17,693 for the
twelve month periods ending
December 31, 2011 and December
31, 2010, respectively.
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars in thousands)
Three Months Ended Twelve Months Ended
Dec 31, 2011 Dec 31, 2010 Dec 31, 2011 Dec 31, 2010
------------ ------------ ------------ ------------
Income Statement Data (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest on loans $53,899 $52,722 $214,273 $209,711
Interest on securities 35,719 39,708 157,580 174,707
Interest on federal funds sold and
other earning assets 40 6 55 119
--- --- --- ---
Total interest income 89,658 92,436 371,908 384,537
------ ------ ------ -------
Interest expense - deposits 8,682 11,749 40,975 61,509
Interest expense - debentures 632 803 2,984 3,250
Interest expense - other 257 375 1,281 1,630
--- --- --- -----
Total interest expense 9,571 12,927 45,240 66,389
----- ----- ------ ------
Net interest income(B) 80,087 79,509 326,668 318,148
Provision for credit losses 1,150 2,900 5,200 13,585
----- ----- ----- -----
Net interest income after
provision for credit losses 78,937 76,609 321,468 304,563
------ ------ ------ -------
Non-sufficient funds (NSF) fees 5,860 6,905 24,442 27,580
Debit card and ATM card income 4,189 3,261 15,391 12,582
Service charges on deposit accounts 2,515 2,614 9,981 10,088
Net gain on sale of assets -- 2 377 402
Net (loss) gain on sale of ORE (473) (915) (904) (4,262)
Net loss on sale of securities -- -- (581) --
Other non-interest income 1,974 2,038 7,337 7,443
----- ----- ----- -----
Total non-interest income 14,065 13,905 56,043 53,833
------ ------ ------ ------
Salaries and benefits(C) 21,258 21,421 92,057 86,980
CDI amortization 1,879 2,172 7,780 9,016
Net occupancy and equipment 3,655 3,975 14,634 15,153
Depreciation 2,051 1,999 8,150 8,313
Data processing
and software amortization 1,417 1,515 6,823 6,222
Regulatory assessments and FDIC insurance 1,518 2,812 8,901 11,039
ORE Expense 680 1,013 1,501 3,483
Other non-interest expense 5,927 6,320 23,899 26,388
----- ----- ----- ------
Total non-interest expense 38,385 41,227 163,745 166,594
------ ------ ------ -------
Net income before taxes 54,617 49,287 213,766 191,802
Federal income taxes 18,211 16,489 72,017 64,094
------ ------ ------ ------
Net income available
to common shareholders $36,406 $32,798 $141,749 $127,708
======= ======= ======= ========
(B) Net interest income on a tax equivalent basis would be $80,937 and $80,238 for the three months ended December 31, 2011 and December 31, 2010, respectively, and $330,282 and $321,049 for the twelve months ended December 31, 2011 and December 31, 2010, respectively.
(C) Salaries and benefits includes equity compensation expenses of $972 and $825 for the three months ended December 31, 2011 and December 31, 2010, respectively, and $3,576 and $3,037 for the twelve months ended December 31, 2011 and December 31, 2010, respectively.
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars and share amounts in thousands, except per share data)
As of and for the As of and for the
Three Months Ended Twelve Months Ended
Dec 31, 2011 Dec 31, 2010 Dec 31, 2011 Dec 31, 2010
------------ ------------ ------------ ------------
Common Share and (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Other Data
Employees - FTE 1,664 1,708 1,664 1,708
Book value per share $33.41 $31.11 $33.41 $31.11
Tangible book value per share $13.25 $10.70 $13.25 $10.70
Period end shares outstanding 46,910 46,684 46,910 46,684
Weighted average shares
outstanding (basic) 46,893 46,671 46,846 46,621
Weighted average shares
outstanding (diluted) 47,028 46,818 47,017 46,832
Non-accrual loans $3,578 $4,439 $3,578 $4,439
Accruing loans 90 or more
days past due -- 189 -- 189
Restructured loans -- -- -- --
--- --- --- ---
Total non-performing loans 3,578 4,628 3,578 4,628
Repossessed assets 146 161 146 161
Other real estate 8,328 11,053 8,328 11,053
----- ------ ----- ------
Total non-performing assets $12,052 $15,842 $12,052 $15,842
Allowance for credit losses at
end of period $51,594 $51,584 $51,594 $51,584
Net charge-offs $2,069 $2,670 $5,190 $13,864
Basic earnings per share $0.78 $0.70 $3.03 $2.74
Diluted earnings per share $0.77 $0.70 $3.01 $2.73
Prosperity Bancshares, Inc.(R)
Financial Highlights
Three Months Ended Twelve Months Ended
Dec 31, 2011 Dec 31, 2010 Dec 31, 2011 Dec 31, 2010
------------ ------------ ------------ ------------
Performance Ratios (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Return on average
assets (annualized) 1.50% 1.41% 1.47% 1.38%
Return on average common
equity (annualized) 9.35% 9.08% 9.36% 9.08%
Return on average tangible
common equity (annualized) 23.86% 26.70% 25.11% 27.40%
Net interest margin(D)
(tax equivalent) (annualized) 3.82% 3.99% 3.98% 4.04%
Efficiency ratio(E) 40.77% 44.13% 42.76% 44.83%
Asset Quality Ratios
Non-performing assets to
average earning assets 0.14% 0.20% 0.15% 0.20%
Non-performing assets to loans
and other real estate 0.32% 0.45% 0.32% 0.45%
Net charge-offs
to average loans 0.06% 0.08% 0.14% 0.41%
Allowance for credit losses to
total loans 1.37% 1.48% 1.37% 1.48%
Common Stock Market Price
High $41.74 $39.96 $46.87 $43.66
Low $31.31 $30.37 $30.91 $28.27
Period end market price $40.35 $39.28 $40.35 $39.28
(D) Net interest margin for all
periods presented is calculated
on an actual 365 day basis.
(E) Prosperity's efficiency
ratio is calculated by dividing
total non-interest expense
(excluding credit loss
provisions) by net interest
income plus non-interest
income (excluding net gains and
losses on the sale of assets
and securities). Additionally,
taxes are not part of this
calculation.
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars in thousands)
Dec 31, 2011 Sept 30, 2011 June 30, 2011 Mar 31, 2011
------------ ------------- ------------- ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Loan Portfolio
Commercial $439,854 11.7% $451,541 12.1% $455,791 12.4% $460,066 12.9%
Construction 482,140 12.8% 490,193 13.1% 483,581 13.2% 494,159 13.8%
1-4 family residential 1,007,266 26.8% 981,388 26.3% 941,250 25.7% 882,807 24.7%
Home equity 146,999 3.8% 139,553 3.7% 131,213 3.6% 123,696 3.4%
Commercial real estate 1,441,226 38.3% 1,426,704 38.2% 1,411,501 38.5% 1,385,031 38.8%
Agriculture 170,234 4.5% 168,011 4.5% 160,780 4.4% 144,535 4.1%
Consumer 78,187 2.1% 80,240 2.1% 81,132 2.2% 82,626 2.3%
------ ------ ------ ------
Total Loans $3,765,906 $3,737,630 $3,665,248 $3,572,920
========== ========== ========== ==========
Deposit Types
Non-interest bearing DDA $1,972,226 24.5% $1,861,907 23.9% $1,788,756 23.3% $1,730,427 22.2%
Interest bearing DDA 1,532,701 19.0% 1,332,914 17.1% 1,358,649 17.7% 1,432,766 18.3%
Money Market 2,042,243 25.3% 1,995,248 25.6% 1,878,679 24.5% 2,014,674 25.8%
Savings 514,780 6.4% 498,451 6.4% 471,082 6.1% 454,649 5.8%
Time < $100 968,806 12.0% 1,005,672 12.9% 1,037,492 13.6% 1,072,343 13.7%
Time > $100 1,029,498 12.8% 1,104,547 14.1% 1,133,034 14.8% 1,111,525 14.2%
--------- --------- --------- ---------
Total Deposits $8,060,254 $7,798,739 $7,667,692 $7,816,384
========== ========== ========== ==========
Loan to Deposit Ratio 46.7% 47.9% 47.8% 45.7%
Construction Loans
Single family residential construction $136,030 28.2% $126,926 25.9% $124,995 25.8% $112,175 22.7%
Land development 43,084 8.9% 44,400 9.1% 46,405 9.6% 50,600 10.2%
Raw land 61,177 12.7% 64,178 13.1% 69,769 14.4% 70,074 14.2%
Residential lots 86,848 18.0% 88,600 18.1% 86,515 17.9% 86,359 17.5%
Commercial lots 49,645 10.3% 54,016 11.0% 54,419 11.3% 50,543 10.2%
Commercial Construction and other 105,356 21.9% 112,073 22.8% 101,478 21.0% 124,408 25.2%
------- ------- ------- -------
Total Construction Loans $482,140 $490,193 $483,581 $494,159
======== ======== ======== ========
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars in thousands)
Dec 31, 2011 Sept 30, 2011 June 30, 2011 Mar 31, 2011 Dec 31, 2010
------------ ------------- ------------- ------------ ------------
Balance Sheet Data (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
(at period end)
Total loans $3,765,906 $3,737,630 $3,665,248 $3,572,920 $3,485,023
Investment securities(F) 4,658,936 4,430,530 4,641,664 4,798,642 4,617,116
Federal funds sold 642 294 350 517 393
Allowance for credit losses (51,594) (52,513) (51,932) (51,760) (51,584)
Cash and due from banks 212,800 211,261 145,910 145,521 158,975
Goodwill 924,537 924,537 924,537 924,537 924,258
Core deposit intangibles 20,996 22,874 24,799 26,742 28,776
Other real estate 8,328 8,216 8,841 10,465 11,053
Fixed assets, net 159,656 160,099 160,119 159,050 159,053
Other assets 122,464 124,159 137,611 136,313 143,509
------- ------- ------- ------- -------
Total assets $9,822,671 $9,567,087 $9,657,147 $9,722,947 $9,476,572
========== ========== ========== ========== ==========
Demand deposits $1,972,226 $1,861,907 $1,788,756 $1,730,427 $1,673,190
Interest bearing deposits 6,088,028 5,936,832 5,878,936 6,085,957 5,781,730
--------- --------- --------- --------- ---------
Total deposits 8,060,254 7,798,739 7,667,692 7,816,384 7,454,920
Securities sold under
repurchase agreements 54,883 66,166 91,288 51,847 60,659
Federal funds purchased and
other borrowings 12,790 13,583 248,839 228,092 374,433
Junior subordinated debentures 85,055 85,055 85,055 85,055 92,265
Other liabilities 42,424 62,205 52,625 61,071 41,956
------ ------ ------ ------ ------
Total liabilities 8,255,406 8,025,748 8,145,499 8,242,449 8,024,233
Shareholders' equity(G) 1,567,265 1,541,339 1,511,648 1,480,498 1,452,339
--------- --------- --------- --------- ---------
Total liabilities and equity $9,822,671 $9,567,087 $9,657,147 $9,722,947 $9,476,572
========== ========== ========== ========== ==========
(F) Includes $20,726, $24,278, $23,647, $21,088 and $22,007 in unrealized gains on available for sale securities for the quarterly periods ending December 31, 2011, September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 2010,
respectively.
(G) Includes $13,472, $15,781, $15,371, $13,707 and $14,304 in after-tax unrealized gains on available for sale securities for the quarterly periods ending December 31, 2011, September 30, 2011, June 30, 2011, March 31, 2011 and December 31,
2010, respectively.
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars in thousands)
Three Months Ended
Dec 31, 2011 Sept 30, 2011 June 30, 2011 Mar 31, 2011 Dec 31, 2010
------------ ------------- ------------- ------------ ------------
Income Statement Data (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest on loans $53,899 $54,471 $53,703 $52,200 $52,722
Interest on securities 35,719 38,714 41,943 41,204 39,708
Interest on federal funds
sold and other earning assets 40 4 6 5 6
--- --- --- --- ---
Total interest income 89,658 93,189 95,652 93,409 92,436
------ ------ ------ ------ ------
Interest expense- deposits 8,682 9,717 11,064 11,512 11,749
Interest expense- debentures 632 607 598 1,147 803
Interest expense- other 257 327 360 337 375
--- --- --- --- ---
Total interest expense 9,571 10,651 12,022 12,996 12,927
----- ------ ------ ------ ------
Net interest income 80,087 82,538 83,630 80,413 79,509
Provision for credit losses 1,150 950 1,400 1,700 2,900
----- --- ----- ----- -----
Net interest income after
provision for credit losses 78,937 81,588 82,230 78,713 76,609
------ ------ ------ ------ ------
Non-sufficient funds (NSF) fees 5,860 6,249 6,226 6,107 6,905
Debit card and ATM card income 4,189 3,941 3,809 3,452 3,261
Service charges on
deposits accounts 2,515 2,472 2,511 2,483 2,614
Net gain on sale of assets -- 17 195 165 2
Net loss on sale of ORE (473) 95 (366) (160) (915)
Net loss on the sale of securities -- -- (581) -- --
Other non-interest income 1,974 1,807 1,736 1,820 2,038
----- ----- ----- ----- -----
Total non-interest income 14,065 14,581 13,530 13,867 13,905
Salaries and benefits 21,258 23,601 23,994 23,204 21,421
CDI amortization 1,879 1,924 1,943 2,034 2,172
Net occupancy and equipment 3,655 3,784 3,547 3,648 3,975
Depreciation 2,051 2,041 2,037 2,021 1,999
Data processing
and software amortization 1,417 1,954 1,780 1,672 1,515
Regulatory assessments and 1,518 1,488 2,894 3,001 2,812
FDIC insurance
ORE expense 680 235 294 292 1,013
Other non-interest expense 5,927 6,124 6,025 5,823 6,320
----- ----- ----- ----- -----
Total non-interest expense 38,385 41,151 42,514 41,695 41,227
------ ------ ------ ------ ------
Net income before taxes 54,617 55,018 53,246 50,885 49,287
------
Federal income taxes 18,211 18,645 18,154 17,007 16,489
------ ------ ------ ------ ------
Net income available
to common shareholders $36,406 $36,373 $35,092 $33,878 $32,798
======= ======= ======= ======= =======
Prosperity Bancshares, Inc.(R)
Financial Highlights
Three Months Ended
Dec 31, 2011 Sept. 30, 2011 June 30, 2011 Mar 31, 2011 Dec 31, 2010
------------ -------------- ------------- ------------ ------------
Comparative Quarterly (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Asset Quality, Performance
& Capital Ratios
Return on average
assets (annualized) 1.50% 1.52% 1.45% 1.42% 1.41%
Return on average common
equity (annualized) 9.35% 9.51% 9.36% 9.22% 9.08%
Return on average tangible
equity (annualized) 23.86% 25.03% 25.56% 26.22% 26.70%
Net interest margin
(tax equivalent) (annualized) 3.82% 4.02% 4.06% 4.02% 3.99%
Employees - FTE 1,664 1,678 1,675 1,672 1,708
Efficiency ratio 40.77% 42.38% 43.58% 44.30% 44.13%
Non-performing assets to
average earning assets 0.14% 0.16% 0.15% 0.16% 0.20%
Non-performing assets to loans
and other real estate 0.32% 0.36% 0.35% 0.36% 0.45%
Net charge-offs to
average loans 0.06% 0.01% 0.03% 0.04% 0.08%
Allowance for credit losses to
total loans 1.37% 1.40% 1.42% 1.45% 1.48%
Book value per share $33.41 $32.87 $32.24 $31.65 $31.11
Tangible book value per share $13.25 $12.67 $11.99 $11.31 $10.70
Tier 1 risk-based capital 15.90% 15.47% 14.72% 14.00% 13.64%
Total risk-based capital 17.09% 16.69% 15.93% 15.21% 14.87%
Tier 1 leverage capital 7.89% 7.70% 7.24% 6.97% 6.87%
Tangible equity to tangible assets 7.00% 6.89% 6.46% 6.03% 5.86%
Equity to assets 15.96% 16.11% 15.65% 15.23% 15.33%
Prosperity Bancshares, Inc.(R)
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
Three Months Ended December 31, Three Months Ended December 31,
2011 2010
YIELD ANALYSIS Average Interest Earned Average Average Interest Earned Average
Balance / Interest Paid Yield/Rate Balance / Interest Paid Yield/Rate
------- --------------- ---------- ------- --------------- ----------
Interest Earning Assets:
Loans $3,749,923 $53,899 5.70% $3,421,698 $52,722 6.11%
Investment securities 4,596,017 35,719 3.11% 4,542,433 39,708 3.50%
Federal funds sold and other
earning assets 62,035 40 0.26% 14,305 6 0.17%
------ --- ------ ---
Total interest earning assets 8,407,975 $89,658 4.23% 7,978,436 $92,436 4.60%
--------- ---------
Allowance for credit losses (51,713) (51,551)
Non-interest earning assets 1,373,217 1,394,266
--------- ---------
Total assets $9,729,479 $9,321,151
========== ==========
Interest Bearing Liabilities:
Interest bearing demand
deposits $1,363,900 $1,450 0.42% $1,291,312 $1,772 0.54%
Savings and money market
deposits 2,553,227 2,450 0.38% 2,229,295 3,189 0.57%
Certificates and other time
deposits 2,057,954 4,782 0.92% 2,271,119 6,788 1.19%
Securities sold under
repurchase agreements 60,999 63 0.41% 77,759 110 0.56%
Federal funds purchased and
other borrowings 66,834 194 1.15% 198,677 265 0.53%
Junior subordinated debentures 85,055 632 2.95% 92,265 803 3.45%
------ --- ------ ---
Total interest bearing
liabilities $6,187,969 $9,571 0.61%(H) $6,160,427 $12,927 0.83%(H)
------ -------
Non-interest bearing liabilities:
Non-interest bearing demand
deposits $1,924,037 $1,661,448
Other liabilities 60,628 54,429
------ ------
Total liabilities $8,172,634 $7,876,304
---------- ----------
Shareholders' equity $1,556,845 $1,444,847
---------- ----------
Total liabilities and
shareholders' equity $9,729,479 $9,321,151
========== ==========
Net Interest Income & Margin $80,087 3.78% $79,509 3.95%
======= =======
Net Interest Income & Margin
(tax equivalent) $80,937 3.82% $80,238 3.99%
======= =======
(H) The Company's total cost of funds, including non-interest bearing deposits was 0.47% and 0.66% for the three months ended December 31, 2011 and December 31, 2010, respectively.
Prosperity Bancshares, Inc.(R)
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
Twelve Months Ended December 31, Twelve Months Ended December 31,
2011 2010
YIELD ANALYSIS Average Interest Earned Average Average Interest Earned Average
Balance / Interest Paid Yield/Rate Balance / Interest Paid Yield/Rate
------- --------------- ---------- ------- --------------- ----------
Interest Earning Assets:
Loans $3,648,701 $214,273 5.87% $3,394,502 $209,711 6.18%
Investment securities 4,625,833 157,580 3.41% 4,508,918 174,707 3.87%
Federal funds sold and other
earning assets 26,879 55 0.20% 48,944 119 0.24%
------ --- ------ ---
Total interest earning assets 8,301,413 $371,908 4.48% 7,952,364 $384,537 4.84%
--------- ---------
Allowance for credit losses (51,871) (52,151)
Non-interest earning assets 1,379,342 1,378,167
--------- ---------
Total assets $9,628,884 $9,278,380
========== ==========
Interest Bearing Liabilities:
Interest bearing demand
deposits $1,393,501 $7,416 0.53% $1,336,400 $8,994 0.67%
Savings and money market
deposits 2,421,735 11,836 0.49% 2,189,695 15,159 0.69%
Certificates and other time
deposits 2,135,858 21,723 1.02% 2,438,968 37,356 1.53%
Securities sold under
repurchase agreements 68,049 369 0.54% 81,623 595 0.73%
Federal funds purchased and other borrowings
152,716 912 0.60% 109,260 1,035 0.95%
Junior subordinated debentures 86,557 2,984 3.45% 92,265 3,250 3.52%
------ ----- ------ -----
Total interest bearing
liabilities 6,258,416 $45,240 0.72%(I) 6,248,211 $66,389 1.06%(I)
--------- ---------
Non-interest bearing liabilities:
Non-interest bearing demand
deposits 1,800,102 1,567,676
Other liabilities 56,617 56,334
------ ------
Total liabilities 8,115,135 7,872,221
Shareholders' equity 1,513,749 1,406,159
--------- ---------
Total liabilities and
shareholders' equity $9,628,884 $9,278,380
========== ==========
Net Interest Income & Margin $326,668 3.94% $318,148 4.00%
======== ========
Net Interest Income & Margin
(tax equivalent) $330,282 3.98% $321,049 4.04%
======== ========
(I) The Company's total cost of funds, including non-interest bearing deposits was 0.56% and 0.85% for the years ended December 31, 2011 and December 31, 2010, respectively.
Prosperity Bancshares, Inc.®
Notes to Selected Financial Data
(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. 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
------------------
Return on average tangible common equity: Dec 31, Sept 30, June 30, Mar 31, Dec 31,
2011 2011 2011 2011 2010
---- ---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
---------- ---------- ---------- ---------- ----------
Net income $36,406 $36,373 $35,092 $33,878 $32,798
------- ------- ------- ------- -------
Average shareholders' equity 1,556,845 1,529,718 1,499,385 1,469,048 1,444,847
Less: Average goodwill and other intangible assets (946,427) (948,351) (950,265) (952,123) (953,509)
-------- -------- -------- -------- --------
Average tangible shareholders' equity $610,418 $581,367 $549,120 $516,925 $491,338
Return on average tangible common equity: 23.86% 25.03% 25.56% 26.22% 26.70%
Tangible book value per share:
Shareholders' equity $1,567,265 $1,541,339 $1,511,648 $1,480,498 $1,452,339
Less: Goodwill and other intangible assets (945,533) (947,411) (949,336) (951,279) (953,034)
-------- -------- -------- -------- --------
Tangible shareholders' equity $621,732 $593,928 $562,312 $529,219 $499,305
Period end shares outstanding 46,910 46,893 46,888 46,782 46,684
Tangible book value per share: $13.25 $12.67 $11.99 $11.31 $10.70
Tangible equity to tangible assets ratio:
Tangible shareholders' equity $621,732 $593,928 $562,312 $529,219 $499,305
Total assets $9,822,671 $9,567,087 $9,657,147 $9,722,947 $9,476,572
Less: Goodwill and other intangible assets (945,533) (947,411) (949,336) (951,279) (953,034)
-------- -------- -------- -------- --------
Tangible assets $8,877,138 $8,619,676 $8,707,811 $8,771,668 $8,523,538
Tangible equity to tangible assets ratio: 7.00% 6.89% 6.46% 6.03% 5.86%
Prosperity Bancshares, Inc.(R)
Notes to Selected Financial Data (Unaudited)
(Dollars and share amounts in thousands, except per share data)
Twelve Months Ended
Dec 31, 2011 Dec 31, 2010
Return on average tangible common equity: (unaudited) (unaudited)
Net income $141,749 $127,708
-------- --------
Average shareholders' equity 1,513,749 1,406,159
Less: Average goodwill and other intangible assets (949,273) (940,080)
-------- --------
Average tangible shareholders' equity $564,476 $466,079
Return on average tangible common equity: 25.11% 27.40%
Tangible book value per share:
Shareholders equity $1,567,265 $1,452,339
Less: Goodwill and other intangible assets (945,533) (953,034)
-------- --------
Tangible shareholders' equity $621,732 $499,305
Period end shares outstanding 46,910 46,684
Tangible book value per share: $13.25 $10.70
Tangible equity to tangible assets ratio:
Tangible shareholders' equity $621,732 $499,305
Total assets $9,822,671 $9,476,572
Less: Goodwill and other intangible assets (945,533) (953,034)
-------- --------
Tangible assets $8,877,138 $8,523,538
Tangible equity to tangible assets ratio: 7.00% 5.86%
SOURCE Prosperity Bancshares, Inc.
