Form 8-K PROSPERITY BANCSHARES For: Apr 24

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 or 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):  April 24, 2015

 

Prosperity bancshares, inc.

(Exact name of registrant as specified in its charter)

 

 

Texas	001-35388	74-2331986
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

 

4295 San Felipe Houston, Texas 77027 (Address of principal executive offices including zip code)

 

 

Registrant's telephone number, including area code: (281) 269-7199

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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Item 2.02     Results of Operations and Financial Condition.

 

On April 24, 2015, Prosperity Bancshares, Inc. publicly disseminated a press release announcing its financial results for the first quarter ending March 31, 2015. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.

 

As provided in General Instruction B.2 to Form 8-K, the information furnished in Item 2.02 and Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

 

Item 9.01     Financial Statements and Exhibits.

 

(d)     Exhibits. The following is furnished as an exhibit to this Current Report on Form 8-K:

 

	Exhibit Number	Description of Exhibit
	99.1	Press Release issued by Prosperity Bancshares, Inc. dated April 24, 2015.

 

 

Signatures

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	PROSPERITY BANCSHARES, INC.
	(Registrant)
Dated: April 24, 2015	By:	/s/ Charlotte M. Rasche
		Charlotte M. Rasche
		Executive Vice President and General Counsel

 

 

exhibit index

 

 

	Exhibit Number	Description of Exhibit
	99.1	Press Release issued by Prosperity Bancshares, Inc. dated April 24, 2015.

 

 

 

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	[email protected]

 

 

FOR IMMEDIATE RELEASE

 

Prosperity Bancshares, Inc.^®

REPORTS FIRST QUARTER

2015 EARNINGS

 

●

First quarter 2015 earnings per share (diluted) increased 4.0% to $1.05 compared with the first quarter 2014

●

Net income increased $6.504 million or 9.7% compared with the first quarter 2014

●

Nonperforming assets remain low at 0.19% of first quarter average earning assets

●

Loans increased $1.414 billion or 18.2% compared with the first quarter 2014

●

Deposits increased $2.101 billion or 13.6% compared with the first quarter 2014

●

Named to the 2014 Keefe, Bruyette & Woods Honor Roll

 

HOUSTON, April 24, 2015. Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, “Prosperity”), reported net income for the quarter ended March 31, 2015 of $73.641 million, an increase of $6.504 million or 9.7%, compared with $67.137 million in net income for the quarter ended March 31, 2014. Additionally, diluted earnings per share increased 4.0% to $1.05 per diluted common share for the quarter ended March 31, 2015 compared with $1.01 per diluted common share for the same period in 2014.

 

“Despite a lot of press and articles concerning the demise of the Texas and Oklahoma economies due to the lower price of oil, we are not experiencing this as evidenced by the loan growth we had in our Houston market and other major metropolitan areas in Texas. Although jobs are being reduced in the oil related fields, we still see good economics in other areas. People continue to move to Texas and Oklahoma because of the states’ friendly business climate with regulation and legislation favoring business and, in Texas, no state income taxes,” said David Zalman, Prosperity’s Chairman and Chief Executive Officer.

 

“Most forecasters are projecting the Texas population to double in size by the year 2050. We believe that the Texas economy is much more diversified than it was in 1980, and that resiliency is showing. In 1980, the population in Texas was 14.2 million people, and today it is 27 million people. In 1980, the workforce was 7 million people, and today it is 13 million people. In conclusion, we believe our market areas in Texas and Oklahoma are, and will be, dynamic growth markets into the future,” continued Zalman.

  

 

“I am pleased to announce Prosperity Bancshares’ inclusion in the 2014 Keefe Bruyette & Woods’ Honor Roll based on our strong performance over the past ten years. This is the tenth year that our company has received this award. I would like to thank our whole team once again for a job well done,” concluded Zalman.

  

Results of operations for the three months ended March 31, 2015

 

For the three months ended March 31, 2015, net income was $73.641 million compared with $67.137 million for the same period in 2014. Net income per diluted common share was $1.05 for the three months ended March 31, 2015 compared with $1.01 for the same period in 2014. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2015 were 1.37%, 8.98% and 21.84%, respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and taxes) was 41.83% for the three months ended March 31, 2015.

 

Net interest income before provision for credit losses for the quarter ended March 31, 2015, increased 13.4% to $162.905 million compared with $143.691 million during the same period in 2014. The increase was primarily due to a 14.5% increase in average interest-earning assets for the same period. Linked quarter net interest income before provision for credit losses decreased $14.846 million or 8.4% to $162.905 million compared with $177.751 million during the three months ended December 31, 2014. This was primarily due to an $8.943 million decrease in loan discount accretion. Additionally, interest expense was impacted during the fourth quarter 2014 by a $2.428 million credit to interest expense recorded after finalizing the fair value adjustments for certificates of deposit acquired from F&M Bancorporation Inc. and its wholly-owned subsidiary, The F&M Bank & Trust Company (collectively, “F&M”), and FVNB Corp. and its wholly-owned subsidiary, First Victoria National Bank. The net interest margin on a tax equivalent basis decreased to 3.57% for the three months ended March 31, 2015, compared with 3.62% for the same period in 2014 and 3.89% for the three months ended December 31, 2014. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis decreased on a linked quarter basis from 3.25% for the quarter ended December 31, 2014 to 3.17% for the quarter ended March 31, 2015. This was primarily due to liquidity from additional deposits being invested in securities at a lower yield than the average loan yield.

 

Noninterest income decreased $243 thousand or 0.8% to $28.421 million for the three months ended March 31, 2015, compared with $28.664 million for the same period in 2014. On a linked quarter basis, noninterest income decreased $959 thousand or 3.3% compared with the quarter ended December 31, 2014.

 

Noninterest expense increased $8.368 million or 11.8% to $79.462 million for the three months ended March 31, 2015, compared with $71.094 million for the same period in 2014. This increase was primarily due to increased salary and benefits expense, increased regulatory assessments and FDIC insurance and increased operational expenses associated with the addition of F&M. On a linked quarter basis, noninterest expense decreased $4.574 million or 5.4%, compared with the quarter ended December 31, 2014. This was primarily due to decreases in most categories of noninterest expense and a decrease in depreciation expense resulting from finalized fair value adjustments recorded on building and equipment acquired from F&M.

 

Loans at March 31, 2015 were $9.166 billion, an increase of $1.414 billion or 18.2%, compared with $7.752 billion at March 31, 2014, primarily due to the acquisition of F&M. Linked quarter loans decreased $78.178 million or 0.8% from $9.244 billion at December 31, 2014.

 

Deposits at March 31, 2015 were $17.561 billion, an increase of $2.101 billion or 13.6% compared with $15.460 billion at March 31, 2014, primarily due to the acquisition of F&M. Linked quarter deposits decreased $131.806 million or 0.7% from $17.693 billion at December 31, 2014.

 

Average loans increased $1.433 billion or 18.5% to $9.189 billion for the quarter ended March 31, 2015, compared with $7.756 billion for the same period in 2014. On a linked quarter basis, average loans decreased $135.950 million or 1.5% from $9.325 billion for the quarter ended December 31, 2014. Average deposits increased $2.195 billion or 14.3% to $17.576 billion for the quarter ended March 31, 2015, compared with $15.382 billion for the same period of 2014. On a linked quarter basis, average deposits increased $458.744 million or 2.7% from $17.118 billion for the quarter ended December 31, 2014.

  

 

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

 

Balance Sheet Data (at period end)

(In thousands) 

		Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Loans acquired (including new production since acquisition date):
F&M		$	1,139,849			$	1,224,498			$	1,451,075			$	1,502,836			$	-
All other loans			8,026,156				8,019,685				7,917,813				7,805,326				7,752,400
Total loans		$	9,166,005			$	9,244,183			$	9,368,888			$	9,308,162			$	7,752,400
Deposits assumed (including new deposits since acquisition date):
F&M		$	1,705,203			$	2,063,229			$	1,905,233			$	2,090,468			$	-
All other deposits			15,856,149				15,629,929				15,108,794				15,190,587				15,460,057
Total deposits		$	17,561,352			$	17,693,158			$	17,014,027			$	17,281,055			$	15,460,057

 

 

As reflected in the table above, loan and deposit growth was impacted by the acquisition of F&M. Excluding loans acquired in the acquisition and new production at the acquired banking centers since the acquisition date, loans at March 31, 2015 increased $273.756 million or 3.5% compared with March 31, 2014 and increased $6.471 million or 0.1% (0.3% annualized) on a linked quarter basis. Excluding deposits assumed in the acquisition and new deposits generated at the acquired banking centers since the acquisition date, deposits at March 31, 2015 increased $396.092 million or 2.6% compared with March 31, 2014 and increased $226.220 million or 1.4% (5.8% annualized) on a linked quarter basis.

 

At March 31, 2015, Prosperity had $21.607 billion in total assets, $9.166 billion in loans and $17.561 billion in deposits. Assets, loans and deposits at March 31, 2015 increased by 14.2%, 18.2% and 13.6%, respectively, compared with their respective levels at March 31, 2014.

 

Asset Quality

 

Nonperforming assets totaled $35.376 million or 0.19% of quarterly average earning assets at March 31, 2015, compared with $18.696 million or 0.11% of quarterly average earning assets at March 31, 2014, and $36.919 million or 0.20% of quarterly average earning assets at December 31, 2014. The allowance for credit losses was 0.88% of total loans at March 31, 2015 and 0.87% of total loans at both March 31, 2014 and December 31, 2014. Excluding loans acquired that are accounted for under ASC Topics 310-20 and 310-30, the allowance for credit losses was 1.12% of remaining loans as of March 31, 2015, compared with 1.18% at March 31, 2014 and 1.14% at December 31, 2014. Refer to the “Notes to Selected Financial Data” at the end of this Earnings Release for a reconciliation of this non-GAAP (generally accepted accounting principles) financial measure.

 

The provision for credit losses was $1.250 million for the three months ended March 31, 2015 compared with $600 thousand for the three months ended March 31, 2014 and $6.350 million for the three months ended December 31, 2014.

 

Net charge offs were $1.049 million for the three months ended March 31, 2015 compared with $786 thousand for the three months ended March 31, 2014 and $3.201 million for the three months ended December 31, 2014.

 

Conference Call

 

Prosperity’s management team will host a conference call on Friday, April 24, 2015 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity’s first quarter 2015 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383. The elite entry number is 8937576.

 

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

  

 

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 ratio. 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 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 second quarter cash dividend of $0.2725 per share, to be paid on July 1, 2015 to all shareholders of record as of June 15, 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.

 

In addition, during the first quarter of 2015, Bancshares redeemed all $167.5 million of its outstanding trust preferred securities which, beginning January 1, 2015, are no longer fully includable as tier 1 capital under the Basel III Capital Rules. These redemptions were funded through dividends from Prosperity Bank.

 

While Prosperity’s capital ratios as of March 31, 2015 reflect both the phase-in provisions of the new Basel III Capital Rules and the redemption of the trust preferred securities, the decrease in capital ratios was primarily attributable to the redemption of the trust preferred securities.

 

 

Acquisition of F&M Bancorporation Inc.

 

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

 

Pursuant to the terms of the acquisition agreement, Prosperity issued 3,298,022 shares of Prosperity common stock plus $34.240 million in cash for all outstanding shares of FMBC capital stock, which resulted in goodwill of $206.010 million as of March 31, 2015. Additionally, Prosperity recognized $27.140 million of core deposit intangibles as of March 31, 2015.

 

Prosperity Bancshares, Inc. ^®

 

As of March 31, 2015, Prosperity Bancshares Inc. ^® is a $21.607 billion Houston, Texas based regional financial holding company, formed in 1983. Operating under a community banking philosophy and seeking to develop broad customer relationships based on service and convenience, Prosperity offers a variety of traditional loan and deposit products to its customers, which consist primarily of small and medium sized businesses and consumers. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services at http://www.prosperitybankusa.com, Retail Brokerage Services, Credit Cards, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management, Mortgage Services and Mobile Banking.

 

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

 

 

Bryan/College Station Area - Bryan Bryan-29th Street Bryan-East Bryan-North Caldwell College Station Crescent Point Hearne Huntsville Madisonville Navasota New Waverly Rock Prairie Southwest Parkway Tower Point Wellborn Road   Central Texas Area - Austin - 183 Allandale Cedar Park Congress Lakeway Liberty Hill Northland Oak Hill Research Blvd Westlake   Other Central Texas Locations - Bastrop Canyon Lake Dime Box Dripping Springs Elgin Flatonia Georgetown Gruene Kingsland La Grange Lexington New Braunfels Pleasanton Round Rock San Antonio Schulenburg Seguin Smithville Thorndale Weimar   Dallas/Fort Worth Area - Dallas - Abrams Centre Balch Springs Camp Wisdom Cedar Hill Dallas – Central Expressway Forest Park Frisco Frisco-West Kiest McKinney McKinney-Stonebridge Midway Northwest Highway Plano Preston Forest Preston Road Red Oak

Sachse  The Colony Turtle Creek Westmoreland   Fort Worth -  Haltom City Keller Roanoke Stockyards   Other Dallas/Fort Worth Locations - Arlington Azle Ennis Gainesville Glen Rose Granbury Mesquite Muenster Sanger Waxahachie Weatherford   East Texas Area - Athens Blooming Grove Canton Carthage Corsicana Crockett Eustace Gilmer Grapeland Gun Barrel City Jacksonville Kerens Longview Mount Vernon Palestine Rusk Seven Points Teague Tyler-Beckham Tyler-South Broadway Tyler-University Winnsboro   Houston Area - Houston -  Aldine Bellaire Beltway Clear Lake Copperfield Cypress Downtown Eastex Fairfield First Colony Gessner Gladebrook Heights Highway 6 West Little York Medical Center Memorial Drive Northside Pasadena Pecan Grove River Oaks

Sugar Land SW Medical Center Tanglewood Uptown Waugh Drive Westheimer West University Woodcreek   Other Houston Area Locations -  Angleton Bay City Beaumont Cinco Ranch Cleveland East Bernard El Campo Dayton Galveston Groves Hempstead Hitchcock Katy Katy-Spring Green Liberty Magnolia Magnolia Parkway Mont Belvieu Nederland Needville Rosenberg Shadow Creek Spring Sweeny The Woodlands-I-45 The Woodlands-Research Forest Tomball Waller West Columbia Wharton Winnie Wirt   South Texas Area - Corpus Christi - Airline Calallen Carmel Northwest Saratoga Timbergate Water Street   Other South Texas Locations -  Alice Aransas Pass Beeville Colony Creek Cuero Edna Goliad  Gonzales Hallettsville Kingsville Mathis Padre Island Palacios Port Lavaca Portland Rockport

Sinton Taft  Victoria Victoria-Navarro Victoria-North Yoakum Yorktown   West Texas Area - Abilene - Antilley Road Barrow Street Cypress Street Judge Ely Mockingbird   Lubbock - 4th Street 66th Street 82nd Street 86th Street 98th Street Avenue Q North University Texas Tech Student Union   Midland - Wadley Wall Street   Odessa - Grandview Grant Kermit Highway Parkway   Other West Texas Locations - Big Spring Brownfield Brownwood Cisco Comanche Early Floydada Gorman Levelland Littlefield Merkel Plainview San Angelo Slaton Snyder   Oklahoma Central Oklahoma- 23rd Street Edmond Expressway I-240 Memorial Norman   Tulsa- Garnett Harvard Memorial Owasso Sheridan S. Harvard Utica Square Utica Tower 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)

 

		Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
Balance Sheet Data
(at period end)
Total loans		$	9,166,005			$	9,244,183			$	9,368,888			$	9,308,162			$	7,752,400
Investment securities(A)			9,579,496				9,045,776				8,845,909				8,851,235				8,561,337
Federal funds sold			1,639				569				484				3,630				382
Allowance for credit losses			(80,963	)			(80,762	)			(77,613	)			(73,266	)			(67,096	)
Cash and due from banks			352,642				677,285				330,952				509,853				349,860
Goodwill			1,881,955				1,874,191				1,892,255				1,894,270				1,672,004
Core deposit intangibles, net			56,458				58,947				34,474				37,072				39,702
Other real estate owned			3,010				3,237				5,504				5,093				7,372
Fixed assets, net			276,468				281,549				283,011				285,751				280,812
Other assets			370,149				402,758				433,450				426,306				316,360
Total assets		$	21,606,859			$	21,507,733			$	21,117,314			$	21,248,106			$	18,913,133
Noninterest-bearing deposits		$	5,038,436			$	4,936,420			$	4,968,867			$	4,921,398			$	4,142,042
Interest-bearing deposits			12,522,916				12,756,738				12,045,160				12,359,657				11,318,015
Total deposits			17,561,352				17,693,158				17,014,027				17,281,055				15,460,057
Other borrowings			331,914				8,724				289,972				200,210				40,451
Securities sold under repurchase agreements			318,418				315,523				358,053				388,342				349,074
Junior subordinated debentures			-				167,531				167,531				167,531				124,231
Other liabilities			93,314				77,971				104,781				90,374				98,566
Total liabilities			18,304,998				18,262,907				17,934,364				18,127,512				16,072,379
Shareholders' equity(B)			3,301,861				3,244,826				3,182,950				3,120,594				2,840,754
Total liabilities and equity		$	21,606,859			$	21,507,733			$	21,117,314			$	21,248,106			$	18,913,133

 

(A) Includes $5,296, $5,737, $5,756, $6,706 and $7,023 in unrealized gains on available for sale securities for the quarterly periods ending March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively.

(B) Includes $3,442, $3,729, $3,741, $4,359 and $4,565 in after-tax unrealized gains on available for sale securities for the quarterly periods ending March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively.

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited) 

(In thousands)

 

		Three Months Ended
		Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
Income Statement Data
Interest income:
Loans		$	124,878			$	139,396			$	140,521			$	138,655			$	107,144
Securities(C)			48,562				47,108				46,910				47,670				47,056
Federal funds sold and other earning assets			165				74				35				178				48
Total interest income			173,605				186,578				187,466				186,503				154,248
Interest expense:
Deposits			9,577				7,326				10,240				10,918				9,387
Other borrowings			129				200				225				189				158
Securities sold under repurchase agreements			203				202				245				254				237
Junior subordinated debentures			791				1,099				1,099				1,087				775
Total interest expense			10,700				8,827				11,809				12,448				10,557
Net interest income			162,905				177,751				175,657				174,055				143,691
Provision for credit losses			1,250				6,350				5,000				6,325				600
Net interest income after provision for credit losses			161,655				171,401				170,657				167,730				143,091
Noninterest income:
Nonsufficient funds (NSF) fees			7,918				9,345				9,734				9,099				8,870
Credit card, debit card and ATM card income			5,638				5,786				5,921				6,030				5,152
Service charges on deposit accounts			4,179				4,263				4,255				4,325				3,609
Trust income			2,009				2,165				2,099				2,044				1,800
Mortgage income			1,148				1,049				1,414				1,208				593
Brokerage income			1,409				1,455				1,743				1,401				1,269
Bank owned life insurance income			1,380				1,392				1,404				1,365				1,028
Net gain on sale of assets			1,379				24				23				1,301				3,310
Other noninterest income			3,361				3,901				3,598				5,824				3,033
Total noninterest income			28,421				29,380				30,191				32,597				28,664
Noninterest expense:
Salaries and benefits			49,966				49,557				52,179				54,126				43,408
Net occupancy and equipment			5,964				6,620				6,801				5,996				5,339
Debit card, data processing and software amortization			3,817				4,553				4,044				4,009				3,184
Regulatory assessments and FDIC insurance			4,354				4,354				4,051				3,886				2,726
Core deposit intangibles amortization			2,490				2,667				2,598				2,630				2,045
Depreciation			2,916				3,491				3,516				3,522				3,201
Communications			2,809				2,993				2,960				2,919				2,737
Other real estate expense			132				363				72				188				396
Net (gain) loss on sale of other real estate			-				(726	)			30				(1,404	)			60
Other noninterest expense			7,014				10,164				9,289				11,420				7,998
Total noninterest expense			79,462				84,036				85,540				87,292				71,094
Income before income taxes			110,614				116,745				115,308				113,035				100,661
Provision for income taxes			36,973				38,517				38,738				37,529				33,524
Net income available to common shareholders		$	73,641			$	78,228			$	76,570			$	75,506			$	67,137

 

(C) Interest income on securities was reduced by net premium amortization of $14,144, $13,031, $13,531, $12,837 and $12,280 for the three month periods ended March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively.

 

 

Prosperity Bancshares, Inc. ^®

Financial Highlights (Unaudited)

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

 

		Three Months Ended
		Mar 31, 2015					Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
Profitability
Net income		$	73,641				$	78,228			$	76,570			$	75,506			$	67,137
Basic earnings per share		$	1.05				$	1.12			$	1.10			$	1.08			$	1.01
Diluted earnings per share		$	1.05				$	1.12			$	1.10			$	1.08			$	1.01
Return on average assets (D)			1.37	%				1.48	%			1.45	%			1.42	%			1.43	%
Return on average common equity (D)			8.98	%				9.70	%			9.69	%			9.75	%			9.52	%
Return on average tangible common equity (D)(E)			21.84	%				23.87	%			24.84	%			24.06	%			24.23	%
Tax equivalent net interest margin (F)			3.57	%				3.89	%			3.85	%			3.83	%			3.62	%
Efficiency ratio(G)			41.83	%				40.78	%			41.55	%			42.90	%			42.04	%
Liquidity and Capital Ratios
Equity to assets			15.28	%				15.09	%			15.07	%			14.69	%			15.02	%
Common equity tier 1 capital(H)			12.40	%			N/A				N/A				N/A				N/A
Tier 1 risk-based capital			12.40	%	(I)			13.80	%			13.18	%			12.50	%			13.85	%
Total risk-based capital			13.14	%	(I)			14.56	%			13.90	%			13.18	%			14.59	%
Tier 1 leverage capital			6.96	%	(I)			7.69	%			7.40	%			6.98	%			7.30	%
Period end tangible equity to period end tangible assets(E)			6.93	%				6.70	%			6.55	%			6.16	%			6.56	%
Other Data
Shares used in computed earnings per share
Basic			70,034					69,768				69,751				69,667				66,186
Diluted			70,055					69,796				69,791				69,728				66,280
Period end shares outstanding			70,024					69,780				69,756				69,744				66,261
Cash dividends paid per common share		$	0.2725				$	0.2725			$	0.2400			$	0.2400			$	0.2400
Book value per share		$	47.15				$	46.50			$	45.63			$	44.74			$	42.87
Tangible book value per share(E)		$	19.47				$	18.80			$	18.01			$	17.05			$	17.04
Common Stock Market Price
High		$	55.88				$	61.15			$	63.73			$	67.49			$	67.68
Low			45.01					52.62				55.99				56.04				59.75
Period end closing price			52.48					55.36				57.17				62.60				66.15
Employees – FTE			3,081					3,096				3,057				3,199				2,888
Number of banking centers			244					245				245				247				236

 

(D) Interim periods annualized.                     

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

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

(G) Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale of assets. 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
		Mar 31, 2015													Dec 31, 2014													Mar 31, 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		$	9,189,380			$	124,878				5.51	%			$	9,325,330			$	139,396				5.93	%			$	7,755,997			$	107,144				5.60	%
Investment securities			9,241,434				48,562				2.13	%	(J)			8,835,176				47,108				2.12	%	(J)			8,466,946				47,056				2.25	%	(J)
Federal funds sold and other earning assets			267,672				165				0.25	%				143,705				74				0.20	%				101,700				48				0.19	%
Total interest-earning assets			18,698,486			$	173,605				3.77	%				18,304,211			$	186,578				4.04	%				16,324,643			$	154,248				3.83	%
Allowance for credit losses			(80,681	)												(76,948	)												(67,222	)
Noninterest-earning assets			2,871,702													2,883,029													2,550,893
Total assets		$	21,489,507												$	21,110,292												$	18,808,314
Interest-Bearing Liabilities:
Interest-bearing demand deposits		$	4,178,883			$	2,583				0.25	%			$	3,546,825			$	2,068				0.23	%			$	3,554,366			$	2,132				0.24	%
Savings and money market deposits			5,542,081				3,405				0.25	%				5,442,568				3,301				0.24	%				4,992,442				3,155				0.26	%
Certificates and other time deposits			2,956,038				3,589				0.49	%				3,083,047				1,957				0.25	%				2,816,701				4,100				0.59	%
Other borrowings			72,118				129				0.73	%				168,167				200				0.47	%				51,932				158				1.23	%
Securities sold under repurchase agreements			340,469				203				0.24	%				323,882				202				0.25	%				347,747				237				0.28	%
Junior subordinated debentures			119,408				791				2.69	%				167,531				1,099				2.60	%				124,231				775				2.53	%
Total interest-bearing liabilities			13,208,997				10,700				0.33	%	(K)			12,732,020				8,827				0.28	%	(K)			11,887,419				10,557				0.36	%	(K)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			4,899,279													5,045,097													4,018,094
Other liabilities			100,648													106,222													82,288
Total liabilities			18,208,924													17,883,339													15,987,801
Shareholders' equity			3,280,583													3,226,953													2,820,513
Total liabilities and shareholders' equity		$	21,489,507												$	21,110,292												$	18,808,314
Net interest income and margin						$	162,905				3.53	%							$	177,751				3.85	%							$	143,691				3.57	%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							1,664													1,836													2,052
Net interest income and margin (tax equivalent basis)						$	164,569				3.57	%							$	179,587				3.89	%							$	145,743				3.62	%

 

(J) Yield on securities was impacted by net premium amortization of $14,144, $13,031, and $12,280 for the three month periods ended March 31, 2015, December 31, 2014 and March 31, 2014, respectively.                                       

(K) Total cost of funds, including noninterest bearing deposits, was 0.24%, 0.20% and 0.27% for the three months ended March 31, 2015, December 31, 2014 and March 31, 2014, respectively.                                       

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
Adjustment to Loan Yield (L)
Interest on loans, as reported		$	124,878			$	139,396			$	140,521			$	138,655			$	107,144
Purchase accounting adjustment- loan discount accretion			(19,647	)			(28,590	)			(28,458	)			(25,352	)			(13,475	)
Interest on loans without discount accretion		$	105,231			$	110,806			$	112,063			$	113,303			$	93,669
Average loans		$	9,189,380			$	9,325,330			$	9,381,248			$	9,468,136			$	7,755,997
Loan yield without purchase accounting adjustment			4.64	%			4.71	%			4.74	%			4.80	%			4.90	%
Loan yield, as reported			5.51	%			5.93	%			5.94	%			5.87	%			5.60	%
Adjustment to Securities Yield (L)
Interest on securities, as reported		$	48,562			$	47,108			$	46,910			$	47,670			$	47,056
Purchase accounting adjustment- securities amortization			1,647				1,590				1,466				1,570				1,964
Interest on securities without amortization		$	50,209			$	48,698			$	48,376			$	49,240			$	49,020
Average securities		$	9,241,434			$	8,835,176			$	8,836,309			$	8,748,322			$	8,466,946
Securities yield without purchase accounting adjustment			2.20	%			2.19	%			2.17	%			2.26	%			2.35	%
Securities yield, as reported			2.13	%			2.12	%			2.11	%			2.19	%			2.25	%
Adjustment to Time Deposits Yield (L)
Interest on time deposits, as reported		$	3,589			$	1,957			$	4,751			$	5,096			$	4,100
Purchase accounting adjustment- time deposit amortization			420				2,443				16				16				81
Interest on time deposits without amortization		$	4,009			$	4,400			$	4,767			$	5,112			$	4,181
Average time deposits		$	2,956,038			$	3,083,047			$	3,235,185			$	3,379,819			$	2,816,701
Time deposits yield without purchase accounting adjustment			0.55	%			0.57	%			0.58	%			0.61	%			0.60	%
Time deposits yield, as reported			0.49	%			0.25	%			0.58	%			0.60	%			0.59	%
Net Interest Margin (tax equivalent basis, excluding purchase accounting adjustments to yield)			3.17	%			3.25	%			3.26	%			3.31	%			3.33	%
Net Interest Margin (tax equivalent basis), as reported			3.57	%			3.89	%			3.85	%			3.83	%			3.62	%
Net income available to common shareholders, as reported		$	73,641			$	78,228			$	76,570			$	75,506			$	67,137
Less: Purchase accounting adjustments, net of tax (M)			(12,263	)			(19,729	)			(17,935	)			(15,897	)			(7,731	)
Net income available to common shareholders, adjusted		$	61,378			$	58,499			$	58,635			$	59,609			$	59,406

 

 

		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 Dec 31, 2014				Balance at Mar 31, 2015				Balance at Acquisition Date				Balance at Dec 31, 2014				Balance at Mar 31, 2015				Balance at Acquisition Date					Balance at Dec 31, 2014				Balance at Mar 31, 2015
Loan marks:
Acquired banks (N)		$	225,589			$	89,105			$	78,289			$	131,906			$	72,270			$	51,647			$	357,495				$	161,375			$	129,936
Acquired portfolio loan balances:
Acquired banks (N)			5,456,934				2,186,111				1,939,609				255,846				129,412				100,973				5,712,780		(O)			2,315,523				2,040,582
Acquired portfolio loan balances less loan marks		$	5,231,345			$	2,097,006			$	1,861,320			$	123,940			$	57,142			$	49,326			$	5,355,285				$	2,154,148			$	1,910,646

 

(L) Non-GAAP financial measure.

(M) Using effective tax rate of 33.4%, 33.0%, 33.6%, 33.2% and 33.3% for the three month periods ended March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively.

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

(O) Actual principal balances acquired.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
YIELD TREND
Interest-Earning Assets:
Loans			5.51	%			5.93	%			5.94	%			5.87	%			5.60	%
Investment securities (P)			2.13	%			2.12	%			2.11	%			2.19	%			2.25	%
Federal funds sold and other earning assets			0.25	%			0.20	%			0.15	%			0.30	%			0.19	%
Total interest-earning assets			3.77	%			4.04	%			4.06	%			4.05	%			3.83	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits			0.25	%			0.23	%			0.24	%			0.26	%			0.24	%
Savings and money market deposits			0.25	%			0.24	%			0.25	%			0.26	%			0.26	%
Certificates and other time deposits			0.49	%			0.25	%			0.58	%			0.60	%			0.59	%
Other borrowings			0.73	%			0.47	%			0.42	%			0.54	%			1.23	%
Securities sold under repurchase agreements			0.24	%			0.25	%			0.25	%			0.27	%			0.28	%
Junior subordinated debentures			2.69	%			2.60	%			2.60	%			2.60	%			2.53	%
Total interest-bearing liabilities			0.33	%			0.28	%			0.36	%			0.38	%			0.36	%
Net Interest Margin			3.53	%			3.85	%			3.81	%			3.78	%			3.57	%
Net Interest Margin (tax equivalent)			3.57	%			3.89	%			3.85	%			3.83	%			3.62	%

 

(P) Yield on securities was impacted by net premium amortization of $14,144, $13,031, $13,531, $12,837 and $12,280 for the three month periods ended March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
Balance Sheet Averages
Total loans		$	9,189,380			$	9,325,330			$	9,381,248			$	9,468,136			$	7,755,997
Investment securities			9,241,434				8,835,176				8,836,309				8,748,322				8,466,946
Federal funds sold and other earning assets			267,672				143,705				95,378				234,302				101,700
Total interest-earning assets			18,698,486				18,304,211				18,312,935				18,450,760				16,324,643
Allowance for credit losses			(80,681	)			(76,948	)			(73,977	)			(72,587	)			(67,222	)
Cash and due from banks			284,395				273,503				267,389				284,432				255,297
Goodwill			1,874,274				1,883,654				1,893,667				1,803,534				1,673,216
Core deposit intangibles, net			57,687				43,157				35,753				38,469				38,754
Other real estate			3,536				4,843				5,405				8,562				7,885
Fixed assets, net			280,515				282,827				285,039				292,075				282,411
Other assets			371,295				395,045				394,509				512,303				293,330
Total assets		$	21,489,507			$	21,110,292			$	21,120,720			$	21,317,548			$	18,808,314
Noninterest-bearing deposits		$	4,899,279			$	5,045,097			$	4,939,388			$	4,735,575			$	4,018,094
Interest-bearing demand deposits			4,178,883				3,546,825				3,399,655				3,568,475				3,554,366
Savings and money market deposits			5,542,081				5,442,568				5,502,326				5,479,978				4,992,442
Certificates and other time deposits			2,956,038				3,083,047				3,235,185				3,379,819				2,816,701
Total deposits			17,576,281				17,117,537				17,076,554				17,163,847				15,381,603
Other borrowings			72,118				168,167				215,222				140,906				51,932
Securities sold under repurchase agreements			340,469				323,882				389,726				382,692				347,747
Junior subordinated debentures			119,408				167,531				167,531				167,531				124,231
Other liabilities			100,648				106,222				109,287				365,169				82,288
Shareholders' equity			3,280,583				3,226,953				3,162,400				3,097,403				2,820,513
Total liabilities and equity		$	21,489,507			$	21,110,292			$	21,120,720			$	21,317,548			$	18,808,314

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Mar 31, 2015								Dec 31, 2014								Sep 30, 2014								Jun 30, 2014								Mar 31, 2014
Period End Balances
Loan Portfolio
Commercial and other		$	1,851,906				20.2	%		$	1,952,945				21.1	%		$	2,058,217				22.0	%		$	2,139,983				23.0	%		$	1,312,405				16.9	%
Construction			1,040,845				11.3	%			1,026,475				11.1	%			1,041,300				11.1	%			1,005,099				10.8	%			888,985				11.5	%
1-4 family residential			2,272,788				24.8	%			2,250,251				24.4	%			2,210,141				23.6	%			2,153,801				23.1	%			1,906,480				24.7	%
Home equity			269,894				2.9	%			271,930				2.9	%			269,850				2.9	%			267,759				2.9	%			263,966				3.4	%
Commercial real estate			3,021,656				33.0	%			3,030,340				32.8	%			3,091,090				33.0	%			3,027,945				32.6	%			2,709,386				34.9	%
Agriculture (includes farmland)			556,839				6.1	%			551,646				6.0	%			534,672				5.7	%			542,360				5.8	%			512,857				6.6	%
Consumer			152,077				1.7	%			160,596				1.7	%			163,618				1.7	%			171,215				1.8	%			158,321				2.0	%
Total loans		$	9,166,005							$	9,244,183							$	9,368,888							$	9,308,162							$	7,752,400
Deposit Types
Noninterest-bearing DDA		$	5,038,436				28.7	%		$	4,936,420				27.9	%		$	4,968,867				29.2	%		$	4,921,398				28.5	%		$	4,142,042				26.9	%
Interest-bearing DDA			4,038,690				23.0	%			4,260,038				24.1	%			3,359,606				19.7	%			3,467,826				20.1	%			3,446,375				22.3	%
Money market			3,773,011				21.5	%			3,680,711				20.8	%			3,788,358				22.3	%			3,861,339				22.3	%			3,468,016				22.4	%
Savings			1,828,790				10.4	%			1,784,889				10.1	%			1,728,676				10.2	%			1,707,645				9.9	%			1,630,395				10.5	%
Certificates and other time deposits			2,882,425				16.4	%			3,031,100				17.1	%			3,168,520				18.6	%			3,322,847				19.2	%			2,773,229				17.9	%
Total deposits		$	17,561,352							$	17,693,158							$	17,014,027							$	17,281,055							$	15,460,057
Loan to Deposit Ratio			52.2	%							52.2	%							55.1	%							53.9	%							50.1	%
Construction Loans
Single family residential construction		$	356,081				34.1	%		$	329,797				32.0	%		$	317,307				30.3	%		$	316,579				31.2	%		$	292,137				32.6	%
Land development			89,403				8.5	%			84,051				8.2	%			89,553				8.5	%			88,947				8.8	%			73,974				8.2	%
Raw land			129,470				12.4	%			106,058				10.3	%			83,013				7.9	%			62,731				6.2	%			55,384				6.2	%
Residential lots			128,064				12.2	%			148,763				14.4	%			154,027				14.7	%			138,769				13.7	%			118,733				13.2	%
Commercial lots			92,677				8.9	%			89,565				8.7	%			86,991				8.3	%			93,200				9.2	%			99,300				11.1	%
Commercial construction and other			249,504				23.9	%			272,723				26.4	%			317,355				30.3	%			312,870				30.9	%			257,942				28.7	%
Net unaccreted discount			(4,354	)							(4,482	)							(6,946	)							(7,997	)							(8,485	)
Total construction loans		$	1,040,845							$	1,026,475							$	1,041,300							$	1,005,099							$	888,985

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
Asset Quality
Nonaccrual loans		$	29,252			$	31,422			$	26,804			$	23,082			$	7,714
Accruing loans 90 or more days past due			2,968				2,193				17,753				335				3,519
Total nonperforming loans			32,220				33,615				44,557				23,417				11,233
Repossessed assets			146				67				21				11				91
Other real estate			3,010				3,237				5,504				5,093				7,372
Total nonperforming assets		$	35,376			$	36,919			$	50,082			$	28,521			$	18,696
Nonperforming assets:
Commercial and industrial		$	16,830			$	21,418			$	26,172			$	14,434			$	4,748
Construction, land development and other land loans			3,023				1,893				5,998				2,449				4,053
1-4 family residential (including home equity)			5,087				5,232				7,559				6,909				5,435
Commercial real estate (including multi-family residential)			9,736				6,695				9,686				3,970				4,196
Agriculture (including farmland)			281				473				182				140				104
Consumer and other			419				1,208				485				619				160
Total		$	35,376			$	36,919			$	50,082			$	28,521			$	18,696
Number of loans/properties			166				169				194				179				164
Allowance for credit losses at end of period		$	80,963			$	80,762			$	77,613			$	73,266			$	67,096
Net charge-offs:
Commercial and industrial		$	504			$	318			$	17			$	(64	)		$	81
Construction, land development and other land loans			145				(1	)			(28	)			115				(17	)
1-4 family residential (including home equity)			86				420				70				406				131
Commercial real estate (including multi-family residential)			33				1,732				(6	)			5				60
Agriculture (including farmland)			(78	)			(13	)			(53	)			(843	)			(81	)
Consumer and other			359				745				653				536				612
Total		$	1,049			$	3,201			$	653			$	155			$	786
Asset Quality Ratios
Nonperforming assets to average earning assets			0.19	%			0.20	%			0.27	%			0.15	%			0.11	%
Nonperforming assets to loans and other real estate			0.39	%			0.40	%			0.53	%			0.31	%			0.24	%
Net charge-offs to average loans (annualized)			0.05	%			0.14	%			0.03	%			0.01	%			0.04	%
Allowance for credit losses to total loans			0.88	%			0.87	%			0.83	%			0.79	%			0.87	%
Allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30) (E)			1.12	%			1.14	%			1.14	%			1.15	%			1.18	%

 

  

Prosperity Bancshares, Inc.^®

Notes to Selected Financial Data (Unaudited)

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

 

Consolidated Financial Highlights

 

NOTES TO SELECTED FINANCIAL DATA

 

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

 

		Three Months Ended
		Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
Return on average tangible common equity:
Net income		$	73,641			$	78,228			$	76,570			$	75,506			$	67,137
Average shareholders' equity		$	3,280,583			$	3,226,953			$	3,162,400			$	3,097,403			$	2,820,513
Less:   Average goodwill and other intangible assets			(1,931,961	)			(1,926,811	)			(1,929,420	)			(1,842,003	)			(1,711,970	)
Average tangible shareholders’ equity		$	1,348,622			$	1,300,142			$	1,232,980			$	1,255,400			$	1,108,543
Return on average tangible common equity:			21.84	%			23.87	%			24.84	%			24.06	%			24.23	%
Tangible book value per share:
Shareholders’ equity		$	3,301,861			$	3,244,826			$	3,182,950			$	3,120,594			$	2,840,754
Less:   Goodwill and other intangible assets			(1,938,413	)			(1,933,138	)			(1,926,729	)			(1,931,342	)			(1,711,706	)
Tangible shareholders’ equity		$	1,363,448			$	1,311,688			$	1,256,221			$	1,189,252			$	1,129,048
Period end shares outstanding			70,024				69,780				69,756				69,744				66,261
Tangible book value per share:		$	19.47			$	18.80			$	18.01			$	17.05			$	17.04
Period end tangible equity to period end tangible assets ratio:
Tangible shareholders’ equity		$	1,363,448			$	1,311,688			$	1,256,221			$	1,189,252			$	1,129,048
Total assets		$	21,606,859			$	21,507,733			$	21,117,314			$	21,248,106			$	18,913,133
Less:   Goodwill and other intangible assets			(1,938,413	)			(1,933,138	)			(1,926,729	)			(1,931,342	)			(1,711,706	)
Tangible assets		$	19,668,446			$	19,574,595			$	19,190,585			$	19,316,764			$	17,201,427
Period end tangible equity to period end tangible assets ratio:			6.93	%			6.70	%			6.55	%			6.16	%			6.56	%

 

 

Prosperity Bancshares, Inc.^®

Notes to Selected Financial Data (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Mar 31, 2015				Dec 31, 2014				Sep 30, 2014				Jun 30, 2014				Mar 31, 2014
Allowance for credit losses to total loans, excluding acquired loans:
Allowance for credit losses		$	80,963			$	80,762			$	77,613			$	73,266			$	67,096
Total loans		$	9,166,005			$	9,244,183			$	9,368,888			$	9,308,162			$	7,752,400
Less: Fair value of acquired loans (acquired portfolio loan balances less loan marks)		$	1,910,646			$	2,154,148			$	2,536,433			$	2,948,999			$	2,086,744
Total loans less acquired loans		$	7,255,358			$	7,090,035			$	6,832,455			$	6,359,163			$	5,665,656
Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis)			1.12	%			1.14	%			1.14	%			1.15	%			1.18	%

 

 

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