- 2Q 2008 Earnings Per Share of $0.52 (diluted) - Net Interest Margin (tax equivalent) increases to 4.10%
HOUSTON, July 23 /PRNewswire-FirstCall/ -- Prosperity Bancshares, Inc.(R)
(Nasdaq: PRSP), the parent company of Prosperity Bank(R), reported earnings
for the quarter ended June 30, 2008. Net income for the quarter was $23.437
million or $0.52 per diluted common share, an increase in net income of
$444,000 or 1.9%, compared with $22.993 million or $0.52 per diluted common
share for the same period in the prior year.
Since January 1, 2007, Prosperity has completed the following
acquisitions: 1st Choice Bancorp, Inc. on June 1, 2008, Houston branches of
Banco Popular North America on January 10, 2008, The Bank of Navasota, N.A. on
September 1, 2007 and Texas United Bancshares, Inc. on January 31, 2007. The
results of operations for these acquisitions have been included in
Prosperity's consolidated financial statements since their respective purchase
dates.
"I am proud to report another strong quarter of performance by our bank,"
said David Zalman, Prosperity's Chairman and Chief Executive Officer. "While
we are certainly not immune to the issues facing the commercial banking
industry nationwide, we are pleased with our performance and are cautiously
optimistic about the future."
Results of operations for the three months ended June 30, 2008
For the three months ended June 30, 2008, net income was $23.437 million
compared with $22.993 million for the same period in 2007. Net income per
diluted common share was $0.52 for the three months ended June 30, 2008 and
2007. Returns on average assets, average common equity and average tangible
common equity for the three months ended June 30, 2008 were 1.43%, 7.96% and
26.93%, respectively. Prosperity's efficiency ratio was 46.17% for the three
months ended June 30, 2008.
Net interest income before provision for credit losses for the quarter
ended June 30, 2008 increased 5.1% to $53.971 million compared with $51.344
million during the same period in 2007. The increase was attributable
primarily to a 5.1% increase in average earning assets. The net interest
margin on a tax equivalent basis increased to 4.10% for the three months ended
June 30, 2008 compared with 4.09% for the same period in 2007.
Non-interest income decreased 5.6% to $13.066 million for the three months
ended June 30, 2008 compared with $13.845 million for the same period in 2007.
The decrease was attributable primarily to a $200,000 decrease in gains on the
sale of held for sale loans and a $416,000 decrease in trust and investment
income, which is a component of other non-interest income. Prosperity
discontinued the origination of mortgage loans for sale, which was part of the
mortgage banking activities of Texas United Bancshares, Inc. (TXUI), in the
fourth quarter 2007 and does not expect to have significant gains and losses
from this activity going forward. The decrease in trust and investment income
was due to the dissolution in the second quarter of 2007 of the trust
department acquired in the TXUI acquisition. Linked quarter non-interest
income increased 3.1% primarily due to an increase in service charges on
deposit accounts related to the 1st Choice acquisition.
Non-interest expense increased $788,000 or 2.6% to $30.860 million for the
second quarter of 2008 compared with $30.072 million for the second quarter of
2007. The increase was attributable primarily to the increased operating costs
associated with the additional banking centers acquired as a part of the three
acquisitions completed since July 2007. Linked quarter non-interest expense
increased 6.0% primarily due to the 1st Choice acquisition and increases in
annual salaries and benefits and professional fees.
Loans at June 30, 2008 were $3.313 billion, an increase of $132.152
million, or 4.2%, compared with $3.181 billion at June 30, 2007. Linked
quarter loans increased 4.8% or $151.701 million, with loans increasing from
$3.162 billion at March 31, 2008. As reflected in the table below, linked
quarter loan growth for the second quarter of 2008 was impacted by the loans
acquired as a part of the acquisitions of The Bank of Navasota, the Banco
Popular Houston branches and 1st Choice. Excluding the loans acquired as a
part of those acquisitions, linked quarter loans decreased 1.0%
Deposits at June 30, 2008 were $5.297 billion, an increase of $520.252
million or 10.9%, compared with $4.776 billion at June 30, 2007. Linked
quarter deposits increased 7.0% from $4.949 billion at March 31, 2008. As
reflected in the table below, linked quarter deposits for the second quarter
of 2008 were impacted by the deposits assumed as a part of the acquisitions of
Navsasota, the Banco Popular Houston branches and 1st Choice. Excluding
deposits assumed as a part of those acquisitions, linked quarter deposits
increased 1.0%.
Balance Sheet DataJune 30, 2008Mar 31, 2008June 30, 2007
(at period end)(Unaudited) (Unaudited) (Unaudited)
(In Thousands)
Loans:
Acquired with The
Bank of Navasota $21,862 $24,339 $ 0
Acquired with Banco
Popular Houston
Branches2,2071,629 0
Acquired with 1st
Choice Bank 184,5260 0
All other3,104,7333,135,659 3,181,176
Total Loans $3,313,328 $3,161,627 $ 3,181,176
Deposits:
Assumed with The
Bank of Navasota $60,470 59,212 $ 0
Assumed with Banco
Popular Houston
Branches 127,965 117,873 0
Assumed with 1st
Choice Bank 287,9960 0
All other4,820,2034,771,633 4,776,382
Total Deposits $5,296,634 $4,948,718 $ 4,776,382
Average loans decreased 0.5% or $16.595 million to $3.203 billion for the
quarter ended June 30, 2008 compared with $3.220 billion for the same period
of 2007. Linked quarter average loans increased 1.9% or $60.131 million from
$3.143 billion. Average deposits increased 4.2% to $5.040 billion for the
quarter ended June 30, 2008 compared with $4.838 billion for the same period
of 2007. Linked quarter average deposits increased 2.1% or $101.885 million
from $4.938 billion at March 31, 2008. The linked quarter increase in both
average loans and average deposits was primarily due to the 1st Choice
acquisition.
At June 30, 2008, construction loans totaled $658.669 million, consisting
of approximately $225 million of single family residence construction; $130
million of land development; $135 million of raw land; $100 million of lot
loans; and $69 million of commercial construction and other construction
loans.
The provision for credit losses was $1.000 million for the three months
ended June 30, 2008, $320,000 for the three months ended June 30, 2007 and
$1.167 million for the three months ended March 31, 2008. In making its
evaluation of the adequacy of the allowance for credit losses, management
considers factors such as historical loan loss experience, industry
diversification of Prosperity's commercial loan portfolio, the amount of
nonperforming assets and related collateral, the volume, growth and
composition of Prosperity's loan portfolio, current economic changes that may
affect the borrower's ability to pay and the value of collateral, the
evaluation of Prosperity's loan portfolio through its internal loan review
process and other relevant factors.
Non-performing assets totaled $11.651 million or 0.22% of average earning
assets at June 30, 2008 compared with $11.193 million or 0.22% of average
earning assets at June 30, 2007 and $17.554 million or 0.33% of average
earnings assets at March 31, 2008. At June 30, 2008, the allowance for credit
losses was 1.03% of total loans, compared with 1.14% at June 30, 2007 and
1.01% of total loans at March 31, 2008.
Prosperity owns Fannie Mae and Freddie Mac preferred stock with a par
value of $24 million. In the fourth quarter of 2007, the net book value of the
preferred stock was reduced to it's December 31, 2007 market value of $14.025
million, or 0.21% of total assets at June 30, 2008, due to an other-than-
temporary impairment charge of $9.975 million. The market value of the Fannie
Mae and Freddie Mac preferred stock was $11.769 million as of June 30, 2008,
or 0.17% of total assets, resulting in an unrealized loss of $2.256 million as
of June 30, 2008 and a $1.466 million reduction in equity through other
comprehensive income as of the same date.
At June 30, 2008, Prosperity had $6.794 billion in total assets, $3.313
billion in loans, $5.297 billion in deposits, and approximately 336,000
deposit and loan accounts. Assets, loans and deposits at June 30, 2008 grew by
9.8%, 4.2% and 10.9%, respectively, compared with their level at June 30,
2007.
Results of operations for the six months ended June 30, 2008
For the six months ended June 30, 2008, net income was $46.375 million
compared with $43.222 million for the same period in 2007. Net income per
diluted common share was $1.04 for the six months ended June 30, 2008 compared
with $1.02 for the same period in 2007. Returns on average assets, average
common equity and average tangible common equity for the six months ended June
30, 2008 were 1.43%, 7.99% and 27.01%, respectively. Prosperity's efficiency
ratio was 45.62% for the six months ended June 30, 2008.
Net interest income before provision for credit losses for the six months
ended June 30, 2008 increased $8.534 million or 8.8%, to $105.966 million
compared with $97.432 million during the same period in 2007. The increase was
attributable primarily to a 7.1% increase in average earning assets.
Non-interest income increased $229,000 or 0.9% to $25.745 million for the
six months ended June 30, 2008 compared with $25.516 million for the same
period in 2007. The increase was attributable primarily to the increased
customer service charges associated with the additional banking centers
acquired as a part of the four acquisitions completed since January 2007,
partially offset by a decrease in gain on sale of held for sale loans and
trust and investment income.
Non-interest expense increased $2.637 million or 4.6% to $59.980 million
for the first six months of 2008 compared with $57.343 million the same period
in 2007. The increase was mainly attributed to the increased operating costs
associated with the additional banking centers acquired as a part of the four
acquisitions completed since January 2007.
The provision for credit losses was $2.167 million for the six months
ended June 30, 2008 and $565,000 for the six months ended June 30, 2007. Net
charge offs were $2.806 million for the six months ended June 30, 2008 and
$1.166 million for the six months ended June 30, 2007.
Redemption of Junior Subordinated Debentures
On June 26, 2008, Prosperity redeemed in full the junior subordinated
debentures held by SNB Statutory Trust II in the amount of $10.310 million.
The debentures redeemed bore interest at a floating rate of 3 month LIBOR +
3.15%. The trust in turn redeemed in full the trust preferred securities and
common securities it issued.
Conference Call
Prosperity's management team will host a conference call on Wednesday,
July 23, 2008 at 10:30 a.m. Eastern Daylight Savings Time (9:30 a.m. Central
Daylight Savings Time) to discuss Prosperity's second quarter earnings.
Individuals and investment professionals may participate in the call by
dialing 1-800-862-9098, 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 "2nd Quarter Results and Webcast" link.
Acquisition of 1st Choice Bancorp, Inc.
On June 1, 2008, Prosperity completed its previously announced acquisition
of 1st Choice Bancorp, Inc. and its wholly- owned subsidiary, 1st Choice Bank.
1st Choice Bancorp, Inc. operated two (2) banking offices in Houston, Texas,
with one location in South Houston and another in the Heights area, which was
consolidated with Prosperity's Heights location and is located in 1st Choice's
Heights banking office. As of May 31, 2008, 1st Choice Bancorp reported total
assets of approximately $314.9 million, loans of approximately $192.7 million,
deposits of approximately $285.2 million and stockholders' equity of
approximately $26.4 million.
In connection with the acquisition, Prosperity issued 1,757,757 shares of
Prosperity common stock plus approximately $18.758 million in cash for all
outstanding shares of 1st Choice Bancorp.
Acquisition of Banco Popular's Houston Branches
On January 10, 2008, Prosperity Bank(R) completed its previously announced
acquisition of six (6) Houston retail bank branches from Banco Popular North
America. The branches had approximately $125 million in combined deposits.
All six (6) locations are now operating as full service banking centers of
Prosperity Bank(R).
Acquisition of The Bank of Navasota, N.A.
On September 1, 2007, Prosperity completed its previously announced
acquisition of The Bank of Navasota, N.A. Navasota is located between
Hempstead and College Station and bridges the gap between Prosperity's banking
centers in northwest Houston, including Hempstead, and its five (5) locations
in Bryan-College Station. The Bank of Navasota operated one (1) banking office
in Navasota, Grimes County, Texas, which became a full service banking center
of Prosperity Bank. As of August 31, 2007, The Bank of Navasota reported
total assets of approximately $73.4 million, loans of approximately $33.0
million, deposits of approximately $63.8 million and shareholders' equity of
approximately $9.1 million.
In connection with the acquisition, Prosperity issued 251,454 shares of
its common stock and paid approximately $8.625 million in cash for all
outstanding shares of The Bank of Navasota.
Prosperity Bancshares, Inc.(R)
Prosperity Bancshares, Inc.(R), a $6.8 billion Houston, Texas based
regional financial holding company, formed in 1983, operates under a community
banking philosophy and seeks 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 thirty-one (131) full service banking
locations; forty-six (46) in the Houston CMSA; thirty-three (33) in the South
Texas area including Corpus Christi and Victoria; twenty-six (26) in the
Dallas/Fort Worth metroplex; two (2) in the East Texas area; twenty-four (24)
in the Central Texas area including Austin, Bryan/College Station and San
Antonio.
Prosperity Bank(R) operates the following full service banking centers:
Central Texas Area -
Austin -
Allandale
Cedar Park
Congress
183
Lakeway
Liberty Hill
Oak Hill
Research Blvd
Round Rock
Bryan/College Station -
Bryan
Bryan- East
Bryan- North
College Station
Wellborn Road
Other Central Texas Locations -
Caldwell
Dime Box
Flatonia
La Grange
Lexington
Navasota
New Braunfels
San Antonio
Schulenburg
Weimar
Dallas/Fort Worth Area -
Dallas -
Abrams Centre
Balch Springs
Camp Wisdom
Cedar Hill
Central Expressway
Frisco
Frisco - West
Kiest
Preston Road
Red Oak
The Colony
Turtle Creek
Westmoreland
Fort Worth -
Haltom City
Keller
Roanoke
Stockyards
Other Dallas/Fort Worth Locations -
Azle
Blooming Grove
Corsicana
Ennis
Gainesville
Mesquite
Muenster
Sanger
Waxahachie
East Texas Area -
Crockett
Grapeland
Houston Area -
Houston -
Aldine
Bellaire
CityWest
Clear Lake
Copperfield
Cypress
Downtown
Fairfield
Gessner
Gladebrook
Harrisburg
Heights
Highway 6 West
Hillcroft
Holcombe
Little York
Medical Center
Memorial Drive
Pasadena
Pecan Grove
River Oaks
Sugar Land
SW Medical Center
Tanglewood
Uptown
Waugh Drive
Westheimer
Woodcreek
Other Houston Area Locations -
Angleton
Cinco Ranch
Cleveland
Dayton
Galveston
Hempstead
Hitchcock
Katy
Liberty
Magnolia
Mont Belvieu
Needville
Sweeny
Tomball
Waller
West Columbia
Winnie
Wirt
South Texas Area -
Corpus Christi -
Airline
Carmel
Everhart
Northwest
Saratoga
Woodlawn
Water Street
Other South Texas Locations -
Alice
Aransas Pass
Bay City
Beeville
Cuero
East Bernard
Edna
El Campo
Goliad
Gonzales
Hallettsville
Kingsville
Mathis
Palacios
Pleasanton
Port Aransas
Port Lavaca
Portland
Rockport
Seguin
Sinton
Victoria
Victoria - North
Wharton
Yoakum
Yorktown
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: This release contains, and the remarks by our 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 Bancshares(R), 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, that 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 our most recent Annual Report on
Form 10-K and other reports and statements we have filed with the SEC.
Copies of the SEC filings for Prosperity Bancshares's(R) 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 Six Months Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
Selected Earnings and Per (Unaudited)(Unaudited) (Unaudited) (Unaudited)
Share Data
Total interest income$81,979$87,300 $166,444$167,163
Total interest expense28,008 35,956 60,478 69,731
Net interest income 53,971 51,344 105,966 97,432
Provision for credit losses1,0003202,167 565
Net interest income after
provision for credit losses 52,971 51,024 103,799 96,867
Total non-interest income 13,066 13,845 25,745 25,516
Total non-interest expense30,860 30,072 59,980 57,343
Net income before taxes 35,177 34,797 69,564 65,040
Federal income taxes 11,740 11,804 23,189 21,818
Net income $23,437$22,993 $46,375 $43,222
Basic earnings per share $0.52 $0.53$1.04 $1.03
Diluted earnings per share $0.52 $0.52$1.04 $1.02
Period end shares
outstanding 46,060 43,811 46,060 43,811
Weighted average shares
outstanding (basic) 44,852 43,796 44,520 41,816
Weighted average shares
outstanding (diluted)45,039 44,216 44,676 42,261
Prosperity Bancshares, Inc. (R)
Financial Highlights
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30, June 30,June 30,
2008 200720082007
Balance Sheet Averages (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Total loans$3,203,305 $3,219,900 $3,173,240 $3,045,020
Investment securities 2,131,370 1,837,702 2,054,440 1,852,538
Federal funds sold and
other temporary
investments 33,803 51,238 82,702 61,288
Total earning assets 5,368,478 5,108,840 5,310,382 4,958,846
Allowance for credit
losses (32,813)(36,348)(32,381)(34,173)
Cash and due from banks 131,015 152,302 138,354 142,021
Goodwill 785,604 739,316 772,774 691,489
Core Deposit
Intangibles (CDI) 43,461 50,576 44,131 36,818
Other real estate 8,581 1,315 10,002 1,033
Fixed assets, net 123,876 119,615 123,705 113,090
Other assets 111,062 112,310 111,016 106,185
Total assets $6,539,264 $6,247,926 $6,477,983 $6,015,309
Non-interest bearing
deposits $1,215,176 $1,168,630 $1,184,121 $1,097,824
Interest bearing deposits 3,824,628 3,669,599 3,803,669 3,578,549
Total deposits 5,039,804 4,838,229 4,987,790 4,676,373
Securities sold under
repurchase agreements 82,408 75,809 74,241 67,515
Federal funds purchased and
other borrowings 76,132 65,892 86,554 88,075
Junior subordinated
debentures 102,575 141,236 106,012 133,763
Other liabilities 61,187 49,799 63,032 43,344
Shareholders' equity(A) 1,177,158 1,076,961 1,160,354 1,006,239
Total liabilities and
equity $6,539,264 $6,247,926 $6,477,983 $6,015,309
(A)Includes $1,675 and ($1,819), in after tax unrealized gains (losses)
on available for sale securities for the three month periods ending
June 30, 2008 and June 30, 2007, respectively, and $172 and ($2,194)
for the six month periods ending June 30, 2008 and June 30, 2007,
respectively.
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,June 30,June 30,
2008 20072008 2007
Income Statement Data (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest on loans $55,948 $64,622$114,468 $121,882
Interest on securities 25,856 21,996 50,639 43,705
Interest on federal funds
sold and other earning
assets 175 682 1,3371,576
Total interest income 81,979 87,300 166,444 167,163
Interest expense - deposits 25,210 31,421 54,155 60,534
Interest expense - debentures 1,558 2,896 3,5775,494
Interest expense - other 1,240 1,639 2,7463,703
Total interest expense 28,008 35,956 60,478 69,731
Net interest income (B) 53,971 51,344 105,966 97,432
Provision for credit losses 1,000 320 2,167 565
Net interest income after
provision for credit
losses 52,971 51,024 103,799 96,867
Service charges on
deposit accounts10,727 10,613 21,233 19,123
Net gain on sale of assets 198 82 241 96
Brokered mortgage income113 254 222 386
Net gain on sale of held for
sale loans 110 310 183 913
Other non-interest income 1,918 2,586 3,8664,998
Total non-interest income 13,066 13,845 25,745 25,516
Salaries and benefits (C)16,751 16,496 32,881 31,798
CDI amortization 2,459 2,566 4,9514,711
Net occupancy and equipment 2,867 2,636 5,6775,094
Depreciation 1,920 1,885 3,8573,761
Data processing and
software amortization1,361 1,172 2,6522,157
Other non-interest expense5,502 5,317 9,9629,822
Total non-interest expense 30,860 30,072 59,980 57,343
Net income before taxes 35,177 34,797 69,564 65,040
Federal income taxes 11,740 11,804 23,189 21,818
Net income available
to common shareholders$23,437$ 22,993$ 46,375 $43,222
(B) Net interest income on a tax equivalent basis would be $54,692 and
$52,141 for the three months ended June 30, 2008 and June 30, 2007,
respectively, and $107,524 and $98,905 for the six months ended June 30,
2008 and June 30, 2007, respectively.
(C)Salaries and benefits includes equity compensation expenses of $393 and
$524 for the three months ended June 30, 2008 and June 30, 2007,
respectively, and $641 and $957 for the six months ended June 30, 2008 and
June 30, 2007, respectively.
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars and share amounts in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,June 30,June 30,
2008 20072008 2007
Common Share and (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Other Data
Employees - FTE 1,397 1,408 1,3971,408
Book value per share $26.44 $24.69 $26.44 $ 24.69
Tangible book value per
share$7.79 $6.75 $7.79$6.75
Period end shares
outstanding 46,060 43,811 46,060 43,811
Weighted average shares
outstanding (basic) 44,852 43,796 44,520 41,816
Weighted average shares
outstanding (diluted) 45,039 44,216 44,676 42,261
Non-accrual loans$2,727 $1,265 $2,727 $ 1,265
Accruing loans 90 or more
days past due2,130 6,216 2,1306,216
Restructured loans0 0 00
Total non-performing loans4,857 7,481 4,8577,481
Repossessed assets 139 75 139 75
Other real estate 6,655 3,637 6,6553,637
Total non-performing
assets$11,651 $11,193 $11,651 $11,193
Allowance for credit
losses at end of period$34,085 $36,129 $34,085 $36,129
Net charge-offs $1,163$531 $2,806 $ 1,166
Basic earnings per share $0.52 $0.53 $1.04$1.03
Diluted earnings per share$0.52 $0.52 $1.04$1.02
Prosperity Bancshares, Inc.(R)
Financial Highlights
Three Months Ended Six Months Ended
June 30, June 30,June 30,June 30,
2008 20072008 2007
Performance Ratios(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Return on average assets
(annualized) 1.43% 1.47%1.43% 1.44%
Return on average common
equity (annualized) 7.96% 8.54%7.99% 8.59%
Return on average tangible
common equity (annualized) 26.93% 32.04% 27.01% 31.10%
Net interest margin (D)
(tax equivalent)
(annualized) 4.10% 4.09%4.07% 4.02%
Efficiency ratio(E) 46.17% 46.19% 45.62% 46.68%
Asset Quality Ratios
Non-performing assets to
average earning assets 0.22% 0.22%0.22% 0.23%
Non-performing assets to
loans and other real estate 0.35% 0.35%0.35% 0.35%
Net charge-offs to average
loans0.04% 0.02%0.09% 0.04%
Allowance for credit
losses to total loans1.03% 1.14%1.03% 1.14%
Common Stock Market Price
High$32.29 $35.91 $32.29 $37.11
Low $25.37 $32.63 $21.96 $32.18
Period end market price $26.73 $32.76 $26.73 $32.76
(D) Net interest margin for all periods presented is calculated on an
actual/365 or actual/ 366 day basis.
(E) 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 securities and assets).
Additionally, taxes are not part of this calculation.
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars in thousands)
June 30, 2008 March 31, 2008
Balance Sheet Data (Unaudited)(Unaudited)
(at period end)
Loan Portfolio
Commercial $486,817 14.7% $452,635 14.3%
Construction 658,669 19.9% 664,679 21.0%
1-4 family residential 568,377 17.1% 546,765 17.3%
Home equity 95,7742.9%94,5593.0%
Commercial real estate 1,241,872 37.5% 1,161,668 36.7%
Agriculture 135,4214.1% 119,3463.8%
Consumer 126,3983.8% 121,9753.9%
Total Loans $3,313,328$3,161,627
Deposit Types
Non-interest bearing DDA $1,285,493 24.3%$1,202,622 24.3%
Interest bearing DDA 750,214 14.2% 769,440 15.5%
Money Market 1,213,710 22.9% 1,042,744 21.1%
Savings 251,8154.7% 239,6334.8%
Time < $100 840,744 15.9% 819,671 16.6%
Time > $100 954,658 18.0% 874,608 17.7%
Total Deposits$5,296,634$4,948,718
Loan to Deposit Ratio 62.6% 63.9%
December 31, 2007 Sept 30, 2007
Balance Sheet Data (Unaudited) (Unaudited)
(at period end)
Loan Portfolio
Commercial $453,644 14.5% $445,132 14.2%
Construction 683,171 21.7% 708,355 22.7%
1-4 family residential 526,338 16.7% 527,176 16.9%
Home equity 93,8773.0%94,8613.0%
Commercial real estate 1,148,709 36.6% 1,108,254 35.4%
Agriculture 114,0193.6% 115,6193.7%
Consumer 123,2133.9% 128,1584.1%
Total Loans $ 3,142,971$3,127,555
Deposit Types
Non-interest bearing DDA $1,168,069 23.5%$1,165,089 24.4%
Interest bearing DDA 1,004,761 20.2% 809,459 16.9%
Money Market 970,112 19.5% 997,250 20.9%
Savings 223,1614.5% 225,8314.7%
Time < $100 791,818 16.0% 800,400 16.7%
Time > $100 808,486 16.3% 785,985 16.4%
Total Deposits$4,966,407$4,784,014
Loan to Deposit Ratio 63.3% 65.4%
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars in thousands)
June 30, Mar 31,Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
Balance Sheet Data(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
(at period end)
Total loans $3,313,328 $3,161,627 $3,142,971 $3,127,555 $3,181,176
Investment
securities (F)2,235,703 2,086,382 1,857,606 1,804,326 1,818,723
Federal funds sold
and other
temporary
investments 14,230 32,268193,043101,173 32,243
Total earning
assets 5,563,261 5,280,277 5,193,620 5,033,054 5,032,142
Allowance for
credit losses (34,085) (32,067) (32,543) (35,536) (36,129)
Cash and due
from banks 170,966159,754178,247141,662153,854
Goodwill 811,391769,013753,909745,650736,624
Core deposit
intangibles 47,536 43,577 46,069 48,689 49,317
Other real estate 6,655 11,612 10,207 1,460 3,637
Fixed assets, net125,000123,806120,044120,794120,810
Other assets 103,010108,761102,790114,751124,659
Total assets $6,793,734 $6,464,733 $6,372,343 $6,170,524 $6,184,914
Demand deposits $1,285,493 $1,202,622 $1,168,069 $1,165,089 $1,184,172
Interest bearing
deposits 4,011,141 3,746,096 3,798,338 3,618,925 3,592,210
Total deposits5,296,634 4,948,718 4,966,407 4,784,014 4,776,382
Securities sold
under repurchase
agreements 99,225 70,942 84,581 79,484 86,035
Federal funds
purchased and other
borrowings 42,089125,360 31,466 31,988 59,499
Junior subordinated
debentures 92,265112,885112,885112,885120,617
Other liabilities 45,916 58,761 49,573 50,908 60,805
Total liabilities 5,576,129 5,316,666 5,244,912 5,059,279 5,103,338
Shareholders'
equity (G)1,217,605 1,148,067 1,127,431 1,111,245 1,081,576
Total liabilities
and equity $6,793,734 $6,464,733 $6,372,343 $6,170,524 $6,184,914
(F) Includes ($633), $3,903, ($7,795),($2,924), and ($5,111) in unrealized
gains (losses) on available for sale securities for the quarterly periods
ending June 30, 2008, March 31, 2008, December 31, 2007, September 30,
2007, and June 30, 2007, respectively.
(G) Includes ($411), $2,537, ($5,067), ($1,901), and ($3,322) in after tax
unrealized gains (losses) on available for sale securities for the
quarterly periods ending June 30, 2008, March 31, 2008, December 31, 2007,
September 30, 2007, and June 30, 2007, respectively.
Prosperity Bancshares, Inc.(R)
Financial Highlights
(Dollars in thousands)
Three Months Ended
June 30, Mar 31,Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
Income Statement (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Data
Interest on loans$55,948$58,520$61,682$64,036$64,622
Interest on
securities 25,856 24,783 22,446 23,316 21,996
Interest on federal
funds sold and
other earning assets175 1,162 1,313652682
Total interest
income 81,979 84,465 85,441 88,004 87,300
Interest expense
- deposits 25,210 28,945 30,354 31,794 31,421
Interest expense
- debentures 1,558 2,019 2,206 2,358 2,896
Interest expense
- other 1,240 1,506 1,247 2,483 1,639
Total interest
expense 28,008 32,470 33,807 36,635 35,956
Net interest income 53,971 51,995 51,634 51,369 51,344
Provision for credit
losses1,000 1,167120 75320
Net interest income
after provision for
credit losses 52,971 50,828 51,514 51,294 51,024
Service charges on
deposits accounts10,727 10,506 11,029 10,785 10,613
Net gain on sale
of assets 198 43 85640 82
Brokered mortgage
income 113109105188254
Net gain on sale
of held for sale
loans 110 73132269310
Gain on sale of
securities0 0 28 58 0
Other non-interest
income1,918 1,948 1,869 2,219 2,586
Total non-interest
income 13,066 12,679 13,248 14,159 13,845
Salaries and benefits 16,751 16,130 15,747 16,365 16,496
CDI amortization 2,459 2,492 2,620 2,586 2,566
Net occupancy and
equipment 2,867 2,810 2,775 2,665 2,636
Depreciation 1,920 1,937 1,955 1,895 1,885
Impairment write-down
loss on securities0 0 9,975 0 0
Data processing and
software
amortization 1,361 1,291 1,123 1,290 1,172
Other non-interest
expense 5,502 4,460 5,218 5,286 5,317
Total non-interest
expense 30,860 29,120 39,413 30,087 30,072
Net income before
taxes 35,177 34,387 25,349 35,366 34,797
Federal income taxes 11,740 11,449 8,268 11,518 11,804
Net income available
to common
shareholders $23,437$22,938$17,081(H) $23,848 $ 22,993
(H)Earnings for the three months ended December 31, 2007 includes a $10.0
million pre-tax, or $6.5 million after-tax, impairment charge on write-
down of securities.
Prosperity Bancshares, Inc.(R)
Financial Highlights
Three Months Ended
June 30, Mar 31,Dec 31, Sept 30, June 30,
2008 2008 2007 2007 2007
Comparative (Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Quarterly Asset
Quality, Performance
& Capital Ratios
Return on average
assets (annualized) 1.43% 1.43% 1.11% (I) 1.53% 1.47%
Return on average
common equity
(annualized)7.96% 8.02% 6.09% (I) 8.67% 8.54%
Return on average
tangible equity
(annualized) 26.93% 27.28% 20.83% (I) 30.53%32.04%
Net interest margin
(tax equivalent)
(annualized)4.10% 4.03% 4.12% 4.07% 4.09%
Employees - FTE 1,397 1,374 1,359 1,369 1,408
Efficiency ratio46.17% 45.06% 45.45% 46.41%46.19%
Non-performing
assets to average
earning assets 0.22% 0.33% 0.30% 0.19% 0.22%
Non-performing
assets to loans
and other real
estate 0.35% 0.55% 0.49% 0.30% 0.35%
Net charge-offs to
average loans 0.04% 0.05% 0.10% 0.04% 0.02%
Allowance for
credit losses to
total loans 1.03% 1.01% 1.04% 1.14% 1.14%
Tier 1 risk-based
capital12.70% 13.16% 13.13% 13.03%12.36%
Total risk-based
capital13.67% 14.11% 14.11% 14.11%14.18%
Tier 1 leverage
capital 7.87% 7.91% 8.09% 7.83% 7.57%
Tangible equity to
tangible assets 6.04% 5.94% 5.88% 5.89% 5.48%
Equity to assets17.92% 17.76% 17.69% 18.01%17.49%
(I) Earnings for the three months ended December 31, 2007 includes a $6.5
million after-tax impairment charge on write-down of securities, which
resulted in a 41 basis point decrease on return on average assets to
1.11%, a 231 basis point decrease on return on average equity to 6.09% and
a 790 basis point decrease on return on average tangible common equity to
20.83%.
Prosperity Bancshares, Inc.(R)
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
Three Months Ended June 30, 2008
YIELD ANALYSIS AverageInterest Earned Average
Balance/ Interest PaidYield/Rate
Interest Earning Assets:
Loans $3,203,305$55,948 7.02%
Investment securities 2,131,370 25,856 4.85%
Federal funds sold
and other temporary
investments 33,803175 2.08%
Total interest earning
assets 5,368,478$81,979 6.14%
Allowance for credit losses (32,813)
Non-interest earning assets1,203,599
Total assets $6,539,264
Interest Bearing Liabilities:
Interest bearing demand
deposits $745,413$ 1,652 0.89%
Savings and money market
deposits 1,370,964 6,678 1.96%
Certificates and other time
deposits 1,708,251 16,880 3.97%
Securities sold under
repurchase agreements82,408574 2.80%
Federal funds purchased and
other borrowings Securities
sold under repurchase agreements 76,132666 3.52%
Junior subordinated debentures 102,575 1,558 6.11%
Total interest bearing
liabilities 4,085,743$28,008 2.76%
Non-interest bearing liabilities:
Non-interest bearing demand
deposits 1,215,176
Other liabilities 61,187
Total liabilities 5,362,106
Shareholders' equity 1,177,158
Total liabilities and
shareholders' equity$6,539,264
Net Interest Income & Margin$53,971 4.04%
Net Interest Income & Margin
(tax equivalent) $54,692 4.10%
Prosperity Bancshares, Inc.(R)
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
Three Months Ended June 30, 2007
YIELD ANALYSIS AverageInterest Earned Average
Balance/ Interest PaidYield/Rate
Interest Earning Assets:
Loans $3,219,900$64,622 8.05%
Investment securities 1,837,702 21,996 4.79%
Federal funds sold
and other temporary
investments 51,238682 5.34%
Total interest earning
assets 5,108,840$87,300 6.85%
Allowance for credit losses (36,348)
Non-interest earning assets1,175,434
Total assets $6,247,926
Interest Bearing Liabilities:
Interest bearing demand
deposits $839,596$ 4,193 2.00%
Savings and money market
deposits 1,241,951 9,030 2.92%
Certificates and other time
deposits 1,588,052 18,198 4.60%
Securities sold under
repurchase agreements75,809782 4.14%
Federal funds purchased and
other borrowings 65,892857 5.22%
Junior subordinated debentures 141,236 2,896 8.22%
Total interest bearing
liabilities 3,952,536$35,956 3.65%
Non-interest bearing liabilities:
Non-interest bearing demand
deposits 1,168,630
Other liabilities 49,799
Total liabilities 5,170,965
Shareholders' equity 1,076,961
Total liabilities and
shareholders' equity$6,247,926
Net Interest Income & Margin$51,344 4.03%
Net Interest Income & Margin
(tax equivalent) $52,141 4.09%
Prosperity Bancshares, Inc.(R)
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
Six Months Ended June 30, 2008
YIELD ANALYSIS AverageInterest Earned Average
Balance/ Interest PaidYield/Rate
Interest Earning Assets:
Loans $3,173,240 $114,468 7.25%
Investment securities 2,054,440 50,639 4.93%
Federal funds sold and other
temporary investments82,702 1,337 3.25%
Total interest earning assets 5,310,382 $166,444 6.30%
Allowance for credit losses (32,381)
Non-interest earning assets 1,199,982
Total assets $6,477,983
Interest Bearing Liabilities:
Interest bearing demand
deposits $807,570 $4,773 1.19%
Savings and money market
deposits 1,311,655 14,092 2.16%
Certificates and other time
deposits 1,684,444 35,290 4.21%
Securities sold under
repurchase agreements 74,241 1,178 3.19%
Federal funds purchased and
other borrowings86,554 1,568 3.64%
Junior subordinated debentures 106,012 3,577 6.79%
Total interest bearing
liabilities 4,070,476$ 60,478 2.99%
Non-interest bearing liabilities:
Non-interest bearing demand
deposits 1,184,121
Other liabilities63,032
Total liabilities5,317,629
Shareholders' equity 1,160,354
Total liabilities and
shareholders' equity $6,477,983
Net Interest Income & Margin $105,966 4.01%
Net Interest Income & Margin
(tax equivalent) $107,524 4.07%
Prosperity Bancshares, Inc.(R)
Supplemental Financial Data (Unaudited)
(Dollars in thousands)
Six Months Ended June 30, 2007
YIELD ANALYSIS AverageInterest Earned Average
Balance/ Interest PaidYield/Rate
Interest Earning Assets:
Loans$3,045,020$121,882 8.07%
Investment securities 1,852,538 43,705 4.72%
Federal funds sold and
other temporary investments 61,288 1,576 5.19%
Total interest earning
assets 4,958,846$167,163 6.80%
Allowance for credit losses (34,173)
Non-interest earning assets 1,090,636
Total assets$6,015,309
Interest Bearing Liabilities:
Interest bearing demand
deposits $848,943 $ 8,923 2.12%
Savings and money market
deposits 1,209,377 17,297 2.88%
Certificates and other time
deposits 1,520,229 34,314 4.55%
Securities sold under
repurchase agreements 67,515 1,384 4.13%
Federal funds purchased and
other borrowings88,075 2,319 5.31%
Junior subordinated debentures 133,763 5,494 8.28%
Total interest bearing
liabilities 3,867,902 $69,731 3.64%
Non-interest bearing liabilities:
Non-interest bearing demand
deposits 1,097,824
Other liabilities43,344
Total liabilities5,009,070
Shareholders' equity 1,006,239
Total liabilities and
shareholders' equity $6,015,309
Net Interest Income & Margin$97,432 3.96%
Net Interest Income & Margin
(tax equivalent) $98,905 4.02%
SOURCE Prosperity Bancshares, Inc.
