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 October 23, 2015 - 6:05 AM EDT
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Prosperity Bancshares, Inc.® Reports Third Quarter 2015 Earnings

- Third quarter 2015 earnings per share (diluted) of $1.01 - Third quarter net income of $70.598 million - Nonperforming assets remain low at 0.26% of third quarter average earning assets - Return on third quarter average assets of 1.30% - Third quarter efficiency ratio of 40.72% - Increase in dividend of 10% to $0.30 per share for the fourth quarter 2015 - Received all regulatory approvals for the pending acquisition of Tradition Bancshares, Inc. headquartered in Houston, Texas

HOUSTON, Oct. 23, 2015 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income for the quarter ended September 30, 2015 of $70.598 million or $1.01 per diluted common share. Additionally, nonperforming assets remain low at 0.26% of third quarter average earning assets with an annualized return on third quarter average assets of 1.30%.

"I am excited to announce that the Prosperity Board of Directors has decided to increase the dividend payable to shareholders to $0.30 per share for the fourth quarter, representing a 10% increase.  The Board and management appreciate our shareholders and are glad to be able to show our appreciation with this increase," said David Zalman, Prosperity's Chairman and Chief Executive Officer.

"Prosperity enjoyed another successful quarter.  Because of the acquisitions we completed over the last several years, our net income figures include purchase accounting adjustment income, which has been quickly declining. Excluding these purchase accounting adjustments, net income per diluted common share was $0.92 for the three months ended September 30, 2015 compared with $0.84 for the three months ended September 30, 2014, a 9.5% increase.  Prosperity's return on average tangible common equity for the three months ended September 30, 2015 was 19.30%. The reconciliations of these non-GAAP financial measures are included below," continued Zalman.

"Despite employment declines in the oil and gas extraction and the manufacturing sectors, the Texas unemployment rate fell in August to 4.1% and continues to be lower than the U.S. rate, which was 5.1%.  Oklahoma's unemployment rate inched down slightly in September to 4.4% compared with 4.6% in August, according to data recently released by the U.S. Labor Department."

"Although our loans decreased overall during the first nine months of 2015 primarily due to planned reductions at some of our acquired banks, our third quarter results showed loan growth of 1% (4% annualized) compared to the previous quarter ended June 30, 2015. Deposits have been flat for the first nine months of 2015, but, when comparing deposits as of September 30, 2015 to September 30, 2014, Prosperity has been successful in replacing over $500 million in higher cost time deposits at acquired banks with more traditional transactional accounts," stated Zalman.

"Prosperity continues to be one of the best in class in asset quality with non-performing assets at 0.26% of third quarter average earning assets," concluded Zalman.

Results of Operations for the Three Months Ended September 30, 2015

Net income was $70.598 million for the three months ended September 30, 2015 compared with $76.570 million for the same period in 2014. Net income per diluted common share was $1.01 for the three months ended September 30, 2015 compared with $1.10 for the same period in 2014. Net income (excluding purchase accounting adjustments) was $64.154 million for the quarter ended September 30, 2015 compared with $58.635 million for the quarter ended September 30, 2014, an increase of 9.4%. Net income per diluted common share (excluding purchase accounting adjustments) was $0.92 for the three months ended September 30, 2015 compared with $0.84 for the three months ended September 30, 2014. The reconciliation of these non-GAAP financial measures is shown on page 12. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended September 30, 2015 were 1.30%, 8.31% and 19.30%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and taxes) was 40.72% for the three months ended September 30, 2015.

Net interest income before provision for credit losses for the quarter ended September 30, 2015 was $156.108 million compared with $175.657 million during the same period in 2014. This change was primarily due to a decrease in loan discount accretion of $17.424 million for the quarter ended September 30, 2015 compared with the quarter ended September 30, 2014. Linked quarter net interest income before provision for credit losses was $156.108 million for the three months ended September 30, 2015 compared with $158.239 million for the three months ended June 30, 2015. This change was primarily due to a decrease in loan discount accretion of $2.568 million for the quarter ended September 30, 2015 compared with the quarter ended June 30, 2015. The net interest margin on a tax equivalent basis was 3.30% for the three months ended September 30, 2015, compared with 3.85% for the same period in 2014 and 3.39% for the three months ended June 30, 2015. This change was primarily due to the decrease in loan discount accretion and lower yields on average interest-earning assets partially offset by lower rates paid on average interest-bearing liabilities for the three months ended September 30, 2015. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis was 3.10% for the three months ended September 30, 2015, compared with 3.26% for the same period in 2014 and 3.13% for the three months ended June 30, 2015.

Noninterest income was $31.780 million for the three months ended September 30, 2015 compared with $30.191 million for the same period in 2014. This change was primarily due to an increase in mortgage income and other noninterest income. On a linked quarter basis, noninterest income increased $1.483 million or 4.9% compared with the quarter ended June 30, 2015. This was primarily due to an increase in NSF fees and service charges on deposit accounts.

Noninterest expense was $76.430 million for the three months ended September 30, 2015 compared with $85.540 million for the same period in 2014. This change was primarily due to a decrease in salary and benefits expense, other noninterest expense, net occupancy and equipment expense and regulatory assessments. On a linked quarter basis, noninterest expense decreased $3.305 million or 4.1% compared with the quarter ended June 30, 2015. This was primarily due to a decrease in salary and benefits expense, other noninterest expense and regulatory assessments for the three months ended September 30, 2015.  

Results of Operations for the Nine Months Ended September 30, 2015

Net income was $216.171 million for the nine months ended September 30, 2015 compared with $219.213 million for the same period in 2014.  Net income per diluted common share was $3.09 for the nine months ended September 30, 2015 compared with $3.19 for the same period in 2014. Net income (excluding purchase accounting adjustments) was $189.332 million for the nine months ended September 30, 2015 compared with $177.638 million for the nine months ended September 30, 2014. Net income per diluted common share (excluding purchase accounting adjustments) was $2.71 for the nine months ended September 30, 2015 compared with $2.59 for the nine months ended September 30, 2014. The reconciliation of these non-GAAP financial measures is shown on page 12.  Returns on average assets, average common equity and average tangible common equity, each on an annualized basis, for the nine months ended September 30, 2015 were 1.33%, 8.63% and 20.51%, respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 41.64% for the nine months ended September 30, 2015.

Net interest income before provision for credit losses for the nine months ended September 30, 2015 was $477.252 million compared with $493.403 million during the same period in 2014.  The change was primarily due to a decrease of $23.002 million in loan discount accretion partially offset by lower rates paid on average interest-bearing liabilities for the nine months ended September 30, 2015. The net interest margin on a tax equivalent basis for the nine months ended September 30, 2015 decreased to 3.42% compared with 3.77% for the same period in 2014. This was primarily due to a decrease in loan discount accretion and lower yields on average interest-earning assets partially offset by lower rates paid on average interest-bearing liabilities for the nine months ended September 30, 2015. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis was 3.13% for the nine months ended September 30, 2015 compared with 3.30% for the same period in 2014. 

Noninterest income was $90.498 million for the nine months ended September 30, 2015 compared with $91.452 million for the same period in 2014. This change was primarily due to a decrease in net gain on sale of assets and NSF fees partially offset by an increase in other noninterest income and mortgage income. Noninterest expense was $235.627 million for the nine months ended September 30, 2015 compared with $243.926 million for the same period in 2014.  This change was primarily due to a decrease in salary and benefits expense and other noninterest expense partially offset by an increase in regulatory assessments and a net gain on sale of other real estate recorded in 2014.

Balance Sheet Information

At September 30, 2015, Prosperity had $21.567 billion in total assets, an increase of $449.922 million or 2.1%, compared with $21.117 billion at September 30, 2014.

Loans at September 30, 2015 were $9.205 billion, a decrease of $163.900 million or 1.7%, compared with $9.369 billion at September 30, 2014. Linked quarter loans increased $90.653 million or 1.0% (4.0% annualized) from $9.114 billion at June 30, 2015. 

As part of its lending activities, Prosperity extends credit to oil and gas production and servicing companies. Oil and gas production loans are loans to companies directly involved in the exploration and or production of oil and gas. Oil and gas servicing loans are loans to companies that provide services for oil and gas production and exploration. At September 30, 2015, oil and gas loans totaled $405.176 million or 4.4% of total loans, of which $185.162 million were production loans and $220.014 million were servicing loans compared with total oil and gas loans of $500.409 million or 5.3% of total loans at December 31, 2014, of which $271.972 million were production loans and $228.437 million were servicing loans.

Deposits at September 30, 2015 were $16.940 billion, a decrease of $74.090 million or 0.4%, compared with $17.014 billion at September 30, 2014. Linked quarter deposits decreased $61.727 million or 0.4% from $17.002 billion at June 30, 2015.

Asset Quality

Nonperforming assets totaled $48.628 million or 0.26% of quarterly average earning assets at September 30, 2015, compared with $50.082 million or 0.27% of quarterly average earning assets at September 30, 2014, and $35.119 million or 0.19% of quarterly average earning assets at June 30, 2015.  The allowance for credit losses was 0.88% of total loans at September 30, 2015, 0.83% of total loans at September 30, 2014 and 0.89% of total loans at June 30, 2015.  Excluding loans acquired that are accounted for under FASB Accounting Standards Codification ("ASC") Topics 310-20 and 310-30, the allowance for credit losses was 1.06% of remaining loans as of September 30, 2015, compared with 1.14% at September 30, 2014 and 1.09% at June 30, 2015.  Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure. 

The provision for credit losses was $5.310 million for the three months ended September 30, 2015 compared with $5.000 million for the three months ended September 30, 2014 and $500 thousand for the three months ended June 30, 2015.  The provision for credit losses was $7.060 million for the nine months ended September 30, 2015 compared with $11.925 million for the nine months ended September 30, 2014. 

Net charge offs were $5.279 million for the three months ended September 30, 2015 compared with $653 thousand for the three months ended September 30, 2014 and $491 thousand for the three months ended June 30, 2015. This increase was primarily due to the charge off of three commercial and industrial loans during the third quarter of 2015. Net charge offs were  $6.819 million  for the nine months ended September 30, 2015 compared with $1.594 million for the nine months ended September 30, 2014.

Conference Call

Prosperity's management team will host a conference call on Friday, October 23, 2015 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity's third quarter 2015 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383. The elite entry number is 2554742.

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

Non-GAAP Financial Measures

Prosperity's management uses certain non−GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio.  Further, as a result of acquisitions, and the related purchase accounting adjustments, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its net income and earnings per share (excluding purchase accounting adjustments) and its allowance for credit losses to total loans (excluding acquired loans accounted for under 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 page 12 and 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. ("Prosperity Bancshares") declared a fourth quarter cash dividend of $0.30 per share, to be paid on January 4, 2016 to all shareholders of record as of December 18, 2015.

Pending Acquisition of Tradition Bancshares, Inc.; Regulatory Approvals Received

On August 6, 2015, Prosperity Bancshares announced the signing of a definitive merger agreement to acquire Tradition Bancshares, Inc. ("Tradition") and its wholly-owned subsidiary Tradition Bank headquartered in Houston, Texas. Tradition Bank operates 7 banking offices in the Houston, Texas area, including its main office in Bellaire, 3 banking centers in Katy and 1 banking center in The Woodlands. As of September 30, 2015, Tradition, on a consolidated basis, reported total assets of $540.565 million, total loans of $239.196 million, total deposits of $483.828 million and shareholder's equity of $46.288 million.

Under the terms of the definitive agreement, Prosperity Bancshares will issue approximately 679,679 shares of Prosperity Bancshares common stock plus $39.0 million in cash for all outstanding shares of Tradition capital stock, subject to potential adjustments. The transaction is subject to customary closing conditions and approval by Tradition's shareholders. Prosperity has received all necessary regulatory approvals for this acquisition and expects to close the transaction on December 31, 2015.

Prosperity Bancshares, Inc. ®

As of September 30, 2015, Prosperity Bancshares, Inc. ® is a $21.567 billion Houston, Texas based regional financial holding company, formed in 1983. Operating under a community banking philosophy and seeking to develop broad customer relationships based on service and convenience, Prosperity offers a variety of traditional loan and deposit products to its customers, which consist primarily of small and medium sized businesses and consumers. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services at www.prosperitybankusa.com, Retail Brokerage Services, Credit Cards, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management, Mortgage Services and Mobile Banking.

Prosperity currently operates 244 full-service banking locations: 61 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 37 in the Dallas/Fort Worth area; 22 in the East Texas area; 30 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area, 6 in the Central Oklahoma area and 8 in the Tulsa, Oklahoma area.

Bryan/College Station Area -

Sachse

Sugar Land

Taft

Bryan

The Colony

SW Medical Center

Victoria

Bryan-29th Street

Turtle Creek

Turtle Creek Loan Office

Tanglewood

Victoria-Navarro

Bryan-East

Westmoreland

Uptown

Victoria-North

Bryan-North


Waugh Drive

Yoakum

Caldwell

Fort Worth -

Westheimer

Yorktown

College Station

Haltom City

West University


Crescent Point

Keller

Woodcreek

West Texas Area -

Hearne

Roanoke


Abilene -

Huntsville

Stockyards

Other Houston Area

Antilley Road

Madisonville


Locations -

Barrow Street

Navasota

Other Dallas/Fort Worth

Angleton

Cypress Street

New Waverly

Locations -

Bay City

Judge Ely

Rock Prairie

Arlington

Beaumont

Mockingbird

Southwest Parkway

Azle

Cinco Ranch


Tower Point

Ennis

Cleveland

Lubbock -

Wellborn Road

Gainesville

East Bernard

4th Street


Glen Rose

El Campo

66th Street

Central Texas Area -

Granbury

Dayton

82nd Street

Austin -

Mesquite

Galveston

86th Street

183

Muenster

Groves

98th Street

Allandale

Sanger

Hempstead

Avenue Q

Cedar Park

Waxahachie

Hitchcock

North University

Congress

Weatherford

Katy

Texas Tech Student Union

Lakeway


Katy-Spring Green


Liberty Hill

East Texas Area -

Liberty

Midland -

Northland

Athens

Magnolia

Wadley

Oak Hill

Blooming Grove

Magnolia Parkway

Wall Street

Research Blvd

Canton

Mont Belvieu


Westlake

Carthage

Nederland

Odessa -


Corsicana

Needville

Grandview

Other Central Texas Locations -

Crockett

Rosenberg

Grant

Bastrop

Eustace

Shadow Creek

Kermit Highway

Canyon Lake

Gilmer

Spring

Parkway

Dime Box

Grapeland

Sweeny


Dripping Springs

Gun Barrel City

The Woodlands-I-45

Other West Texas

Locations -

Elgin

Jacksonville

The Woodlands-Research Forest

Big Spring

Flatonia

Kerens

Tomball

Brownfield

Georgetown

Longview

Waller

Brownwood

Gruene

Mount Vernon

West Columbia

Cisco

Kingsland

Palestine

Wharton

Comanche

La Grange

Rusk

Winnie

Early

Lexington

Seven Points

Wirt

Floydada

New Braunfels

Teague


Gorman

Pleasanton

Tyler-Beckham

South Texas Area -

Levelland

Round Rock

Tyler-South Broadway

Corpus Christi -

Littlefield

San Antonio

Tyler-University

Airline

Merkel

Schulenburg

Winnsboro

Calallen

Plainview

Seguin


Carmel

San Angelo

Smithville


Northwest

Slaton

Thorndale

Houston Area -

Saratoga

Snyder

Weimar

Houston -

Timbergate



Aldine

Water Street

Oklahoma

Dallas/Fort Worth Area -

Bellaire


Central Oklahoma-

Dallas -

Beltway

Other South Texas

23rd Street

Abrams Centre

Clear Lake

Locations -

Edmond

Balch Springs

Copperfield

Alice

Expressway

Camp Wisdom

Cypress

Aransas Pass

I-240

Cedar Hill

Downtown

Beeville

Memorial

Dallas – Central Expressway

Eastex

Colony Creek

Norman

Forest Park

Fairfield

Cuero


Frisco

First Colony

Edna

Tulsa-

Frisco-West

Gessner

Goliad

Garnett

Kiest

Gladebrook

Gonzales

Harvard

McKinney

Heights

Hallettsville

Memorial

McKinney-Stonebridge

Highway 6 West

Kingsville

Owasso

Midway

Little York

Mathis

Sheridan

Northwest Highway

Medical Center

Padre Island

S. Harvard

Plano

Memorial Drive

Palacios

Utica Square

Preston Forest

Northside

Port Lavaca

Utica Tower

Preston Road

Pasadena

Portland

Yale

Red Oak

Pecan Grove

Rockport



River Oaks

Sinton

In connection with the proposed merger of Tradition Bancshares, Inc. into Prosperity Bancshares, Prosperity Bancshares has filed with the Securities and Exchange Commission a registration statement on Form S-4 to register the shares of Prosperity's common stock to be issued to the shareholders of Tradition Bancshares, Inc. The registration statement includes a proxy statement/prospectus which will be sent to the shareholders of Tradition Bancshares, Inc. seeking their approval of the proposed transaction.

WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY BANCSHARES, TRADITION BANCSHARES, INC. AND THE PROPOSED TRANSACTION.

Investors and security holders may obtain free copies of these documents through the website maintained by the Securities and Exchange Commission at http://www.sec.gov. Documents filed with the SEC by Prosperity Bancshares will be available free of charge by directing a request by telephone or mail to Prosperity Bancshares, Inc., Prosperity Bank Plaza, 4295 San Felipe, Houston, Texas 77027 Attn: Investor Relations. Prosperity's telephone number is (281) 269-7199.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the securities laws that are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares 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 Bancshares' Annual Report on Form 10-K for the year ended December 31, 2014 and other reports and statements Prosperity Bancshares 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)












Sep 30, 2015


Jun 30, 2015


 Mar 31, 2015 


 Dec 31, 2014 


 Sep 30, 2014 

Balance Sheet Data










 (at period end)







Total loans

$    9,204,988


$    9,114,335


$        9,166,005


$       9,244,183


$       9,368,888

Investment securities(A)

9,530,761


9,698,079


9,579,496


9,045,776


8,845,909

Federal funds sold 

996


1,451


1,639


569


484

Allowance for credit losses

(81,003)


(80,972)


(80,963)


(80,762)


(77,613)

Cash and due from banks

300,230


353,047


352,642


677,285


330,952

Goodwill

1,881,955


1,881,955


1,881,955


1,874,191


1,892,255

Core deposit intangibles, net

51,712


54,068


56,458


58,947


34,474

Other real estate owned

3,271


2,806


3,010


3,237


5,504

Fixed assets, net

271,650


275,347


276,468


281,549


283,011

Other assets

402,676


386,171


370,149


402,758


433,450

Total assets

$  21,567,236


$  21,686,287


$      21,606,859


$     21,507,733


$     21,117,314











Noninterest-bearing deposits

$    5,093,175


$    5,040,628


$        5,038,436


$       4,936,420


$       4,968,867

Interest-bearing deposits

11,846,762


11,961,036


12,522,916


12,756,738


12,045,160

Total deposits

16,939,937


17,001,664


17,561,352


17,693,158


17,014,027

Other borrowings

786,571


886,741


331,914


8,724


289,972

Securities sold under repurchase agreements

310,038


334,189


318,418


315,523


358,053

Junior subordinated debentures

-


-


-


167,531


167,531

Other liabilities

119,451


106,408


93,314


77,971


104,781

Total liabilities

18,155,997


18,329,002


18,304,998


18,262,907


17,934,364

Shareholders' equity(B)

3,411,239


3,357,285


3,301,861


3,244,826


3,182,950

Total liabilities and equity

$  21,567,236


$  21,686,287


$      21,606,859


$     21,507,733


$     21,117,314











(A) Includes $3,788, $4,655, $5,296, $5,737 and $5,756 in unrealized gains on available for sale securities for the quarterly periods ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014, respectively.

(B) Includes $2,462, $3,026, $3,442, $3,729 and $3,741 in after-tax unrealized gains on available for sale securities for the quarterly periods ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)
















Three Months Ended


Year-to-Date


Sep 30, 2015


Jun 30, 2015


Mar 31, 2015


Dec 31, 2014


Sep 30, 2014


Sep 30, 2015


Sep 30, 2014















Income Statement Data














Interest income:














Loans

$       116,911


$       119,404


$        124,878


$       139,396


$       140,521


$       361,193


$       386,320

Securities(C)

48,610


48,530


48,562


47,108


46,910


145,702


141,636

Federal funds sold and other earning assets

22


47


165


74


35


234


261

Total interest income

165,543


167,981


173,605


186,578


187,466


507,129


528,217















Interest expense:














Deposits

8,753


9,169


9,577


7,326


10,240


27,499


30,545

Other borrowings

473


365


129


200


225


967


572

Securities sold under repurchase agreements

209


208


203


202


245


620


736

Junior subordinated debentures

-


-


791


1,099


1,099


791


2,961

Total interest expense

9,435


9,742


10,700


8,827


11,809


29,877


34,814

Net interest income

156,108


158,239


162,905


177,751


175,657


477,252


493,403

Provision for credit losses

5,310


500


1,250


6,350


5,000


7,060


11,925

Net interest income after provision for credit losses

150,798


157,739


161,655


171,401


170,657


470,192


481,478















Noninterest income:














Nonsufficient funds (NSF) fees

9,082


8,310


7,918


9,345


9,734


25,310


27,703

Credit card, debit card and ATM card income 

5,955


6,003


5,638


5,786


5,921


17,596


17,103

Service charges on deposit accounts

4,438


4,189


4,179


4,263


4,255


12,806


12,189

Trust income

1,986


2,047


2,009


2,165


2,099


6,042


5,943

Mortgage income

1,770


1,513


1,148


1,049


1,414


4,431


3,215

Brokerage income

1,596


1,541


1,409


1,455


1,743


4,546


4,413

Bank owned life insurance income

1,384


1,390


1,380


1,392


1,404


4,154


3,797

Net gain on sale of assets

173


270


1,379


24


23


1,822


4,634

Other noninterest income

5,396


5,034


3,361


3,901


3,598


13,791


12,455

Total noninterest income

31,780


30,297


28,421


29,380


30,191


90,498


91,452















Noninterest expense:














Salaries and benefits

46,587


47,819


49,966


49,557


52,179


144,372


149,713

Net occupancy and equipment

6,088


5,812


5,964


6,620


6,801


17,864


18,136

Debit card, data processing and software amortization

3,924


4,045


3,817


4,553


4,044


11,786


11,237

Regulatory assessments and FDIC insurance

3,366


4,253


4,354


4,354


4,051


11,973


10,663

Core deposit intangibles amortization

2,356


2,390


2,489


2,667


2,598


7,235


7,273

Depreciation

3,313


3,420


2,916


3,491


3,516


9,649


10,239

Communications

2,663


2,835


2,809


2,993


2,960


8,307


8,616

Other real estate expense

123


129


132


363


72


384


656

Net (gain) loss on sale of other real estate

(68)


(32)


14


(726)


30


(86)


(1,314)

Other noninterest expense

8,078


9,064


7,001


10,164


9,289


24,143


28,707

Total noninterest expense

76,430


79,735


79,462


84,036


85,540


235,627


243,926

Income before income taxes

106,148


108,301


110,614


116,745


115,308


325,063


329,004

Provision for income taxes

35,550


36,369


36,973


38,517


38,738


108,892


109,791

Net income available to common shareholders

$         70,598


$         71,932


$          73,641


$         78,228


$         76,570


$       216,171


$       219,213















(C) Interest income on securities was reduced by net premium amortization of $14,845, $15,466, $14,144, $13,031 and $13,531 for the three month periods ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014, respectively, and $44,455 and $38,648 for the nine month periods ended September 30, 2015 and September 30, 2014, respectively. 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

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
















Three Months Ended


Year-to-Date


Sep 30, 2015


Jun 30, 2015


Mar 31, 2015


Dec 31, 2014


Sep 30, 2014


Sep 30, 2015


Sep 30, 2014















Profitability














Net income

$         70,598


$         71,932


$          73,641


$         78,228


$         76,570


$       216,171


$       219,213















Basic earnings per share

$             1.01


$             1.03


$              1.05


$             1.12


$             1.10


$             3.09


$             3.20

Diluted earnings per share

$             1.01


$             1.03


$              1.05


$             1.12


$             1.10


$             3.09


$             3.19















Return on average assets(D) 

1.30%


1.33%


1.37%


1.48%


1.45%


1.33%


1.44%

Return on average common equity(D) 

8.31%


8.61%


8.98%


9.70%


9.69%


8.63%


9.67%

Return on average tangible common equity(D) (E)

19.30%


20.49%


21.84%


23.87%


24.84%


20.51%


24.38%

Tax equivalent net interest margin(F)

3.30%


3.39%


3.57%


3.89%


3.85%


3.42%


3.77%

Efficiency ratio(G)

40.72%


42.35%


41.83%


40.78%


41.55%


41.64%


42.17%















Liquidity and Capital Ratios














Equity to assets

15.82%


15.48%


15.28%


15.09%


15.07%


15.82%


15.07%

Common equity tier 1 capital(H)

13.37%


12.91%


12.40%


N/A


N/A


13.37%


N/A

Tier 1 risk-based capital

13.37%

(I)

12.91%

(I)

12.40%

(I)

13.80%


13.18%


13.37%

(I)

13.18%

Total risk-based capital

14.09%

(I)

13.63%

(I)

13.14%

(I)

14.56%


13.90%


14.09%

(I)

13.90%

Tier 1 leverage capital

7.65%

(I)

7.35%

(I)

6.96%

(I)

7.69%


7.40%


7.65%

(I)

7.40%

Period end tangible equity to period end tangible assets(E)

7.53%


7.20%


6.93%


6.70%


6.55%


7.53%


6.55%















Other Data














Shares used in computed earnings per share














Basic

70,041


70,037


70,034


69,768


69,751


70,037


68,548

Diluted

70,053


70,053


70,055


69,796


69,791


70,054


68,614

Period end shares outstanding

70,040


70,040


70,024


69,780


69,756


70,040


69,756

Cash dividends paid per common share

$         0.2725


$         0.2725


$          0.2725


$         0.2725


$         0.2400


$         0.8175


$         0.7200

Book value per share

$           48.70


$           47.93


$            47.15


$           46.50


$           45.63


$           48.70


$           45.63

Tangible book value per share(E)

$           21.10


$           20.29


$            19.47


$           18.80


$           18.01


$           21.10


$           18.01















Common Stock Market Price














High

$           59.97


$           59.30


$            55.88


$           61.15


$           63.73


$           59.97


$           67.68

Low

43.76


50.91


45.01


52.62


55.99


43.76


55.99

Period end closing price

49.11


57.74


52.48


55.36


57.17


49.11


57.17

Employees – FTE

3,051


3,065


3,081


3,096


3,057


3,051


3,057

Number of banking centers

244


245


244


245


245


244


245















(D) Interim periods annualized.

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

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

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

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

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

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




















YIELD ANALYSIS 

Three Months Ended



Sep 30, 2015


Jun 30, 2015


Sep 30, 2014



Average Balance


Interest Earned/ Interest Paid


Average Yield/ Rate

(L)

Average Balance


Interest Earned/ Interest Paid


Average Yield/ Rate

(L)

Average Balance


Interest Earned/ Interest Paid


Average Yield/ Rate

(L)




















Interest-Earning Assets: 



















Loans

$   9,156,679


$ 116,911


5.07%


$   9,133,625


$ 119,404


5.24%


$   9,381,248


$ 140,521


5.94%


Investment securities

9,706,373


48,610


1.99%

(J)

9,688,961


48,530


2.01%

(J)

8,836,309


46,910


2.11%

(J)

Federal funds sold and other



















   earning assets

55,000


22


0.16%


79,659


47


0.24%


95,378


35


0.15%


  Total interest-earning assets 

18,918,052


$ 165,543


3.47%


18,902,245


$ 167,981


3.56%


18,312,935


$ 187,466


4.06%


Allowance for credit losses 

(80,793)






(80,868)






(73,977)






Noninterest-earning assets 

2,819,150






2,817,644






2,881,762






  Total assets

$ 21,656,409






$ 21,639,021






$ 21,120,720

























Interest-Bearing Liabilities: 



















Interest-bearing demand deposits

$   3,663,114


$     1,961


0.21%


$   3,891,682


$     2,227


0.23%


$   3,399,655


$     2,089


0.24%


Savings and money market deposits

5,492,326


3,392


0.24%


5,476,931


3,374


0.25%


5,502,326


3,400


0.25%


Certificates and other time deposits 

2,685,346


3,400


0.50%


2,821,058


3,568


0.51%


3,235,185


4,751


0.58%


Other borrowings 

886,787


473


0.21%


684,371


365


0.21%


215,222


225


0.42%


Securities sold under repurchase agreements 

331,286


209


0.25%


333,220


208


0.25%


389,726


245


0.25%


Junior subordinated debentures 







167,531


1,099


2.60%


  Total interest-bearing liabilities 

13,058,859


9,435


0.29%

(K)

13,207,262


9,742


0.30%

(K)

12,909,645


11,809


0.36%

(K)




















Noninterest-bearing liabilities: 



















Noninterest-bearing demand deposits

5,078,234






4,992,301






4,939,388






Other liabilities 

121,360






98,133






109,287






  Total liabilities

18,258,453






18,297,696






17,958,320






Shareholders' equity 

3,397,956






3,341,325






3,162,400






  Total liabilities and shareholders' equity 

$ 21,656,409






$ 21,639,021






$ 21,120,720

























Net interest income and margin 



$ 156,108


3.27%




$ 158,239


3.36%




$ 175,657


3.81%





















Non-GAAP to GAAP reconciliation:



















Tax equivalent adjustment



1,463






1,563






1,997























Net interest income and margin



















     (tax equivalent basis)



$ 157,571


3.30%




$ 159,802


3.39%




$ 177,654


3.85%





















(J) Yield on securities was impacted by net premium amortization of $14,845, $15,466 and $13,531 for the three month periods ended September 30, 2015, June 30, 2015 and September 30, 2014, respectively.


(K) Total cost of funds, including noninterest bearing deposits, was 0.21%, 0.21% and 0.26% for the three months ended September 30, 2015, June 30, 2015 and September 30, 2014, respectively.


(L) Annualized and based on an actual/365 day basis.


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)


(Dollars in thousands)















YIELD ANALYSIS 

Year-to-Date



September 30, 2015


September 30, 2014



Average Balance


Interest Earned/ Interest Paid


Average Yield/ Rate

(O)

Average Balance


Interest Earned/ Interest Paid


Average Yield/ Rate

(O)














Interest-Earning Assets: 













Loans

$   9,159,775


$    361,193


5.27%


$   8,874,414


$   386,320


5.82%


Investment securities

9,547,293


145,702


2.04%

(M)

8,685,212


141,636


2.18%

(M)

Federal funds sold and other













   earning assets

133,331


234


0.23%


143,770


261


0.24%


      Total interest-earning assets 

18,840,399


$    507,129


3.60%


17,703,396


$   528,217


3.99%


Allowance for credit losses 

(80,781)






(71,287)






Noninterest-earning assets 

2,835,450






2,791,827






      Total assets

$ 21,595,068






$ 20,423,936



















Interest-Bearing Liabilities: 













Interest-bearing demand deposits

$   3,909,337


$        6,771


0.23%


$   3,506,932


$       6,493


0.25%


Savings and money market deposits

5,503,597


10,171


0.25%


5,326,783


10,105


0.25%


Certificates and other time deposits 

2,819,822


10,557


0.50%


3,145,435


13,947


0.59%


Other borrowings

550,743


967


0.23%


136,618


571


0.56%


Securities sold under repurchase agreements 

334,958


620


0.25%


373,542


737


0.26%


Junior subordinated debentures 

39,365


791


2.69%


150,692


2,961


2.63%


      Total interest-bearing liabilities 

13,157,822


29,877


0.30%

(N)

12,640,002


34,814


0.37%

(N)














Noninterest-bearing liabilities: 













Noninterest-bearing demand deposits

4,990,769






4,567,397






Other liabilities 

106,782






185,838






      Total liabilities

18,255,373






17,393,237






Shareholders' equity 

3,339,695






3,030,699






      Total liabilities and shareholders' equity 

$ 21,595,068






$ 20,423,936



















Net interest income and margin 



$    477,252


3.39%




$   493,403


3.73%















Non-GAAP to GAAP reconciliation:













Tax equivalent adjustment



4,690






6,132

















Net interest income and margin













      (tax equivalent basis)



$    481,942


3.42%




$   499,535


3.77%















(M) Yield on securities was impacted by net premium amortization of $44,455 and $38,648 for the nine month periods ended September 30, 2015 and 2014, respectively.


(N) Total cost of funds, including noninterest bearing deposits, was 0.22% and 0.27% for the nine month periods ended September 30, 2015 and 2014, respectively.


(O) Annualized and based on an actual/365 day basis.


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands, except per share data)
















Three Months Ended


Year -to-Date


Sep 30, 2015


Jun 30, 2015


Mar 31, 2015


Dec 31, 2014


Sep 30, 2014


Sep 30, 2015


Sep 30, 2014

Adjustment to Loan Yield (P)














Interest on loans, as reported

$         116,911


$         119,404


$         124,878


$         139,396


$      140,521


$        361,193


$         386,320

   Purchase accounting adjustment- loan discount accretion














ASC 310-20

(7,060)


(10,388)


(10,714)


(14,857)


(19,122)


(28,162)


(50,789)

ASC 310-30

(3,974)


(3,214)


(8,933)


(13,733)


(9,336)


(16,121)


(16,496)

Total

(11,034)


(13,602)


(19,647)


(28,590)


(28,458)


(44,283)


(67,285)

Interest on loans excluding discount accretion

$         105,877


$         105,802


$         105,231


$         110,806


$      112,063


$        316,910


$         319,035

Average loans

$      9,156,679


$      9,133,625


$      9,189,380


$      9,325,330


$   9,381,248


$     9,159,775


$      8,874,414

Loan yield excluding purchase accounting adjustment

4.59%


4.65%


4.64%


4.71%


4.74%


4.63%


4.81%

Loan yield, as reported

5.07%


5.24%


5.51%


5.93%


5.94%


5.27%


5.82%















Adjustment to Securities Yield (P)














Interest on securities, as reported

$           48,610


$           48,530


$           48,562


$           47,108


$        46,910


$        145,702


$         141,636

   Purchase accounting adjustment-














            securities amortization

1,565


1,579


1,647


1,590


1,466


4,791


5,000

Interest on securities excluding amortization

$           50,175


$           50,109


$           50,209


$           48,698


$        48,376


$        150,493


$         146,636

Average securities

$      9,706,373


$      9,688,961


$      9,241,434


$      8,835,176


$   8,836,309


$     9,547,293


$      8,685,212

Securities yield excluding purchase accounting adjustment

2.05%


2.07%


2.20%


2.19%


2.17%


2.11%


2.26%

Securities yield, as reported

1.99%


2.01%


2.13%


2.12%


2.11%


2.04%


2.18%















Adjustment to Time Deposits Yield (P)














Interest on time deposits, as reported

$             3,400


$             3,568


$             3,589


$             1,957


$          4,751


$          10,557


$           13,947

   Purchase accounting adjustment-














           time deposit amortization

220


220


420


2,443


16


860


113

Interest on time deposits excluding amortization

$             3,620


$             3,788


$             4,009


$             4,400


$          4,767


$          11,417


$           14,060

Average time deposits

$      2,685,346


$      2,821,058


$      2,956,038


$      3,083,047


$   3,235,185


$     2,819,822


$      3,145,435

Time deposits yield excluding purchase accounting adjustment

0.53%


0.54%


0.55%


0.57%


0.58%


0.54%


0.60%

Time deposits yield, as reported

0.50%


0.51%


0.49%


0.25%


0.58%


0.50%


0.59%















Net Interest Margin (tax equivalent basis, excluding














purchase accounting adjustments to yield)

3.10%


3.13%


3.17%


3.25%


3.26%


3.13%


3.30%















Net Interest Margin (tax equivalent basis), as reported

3.30%


3.39%


3.57%


3.89%


3.85%


3.42%


3.77%















Net income available to common shareholders, 














          as reported

$           70,598


$           71,932


$           73,641


$           78,228


$        76,570


$        216,171


$         219,213

    Less:  Purchase accounting adjustments, net of tax (Q)

(6,444)


(8,132)


(12,263)


(19,729)


(17,935)


(26,839)


(41,575)

Net income available to common shareholders, excluding

$           64,154


$           63,800


$           61,378


$           58,499


$        58,635


$        189,332


$         177,638

purchase accounting adjustments




























Basic earnings per share, excluding purchase accounting adjustments (P)

$               0.92


$               0.91


$               0.88


$               0.84


$            0.84


$              2.71


$               2.59

Diluted earnings per share, excluding purchase accounting adjustments (P)

$               0.92


$               0.91


$               0.88


$               0.84


$            0.84


$              2.71


$               2.59

 


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 Jun 30, 2015


Balance at Sep 30, 2015


Balance at Acquisition Date


Balance at Jun 30, 2015


Balance at Sep 30, 2015


Balance at Acquisition Date


Balance at Jun 30, 2015


Balance at Sep 30, 2015

Loan marks:


















Acquired banks (R)

$            225,589


$          67,895


$          60,819


$            131,906


$          48,277


$          41,814


$            357,495


$        116,172


$        102,633



















Acquired portfolio loan balances:


















Acquired banks (R)

5,456,934


1,727,123


1,560,730


255,846


94,601


83,272


5,712,780

 (S)

1,821,724


1,644,002



















Acquired portfolio loan balances less loan marks

$         5,231,345


$     1,659,228


$     1,499,911


$            123,940


$          46,324


$          41,458


$         5,355,285


$     1,705,552


$     1,541,369



















(P)  Non-GAAP financial measure.









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

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

(S)  Actual principal balances acquired.









 

Prosperity Bancshares, Inc.®


Financial Highlights (Unaudited)


(Dollars in thousands)














Three Months Ended



Sep 30, 2015


 Jun 30, 2015 


 Mar 31, 2015 


 Dec 31, 2014 


 Sep 30, 2014 


YIELD TREND






















Interest-Earning Assets: 











Loans

5.07%


5.24%


5.51%


5.93%


5.94%


Investment securities (T) 

1.99%


2.01%


2.13%


2.12%


2.11%


Federal funds sold and other earning assets

0.16%


0.24%


0.25%


0.20%


0.15%


  Total interest-earning assets 

3.47%


3.56%


3.77%


4.04%


4.06%













Interest-Bearing Liabilities: 











Interest-bearing demand deposits

0.21%


0.23%


0.25%


0.23%


0.24%


Savings and money market deposits

0.24%


0.25%


0.25%


0.24%


0.25%


Certificates and other time deposits 

0.50%


0.51%


0.49%


0.25%


0.58%


Other borrowings

0.21%


0.21%


0.73%


0.47%


0.42%


Securities sold under repurchase agreements

0.25%


0.25%


0.24%


0.25%


0.25%


Junior subordinated debentures 



2.69%


2.60%


2.60%


  Total interest-bearing liabilities 

0.29%


0.30%


0.33%


0.28%


0.36%













Net Interest Margin 

3.27%


3.36%


3.53%


3.85%


3.81%


Net Interest Margin (tax equivalent)

3.30%


3.39%


3.57%


3.89%


3.85%
























(T) Yield on securities was impacted by net premium amortization of $14,845, $15,466, $14,144, $13,031 and $13,531 for the three month periods ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)












Three Months Ended


Sep 30, 2015


Jun 30, 2015


March 31, 2015


Dec 31, 2014


Sep 30, 2014

Balance Sheet Averages










Total loans

$        9,156,679


$         9,133,625


$          9,189,380


$        9,325,330


$        9,381,248

Investment securities

9,706,373


9,688,961


9,241,434


8,835,176


8,836,309

Federal funds sold and










     other earning assets

55,000


79,659


267,672


143,705


95,378

Total interest-earning assets

18,918,052


18,902,245


18,698,486


18,304,211


18,312,935

Allowance for credit losses

(80,793)


(80,868)


(80,681)


(76,948)


(73,977)

Cash and due from banks

237,191


241,110


284,395


273,503


267,389

Goodwill

1,881,955


1,881,955


1,874,274


1,883,654


1,893,667

Core deposit intangibles, net

52,909


55,245


57,687


43,157


35,753

Other real estate

3,096


2,972


3,536


4,843


5,405

Fixed assets, net

273,818


276,761


280,515


282,827


285,039

Other assets

370,181


359,601


371,295


395,045


394,509

Total assets

$      21,656,409


$       21,639,021


$        21,489,507


$      21,110,292


$      21,120,720











Noninterest-bearing deposits

$        5,078,234


$         4,992,301


$          4,899,279


$        5,045,097


$        4,939,388

Interest-bearing demand deposits

3,663,114


3,891,682


4,178,883


3,546,825


3,399,655

Savings and money market deposits

5,492,326


5,476,931


5,542,081


5,442,568


5,502,326

Certificates and other time deposits

2,685,346


2,821,058


2,956,038


3,083,047


3,235,185

Total deposits

16,919,020


17,181,972


17,576,281


17,117,537


17,076,554

Other borrowings

886,787


684,371


72,118


168,167


215,222

Securities sold under repurchase agreements

331,286


333,220


340,469


323,882


389,726

Junior subordinated debentures

-


-


119,408


167,531


167,531

Other liabilities

121,360


98,133


100,648


106,222


109,287

Shareholders' equity

3,397,956


3,341,325


3,280,583


3,226,953


3,162,400

Total liabilities and equity

$      21,656,409


$       21,639,021


$        21,489,507


$      21,110,292


$      21,120,720

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)
































Sep 30, 2015


Jun 30, 2015


Mar 31, 2015


Dec 31, 2014


Sep 30, 2014

Period End Balances






























Loan Portfolio















Commercial and other

$     1,777,913

19.3%


$     1,774,652

19.5%


$     1,851,906

20.2%


$     1,952,945

21.1%


$     2,058,217

22.0%

Construction

1,072,985

11.7%


1,068,056

11.7%


1,040,845

11.3%


1,026,475

11.1%


1,041,300

11.1%

1-4 family residential

2,318,841

25.2%


2,289,114

25.1%


2,272,788

24.8%


2,250,251

24.4%


2,210,141

23.6%

Home equity

277,744

3.0%


273,538

3.0%


269,894

2.9%


271,930

2.9%


269,850

2.9%

Commercial real estate

2,992,726

32.5%


2,958,239

32.5%


3,021,656

33.0%


3,030,340

32.8%


3,091,090

33.0%

Agriculture (includes farmland)

618,563

6.7%


600,745

6.6%


556,839

6.1%


551,646

6.0%


534,672

5.7%

Consumer

146,216

1.6%


149,991

1.6%


152,077

1.7%


160,596

1.7%


163,618

1.7%

Total loans

$     9,204,988



$     9,114,335



$     9,166,005



$     9,244,183



$     9,368,888
































Deposit Types















Noninterest-bearing DDA

$     5,093,175

30.1%


$     5,040,628

29.7%


$     5,038,436

28.7%


$     4,936,420

27.9%


$     4,968,867

29.2%

Interest-bearing DDA

3,604,798

21.3%


3,746,939

22.0%


4,038,690

23.0%


4,260,038

24.1%


3,359,606

19.7%

Money market

3,716,094

21.9%


3,607,000

21.2%


3,773,011

21.5%


3,680,711

20.8%


3,788,358

22.3%

Savings

1,896,725

11.2%


1,853,322

10.9%


1,828,790

10.4%


1,784,889

10.1%


1,728,676

10.2%

Certificates and other time deposits

2,629,145

15.5%


2,753,775

16.2%


2,882,425

16.4%


3,031,100

17.1%


3,168,520

18.6%

Total deposits

$   16,939,937



$   17,001,664



$   17,561,352



$   17,693,158



$   17,014,027

















Loan to Deposit Ratio

54.3%



53.6%



52.2%



52.2%



55.1%
































Construction Loans















Single family residential















   construction

$        351,169

32.6%


$        354,211

33.0%


$        356,081

34.1%


$        329,797

32.0%


$        317,307

30.3%

Land development

84,040

7.8%


84,864

7.9%


89,403

8.5%


84,051

8.2%


89,553

8.5%

Raw land

143,955

13.4%


145,885

13.6%


129,470

12.4%


106,058

10.3%


83,013

7.9%

Residential lots

131,793

12.3%


127,671

11.9%


128,064

12.2%


148,763

14.4%


154,027

14.7%

Commercial lots

84,162

7.8%


87,719

8.2%


92,677

8.9%


89,565

8.7%


86,991

8.3%

Commercial construction and other

281,231

26.1%


271,833

25.4%


249,504

23.9%


272,723

26.4%


317,355

30.3%

Net unaccreted discount

(3,365)



(4,127)



(4,354)



(4,482)



(6,946)


Total construction loans

$     1,072,985



$     1,068,056



$     1,040,845



$     1,026,475



$     1,041,300


 

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of September 30, 2015 


Collateral Type

Houston


Dallas


Austin


OK City


Tulsa


Other (U) 


Total


Shopping center/retail

$          157,691


$        44,184


$     28,052


$      30,832


$     23,457


$    121,723


$     405,939


Commercial & industrial buildings

71,677


31,081


6,804


8,222


10,086


59,040


186,910


Office buildings

55,497


78,774


21,391


25,228


9,822


72,527


263,239


Medical buildings

48,978


8,060


58


9,792


8,413


52,647


127,948


Apartment buildings

41,254


9,230


14,554


16,968


8,605


99,900


190,511


Hotel

22,303


27,400


9,595


25,248


-


85,143


169,689


Other

85,952


10,272


15,697


8,189


10,897


85,585


216,592


Total

$          483,352


$      209,001


$     96,151


$    124,479


$     71,280


$    576,565


$  1,560,828

(V)
















(U) Includes other MSA and non-MSA regions.





(V) Represents a portion of total commercial real estate loans of $2.993 billion as of September 30, 2015. 


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)
















Three Months Ended


Year-to-Date


Sep 30, 2015


Jun 30, 2015


Mar 31, 2015


Dec 31, 2014


Sep 30, 2014


Sep 30, 2015


Sep 30, 2014















Asset Quality














Nonaccrual loans

$          44,935


$            31,987


$          29,252


$          31,422


$          26,804


$         44,935


$         26,804

Accruing loans 90 or more














days past due

261


153


2,968


2,193


17,753


261


17,753

Total nonperforming loans

45,196


32,140


32,220


33,615


44,557


45,196


44,557

Repossessed assets

161


173


146


67


21


161


21

Other real estate

3,271


2,806


3,010


3,237


5,504


3,271


5,504

  Total nonperforming assets

$          48,628


$            35,119


$          35,376


$          36,919


$          50,082


$         48,628


$         50,082





























Nonperforming assets:














Commercial and industrial

$          26,200


$            20,295


$          16,830


$          21,418


$          26,172


$         26,200


$         26,172

Construction, land development and other land loans

475


813


3,023


1,893


5,998


475


5,998

1-4 family residential (including home equity)

4,766


5,124


5,087


5,232


7,559


4,766


7,559

Commercial real estate (including multi-family residential)

16,485


7,939


9,736


6,695


9,686


16,485


9,686

Agriculture (including farmland)

376


605


281


473


182


376


182

Consumer and other

326


343


419


1,208


485


326


485

Total 

$          48,628


$            35,119


$          35,376


$          36,919


$          50,082


$         48,628


$         50,082















Number of loans/properties

159


161


166


169


194


159


194















Allowance for credit losses at














end of period

$          81,003


$            80,972


$          80,963


$          80,762


$          77,613


$         81,003


$         77,613















Net charge-offs:














Commercial and industrial

$            4,426


$                 (28)


$               504


$               318


$                 17


4,902


$                34

Construction, land development and other land loans

173


(2)


145


(1)


(28)


316


70

1-4 family residential (including home equity)

110


12


86


420


70


208


607

Commercial real estate (including multi-family residential)

53


114


33


1,732


(6)


200


59

Agriculture (including farmland)

(40)


(65)


(78)


(13)


(53)


(183)


(977)

Consumer and other

557


460


359


745


653


1,376


1,801

Total 

$            5,279


$                 491


$            1,049


$            3,201


$               653


$           6,819


$           1,594





























Asset Quality Ratios














Nonperforming assets to average earning assets














0.26%


0.19%


0.19%


0.20%


0.27%


0.26%


0.28%

Nonperforming assets to loans and other real estate














0.53%


0.39%


0.39%


0.40%


0.53%


0.53%


0.53%

Net charge-offs to average loans (annualized)














0.23%


0.02%


0.05%


0.14%


0.03%


0.10%


0.02%

Allowance for credit losses to total loans














0.88%


0.89%


0.88%


0.87%


0.83%


0.88%


0.83%

Allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30) (E)



























1.06%


1.09%


1.12%


1.14%


1.14%


1.06%


1.14%

Prosperity Bancshares, Inc.®
Notes to Selected Financial Data (Unaudited)
(Dollars and share amounts in thousands, except per share data)

Consolidated Financial Highlights

NOTES TO SELECTED FINANCIAL DATA

Prosperity's management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its net income and earnings per share (each excluding purchase accounting adjustments) and its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30). Prosperity has included information below and on page 12 of this Earnings Release relating to these non-GAAP financial measures for the applicable periods presented. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and Prosperity believes that its presentation, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Prosperity's business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook.  These non-GAAP measures should not be considered a substitute for GAAP basis measures and results and Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.


Three Months Ended


Year-to-Date


Sep 30, 2015


 Jun 30, 2015 


 Mar 31, 2015 


 Dec 31, 2014 


 Sep 30, 2014 


 Sep 30, 2015 


 Sep 30, 2014 















Return on average tangible common equity:














Net income

$             70,598


$          71,932


$          73,641


$          78,228


$          76,570


$        216,171


$        219,213

Average shareholders' equity

$        3,397,956


$     3,341,325


$     3,280,583


$     3,226,953


$     3,162,400


$     3,339,695


$     3,030,699

Less: Average goodwill and other intangible assets

(1,934,864)


(1,937,200)


(1,931,961)


(1,926,811)


(1,929,420)


(1,934,686)


(1,828,594)

         Average tangible shareholders' equity

$        1,463,092


$     1,404,125


$     1,348,622


$     1,300,142


$     1,232,980


$     1,405,009


$     1,202,105

Return on average tangible common  equity:

19.30%


20.49%


21.84%


23.87%


24.84%


20.51%


24.38%















Tangible book value per share:














Shareholders' equity

$        3,411,239


$     3,357,285


$     3,301,861


$     3,244,826


$     3,182,950


$     3,411,239


$     3,182,950

Less: Goodwill and other intangible assets

(1,933,667)


(1,936,023)


(1,938,413)


(1,933,138)


(1,926,729)


(1,933,667)


(1,926,729)

         Tangible shareholders' equity

$        1,477,572


$     1,421,262


$     1,363,448


$     1,311,688


$     1,256,221


$     1,477,572


$     1,256,221















Period end shares outstanding

70,040


70,040


70,024


69,780


69,756


70,040


69,756

Tangible book value per share:

$               21.10


$            20.29


$            19.47


$            18.80


$            18.01


$            21.10


$            18.01















Period end tangible equity to period end tangible assets ratio:














Tangible shareholders' equity

$        1,477,572


$     1,421,262


$     1,363,448


$     1,311,688


$     1,256,221


$     1,477,572


$     1,256,221















Total assets

$      21,567,236


$   21,686,287


$   21,606,859


$   21,507,733


$   21,117,314


$   21,567,236


$   21,117,314

Less: Goodwill and other intangible assets

(1,933,667)


(1,936,023)


(1,938,413)


(1,933,138)


(1,926,729)


(1,933,667)


(1,926,729)

         Tangible assets

$      19,633,569


$   19,750,264


$   19,668,446


$   19,574,595


$   19,190,585


$   19,633,569


$   19,190,585















Period end tangible equity to period end tangible assets ratio:

7.53%


7.20%


6.93%


6.70%


6.55%


7.53%


6.55%

 

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

(Dollars in thousands)






Three Months Ended


Year-to-Date


Sep 30, 2015


 Jun 30, 2015 


 Mar 31, 2015 


 Dec 31, 2014 


 Sep 30, 2014 


 Sep 30, 2015 


 Sep 30, 2014 

Allowance for credit losses to total loans, excluding acquired loans:



























Allowance for credit losses

$             81,003


$          80,972


$          80,963


$          80,762


$          77,613


$          81,003


$          77,613

Total loans

$        9,204,988


$     9,114,335


$     9,166,005


$     9,244,183


$     9,368,888


$     9,204,988


$     9,368,888















Less: Fair value of acquired loans (acquired portfolio loan balances less loan marks)














$        1,541,369


$     1,705,552


$     1,910,646


$     2,154,148


$     2,536,433


$     1,541,369


$     2,536,433

Total loans less acquired loans

$        7,663,619


$     7,408,783


$     7,255,359


$     7,090,035


$     6,832,455


$     7,663,619


$     6,832,455

Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis)














1.06%


1.09%


1.12%


1.14%


1.14%


1.06%


1.14%

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/prosperity-bancshares-inc-reports-third-quarter-2015-earnings-300165307.html

SOURCE Prosperity Bancshares, Inc.


Source: PR Newswire (October 23, 2015 - 6:05 AM EDT)

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