July 27, 2016 - 6:30 AM EDT
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Prosperity Bancshares, Inc.® Reports Second Quarter 2016 Earnings

- Second quarter 2016 earnings per share (diluted) of $0.98 - Second quarter net income of $68.071 million - Nonperforming assets remain low at 0.27% of second quarter average earning assets - Return (annualized) on second quarter average assets of 1.24% - Second quarter efficiency ratio of 42.46% - Returns (annualized) on second quarter average common equity of 7.70% and average tangible common equity of 17.15%(1)

HOUSTON, July 27, 2016 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income for the quarter ended June 30, 2016 of $68.071 million or $0.98 per diluted common share. Additionally, nonperforming assets remain low at 0.27% of second quarter average earning assets.

"I am pleased to share the positive earnings we had for the second quarter of 2016, despite a large provision for credit losses and continued low interest rates. We showed impressive annualized returns on second quarter average tangible common equity of 17.15% and on second quarter average assets of 1.24%.   Our earnings were impacted by a $6.0 million provision for credit losses, larger than our provision for this same period in 2015," said David Zalman, Prosperity's Chairman and Chief Executive Officer.  

"Prosperity operates in markets across Texas and Oklahoma, some of which have been impacted more than others by the downturn in the energy industry.  We have experienced solid loan growth in the first six months of 2016 in our Central Texas, Bryan/College Station, Houston and Dallas/Ft. Worth areas, which have offset the markets affected more by the energy industry, such as West Texas, South Texas and Oklahoma.  We believe that we have seen the bottom in oil prices and that the energy industry should start experiencing job recoveries by the first quarter of 2017," continued Zalman.

"I am amazed at the resiliency in the markets we serve.  Austin, Dallas and San Antonio are three of the ten fastest growing cities in the U.S.  The Texas unemployment rate held steady in May 2016 at 4.4%, which is lower than the U.S. rate of 4.7%, while the Oklahoma unemployment rate was 4.7% in May, in line with the U.S. rate.  Home prices in Texas continue to rise, partly due to solid demand and low inventories, while home prices in Oklahoma also rose slightly," added Zalman.

"I am very optimistic about our future.  We believe that the hard work of our entire team will help our customers grow and in turn increase profitability.  We will continue to focus on running one of the most efficient banks in the country, maintaining our solid asset quality and enhancing shareholder value," concluded Zalman.  

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

Results of Operations for the Three Months Ended June 30, 2016

Net income was $68.071 million for the three months ended June 30, 2016 compared with $71.932 million for the same period in 2015. Net income per diluted common share was $0.98 for the three months ended June 30, 2016 compared with $1.03 for the same period in 2015. Net income (excluding purchase accounting adjustments) was $62.359 million for the quarter ended June 30, 2016 compared with $63.800 million for the quarter ended June 30, 2015. Net income per diluted common share (excluding purchase accounting adjustments) was $0.90 for the three months ended June 30, 2016 compared with $0.91 for the three months ended June 30, 2015. The reconciliation of these non-GAAP financial measures is shown on page 13.  Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2016 were 1.24%, 7.70% and 17.15%(1), respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and taxes) was 42.46% for the three months ended June 30, 2016.

Net interest income before provision for credit losses for the quarter ended June 30, 2016 was $158.467 million compared with $158.239 million during the same period in 2015, an increase of $228 thousand or 0.1%. Linked quarter net interest income before provision for credit losses decreased to $158.467 million compared with $166.257 million during the three months ended March 31, 2016, primarily due to a decrease in loan discount accretion of $5.190 million and a decrease in average interest-earning assets of 1.3% for the three months ended June 30, 2016.

The net interest margin on a tax equivalent basis was 3.37% for the three months ended June 30, 2016, compared with 3.39% for the same period in 2015. Linked quarter net interest margin on a tax equivalent basis was 3.37% for the three months ended June 30, 2016 compared with 3.48% for the three months ended March 31, 2016. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis was 3.19% for the three months ended June 30, 2016, compared with 3.13% for the same period in 2015 and 3.21% for the three months ended March 31, 2016. The reconciliation of these non-GAAP financial measures is shown on page 13.  

Noninterest income was $28.473 million for the three months ended June 30, 2016 compared with $30.297 million for the same period in 2015, a decrease of $1.824 million or 6.0%. On a linked quarter basis, noninterest income decreased $2.320 million or 7.5% compared with the quarter ended March 31, 2016.

Noninterest expense was $79.235 million for the three months ended June 30, 2016 compared with $79.735 million for the same period in 2015,  a decrease of $500 thousand or 0.6%. On a linked quarter basis, noninterest expense decreased $1.293 million or 1.6% compared with the quarter ended March 31, 2016.

Results of Operations for the Six Months ended June 30, 2016

Net income was $137.022 million for the six months ended June 30, 2016 compared with $145.573 million for the same period in 2015.  Net income per diluted common share was $1.96 for the six months ended June 30, 2016 compared with $2.08 for the same period in 2015. Net income (excluding purchase accounting adjustments) was $122.598 million for the six months ended June 30, 2016 compared with $125.183 million for the six months ended June 30, 2015. Net income per diluted common share (excluding purchase accounting adjustments) was $1.75 for the six months ended June 30, 2016 compared with $1.79 for the six months ended June 30, 2015. The reconciliation of these non-GAAP financial measures is shown on page 13. Annualized returns on average assets, average common equity and average tangible common equity for the six months ended June 30, 2016 were 1.24%, 7.77% and 17.37%(1), respectively.  Prosperity's efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 41.75% for the six months ended June 30, 2016.

Net interest income before provision for credit losses for the six months ended June 30, 2016 was $324.724 million compared with $321.144 million for the same period in 2015, an increase of $3.580 million or 1.1%. The change was primarily due to an increase of 2.6% in average interest-earning assets, partially offset by a decrease in loan discount accretion of $9.451 million for the six months ended June 30, 2016. The net interest margin on a tax equivalent basis for the six months ended June 30, 2016 was 3.43% compared with 3.48% for the same period in 2015. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis was 3.20% for the six months ended June 30, 2016 compared with 3.15% for the same period in 2015. The reconciliation of these non-GAAP financial measures is shown on page 13.

Noninterest income was $59.266 million for the six months ended June 30, 2016 compared with $58.718 million for the same period in 2015, an increase of $548 thousand or 0.9%. Noninterest expense was $159.763 million for the six months ended June 30, 2016 compared with $159.197 million for the same period in 2015, an increase of $566 thousand or 0.4%.    One-time pretax merger related expenses of $658 thousand related to the Tradition acquisition were recorded during the six months ended June 30, 2016.

Balance Sheet Information

At June 30, 2016, Prosperity had $21.796 billion in total assets, an increase of $110.023 million or 0.5%, compared with $21.686 billion at June 30, 2015.

Loans at June 30, 2016 were $9.650 billion, an increase of $535.673 million or 5.9%, compared with $9.114 billion at June 30, 2015. Linked quarter loans decreased $4.400 million from $9.654 billion at March 31, 2016.

As part of its commercial and industrial lending activities, Prosperity extends credit to oil and gas production and service 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 service loans are loans to companies that provide services for oil and gas production and exploration. At June 30, 2016, oil and gas loans totaled $328.409 million or 3.4% of total loans, of which $156.734 million were to production companies and $171.675 million were to service companies. This compares with total oil and gas loans of $433.439 million or 4.8% of total loans at June 30, 2015, of which $216.898 million were to production companies and $216.541 million were to service companies. On a linked quarter basis, oil and gas loans decreased $34.417 million, from $362.826 million or 3.8% of total loans at March 31, 2016, of which $166.422 million were production loans and $196.404 million were service loans.

Deposits at June 30, 2016 were $17.219 billion, an increase of $217.481 million or 1.3%, compared with $17.002 billion at June 30, 2015. Linked quarter deposits decreased $653.621 million or 3.7% from $17.873 billion at March 31, 2016. The decrease primarily resulted from lower deposit balances for Prosperity's over 400 public fund customers due largely to seasonality.

The table below provides detail on the impact of loans acquired and deposits assumed in the acquisition of Tradition completed on January 1, 2016:











Balance Sheet Data (at period end)







(In thousands)










Jun 30, 2016


Mar 31, 2016


Dec 31, 2015


Sep 30, 2015


Jun 30, 2015


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)











Loans acquired (including new production since acquisition date):










   Tradition

$       233,340


$       232,160


$                  -


$                  -


$                  -

   All other loans

9,416,668


9,422,248


9,438,589


9,204,988


9,114,335

Total loans

$   9,650,008


$   9,654,408


$   9,438,589


$   9,204,988


$   9,114,335





















Deposits assumed (including new deposits since acquisition date):










   Tradition

$       440,110


$       476,203


$                  -


$                  -


$                  -

   All other deposits

16,779,035


17,396,563


17,681,119


16,939,937


17,001,664

Total deposits

$ 17,219,145


$ 17,872,766


$ 17,681,119


$ 16,939,937


$ 17,001,664











Excluding loans acquired in the Tradition acquisition and new production at the acquired banking centers since the acquisition date, loans at June 30, 2016 increased $302.333 million or 3.3% compared with June 30, 2015 and, on a linked quarter basis, decreased $5.580 million or 0.1%.

Excluding deposits assumed in the Tradition acquisition and new deposits generated at the acquired banking centers since the acquisition date, deposits at June 30, 2016 decreased $222.629 million or 1.3% compared with June 30, 2015 and, on a linked quarter basis, decreased $617.528 million or 3.5%.

Asset Quality

Nonperforming assets totaled $52.130 million or 0.27% of quarterly average interest-earning assets at June 30, 2016, compared with $35.119 million or 0.19% of quarterly average interest-earning assets at June 30, 2015, and $56.985 million or 0.29% of quarterly average interest-earning assets at March 31, 2016.  

The allowance for credit losses was 0.87% of total loans at June 30, 2016, 0.89% of total loans at June 30, 2015 and 0.87% of total loans at March 31, 2016.  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 1.01% of remaining loans as of June 30, 2016, compared with 1.09% at June 30, 2015 and 1.03% at March 31, 2016(1).   

The provision for credit losses was $6.000 million for the three months ended June 30, 2016 compared with $500 thousand for the three months ended June 30, 2015 and $14.000 million for the three months ended March 31, 2016.  The provision for credit losses was $20.000 million for the six months ended June 30, 2016 compared with $1.750 million for the six months ended June 30, 2015.

Net charge-offs were $5.888 million for the three months ended June 30, 2016 compared with $491 thousand for the three months ended June 30, 2015 and $11.670 million for the three months ended March 31, 2016. Net charge-offs for the second quarter of 2016 were primarily comprised of one energy loan and an additional charge on one agricultural loan. Net charge-offs were  $17.558 million for the six months ended June 30, 2016 compared with $1.540 million for the six months ended June 30, 2015.

Conference Call

Prosperity's management team will host a conference call on Wednesday, July 27, 2016 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity's second quarter 2016 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383. The elite entry number is 7002992.

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 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, nor of greater importance than, 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. Please refer to page 13 and 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 third quarter cash dividend of $0.30 per share, to be paid on October 3, 2016 to all shareholders of record as of September 16, 2016.

Stock Repurchase Program

On January 27, 2016, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 3.54 million shares, of its outstanding common stock may be acquired over the next twelve months at the discretion of management.  As of June 30, 2016, Prosperity Bancshares had repurchased an aggregate of 1.24 million shares of its common stock under this program at an average weighted average price of $40.98 per share. During the second quarter of 2016, Prosperity Bancshares repurchased 85 thousand shares of its common stock at an average weighted price of $45.40 per share. 

Acquisition of Tradition Bancshares, Inc.

On January 1, 2016, Prosperity Bancshares completed the acquisition of Tradition Bancshares, Inc. and its wholly-owned subsidiary Tradition Bank headquartered in Houston, Texas. Tradition Bank operated 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 December 31, 2015, Tradition Bancshares, Inc., on a consolidated basis, reported total assets of $547.963 million, total loans of $253.315 million, total deposits of $488.928 million and shareholders' equity of $43.103 million.

Under the terms of the definitive agreement, Prosperity Bancshares issued 679,528 shares of Prosperity Bancshares common stock plus $39.0 million in cash for all outstanding shares of Tradition Bancshares, Inc. capital stock.

Prosperity Bancshares, Inc. ®

As of June 30, 2016, Prosperity Bancshares, Inc. ® is a $21.796 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, Cash Management and Mobile Banking.

Prosperity currently operates 245 full-service banking locations: 65 in the Houston area, including The Woodlands; 29 in the South Texas area including Corpus Christi and Victoria; 36 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 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 -


Fort Worth - 


Uptown


West Texas Area -  

Bryan


Haltom City


Waugh Drive


Abilene -

Bryan-29thStreet


Keller


Westheimer


Antilley Road

Bryan-East 


Roanoke


West University


Barrow Street

Bryan-North


Stockyards


Woodcreek


Cypress Street

Caldwell






Judge Ely

College Station


Other Dallas/Fort Worth


Other Houston Area


Mockingbird

Crescent Point


Locations -


Locations - 



Hearne


Arlington


Angleton


Lubbock - 

Huntsville


Azle


Bay City


4thStreet

Madisonville


Ennis


Beaumont


66thStreet

Navasota


Gainesville


Cinco Ranch


82ndStreet

New Waverly


Glen Rose


Cleveland


86thStreet

Rock Prairie


Granbury


East Bernard


98thStreet

Southwest Parkway


Mesquite


El Campo


Avenue Q

Tower Point


Muenster


Dayton


North University

Wellborn Road


Sanger


Galveston 


Texas Tech Student Union



Waxahachie


Groves



Central Texas Area -


Weatherford


Hempstead


Midland - 

Austin -




Hitchcock 


Wadley

Allandale


East Texas Area -


Katy-Spring Green


Wall Street

Cedar Park


Athens


Liberty 



Congress


Blooming Grove


Magnolia


Odessa -

Lakeway


Canton


Magnolia Parkway


Grandview

Liberty Hill


Carthage


Mont Belvieu


Grant

Northland


Corsicana


Nederland


Kermit Highway

Oak Hill


Crockett


Needville


Parkway

Research Blvd


Eustace


Rosenberg



Westlake


Gilmer


Shadow Creek


Other West Texas Area Locations -



Grapeland


Spring


Big Spring

Other Central Texas Area Locations -


Gun Barrel City


The Woodlands-College Park


Brownfield

Bastrop


Jacksonville


The Woodlands-I-45


Brownwood

Canyon Lake


Kerens


The Woodlands-Research Forest


Cisco

Dime Box


Longview


Tomball


Comanche

Dripping Springs


Mount Vernon


Waller


Early

Elgin


Palestine


West Columbia


Floydada

Flatonia


Rusk


Wharton


Gorman

Georgetown


Seven Points


Winnie


Levelland

Gruene


Teague


Wirt


Littlefield

Kingsland


Tyler-Beckham




Merkel

La Grange


Tyler-South Broadway


South Texas Area -


Plainview

Lexington


Tyler-University


Corpus Christi -


San Angelo

New Braunfels


Winnsboro


Calallen


Slaton

Pleasanton




Carmel  


Snyder

Round Rock


Houston Area -


Northwest  



San Antonio


Houston - 


Saratoga


Oklahoma

Schulenburg


Aldine


Timbergate


Central Oklahoma Area-

Seguin 


Alief


Water Street


Oklahoma City - 

Smithville


Bellaire (Tradition)




23rd Street

Thorndale


Beltway


Other South Texas Area


Expressway

Weimar


Clear Lake


 Locations - 


I-240



Copperfield


Alice


Memorial

Dallas/Fort Worth Area - 


Cypress 


Aransas Pass



Dallas - 


Downtown


Beeville


Other Central Oklahoma Area

Abrams Centre


Eastex


Colony Creek


 Locations - 

Balch Springs


Fairfield


Cuero


Edmond

Camp Wisdom


First Colony


Edna


Norman

Cedar Hill


Fry Road


Goliad 



Dallas – Central Expressway


Gessner


Gonzales


Tulsa Area-

Forest Park


Gladebrook


Hallettsville


Tulsa -

Frisco


Grand Parkway


Kingsville


Garnett

Frisco-West 


Heights


Mathis


Harvard

Kiest


Highway 6 West


Padre Island


Memorial

McKinney


Little York


Palacios


Sheridan

McKinney-Stonebridge


Medical Center


Port Lavaca 


S. Harvard

Midway


Memorial Drive


Portland


Utica Tower

Northwest Highway


Northside


Rockport


Yale

Plano


Pasadena


Sinton



Preston Forest


Pecan Grove


Taft 


Other Tulsa Area Locations - 

Preston Road


Pin Oak


Victoria


Owasso

Red Oak


River Oaks


Victoria-Navarro



Sachse 


Sugar Land 


Victoria-North



The Colony 


SW Medical Center


Yoakum



Turtle Creek 


Tanglewood


Yorktown



Westmoreland


The Plaza












 

"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, interest rate and commodity price 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, 2015 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)












Jun 30, 2016


Mar 31, 2016


 Dec 31, 2015 


 Sep 30, 2015 


 Jun 30, 2015 

Balance Sheet Data










 (at period end)







Total loans

$   9,650,008


$   9,654,408


$     9,438,589


$    9,204,988


$    9,114,335

Investment securities(A)

9,274,651


9,448,704


9,502,427


9,530,761


9,698,079

Federal funds sold 

484


1,386


1,418


996


1,451

Allowance for credit losses

(83,826)


(83,714)


(81,384)


(81,003)


(80,972)

Cash and due from banks

333,208


334,592


562,544


300,230


353,047

Goodwill

1,903,451


1,903,451


1,868,827


1,881,955


1,881,955

Core deposit intangibles, net

44,861


47,195


49,417


51,712


54,068

Other real estate owned

15,677


16,695


2,963


3,271


2,806

Fixed assets, net

273,104


277,951


267,996


271,650


275,347

Other assets

384,692


377,677


424,419


402,676


386,171

Total assets

$ 21,796,310


$ 21,978,345


$  22,037,216


$  21,567,236


$  21,686,287











Noninterest-bearing deposits

$   5,016,637


$   5,112,943


$     5,136,579


$    5,093,175


$    5,040,628

Interest-bearing deposits

12,202,508


12,759,823


12,544,540


11,846,762


11,961,036

Total deposits

17,219,145


17,872,766


17,681,119


16,939,937


17,001,664

Other borrowings

606,049


186,225


491,399


786,571


886,741

Securities sold under repurchase agreements

320,001


304,204


315,253


310,038


334,189

Junior subordinated debentures

-


7,217


-


-


-

Other liabilities

106,531


108,873


86,535


119,451


106,408

Total liabilities

18,251,726


18,479,285


18,574,306


18,155,997


18,329,002

Shareholders' equity(B)

3,544,584


3,499,060


3,462,910


3,411,239


3,357,285

Total liabilities and equity

$ 21,796,310


$ 21,978,345


$  22,037,216


$  21,567,236


$  21,686,287












(A)

Includes $2,496, $3,286, $3,138, $3,788 and $4,655 in unrealized gains on available for sale securities for the quarterly periods ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively.

(B)

Includes $1,623, $2,136, $2,040, $2,462 and $3,026 in after-tax unrealized gains on available for sale securities for the quarterly periods ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively.

 


Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)
















Three Months Ended


Year-to-Date


Jun 30, 2016


Mar 31, 2016


Dec 31, 2015


Sep 30, 2015


Jun 30, 2015


Jun 30, 2016


Jun 30, 2015















Income Statement Data














Interest income:














Loans

$     118,297


$      124,522


$     114,234


$    116,911


$    119,404


$     242,819


$     244,282

Securities(C)

51,097


52,573


48,301


48,610


48,530


103,670


97,092

Federal funds sold and other earning assets

65


96


37


22


47


161


212

Total interest income

169,459


177,191


162,572


165,543


167,981


346,650


341,586















Interest expense:














Deposits

10,045


10,206


8,575


8,753


9,169


20,251


18,746

Other borrowings

710


482


541


473


365


1,192


494

Securities sold under repurchase agreements

234


212


198


209


208


446


411

Junior subordinated debentures

3


34


-


-


-


37


791

Total interest expense

10,992


10,934


9,314


9,435


9,742


21,926


20,442

Net interest income

158,467


166,257


153,258


156,108


158,239


324,724


321,144

Provision for credit losses

6,000


14,000


500


5,310


500


20,000


1,750

Net interest income after provision for credit losses

152,467


152,257


152,758


150,798


157,739


304,724


319,394















Noninterest income:














Nonsufficient funds (NSF) fees

8,031


8,189


8,974


9,082


8,310


16,220


16,228

Credit card, debit card and ATM card income 

5,929


5,827


5,938


5,955


6,003


11,756


11,641

Service charges on deposit accounts

4,610


4,590


4,289


4,438


4,189


9,200


8,368

Trust income

1,762


2,027


1,988


1,986


2,047


3,789


4,056

Mortgage income

1,772


1,471


1,289


1,770


1,513


3,243


2,661

Brokerage income

1,286


1,290


1,407


1,596


1,541


2,576


2,950

Bank owned life insurance income

1,473


1,383


1,394


1,384


1,390


2,856


2,770

Net gain on sale of assets

332


1,020


581


173


270


1,352


1,649

Other noninterest income

3,278


4,996


4,423


5,396


5,034


8,274


8,395

Total noninterest income

28,473


30,793


30,283


31,780


30,297


59,266


58,718















Noninterest expense:














Salaries and benefits

48,224


50,114


48,500


46,587


47,819


98,338


97,785

Net occupancy and equipment

5,741


5,624


5,774


6,088


5,812


11,365


11,776

Credit and debit card, data processing and software amortization

4,164


4,430


3,996


3,924


4,045


8,594


7,862

Regulatory assessments and FDIC insurance

3,447


3,430


2,460


3,366


4,253


6,877


8,607

Core deposit intangibles amortization

2,334


2,222


2,295


2,356


2,390


4,556


4,879

Depreciation

3,286


3,349


3,310


3,313


3,420


6,635


6,336

Communications

2,981


2,939


2,814


2,663


2,835


5,920


5,644

Other real estate expense

50


42


241


123


129


92


261

Net loss (gain) on sale of other real estate

347


(14)


52


(68)


(32)


333


(18)

Other noninterest expense

8,661


8,392


8,467


8,078


9,064


17,053


16,065

Total noninterest expense

79,235


80,528


77,909


76,430


79,735


159,763


159,197

Income before income taxes

101,705


102,522


105,132


106,148


108,301


204,227


218,915

Provision for income taxes

33,634


33,571


34,657


35,550


36,369


67,205


73,342

Net income available to common shareholders

$       68,071


$        68,951


$       70,475


$       70,598


$      71,932


$     137,022


$     145,573
















(C)

 Interest income on securities was reduced by net premium amortization of $10,407, $10,253, $13,775, $14,845 and $15,466 for the three month periods ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively, and $20,660 and $29,610 for the six month periods ended June 30, 2016 and June 30, 2015, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

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
















Three Months Ended


Year-to-Date


Jun 30, 2016


Mar 31, 2016


Dec 31, 2015


Sep 30, 2015


Jun 30, 2015


Jun 30, 2016


Jun 30, 2015















Profitability














Net income

$       68,071


$        68,951


$       70,475


$       70,598


$       71,932


$     137,022


$     145,573















Basic earnings per share

$           0.98


$             0.98


$            1.01


$           1.01


$           1.03


$           1.96


$           2.08

Diluted earnings per share

$           0.98


$             0.98


$            1.01


$           1.01


$           1.03


$           1.96


$           2.08















Return on average assets(D) 

1.24%


1.24%


1.30%


1.30%


1.33%


1.24%


1.35%

Return on average common equity(D) 

7.70%


7.85%


8.17%


8.31%


8.61%


7.77%


8.80%

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

17.15%


17.60%


18.56%


19.30%


20.49%


17.37%


21.16%

Tax equivalent net interest margin(F)

3.37%


3.48%


3.24%


3.30%


3.39%


3.43%


3.48%

Efficiency ratio(G)

42.46%


41.08%


42.58%


40.72%


42.35%


41.75%


42.09%















Liquidity and Capital Ratios














Equity to assets

16.26%


15.92%


15.71%


15.82%


15.48%


16.26%


15.48%

Common equity tier 1 capital

13.66%


13.20%


13.55%


13.37%


12.91%


13.66%


12.91%

Tier 1 risk-based capital

13.66%


13.20%


13.55%


13.37%


12.91%


13.66%


12.91%

Total risk-based capital

14.37%


13.90%


14.25%


14.09%


13.63%


14.37%


13.63%

Tier 1 leverage capital

8.11%


7.70%


7.97%


7.65%


7.35%


8.11%


7.35%

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

8.04%


7.73%


7.68%


7.53%


7.20%


8.04%


7.20%















Other Data














Weighted-average shares used in computing earnings per share














Basic

69,565


70,174


70,021


70,041


70,037


69,869


70,035

Diluted

69,574


70,181


70,032


70,053


70,053


69,877


70,054

Period end shares outstanding

69,480


69,543


70,022


70,040


70,040


69,480


70,040

Cash dividends paid per common share

$       0.3000


$        0.3000


$       0.3000


$       0.2725


$       0.2725


$       0.6000


$       0.5450

Book value per share

$         51.02


$          50.32


$         49.45


$         48.70


$         47.93


$         51.02


$         47.93

Tangible book value per share(E)

$         22.97


$          22.27


$         22.06


$         21.10


$         20.29


$         22.97


$         20.29















Common Stock Market Price














High

$         54.57


$          47.50


$         57.04


$         59.97


$         59.30


$         54.57


$         59.30

Low

43.28


33.57


46.23


43.76


50.91


33.57


45.01

Period end closing price

50.99


46.39


47.86


49.11


57.74


50.99


57.74

Employees – FTE

3,106


3,132


3,037


3,051


3,065


3,106


3,065

Number of banking centers

245


246


241


244


245


245


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 based on average balances on an actual 365 day or 366 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. 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




















YIELD ANALYSIS 

Three Months Ended



Jun 30, 2016


Mar 31, 2016


Jun 30, 2015



Average
Balance


Interest
Earned/
Interest
Paid


Average
Yield/
Rate

(J)

Average
Balance


Interest
Earned/
Interest
Paid


Average
Yield/ Rate

(J)

Average
Balance


Interest
Earned/
Interest
Paid


Average
Yield/
Rate

(J)




















Interest-Earning Assets: 



















Loans

$   9,660,065


$     118,297


4.93%


$   9,700,554


$  124,522


5.16%


$   9,133,625


$     119,404


5.24%


Investment securities

9,436,896


51,097


2.18%

(H)

9,630,496


52,573


2.20%

(H)

9,688,961


48,530


2.01%

(H)

   Federal funds sold and other earning assets

68,268


65


0.38%


80,400


96


0.48%


79,659


47


0.24%


  Total interest-earning assets 

19,165,229


169,459


3.56%


19,411,450


177,191


3.67%


18,902,245


167,981


3.56%


Allowance for credit losses 

(83,036)






(83,883)






(80,868)






Noninterest-earning assets 

2,826,205






2,937,937






2,817,644






  Total assets

$ 21,908,398






$ 22,265,504






$ 21,639,021

























Interest-Bearing Liabilities: 



















Interest-bearing demand deposits

$   4,108,305


$          2,569


0.25%


$   4,442,652


$       2,784


0.25%


$   3,891,682


$          2,227


0.23%


Savings and money market deposits

5,734,739


3,832


0.27%


5,820,161


3,885


0.27%


5,476,931


3,374


0.25%


Certificates and other time deposits 

2,517,896


3,644


0.58%


2,577,676


3,537


0.55%


2,821,058


3,568


0.51%


Other borrowings 

489,616


710


0.58%


361,778


482


0.54%


684,371


365


0.21%


Securities sold under repurchase agreements 

322,274


234


0.29%


306,192


212


0.28%


333,220


208


0.25%


Junior subordinated debentures 

555


3


2.17%


7,217


34


1.89%


-


-



  Total interest-bearing liabilities 

13,173,385


10,992


0.34%

(I)

13,515,676


10,934


0.33%

(I)

13,207,262


9,742


0.30%

(I)




















Noninterest-bearing liabilities: 



















Noninterest-bearing demand deposits

5,099,736






5,085,456






4,992,301






Other liabilities 

98,023






149,379






98,133






  Total liabilities

18,371,144






18,750,511






18,297,696






Shareholders' equity 

3,537,254






3,514,993






3,341,325






  Total liabilities and shareholders' equity 

$ 21,908,398






$ 22,265,504






$ 21,639,021

























Net interest income and margin 



$     158,467


3.33%




$  166,257


3.44%




$     158,239


3.36%





















Non-GAAP to GAAP reconciliation:



















Tax equivalent adjustment



1,968






1,836






1,563























Net interest income and margin (tax equivalent basis)



$     160,435


3.37%




$  168,093


3.48%




$     159,802


3.39%























(H)

Yield on securities was impacted by net premium amortization of $10,407, $10,253 and $15,466 for the three month periods ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively.

(I)

Total cost of funds, including noninterest bearing deposits, was 0.24%, 0.24% and 0.21% for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively.

(J)

Annualized and based on an actual 365 day or 366 day basis.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)


(Dollars in thousands)















YIELD ANALYSIS 

Year-to-Date



Jun 30, 2016


Jun 30, 2015



Average
Balance


Interest
Earned/
Interest
Paid


Average
Yield/
Rate

(M)

Average
Balance


Interest
Earned/
Interest
Paid


Average
Yield/
Rate

(M)














Interest-Earning Assets: 













Loans

$  9,680,309


$     242,819


5.04%


$  9,161,349


$     244,282


5.38%


Investment securities

9,533,696


103,670


2.19%

(K)

9,466,434


97,092


2.07%

(K)

 

Federal funds sold and other earning assets

74,334


161


0.44%


173,147


212


0.25%


      Total interest-earning assets 

19,288,339


346,650


3.61%


18,800,930


$     341,586


3.66%


Allowance for credit losses 

(83,459)






(80,775)






Noninterest-earning assets 

2,882,072






2,843,739






      Total assets

$22,086,952






$21,563,894



















Interest-Bearing Liabilities: 













Interest-bearing demand deposits

$  4,275,478


$          5,353


0.25%


$  4,034,489


$          4,810


0.24%


Savings and money market deposits

5,777,450


7,717


0.27%


5,509,326


6,779


0.25%


Certificates and other time deposits 

2,547,786


7,181


0.57%


2,888,176


7,157


0.50%


Other borrowings

425,697


1,192


0.56%


379,936


494


0.26%


Securities sold under repurchase agreements 

314,233


446


0.29%


336,824


411


0.25%


Junior subordinated debentures 

3,886


37


1.91%


59,374


791


2.69%


      Total interest-bearing liabilities 

13,344,530


21,926


0.33%

(L)

13,208,125


20,442


0.31%

(L)














Noninterest-bearing liabilities: 













Noninterest-bearing demand deposits

5,092,596






4,946,138






Other liabilities 

123,700






99,375






      Total liabilities

18,560,826






18,253,638






Shareholders' equity 

3,526,126






3,310,256






      Total liabilities and shareholders' equity 

$22,086,952






$21,563,894



















Net interest income and margin 



$     324,724


3.39%




$     321,144


3.44%















Non-GAAP to GAAP reconciliation:













Tax equivalent adjustment



3,804






3,227

















    

Net interest income and margin (tax equivalent basis)



$     328,528


3.43%




$     324,371


3.48%
















(K)

Yield on securities was impacted by net premium amortization of $20,660 and $29,610 for the six month periods ended June 30, 2016 and 2015, respectively.

(L)

Total cost of funds, including noninterest bearing deposits, was 0.24% and 0.23% for the six month periods ended June 30, 2016 and 2015, respectively.

(M)

 Annualized and based on an actual 365 or 366 day basis.

 


Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands, except per share data)
















Three Months Ended


Year -to-Date


Jun 30, 2016


Mar 31, 2016


Dec 31, 2015


Sep 30, 2015


Jun 30, 2015


Jun 30, 2016


Jun 30, 2015

Adjustment to Loan Yield (N)














Interest on loans, as reported

$     118,297


$      124,522


$     114,234


$    116,911


$     119,404


$     242,819


$     244,282

   Purchase accounting adjustment- loan discount accretion














ASC 310-20

(5,833)


(6,663)


(6,066)


(7,060)


(10,388)


(12,496)


(21,101)

ASC 310-30

(3,471)


(7,831)


(1,773)


(3,974)


(3,214)


(11,302)


(12,148)

Total

(9,304)


(14,494)


(7,839)


(11,034)


(13,602)


(23,798)


(33,249)

Interest on loans excluding discount accretion

$     108,993


$      110,028


$     106,395


$    105,877


$     105,802


$     219,021


$     211,033

Average loans

$ 9,660,065


$   9,700,554


$  9,322,399


$ 9,156,679


$ 9,133,625


$ 9,680,309


$ 9,161,349

Loan yield excluding purchase accounting adjustment

4.54%


4.56%


4.53%


4.59%


4.65%


4.55%


4.65%

Loan yield, as reported

4.93%


5.16%


4.86%


5.07%


5.24%


5.04%


5.38%















Adjustment to Securities Yield (N)














Interest on securities, as reported

$       51,097


$        52,573


$       48,301


$       48,610


$       48,530


$     103,670


$       97,092

      Purchase accounting adjustment-securities amortization

948


1,722


1,578


1,565


1,579


2,670


3,226

Interest on securities excluding amortization

$       52,045


$        54,295


$       49,879


$       50,175


$       50,109


$     106,340


$     100,318

Average securities

$ 9,436,896


$   9,630,496


$  9,524,084


$ 9,706,373


$ 9,688,961


$ 9,533,696


$ 9,466,434

Securities yield excluding purchase accounting adjustment

2.22%


2.27%


2.08%


2.05%


2.07%


2.24%


2.14%

Securities yield, as reported

2.18%


2.20%


2.01%


1.99%


2.01%


2.19%


2.07%















Adjustment to Time Deposits Yield (N)














Interest on time deposits, as reported

$         3,644


$          3,537


$         3,253


$         3,400


$         3,568


$         7,181


$         7,157

       Purchase accounting adjustment-time deposit amortization

178


182


195


220


220


360


640

Interest on time deposits excluding amortization

$         3,822


$          3,719


$         3,448


$         3,620


$         3,788


$         7,541


$         7,797

Average time deposits

$ 2,517,896


$   2,577,676


$  2,560,527


$ 2,685,346


$ 2,821,058


$ 2,547,786


$ 2,888,176

Time deposits yield excluding purchase accounting adjustment

0.61%


0.58%


0.53%


0.53%


0.54%


0.60%


0.54%

Time deposits yield, as reported

0.58%


0.55%


0.50%


0.50%


0.51%


0.57%


0.50%















Net Interest Margin (tax equivalent basis, excluding purchase accounting adjustments to yield) (N)














3.19%


3.21%


3.11%


3.10%


3.13%


3.20%


3.15%















Net Interest Margin (tax equivalent basis), as reported

3.37%


3.48%


3.24%


3.30%


3.39%


3.43%


3.48%















Net income available to common shareholders, as reported

$       68,071


$        68,951


$       70,475


$       70,598


$       71,932


$     137,022


$     145,573

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

(5,712)


(8,712)


(4,328)


(6,444)


(8,132)


(14,424)


(20,390)

Net income available to common shareholders, excluding purchase accounting adjustments (N)

$       62,359


$        60,239


$       66,147


$       64,154


$       63,800


$     122,598


$     125,183





























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

$           0.90


$             0.86


$            0.94


$           0.92


$           0.91


$           1.75


$           1.79

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

$           0.90


$             0.86


$            0.94


$           0.92


$           0.91


$           1.75


$           1.79

 



Acquired Loans Accounted for
Under ASC 310-20


Acquired Loans Accounted for
Under ASC 310-30


Total Loans Accounted for
Under ASC 310-20 and 310-30


Balance at
Acquisition
Date


Balance at
Mar 31, 2016


Balance at
Jun 30, 2016


Balance at
Acquisition
Date


Balance at
Mar 31, 2016


Balance at
Jun 30, 2016


Balance at
Acquisition
Date


Balance at
Mar 31, 2016


Balance at
Jun 30, 2016

Loan marks:


















Previously acquired banks (P)

$         225,589


$           47,386


$          41,851


$            131,906


$           27,928


$          26,010


$            357,495


$        75,314


$          67,861

2016 acquisition (Q)

3,491


3,123


2,821


10,222


6,126


4,469


13,713


9,249


7,290

Total

229,080


50,509


44,672


142,128


34,054


30,479


371,208


84,563


75,151



















Acquired portfolio loan balances:


















Previously acquired banks (P)

5,456,934


1,289,661


1,181,003


255,846


60,917


56,223


5,712,780


1,350,578


1,237,226

2016 acquisition (Q)

234,064


216,631


201,687


19,375


12,673


9,348


253,439


229,304


211,035

Total

5,690,998


1,506,292


1,382,690


275,221


73,590


65,571


5,966,219

(R)

1,579,882


1,448,261



















Acquired portfolio loan balances less loan marks

$      5,461,918


$      1,455,783


$     1,338,018


$            133,093


$           39,536


$          35,092


$        5,595,011


$  1,495,319


$     1,373,110




























(N) 

Non-GAAP financial measure.

(O)

Using effective tax rate of 33.1%, 32.7%, 33.0%, 33.5% and 33.6% for the three month periods ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively, and 32.9% and 33.5% for the six month periods ended June 30, 2016 and 2015, respectively.

(P)

Includes Bank of Texas, Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank and The F&M Bank & Trust Company.

(Q)

Tradition Bank was acquired on January 1, 2016. During the first quarter of 2016, Tradition Bank added $253.4 million in loans with related purchase accounting adjustments of $13.7million at acquisition date. 

(R)

Actual principal balances acquired.



 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)












Three Months Ended


Jun 30, 2016


 Mar 31, 2016 


 Dec 31, 2015 


 Sep 30, 2015 


 Jun 30, 2015 

YIELD TREND (S)




















Interest-Earning Assets: 










Loans

4.93%


5.16%


4.86%


5.07%


5.24%

Investment securities (T) 

2.18%


2.20%


2.01%


1.99%


2.01%

Federal funds sold and other earning assets

0.38%


0.48%


0.22%


0.16%


0.24%

  Total interest-earning assets 

3.56%


3.67%


3.41%


3.47%


3.56%











Interest-Bearing Liabilities: 










Interest-bearing demand deposits

0.25%


0.25%


0.21%


0.21%


0.23%

Savings and money market deposits

0.27%


0.27%


0.24%


0.24%


0.25%

Certificates and other time deposits 

0.58%


0.55%


0.50%


0.50%


0.51%

Other borrowings

0.58%


0.54%


0.26%


0.21%


0.21%

Securities sold under repurchase agreements

0.29%


0.28%


0.25%


0.25%


0.25%

Junior subordinated debentures 

2.17%


1.89%




  Total interest-bearing liabilities 

0.34%


0.33%


0.28%


0.29%


0.30%











Net Interest Margin 

3.33%


3.44%


3.22%


3.27%


3.36%

Net Interest Margin (tax equivalent)

3.37%


3.48%


3.24%


3.30%


3.39%






















(S)

Annualized and based on average balances on an actual 365 day or 366 day basis.

(T)

Yield on securities was impacted by net premium amortization of $10,407, $10,253, $13,775, $14,845 and $15,466 for the three month periods ended June 30, 2016,  March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)












Three Months Ended


Jun 30, 2016


Mar 31, 2016


Dec 31, 2015


Sep 30, 2015


Jun 30, 2015

Balance Sheet Averages










Total loans

$   9,660,065


$   9,700,554


$   9,322,399


$   9,156,679


$   9,133,625

Investment securities

9,436,896


9,630,496


9,524,084


9,706,373


9,688,961

Federal funds sold and other earning assets

68,268


80,400


65,695


55,000


79,659

Total interest-earning assets

19,165,229


19,411,450


18,912,178


18,918,052


18,902,245

Allowance for credit losses

(83,036)


(83,883)


(81,230)


(80,793)


(80,868)

Cash and due from banks

227,570


274,535


257,986


237,191


241,110

Goodwill

1,903,451


1,899,667


1,881,812


1,881,955


1,881,955

Core deposit intangibles, net

46,059


48,314


50,545


52,909


55,245

Other real estate

15,549


6,077


3,014


3,096


2,972

Fixed assets, net

276,727


279,179


270,800


273,818


276,761

Other assets

356,849


430,165


390,011


370,181


359,601

Total assets

$ 21,908,398


$ 22,265,504


$ 21,685,116


$ 21,656,409


$ 21,639,021











Noninterest-bearing deposits

$   5,099,736


$   5,085,456


$   5,124,630


$   5,078,234


$   4,992,301

Interest-bearing demand deposits

4,108,305


4,442,652


3,767,138


3,663,114


3,891,682

Savings and money market deposits

5,734,739


5,820,161


5,511,240


5,492,326


5,476,931

Certificates and other time deposits

2,517,896


2,577,676


2,560,527


2,685,346


2,821,058

Total deposits

17,460,676


17,925,945


16,963,535


16,919,020


17,181,972

Other borrowings

489,616


361,778


839,164


886,787


684,371

Securities sold under repurchase agreements

322,274


306,192


314,278


331,286


333,220

Junior subordinated debentures

555


7,217


-


-


-

Other liabilities

98,023


149,379


116,860


121,360


98,133

Shareholders' equity

3,537,254


3,514,993


3,451,279


3,397,956


3,341,325

Total liabilities and equity

$ 21,908,398


$ 22,265,504


$ 21,685,116


$ 21,656,409


$ 21,639,021











 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)
































Jun 30, 2016


Mar 31, 2016


Dec 31, 2015


Sep 30, 2015


Jun 30, 2015

Period End Balances






























Loan Portfolio















Commercial and industrial

$   1,299,310

13.5%


$   1,337,189

14.9%


$   1,293,162

14.9%


$   1,243,656

14.9%


$   1,221,078

14.7%

Construction, land development and other land loans

1,167,286

12.1%


1,173,524

12.2%


1,073,198

11.4%


1,072,985

11.7%


1,068,056

11.7%

1-4 family residential

2,424,868

25.1%


2,379,503

24.6%


2,360,798

25.0%


2,318,841

25.2%


2,289,114

25.1%

Home equity

283,212

2.9%


283,686

2.9%


279,867

2.9%


277,744

3.0%


273,538

3.0%

Commercial real estate (includes multi-family residential)

3,229,556

33.5%


3,229,706

33.5%


3,131,083

33.2%


2,992,726

32.5%


2,958,239

32.5%

Agriculture (includes farmland)

657,633

6.8%


641,293

6.6%


648,818

6.9%


618,563

6.7%


600,745

6.6%

Consumer and other

259,734

2.7%


246,681

1.5%


252,579

1.5%


275,297

1.6%


270,126

1.6%

Energy

328,409

3.4%


362,826

3.8%


399,084

4.2%


405,176

4.4%


433,439

4.8%

Total loans

$   9,650,008



$   9,654,408



$   9,438,589



$   9,204,988



$   9,114,335
































Deposit Types















Noninterest-bearing DDA

$   5,016,637

29.1%


$   5,112,943

28.6%


$   5,136,579

29.1%


$   5,093,175

30.1%


$   5,040,628

29.7%

Interest-bearing DDA

3,976,839

23.1%


4,382,999

24.5%


4,481,575

25.3%


3,604,798

21.3%


3,746,939

22.0%

Money market

3,687,602

21.4%


3,812,420

21.3%


3,639,187

20.6%


3,716,094

21.9%


3,607,000

21.2%

Savings

2,022,327

11.8%


2,017,980

11.3%


1,940,855

11.0%


1,896,725

11.2%


1,853,322

10.9%

Certificates and other time deposits

2,515,740

14.6%


2,546,424

14.3%


2,482,923

14.0%


2,629,145

15.5%


2,753,775

16.2%

Total deposits

$ 17,219,145



$ 17,872,766



$ 17,681,119



$ 16,939,937



$ 17,001,664

















Loan to Deposit Ratio

56.0%



54.0%



53.4%



54.3%



53.6%
































Construction Loans















Single family residential















   construction

$       410,456

35.0%


$       407,519

34.5%


$       353,706

32.9%


$       351,169

32.6%


$       354,211

33.0%

Land development

85,488

7.3%


84,141

7.1%


88,239

8.2%


84,040

7.8%


84,864

7.9%

Raw land

161,402

13.8%


174,546

14.8%


153,274

14.3%


143,955

13.4%


145,885

13.6%

Residential lots

131,807

11.3%


126,881

10.8%


130,596

12.1%


131,793

12.3%


127,671

11.9%

Commercial lots

83,725

7.1%


80,286

6.8%


87,375

8.1%


84,162

7.8%


87,719

8.2%

Commercial construction and other

298,713

25.5%


306,742

26.0%


262,783

24.4%


281,231

26.1%


271,833

25.4%

Net unaccreted discount

(4,305)



(6,591)



(2,775)



(3,365)



(4,127)


Total construction loans

$   1,167,286



$   1,173,524



$   1,073,198



$   1,072,985



$   1,068,056


 

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of June 30, 2016 


Collateral Type

Houston


Dallas


Austin


OK City


Tulsa


Other (U) 


Total


Shopping center/retail

$         205,200


$   44,092


$   29,506


$   28,670


$ 27,653


$ 114,698


$    449,819


Commercial & industrial buildings

83,725


31,233


10,056


11,390


9,486


68,714


214,604


Office buildings

84,554


133,602


18,556


39,153


7,519


80,473


363,857


Medical buildings

52,530


8,724


53


27,820


8,101


57,047


154,275


Apartment buildings

47,711


12,954


13,235


17,507


11,719


80,242


183,368


Hotel

29,470


32,435


11,815


24,588


-


89,596


187,904


Other

76,413


11,168


18,123


8,751


10,439


73,867


198,761


Total

$         579,603


$ 274,208


$ 101,344


$ 157,879


$ 74,917


$ 564,637


$ 1,752,588

(V)





















(U)

Includes other MSA and non-MSA regions.

(V)

Represents a portion of total commercial real estate loans of $3.230 billion as of June 30, 2016. 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)
















Three Months Ended


Year-to-Date


Jun 30, 2016


Mar 31, 2016


Dec 31, 2015


Sep 30, 2015


Jun 30, 2015


Jun 30, 2016


Jun 30, 2015















Asset Quality














Nonaccrual loans

$         29,547


$        39,036


$       39,711


$       44,935


$       31,987


$       29,547


$       31,987

Accruing loans 90 or more days past due














6,822


1,093


614


261


153


6,822


153

Total nonperforming loans

36,369


40,129


40,325


45,196


32,140


36,369


32,140

Repossessed assets

84


161


171


161


173


84


173

Other real estate

15,677


16,695


2,963


3,271


2,806


15,677


2,806

  Total nonperforming assets

$         52,130


$        56,985


$       43,459


$       48,628


$       35,119


$       52,130


$       35,119





























Nonperforming assets:














Commercial and industrial (includes energy)

$         16,822


$        18,835


$       22,275


$       26,200


$       20,295


$       16,822


$       20,295

Construction, land development and other land loans

1,606


2,913


134


475


813


1,606


813

1-4 family residential (includes home equity)

5,016


6,226


4,692


4,766


5,124


5,016


5,124

Commercial real estate (includes multi-family residential)

26,651


22,208


15,836


16,485


7,939


26,651


7,939

Agriculture (includes farmland)

1,682


6,578


208


376


605


1,682


605

Consumer and other

353


225


314


326


343


353


343

Total 

$         52,130


$        56,985


$       43,459


$       48,628


$       35,119


$       52,130


$       35,119















Number of loans/properties

166


168


147


159


161


166


161















Allowance for credit losses at














end of period

$         83,826


$        83,714


$       81,384


$       81,003


$       80,972


$       83,826


$       80,972















Net charge-offs:














Commercial and industrial (includes energy)

$           4,109


$          4,396


$           (528)


$         4,426


$             (28)


$         8,505


$            476

Construction, land development and other land loans

(25)


(186)


(109)


173


(2)


(211)


143

1-4 family residential (includes home equity)

(78)


30


1


110


12


(48)


98

Commercial real estate (includes multi-family residential)

197


59


194


53


114


256


147

Agriculture (includes farmland)

(655)


6,962


(77)


(40)


(65)


6,307


(143)

Consumer and other

2,340


409


638


557


460


2,749


819

Total 

$           5,888


$        11,670


$             119


$         5,279


$            491


$       17,558


$         1,540





























Asset Quality Ratios














Nonperforming assets to














     average earning assets

0.27%


0.29%


0.23%


0.26%


0.19%


0.27%


0.19%

Nonperforming assets to loans














     and other real estate

0.54%


0.59%


0.46%


0.53%


0.39%


0.54%


0.39%

Net charge-offs to














     average loans (annualized)

0.24%


0.48%


0.01%


0.23%


0.02%


0.36%


0.03%

Allowance for credit losses to














     total loans

0.87%


0.87%


0.86%


0.88%


0.89%


0.87%


0.89%

Allowance for credit losses to total loans 














(excluding acquired loans accounted for














under ASC Topics 310-20 and 310-30) (E)

1.01%


1.03%


1.01%


1.06%


1.09%


1.01%


1.09%

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 13 of this Earnings Release relating to these non-GAAP financial measures for the applicable periods presented.

 



Three Months Ended


Year-to-Date



Jun 30, 2016


Mar 31, 2016


 Dec 31, 2015 


 Sep 30, 2015 


 Jun 30, 2015 


 Jun 30, 2016 


 Jun 30, 2015 
















Return on average tangible common equity:















Net income


$         68,071


$         68,951


$           70,475


$           70,598


$           71,932


$         137,022


$         145,573

Average shareholders' equity


$   3,537,254


$    3,514,993


$      3,451,279


$      3,397,956


$      3,341,325


$      3,526,126


$      3,310,256

Less: Average goodwill and other intangible assets


(1,949,510)


(1,947,981)


(1,932,357)


(1,934,864)


(1,937,200)


(1,948,746)


(1,934,595)

         Average tangible shareholders' equity


$   1,587,744


$    1,567,012


$      1,518,922


$      1,463,092


$      1,404,125


$      1,577,380


$      1,375,661

Return on average tangible common  equity:


17.15%


17.60%


18.56%


19.30%


20.49%


17.37%


21.16%
















Tangible book value per share:















Shareholders' equity


$   3,544,584


$    3,499,060


$      3,462,910


$      3,411,239


$      3,357,285


$      3,544,584


$      3,357,285

Less: Goodwill and other intangible assets


(1,948,312)


(1,950,646)


(1,918,244)


(1,933,667)


(1,936,023)


(1,948,312)


(1,936,023)

         Tangible shareholders' equity


$   1,596,272


$    1,548,414


$      1,544,666


$      1,477,572


$      1,421,262


$      1,596,272


$      1,421,262
















Period end shares outstanding


69,480


69,543


70,022


70,040


70,040


69,480


70,040

Tangible book value per share:


$           22.97


$           22.27


$              22.06


$             21.10


$              20.29


$              22.97


$              20.29
















Period end tangible equity to period end tangible assets ratio:















Tangible shareholders' equity


$   1,596,272


$    1,548,414


$      1,544,666


$      1,477,572


$      1,421,262


$      1,596,272


$      1,421,262
















Total assets


$ 21,796,310


$ 21,978,345


$    22,037,216


$   21,567,236


$    21,686,287


$    21,796,310


$    21,686,287

Less: Goodwill and other intangible assets


(1,948,312)


(1,950,646)


(1,918,244)


(1,933,667)


(1,936,023)


(1,948,312)


(1,936,023)

         Tangible assets


$ 19,847,998


$ 20,027,699


$    20,118,972


$   19,633,569


$    19,750,264


$    19,847,998


$    19,750,264
















Period end tangible equity to period end tangible assets ratio:


8.04%


7.73%


7.68%


7.53%


7.20%


8.04%


7.20%
















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





























Allowance for credit losses


$         83,826


$         83,714


$           81,384


$           81,003


$           80,972


$           83,826


$           80,972
















Total loans


$   9,650,008


$    9,654,408


$      9,438,589


$      9,204,988


$      9,114,335


$      9,650,008


$      9,114,335

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


$   1,373,110


$    1,495,319


$      1,415,593


$      1,541,369


$      1,705,552


$      1,373,110


$      1,705,552

Total loans less acquired loans


$   8,276,898


$    8,159,089


$      8,022,996


$      7,663,619


$      7,408,783


$      8,276,898


$      7,408,783

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


1.01%


1.03%


1.01%


1.06%


1.09%


1.01%


1.09%

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/prosperity-bancshares-inc-reports-second-quarter-2016-earnings-300304620.html

SOURCE Prosperity Bancshares, Inc.


Source: PR Newswire (July 27, 2016 - 6:30 AM EDT)

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