A ballooning of its loan-loss provision cut into profits at Prosperity Bancshares in Houston.
First-quarter net income at the $22 billion-asset company fell 6.4% to $69 million year over year and earnings per share fell 6.7% to 98 cents.
Net interest income after the provision for credit losses fell 5.8% to $152.3 million. The provision was $14 million, versus $1.3 million in the first quarter of 2015. The net interest margin narrowed by 9 basis points to 3.48%.
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Texas has had a fair share of M&A since the financial crisis, but deal volume has declined since oil prices began to plummet in late 2014. Uncertainty over sellers' exposure and depressed stock prices for aspiring buyers are largely to blame.
February 26 -
Turmoil in energy markets significantly influenced the sale of Tradition Bancshares in Houston.
October 9
Total nonperforming assets rose 61% to $57 million, and net chargeoffs rose to $11.7 million from $1 million. The bulk of the chargeoffs came from a $7 million agricultural loan and two energy loans totaling $6 million. Prosperity
Total loans rose 5.3% to $9.7 billion on expanded lending for commercial real estate, construction projects and residential mortgages. Prosperity reduced its energy loan book to $363 million, or 3.8% of total loans, from $462 million, or 5%.
“Despite the downturn in the oil and gas industry, the unemployment rates in Texas and Oklahoma remain strong,” Chairman and CEO David Zalman said in a press release Wednesday. “Obviously, parts of Texas are impacted more than others,” but “other parts of Texas and Oklahoma are doing well.”
Noninterest income rose 8.3% to $30.8 million on higher deposit service charges and higher mortgage income.
Noninterest expense rose 1.3% to $80.5 million on higher costs for card processing, data processing and software amortization. The efficiency ratio improved 75 basis points to 41.08%.