HOUSTON, April 17 /PRNewswire-FirstCall/ -- Prosperity Bancshares,Inc.(R) (Nasdaq: PRSP), the parent company of Prosperity Bank(R), reportednet income for the quarter ended March 31, 2009 of $25.478 million or $0.55per diluted common share, an increase in net income of $2.540 million or11.1%, compared with $22.938 million or $0.52 per diluted common share forthe same period in 2008. "I am pleased to report another solid quarter of performance by ourbank," commented David Zalman, Chairman and Chief Executive Officer. "Ourindustry has experienced significant turmoil over the past few months andis at the center of the political debate surrounding the current economicconditions. We believe the decision we made last fall not to participate inthe U.S. Treasury Department's TARP program was the right decision for ourshareholders and expect that the strength of our bank will lead to futureopportunities." "While the Texas economy is not immune to the economic headwinds ourcountry is facing, I am pleased with the performance of our bank. Our teamis competing effectively in all of the markets we serve and we continue toexperience opportunities to grow our market share," continued Zalman. Results of operations for the three months ended March 31, 2009 For the three months ended March 31, 2009, net income was $25.478million compared with $22.938 million for the same period in 2008. Netincome per diluted common share was $0.55 for the three months ended March31, 2009 and $0.52 for the same period in 2008. Returns on average assets,average common equity and average tangible common equity for the threemonths ended March 31, 2009 were 1.15%, 8.02% and 28.52%, respectively.Prosperity's efficiency ratio (excluding net gains and losses on the saleof securities and assets) was 49.47% for the three months ended March 31,2009. Net interest income before provision for credit losses for the quarterended March 31, 2009 increased 42.5% to $74.078 million compared with$51.995 million during the same period in 2008. The increase wasattributable primarily to a 45.2% increase in average earning assets. Thenet interest margin on a tax equivalent basis decreased to 3.98% for thethree months ended March 31, 2009 compared with 4.03% for the same periodin 2008. The tax equivalent net interest margin increased 33 basis points to3.98% reported for the three months ended March 31, 2009 from 3.65%reported for the three months ended December 31, 2008 as a result ofmultiple factors including lower deposit pricing and the effect on the fullquarter of the assets purchased and the deposits assumed during the fourthquarter of 2008 from the FDIC as receiver of Franklin Bank. Non-interest income increased $2.338 million or 18.4% to $15.017million for the three months ended March 31, 2009 compared with $12.679million for the same period in 2008. The increase was mainly attributableto an increase in service charges on deposit accounts related to accountsassumed from the FDIC as part of the Franklin Bank transaction and depositaccounts assumed from the 1st Choice acquisition. Non-interest expense increased $14.903 million or 51.2% to $44.023million for the first quarter of 2009 compared with $29.120 million for thefirst quarter of 2008. The increase was attributable to the increasedexpenses related to operating the additional banking offices that wereacquired in the Franklin Bank transaction and the 1st Choice acquisition. Prosperity's FDIC insurance premium cost for 2008 was approximately$1.4 million. The expected full year 2009 FDIC insurance premium iscurrently projected to be between $8.0 million and $9.0 million based uponcurrent deposit balances. Additionally, on February 27, 2009, the FDICadopted an interim rule imposing a 20 basis point emergency specialassessment on deposits as of June 30, 2009. The assessment is to becollected on September 30, 2009. The interim rule would also permit theFDIC to impose an additional emergency special assessment after June 30,2009, of up to 10 basis points. Legislation has been proposed in Congressthat would reduce the emergency special assessment imposed on June 30, 2009to 10 basis points. Should the legislation pass or the rule becomeeffective, Prosperity expects to incur the additional FDIC insurance costsin the second quarter of 2009. Loans at March 31, 2009 were $3.501 billion, an increase of $339.673million or 10.7%, compared with $3.162 billion at March 31, 2008. Loansdecreased 1.8% or $65.757 million on a linked quarter basis compared withloans of $3.567 billion at December 31, 2008. As reflected in the tablebelow, linked quarter loans for the first quarter of 2009 were impacted bythe loans acquired from the FDIC as a part of the Franklin Bank transactionin November 2008 and the loans acquired as a part of the acquisitions ofBanco Popular's Houston branches and 1st Choice in the first and secondquarters of 2008. Deposits at March 31, 2009 were $7.207 billion, an increase of $2.258billion or 45.6%, compared with $4.949 billion at March 31, 2008. Linkedquarter deposits decreased $96.418 million or 1.3% from $7.303 billion atDecember 31, 2008. As reflected in the table below, linked quarter depositsfor the first quarter of 2009 were impacted by the deposits assumed fromthe FDIC as part of the Franklin Bank transaction and the deposits assumedas a part of the acquisitions of Banco Popular's Houston branches and 1stChoice.
Balance Sheet Data (at period end) Mar 31, Dec 31, Mar 31, 2009 2008 2008 (In thousands) (Unaudited) (Unaudited) (Unaudited) Loans: Acquired with Banco Popular Houston branches $3,045 $3,161 $1,629 Acquired with 1st Choice 155,671 168,642 0 Acquired from FDIC (related to Franklin Bank) 312,793 356,420 0 All other 3,029,791 3,038,834 3,159,998 --------- --------- --------- Total Loans $3,501,300 $3,567,057 $3,161,627 ========== ========== ========== Deposits: Assumed with Banco Popular Houston branches $105,081 $114,434 117,873 Assumed with 1st Choice Bank 242,116 249,287 0 Assumed from FDIC (related to Franklin Bank) 1,880,823 1,994,417 0 All other 4,978,859 4,945,159 4,830,845 --------- --------- --------- Total Deposits $7,206,879 $7,303,297 $4,948,718 ========== ========== ========== Average loans increased 12.3% or $387.056 million to $3.530 billion forthe quarter ended March 31, 2009 compared with $3.143 billion for the sameperiod of 2008. Linked quarter average loans increased 4.9% or $164.678million from $3.366 billion at December 31, 2008. Average depositsincreased 47.4% or $2.339 billion to $7.277 billion for the quarter endedMarch 31, 2009 compared with $4.938 billion for the same period of 2008.Linked quarter average deposits increased 8.9% or $591.890 million from$6.686 billion at December 31, 2008. At March 31, 2009, construction loans totaled $643.151 million,consisting of approximately $214 million of single family residentialconstruction loans; $91 million of land development loans; $89 million ofraw land loans; $105 million of residential lot loans; $37 million ofcommercial lot loans; and $107 million of commercial construction and otherconstruction loans. This is a decrease of $22.929 million from constructionloans at December 31, 2008. At March 31, 2009, Prosperity had $8.799 billion in total assets,$3.501 billion in loans, and $7.207 billion in deposits. Assets, loans anddeposits at March 31, 2009 grew by 36.1%, 10.7% and 45.6%, respectively,compared with their level at March 31, 2008. Asset Quality Non-performing assets totaled $12.525 million or 0.16% of averageearning assets at March 31, 2009 compared with $17.554 million or 0.33% ofaverage earning assets at March 31, 2008 and $14.368 million or 0.20% ofaverage earnings assets at December 31, 2008. The allowance for creditlosses was 1.12% of total loans at March 31, 2009 compared with 1.01% atMarch 31, 2008 and 1.04% of total loans at December 31, 2008.
Non-performing assets (In thousands) Mar 31, Dec 31, Sept 30, 2009 2008 2008 Amount # Amount # Amount # Construction $9,219 46 $9,252 36 $6,562 32 Agriculture and agriculture real estate 8 1 30 3 400 2 1-4 family (including home equity) 1,110 17 1,325 19 2,962 17 Commercial real estate (including multi-family) 859 5 2,014 8 2,886 8 Commercial 1,207 24 1,491 16 1,600 26 Consumer 122 11 250 15 126 18 Other 0 0 6 1 0 0 - - - - - - Total $12,525 104 $14,368 98 $14,536 103 ======= === ======= == ======= === The provision for credit losses was $6.125 million for the three monthsended March 31, 2009 and $1.167 million for the three months ended March31, 2008. Prosperity's loan loss reserve model called for increasedprovisioning in the first quarter due to increased charge-offs resultingfrom a general weakening of the economy. Net charge offs were $3.857million for the three months ended March 31, 2009 and $1.643 million forthe three months ended March 31, 2008.
Net Charge-offs Three Months Three Months Twelve Months (In thousands) Ended Ended Ended Mar 31, 2009 Dec 31, 2008 Dec 31, 2008 1-4 family (including home equity) $117 $100 $351 Agriculture 23 203 327 Commercial 761 1,552 2,489 Commercial RE (including multi-family) 0 43 (110) Construction 2,387 742 3,190 Consumer 569 371 1,374 --- --- ----- Total $3,857 $3,011 $7,621 ====== ====== ====== Conference Call Prosperity's management team will host a conference call on Friday,April 17, 2009 at 10:30 a.m. Eastern Daylight Time (9:30 a.m. CentralDaylight Time) to discuss Prosperity's first quarter earnings. Individualsand investment professionals may participate in the call by dialing1-800-895-4790, the reference code is PBTX. Alternatively, individuals may listen to the live webcast of thepresentation by visiting Prosperity's website at http://www.prosperitybanktx.com.The webcast may be accessed directly from Prosperity's Investor Relationspage by clicking on the "1st Quarter Results and Webcast" link. Assumption of deposits and acquisition of certain assets from the FDICas receiver for Franklin Bank, SSB On November 7, 2008, Prosperity Bank(R) assumed approximately $3.6billion of deposits, including all uninsured deposits, from the FDIC,acting in its capacity as receiver for Franklin Bank. The FDIC entered intoa purchase and assumption agreement with Prosperity Bank, which paid apremium to ensure that all deposits of Franklin Bank, both insured anduninsured, were transferred to Prosperity Bank(R). Under the terms of thepurchase and assumption agreement, Prosperity Bank(R) acquired certainassets from the FDIC, including approximately $350 million in US Treasuryand Agency Securities and approximately $350 million in performing loans.The remaining net proceeds were predominately invested in US AgencySecurities. While Franklin Bank operated forty-five (45) full service bankingoffices, Prosperity Bank continues to operate thirty-three (33) of theselocations and has consolidated the remainder with other nearby Prosperitylocations. Acquisition of 1st Choice Bancorp, Inc. On June 1, 2008, Prosperity completed its previously announcedacquisition of 1st Choice Bancorp, Inc. and its wholly owned subsidiary,1st Choice Bank. 1st Choice Bancorp, Inc. operated two (2) banking officesin Houston, Texas, with one location in South Houston and another in theHeights area, which was consolidated with Prosperity's Heights location andis located in 1st Choice's Heights banking office. As of May 31, 2008, 1stChoice Bancorp reported total assets of approximately $314.9 million, loansof approximately $192.7 million, deposits of approximately $285.2 millionand stockholders' equity of approximately $26.4 million. In connection with the acquisition, Prosperity issued 1,757,757 sharesof its common stock and paid approximately $18.758 million in cash for alloutstanding shares of 1st Choice Bancorp. Acquisition of Banco Popular's Houston Branches On January 10, 2008, Prosperity Bank(R) completed its previouslyannounced acquisition of six (6) Houston retail bank branches from BancoPopular North America. The branches had approximately $125 million incombined deposits. All six (6) locations are now operating as full servicebanking centers of Prosperity Bank(R). Prosperity Bancshares, Inc.(R) Prosperity Bancshares, Inc.(R), an $8.9 billion Houston, Texas basedregional financial holding company, formed in 1983, operates under acommunity banking philosophy and seeks to develop broad customerrelationships based on service and convenience. Prosperity offers a varietyof traditional loan and deposit products to its customers, which consistprimarily of small and medium sized businesses and consumers. In additionto established banking products, Prosperity offers a complete line ofservices including: Internet Banking services athttp://www.prosperitybanktx.com, Retail Brokerage Services, MasterMoneyDebit Cards, and 24 hour voice response banking. Prosperity currentlyoperates one hundred fifty-eight (158) full service banking locations;fifty-one (51) in the Houston area; twenty-seven (27) in the South Texasarea including Corpus Christi and Victoria; twenty-four (24) in theDallas/Fort Worth area; twenty (20) in the East Texas area; and thirty-six(36) in the Central Texas area including Austin, Bryan/College Station andSan Antonio. Central Texas Area - Austin - Allandale Cedar Park Congress 183 Lakeway Liberty Hill Northland Oak Hill Parmer Lane Research Blvd Rollingwood Slaughter Lane Bryan/College Station - Bryan Bryan-East Bryan-North College Station Greens Prairie Wellborn Road Rock Prairie Other Central Texas Locations - Bastrop Caldwell Dime Box Dripping Springs Elgin Flatonia Georgetown Kingsland La Grange Lexington Navasota New Braunfels Round Rock San Antonio Schulenburg Smithville Weimar Dallas/Fort Worth Area - Dallas - Abrams Centre Balch Springs Camp Wisdom Cedar Hill Central Expressway Frisco Frisco-West Kiest Preston Road Red Oak The Colony Turtle Creek Westmoreland Fort Worth - Haltom City Keller Roanoke Stockyards Other Dallas/Fort Worth Locations - Azle Ennis Gainesville Mesquite Muenster Sanger Waxahachie East Texas Area - Athens Athens-South Blooming Grove Canton Carthage Corsicana Crockett Eustace Grapeland Gun Barrel City Jacksonville Kerens Longview Mount Vernon Palestine Rusk Seven Points Tyler Tyler-University Winnsboro Houston Area - Houston - Aldine Bellaire Clear Lake Copperfield Cypress Downtown Fairfield Gessner Gladebrook Harrisburg Heights Highway 6 West Hillcroft Little York Medical Center Memorial Drive Pasadena Pecan Grove River Oaks Sugar Land SW Medical Center Tanglewood Uptown Waugh Drive Westheimer Woodcreek Other Houston Area Locations - Angleton Beaumont Cinco Ranch Cleveland East Bernard Edna El Campo Dayton Galveston Groves Hempstead Hitchcock Katy Liberty Magnolia Mont Belvieu Nederland Needville Sweeny Tomball Waller West Columbia Wharton Winnie Wirt South Texas Area - Corpus Christi - Airline Carmel Northwest Saratoga Water Street Other South Texas Locations - Alice Aransas Pass Bay City Beeville Cuero Goliad Gonzales Hallettsville Kingsville Mathis Palacios Pleasanton Port Aransas Port Lavaca Portland Rockport Seguin Sinton Victoria Victoria-North Yoakum Yorktown "Safe Harbor" Statement under the Private Securities Litigation ReformAct of 1995: This release contains, and the remarks by Prosperity'smanagement on the conference call may contain, forward-looking statementswithin the meaning of the securities laws that are based on currentexpectations, assumptions, estimates and projections about ProsperityBancshares(R), and its subsidiaries. These forward-looking statements arenot guarantees of future performance and are subject to risks anduncertainties, many of which are outside of Prosperity's control, that maycause actual results to differ materially from those expressed or impliedby the forward-looking statements. These risks and uncertainties includebut are not limited to whether Prosperity can: successfully identifyacquisition targets and integrate the businesses of acquired companies andbanks; continue to sustain its current internal growth rate or total growthrate; provide products and services that appeal to its customers; continueto have access to debt and equity capital markets; and achieve its salesobjectives. Other risks include, but are not limited to: the possibilitythat credit quality could deteriorate; actions of competitors; changes inlaws and regulations (including changes in governmental interpretations ofregulations and changes in accounting standards); a deterioration ordowngrade in the credit quality and credit agency ratings of the securitiesin Prosperity's securities portfolio; customer and consumer demand,including customer and consumer response to marketing; effectiveness ofspending, investments or programs; fluctuations in the cost andavailability of supply chain resources; economic conditions, includingcurrency rate fluctuations and interest rate fluctuations; weather; and thestock price volatility associated with "small-cap" companies. These andvarious other factors are discussed in Prosperity's Annual Report on Form10-K for the year ended December 31, 2008 and other reports and statementswe have filed with the SEC. Copies of the SEC filings for ProsperityBancshares's(R) may be downloaded from the Internet at no charge fromhttp://www.prosperitybanktx.com.
Prosperity Bancshares, Inc.(R) Financial Highlights (Dollars and share amounts in thousands, except per share data) Three Months Ended Mar 31, Dec 31, Sept 30, June 30, 2009 2008 2008 2008 Selected Earnings and (Unaudited) (Unaudited) (Unaudited) (Unaudited) Per Share Data Total interest income $105,566 $96,588 $84,846 $81,979 Total interest expense 31,488 32,631 27,040 28,008 ------ ------ ------ ------ Net interest income 74,078 63,957 57,806 53,971 Provision for credit losses 6,125 6,000 1,700 1,000 ----- ----- ----- ----- Net interest income after provision for credit losses 67,953 57,957 56,106 52,971 Total non-interest income 15,017 13,508 13,117 13,066 Total non-interest expense 44,023 37,586 46,230 30,860 ------ ------ ------ ------ Net income before taxes 38,947 33,879 22,993 35,177 Federal income taxes 13,469 11,194 7,546 11,740 ------ ------ ----- ------ Net income $25,478 $22,685 $15,447 $23,437 ======= ======= ======= ======= Basic earnings per share $0.55 $0.49 $0.34 $0.52 Diluted earnings per share $0.55 $0.49 $0.33 $0.52 Period end shares outstanding 46,100 46,080 46,072 46,060 Weighted average shares outstanding (basic) 46,086 46,078 46,065 44,852 Weighted average shares outstanding (diluted) 46,139 46,276 46,302 45,039
Prosperity Bancshares, Inc.(R) Financial Highlights (Dollars in thousands) Three Months Ended Mar 31, Mar 31, Dec 31, Dec 31, 2009 2008 2008 2007 Balance Sheet Averages (Unaudited) (Unaudited) (Unaudited) (Unaudited) Total loans $3,530,230 $3,143,174 $3,365,552 $3,136,515 Investment securities 4,030,151 1,977,510 3,229,874 1,801,443 Federal funds sold and other temporary investments 66,597 131,601 451,524 111,059 Total earning assets 7,626,978 5,252,285 7,046,950 5,049,017 Allowance for credit losses (37,220) (31,948) (33,494) (34,595) Cash and due from banks 156,785 145,693 183,507 141,696 Goodwill 875,925 762,406 835,328 746,427 Core Deposit Intangibles (CDI) 37,085 44,790 42,657 47,372 Other real estate 7,016 11,422 6,431 5,622 Fixed assets, net 123,547 123,534 124,210 120,720 Other assets 107,750 110,969 138,298 106,099 Total assets $8,897,866 $6,419,151 $8,343,887 $6,182,358 Non-interest bearing deposits $1,492,026 $1,155,210 $1,425,440 $1,182,179 Interest bearing deposits 5,785,388 3,782,709 5,260,084 3,602,925 Total deposits 7,277,414 4,937,919 6,685,524 4,785,104 Securities sold under repurchase agreements 83,734 66,074 92,941 66,538 Federal funds purchased and other borrowings 83,091 96,978 178,369 41,106 Junior subordinated debentures 92,265 112,885 92,265 112,885 Other liabilities 90,982 61,745 52,297 54,839 Shareholders' equity(A) 1,270,380 1,143,550 1,242,491 1,121,886 Total liabilities and equity $8,897,866 $6,419,151 $8,343,887 $6,182,358 (A) Includes $11,721, ($1,330), ($1,675) and ($2,287) in after tax unrealized gains (losses) on available for sale securities for the three month periods ending March 31, 2009, March 31, 2008, December 31, 2008 and December 31, 2007, respectively.
Prosperity Bancshares, Inc.(R) Financial Highlights (Dollars in thousands) Three Months Ended Mar 31, Mar 31, Dec 31, Dec 31, 2009 2008 2008 2007 Income Statement Data (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest on loans $55,802 $58,520 $56,073 $61,682 Interest on securities 49,726 24,783 39,713 22,446 Interest on federal funds sold and other temporary investments 38 1,162 802 1,313 -- ----- --- ----- Total interest income 105,566 84,465 96,588 85,441 ------- ------ ------ ------ Interest expense - deposits 29,457 28,945 29,663 30,354 Interest expense - debentures 1,119 2,019 1,452 2,206 Interest expense - other 912 1,506 1,516 1,247 --- ----- ----- ----- Total interest expense 31,488 32,470 32,631 33,807 ------ ------ ------ ------ Net interest income (B) 74,078 51,995 63,957 51,634 Provision for credit losses 6,125 1,167 6,000 120 ----- ----- ----- --- Net interest income after provision for credit losses 67,953 50,828 57,957 51,514 ------ ------ ------ ------ Service charges on deposit accounts 12,372 10,506 13,204 11,029 Net gain on sale of assets 97 4 130 91 Net gain (loss) on sale of ORE 22 39 (1,684) (6) Brokered mortgage income 70 109 34 105 Net gain on sale of held for sale loans 0 73 0 132 Gain on sale of securities 0 0 0 28 Other non-interest income 2,456 1,948 1,824 1,869 ----- ----- ----- ----- Total non-interest income 15,017 12,679 13,508 13,248 ------ ------ ------ ------ Salaries and benefits (C) 22,648 16,130 20,411 15,747 CDI amortization 2,664 2,492 2,284 2,620 Net occupancy and equipment 3,978 2,810 3,704 2,775 Depreciation 2,001 1,937 1,854 1,955 Data processing and software amortization 2,055 1,291 1,609 1,123 Impairment charge on write-down of securities 0 0 0 9,975 Other non-interest expense 10,677 4,460 7,724 5,218 ------ ----- ----- ----- Total non-interest expense 44,023 29,120 37,586 39,413 ------ ------ ------ ------ Net income before taxes 38,947 34,387 33,879 25,349 Federal income taxes 13,469 11,449 11,194 8,268 ------ ------ ------ ----- Net income available to common shareholders $25,478 $22,938 $22,685 $17,081 ======= ======= ======= ======= (B) Net interest income on a tax equivalent basis would be $74,759, $52,832, $64,597 and $52,467, for the three months ended March 31, 2009, March 31, 2008, December 31, 2008 and December 31, 2007, respectively. (C) Salaries and benefits includes stock-based compensation expense of $326, $248, $432 and $477 for the three months ended March 31, 2009, March 31, 2008, December 31, 2008 and December 31, 2007, respectively.
Prosperity Bancshares, Inc.(R) Financial Highlights (Dollars and share amounts in thousands, except per share data) As of and for the Three Months Ended Mar 31, Mar 31, Dec 31, Dec 31, 2009 2008 2008 2007 Common Share and (Unaudited) (Unaudited) (Unaudited) (Unaudited) Other Data Employees - FTE 1,684 1,374 1,734 1,359 Book value per share $27.78 $25.93 $27.24 $25.51 Tangible book value per share $7.88 $7.58 $7.43 $7.42 Period end shares outstanding 46,100 44,279 46,080 44,188 Weighted average shares outstanding (basic) 46,086 44,188 46,078 44,133 Weighted average shares outstanding (diluted) 46,139 44,328 46,276 44,420 Non-accrual loans $1,402 $1,332 $2,142 $1,035 Accruing loans 90 or more days past due 1,562 4,484 7,594 4,092 Restructured loans 0 0 0 0 - - - - Total non-performing loans 2,964 5,816 9,736 5,127 Repossessed assets 427 126 182 56 Other real estate 9,134 11,612 4,450 10,207 ----- ------ ----- ------ Total non-performing assets $12,525 $17,554 $14,368 $15,390 Allowance for credit losses at end of period $39,238 $32,067 $36,970 $32,543 Net charge-offs $3,857 $1,643 $3,011 $3,113 Basic earnings per share $0.55 $0.52 $0.49 $0.39 Diluted earnings per share $0.55 $0.52 $0.49 $0.38
Prosperity Bancshares, Inc.(R) Financial Highlights Three Months Ended Mar 31, Mar 31, Dec 31, Dec 31, 2009 2008 2008 2007 Performance Ratios (Unaudited) (Unaudited) (Unaudited) (Unaudited) Return on average assets (annualized) 1.15% 1.43% 1.09% 1.11% Return on average common equity (annualized) 8.02% 8.02% 7.30% 6.09% Return on average tangible common equity (annualized) 28.52% 27.28% 24.89% 20.82% Net interest margin (D) (tax equivalent) (annualized) 3.98% 4.03% 3.65% 4.12% Efficiency ratio(E) 49. 47% 45.03% 48.60% 45.45% Asset Quality Ratios Non-performing assets to average earning assets 0.16% 0.33% 0.20% 0.30% Non-performing assets to Loans and other real estate 0.36% 0.55% 0.40% 0.49% Net charge-offs to average loans 0.11% 0.05% 0.09% 0.10% Allowance for credit losses to total loans 1.12% 1.01% 1.04% 1.04% Common Stock Market Price High $30.00 $31.46 $36.98 $35.07 Low $20.04 $21.96 $25.08 $28.18 Period end market price $27.35 $28.66 $29.59 $29.39 (D) Net interest margin for all periods presented is calculated on an actual 365 or actual 366 day basis. (E) The Company revised its efficiency ratio in the fourth quarter 2008 and no longer excludes gains and losses on the sale of ORE. The efficiency ratio is calculated by dividing total non-interest expense (excluding provision for credit losses) by net interest income plus non-interest income (excluding net gains and losses on the sale of securities and assets and impairment charge on write-down of securities). Prior period amounts have been restated to reflect the current methodology. Additionally, taxes are not part of this calculation.
Prosperity Bancshares, Inc.(R) Financial Highlights (Dollars in thousands) Mar 31, 2009 Dec 31, 2008 (Unaudited) (Unaudited) Loan Portfolio Commercial $461,514 13.18% $499,143 13.99% Construction 643,151 18.37% 666,080 18.67% 1-4 family residential 667,392 19.06% 668,096 18.73% Home equity 112,053 3.20% 107,048 3.01% Commercial real estate 1,346,056 38.45% 1,343,401 37.66% Agriculture 144,384 4.12% 145,649 4.08% Consumer 126,750 3.62% 137,640 3.86% ------- ------- Total Loans $3,501,300 $3,567,057 ========== ========== Deposit Types Non-interest bearing DDA $1,510,005 20.95% $1,522,983 20.85% Interest bearing DDA 1,030,826 14.30% 1,082,078 14.82% Money Market 1,495,724 20.76% 1,400,673 19.18% Savings 322,130 4.47% 309,938 4.24% Time < $100 1,491,380 20.69% 1,577,431 21.60% Time > $100 1,356,814 18.83% 1,410,194 19.31% --------- --------- Total Deposits $7,206,879 $7,303,297 ========== ========== Loan to Deposit Ratio 48.6% 48.8% Construction Loans Single family residential construction $214,034 33.28% $237,191 35.61% Land development 91,005 14.15% 90,846 13.64% Raw land 89,003 13.84% 89,120 13.38% Residential lots 104,684 16.28% 106,869 16.04% Commercial lots 37,318 5.80% 39,374 5.91% Other 107,107 16.65% 102,680 15.42% ------- ------- Total Construction Loans $643,151 $666,080 ======== ======== Sept 30, 2008 June 30, 2008 (Unaudited) (Unaudited) Loan Portfolio Commercial $470,099 14.47% $486,817 14.69% Construction 626,443 19.28% 658,669 19.88% 1-4 family residential 574,583 17.69% 568,377 17.16% Home equity 95,962 2.95% 95,774 2.89% Commercial real estate 1,229,219 37.84% 1,241,872 37.48% Agriculture 133,123 4.10% 135,421 4.09% Consumer 119,188 3.67% 126,398 3.81% ------- ------- Total Loans $3,248,617 $3,313,328 ========== ========== Deposit Types Non-interest bearing DDA $1,263,407 24.75% $1,285,493 24.27% Interest bearing DDA 707,055 13.85% 750,214 14.16% Money Market 1,147,559 22.48% 1,213,710 22.92% Savings 246,370 4.83% 251,815 4.75% Time < $100 814,165 15.95% 840,744 15.87% Time > $100 926,286 18.14% 954,658 18.03% ------- ------- Total Deposits $5,104,842 $5,296,634 ========== ========== Loan to Deposit Ratio 63.6% 62.6% Construction Loans Single family residential construction $233,196 37.23% $244,250 37.08% Land development 73,955 11.81% 75,376 11.44% Raw land 90,974 14.52% 98,341 14.93% Residential lots 101,027 16.13% 104,384 15.85% Commercial lots 35,890 5.73% 37,714 5.73% Other 91,401 14.58% 98,604 14.97% ------ ------ Total Construction Loans $626,443 $658,669 ======== ========
Prosperity Bancshares, Inc.(R) Financial Highlights (Dollars in thousands) Balance Sheet Mar 31, Dec 31, Sept 30, June 30, Mar 31, Data 2009 2008 2008 2008 2008 (at period end) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Total loans $3,501,300 $3,567,057 $3,248,617 $3,313,328 $3,161,627 Investment securities (F) 3,991,200 4,160,401 2,294,403 2,235,703 2,086,382 Federal funds sold and other temporary investments 590 16,404 25,748 14,230 32,268 Total earning assets 7,493,090 7,743,862 5,568,768 5,563,261 5,280,277 Allowance for credit losses (39,238) (36,970) (33,981) (34,085) (32,067) Cash and due from banks 163,278 212,335 159,386 170,966 159,754 Goodwill 874,356 874,654 811,916 811,391 769,013 Core deposit intangibles 42,796 38,196 44,974 47,536 43,577 Other real estate 9,134 4,450 7,538 6,655 11,612 Fixed assets, net 151,544 123,638 123,823 125,000 123,806 Other assets 104,237 112,199 105,485 103,010 108,761 Total assets $8,799,197 $9,072,364 $6,787,909 $6,793,734 $6,464,733 Demand deposits $1,510,005 $1,522,983 $1,263,407 $1,285,493 $1,202,622 Interest bearing deposits 5,696,874 5,780,314 3,841,435 4,011,141 3,746,096 Total deposits 7,206,879 7,303,297 5,104,842 5,296,634 4,948,718 Securities sold under repurchase agreements 81,773 96,017 100,310 99,225 70,942 Federal funds purchased and other borrowings 28,441 229,395 219,671 42,089 125,360 Junior subordinated debentures 92,265 92,265 92,265 92,265 112,885 Other liabilities 109,291 96,284 41,641 45,916 58,761 Total liabilities 7,518,649 7,817,258 5,558,729 5,576,129 5,316,666 Shareholders' equity (G) 1,280,548 1,255,106 1,229,180 1,217,605 1,148,067 Total liabilities and equity $8,799,197 $9,072,364 $6,787,909 $6,793,734 $6,464,733 (F) Includes $23,784, $15,158, $1,220, ($633) and $3,903 in unrealized gains (losses) on available for sale securities for the quarterly periods ending March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008 and March 31, 2008, respectively. (G) Includes $15,460, $9,853, $793, ($411) and $2,537 in after-tax unrealized gains (losses) on available for sale securities for the quarterly periods ending March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008 and March 31, 2008, respectively.
Prosperity Bancshares, Inc.(R) Financial Highlights (Dollars in thousands) Three Months Ended Income Mar 31, Dec 31, Sept 30, June 30, Mar 31, Statement 2009 2008 2008 2008 2008 Data (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest on loans $55,802 $56,073 $56,925 $55,948 $58,520 Interest on securities 49,726 39,713 27,834 25,856 24,783 Interest on federal funds sold and other earning assets 38 802 87 175 1,162 -- --- -- --- ----- Total interest income 105,566 96,588 84,846 81,979 84,465 ------- ------ ------ ------ ------ Interest expense - deposits 29,457 29,663 23,874 25,210 28,945 Interest expense - debentures 1,119 1,452 1,410 1,558 2,019 Interest expense - other 912 1,516 1,756 1,240 1,506 --- ----- ----- ----- ----- Total interest expense 31,488 32,631 27,040 28,008 32,470 ------ ------ ------ ------ ------ Net interest income 74,078 63,957 57,806 53,971 51,995 Provision for credit losses 6,125 6,000 1,700 1,000 1,167 ----- ----- ----- ----- ----- Net interest income after provision for credit losses 67,953 57,957 56,106 52,971 50,828 ------ ------ ------ ------ ------ Service charges on deposits accounts 12,372 13,204 11,348 10,727 10,506 Net gain on sale of assets 97 130 34 676 4 Net gain (loss) on sale of ORE 22 (1,684) (210) (478) 39 Brokered mortgage income 70 34 74 113 109 Net gain on sale of held for sale loans 0 0 46 110 73 Gain on sale of securities 0 0 0 0 0 Other non-interest income 2,456 1,824 1,825 1,918 1,948 ----- ----- ----- ----- ----- Total non- interest income 15,017 13,508 13,117 13,066 12,679 ------ ------ ------ ------ ------ Salaries and benefits 22,648 20,411 17,526 16,751 16,130 CDI amortization 2,664 2,284 2,562 2,459 2,492 Net occupancy and equipment 3,978 3,704 3,088 2,867 2,810 Depreciation 2,001 1,854 1,955 1,920 1,937 Data processing and software amortization 2,055 1,609 1,319 1,361 1,291 Impairment charge on write-down of securities 0 0 14,025 0 0 Other non- interest expense 10,677 7,724 5,755 5,502 4,460 ------ ----- ----- ----- ----- Total non- interest expense 44,023 37,586 46,230 30,860 29,120 ------ ------ ------ ------ ------ Net income before taxes 38,947 33,879 22,993 35,177 34,387 Federal income taxes 13,469 11,194 7,546 11,740 11,449 ------ ------ ----- ------ ------ Net income available to common shareholders $25,478 $22,685 $15,447 $23,437 $22,938 ======= ======= ======= ======= =======
Prosperity Bancshares, Inc.(R) Financial Highlights Three Months Ended Mar 31, Dec 31, Sept. 30, June 30, Mar 31, 2009 2008 2008 2008 2008 Comparative (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Quarterly Asset Quality, Performance & Capital Ratios Return on average assets (annualized) 1.15% 1.09% 0.91% 1.43% 1.43% Return on average common equity (annualized) 8.02% 7.30% 5.04% 7.96% 8.02% Return on average tangible equity (annualized) 28.52% 24.89% 16.83% 26.93% 27.28% Net interest margin (tax equivalent) (annualized) 3.98% 3.65% 4.15% 4.10% 4.03% Employees - FTE 1,684 1,734 1,366 1,397 1,374 Efficiency ratio 49.47% 48.60% 45.43% 46.50% 45.03% Non-performing assets to average earning assets 0.16% 0.20% 0.26% 0.22% 0.33% Non-performing assets to loans and other real estate 0.36% 0.40% 0.45% 0.35% 0.55% Net charge-offs to average loans 0.11% 0.09% 0.05% 0.04% 0.05% Allowance for credit losses to total loans 1.12% 1.04% 1.05% 1.03% 1.01% Book value per share $27.78 $27.24 $26.68 $26.44 $25.93 Tangible book value per share $7.88 $7.43 $8.08 $7.79 $7.58 Tier 1 risk- based capital 10.44% 9.89% 12.71% 12.70% 13.16% Total risk- based capital 11.37% 10.76% 13.65% 13.67% 14.11% Tier 1 leverage capital 5.48% 5.68% 7.75% 7.87% 7.91% Tangible equity to tangible assets 4.61% 4.19% 6.28% 6.04% 5.94% Equity to assets 14.55% 13.83% 18.11% 17.92% 17.76%
Prosperity Bancshares, Inc.(R) Supplemental Financial Data (Unaudited) (Dollars in thousands) Three Months Ended March 31, 2009 Interest Earned Average YIELD ANALYSIS Average /Interest Yield/ Balance Paid Rate Interest Earning Assets: Loans $3,530,230 $55,802 6.41% Investment securities 4,030,151 49,726 4.94% Federal funds sold and other temporary investments 66,597 38 0.23% ------ -- Total interest earning assets 7,626,978 $105,566 5.61% -------- Allowance for credit losses (37,220) Non-interest earning assets 1,308,108 --------- Total assets $8,897,866 ========== Interest Bearing Liabilities: Interest bearing demand deposits $1,068,685 $2,122 0.81% Savings and money market deposits 1,803,137 6,057 1.36% Certificates and other time deposits 2,913,566 21,278 2.96% Securities sold under repurchase agreements 83,734 348 1.69% Federal funds purchased and other borrowings 83,091 564 2.75% Junior subordinated debentures 92,265 1,119 4.92% ------ ----- Total interest bearing liabilities 6,044,478 $31,488 2.11% ------- Non-interest bearing liabilities: Non-interest bearing demand deposits 1,492,026 Other liabilities 90,982 ------ Total liabilities 7,627,486 Shareholders' equity 1,270,380 --------- Total liabilities and shareholders' equity $8,897,866 ========== Net Interest Income & Margin $74,078 3.94% ======= Net Interest Income & Margin (tax equivalent) $74,759 3.98% =======
Prosperity Bancshares, Inc.(R) Supplemental Financial Data (Unaudited) (Dollars in thousands) Three Months Ended Mar 31, 2008 Interest Earned Average YIELD ANALYSIS Average /Interest Yield/ Balance Paid Rate Interest Earning Assets: Loans $3,143,174 $58,520 7.47% Investment securities 1,977,510 24,783 5.01% Federal funds sold and other temporary investments 131,601 1,162 3.54% ------- ----- Total interest earning assets 5,252,285 $84,465 6.45% ------- Allowance for credit losses (31,948) Non-interest earning assets 1,198,814 --------- Total assets $6,419,151 ========== Interest Bearing Liabilities: Interest bearing demand deposits $869,728 $3,121 1.44% Savings and money market deposits 1,252,346 7,414 2.37% Certificates and other time deposits 1,660,635 18,410 4.45% Securities sold under repurchase agreements 66,074 604 3.67% Federal funds purchased and other borrowings Securities sold under repurchase agreements 96,978 902 3.73% Junior subordinated debentures 112,885 2,019 7.17% ------- ----- Total interest bearing liabilities 4,058,646 $32,470 3.21% ------- Non-interest bearing liabilities: Non-interest bearing demand deposits 1,155,210 Other liabilities 61,745 ------ Total liabilities 5,275,601 Shareholders' equity 1,143,550 --------- Total liabilities and shareholders' equity $6,419,151 ========== Net Interest Income & Margin $51,995 3.97% ======= Net Interest Income & Margin (tax equivalent) $52,832 4.03% =======
Prosperity Bancshares, Inc.(R) Supplemental Financial Data (Unaudited) (Dollars in thousands) Three Months Ended December 31, 2008 Interest Earned Average YIELD ANALYSIS Average /Interest Yield/ Balance Paid Rate Interest Earning Assets: Loans $3,365,552 $56,073 6.63% Investment securities 3,229,874 39,713 4.92% Federal funds sold and other temporary investments 451,524 802 0.71% ------- --- Total interest earning assets 7,046,950 $96,588 5.45% ------- Allowance for credit losses (33,494) Non-interest earning assets 1,330,431 --------- Total assets $8,343,887 ========== Interest Bearing Liabilities: Interest bearing demand deposits $839,152 $1,629 0.77% Savings and money market deposits 1,578,817 6,895 1.74% Certificates and other time deposits 2,842,115 21,139 2.96% Securities sold under repurchase agreements 92,941 579 2.48% Federal funds purchased and other borrowings 178,369 937 2.09% Junior subordinated debentures 92,265 1,452 6.26% ------ ----- Total interest bearing liabilities 5,623,659 $32,631 2.31% ------- Non-interest bearing liabilities: Non-interest bearing demand deposits 1,425,440 Other liabilities 52,297 ------ Total liabilities 7,101,396 Shareholders' equity 1,242,491 --------- Total liabilities and shareholders' equity $8,343,887 ========== Net Interest Income & Margin $63,957 3.61% ======= Net Interest Income & Margin (tax equivalent) $64,597 3.65% =======

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