Prosperity Posts Higher Earnings Following Pickups

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Prosperity Bancshares (PB) in Houston posted higher earnings in the first quarter following a flood of deals.

Earnings at the $15.1 billion-asset company rose 35% from a year earlier, to $49.3 million, or 86 cents per share.

Net interest income increased 32% year over year, to $108 million, but its net interest margin compressed 24 basis points from the first quarter of 2012, to 3.36%.

Noninterest income rose 68% from a year earlier, to $23.4 million, primarily because of fee income generated American State Bank in Lubbock, which Prosperity bought in July.

Its noninterest expense rose 38% year over year, to $55.8 million, primarily because of expenses associated with American State Bank. Prosperity's efficiency ratio deteriorated 17 basis points from a year earlier, to 42.4%.

The company's loan portfolio grew 40% from the first quarter of 2012, to $5.3 billion. The provision for loan losses increased 98% from a year earlier, to $2.8 million; chargeoffs grew 209%, to $315,000.

During the first quarter, Prosperity bought East Texas Financial Services. Besides American State Bank, Prosperity last year also bought Texas Bankers, the Bank of Arlington and Community National Bank.

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