EX-99.1 2 dex991.htm PRESS RELEASE Press Release

EXHIBIT 99.1

 

 

LOGO

 

PRESS RELEASE   For more information contact:
Prosperity Bancshares, Inc.®   Dan Rollins
Prosperity Bank Plaza   Senior Vice President
4295 San Felipe   713.693.9300
Houston, Texas 77027   dan.rollins@prosperitybanktx.com

 

FOR IMMEDIATE RELEASE

 

PROSPERITY BANCSHARES, INC.®

FIRST QUARTER EARNINGS UP 30.9%

 

  •   Earnings Per Share increases to $0.43 (Diluted)

 

  •   Quarterly Earnings Exceed $10 Million

 

  •   FirstCapital Acquisition Completed

 

  •   Non-Interest Income up 23.9%

 

HOUSTON, April 15, 2005. Prosperity Bancshares, Inc.® NASDAQ: (PRSP), the parent company of Prosperity Bank®, reported record earnings for the quarter ended March 31, 2005. Net income for the quarter was $10.554 million or $0.43 per diluted common share, an increase in net income of $2.491 million or 30.9%, compared with $8.063 million or $0.38 per diluted common share for the same period in the prior year.

 

Prosperity completed its acquisition of First Capital Bankers, Inc. and its subsidiary FirstCapital Bank, ssb on March 1, 2005. Prosperity also completed its acquisitions of both Liberty Bancshares, Inc. and its subsidiary Liberty Bank, ssb and of Village Bank & Trust, ssb on August 1, 2004. The results of operations for these acquisitions have been included in Prosperity’s consolidated financial statements since their respective purchase dates.

 

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“I am very pleased to report another quarter of record earnings for our company,” said David Zalman, Prosperity’s Chief Executive Officer and President. “For the first time in our history, our after tax net income for the quarter exceeded ten million dollars.”

 

Zalman continued: “The high point of the first quarter was the completion of our merger with First Capital Bankers, Inc. on March 1st. This is the largest bank we have acquired and provides us with great opportunities in the future. We have solidified our position as one of the leading banks in South and South East Texas and look forward to serving our growing customer base.”

 

“Strengthening margins are and will continue to enhance earnings as interest rates rise through the current tightening cycle, and we have positioned the bank to capitalize on a return to a more normal interest rate environment. We believe that our full year 2005 earnings will fall on the high side of the current analyst estimates of $1.74 to $1.78 per share,” concluded Zalman.

 

“We completed the merger with First Capital on March 1st and we completed the conversion of their computer systems on March 21st. This was the first step toward integrating the twenty-seven banking centers into our bank,” remarked Dan Rollins, President of Prosperity Bank®. “We are very pleased with the progress we are making and are on schedule with our plans. Within the next few weeks, we will complete the re-branding of these full service banking centers.”

 

“We believe Prosperity is well equipped to deal with any challenges which may emerge. We will continue to implement our proven business plan, and prudently pursue the expansion of our franchise, which has been the foundation of our success,” added Rollins.

 

“Our solid performance continues to confirm our success in building a strong, true Texas bank,” added Ned S. Holmes, Prosperity’s Chairman of the Board of Directors. “We believe that Texans are hungry for true personal service and full service locations staffed with Real Bankers®. Our team of qualified and enthusiastic bankers is an essential component to our strategy.”

 

Results of operations for the three months ended March 31, 2005

 

For the three months ended March 31, 2005, net income was $10.554 million compared with $8.063 million for the same period in 2004. Net income per diluted common share was $0.43 for the three months ended March 31, 2005 compared with $0.38 for the same period in 2004. Returns on average assets, average common shareholders’ equity and average tangible shareholders’ equity for the three months ended March 31, 2005 were 1.42%, 12.87% and 33.38%, respectively. Prosperity’s efficiency ratio was 51.06% for the three months ended March 31, 2005.

 

Net interest income for the quarter ended March 31, 2005 increased 26.5%, to $24.477 million compared with $19.347 million during the same period in 2004. The increase was attributable primarily to an 20.6% increase in average earning assets combined with a 13 basis point increase in the net interest margin on a tax equivalent basis.

 

Non-interest income increased 23.9% to $6.533 million for the three months ended March 31, 2005

 

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compared with $5.272 million for the same period in 2004. The increase was attributable primarily to deposit service charges on the increased number of deposit accounts as a result of the additional banking centers acquired since April 2004. Linked quarter non-interest income increased $300,000 which includes a $225,000 distribution related to the Pulse EFT Association Merger.

 

The effective tax rate for the three months ended March 31, 2005 was 29.9% as compared to 33.0% during the same period in 2004. The effective tax rate was positively impacted by a non-recurring tax credit of approximately $540,000.

 

Non-interest expenses increased $3.375 million or 27.1% to $15.834 million for the first quarter of 2005 compared with the first quarter of 2004. The increase in non-interest expenses was attributable primarily to the increased operating costs associated with the additional banking centers acquired as a part of the three acquisitions completed since April 2004 and approximately $1.0 million in extraordinary expenses including additional advertising, merger related integration expenses and additional one-time incentive compensation accrual.

 

Loans at March 31, 2005 were $1.500 billion, an increase of $729.9 million, or 94.8%, compared with $770.2 million at March 31, 2004. As reflected in the table below, linked quarter loan growth for the first quarter of 2005 was impacted by the loans acquired as a part of the First Capital merger. Excluding the loans acquired as a part of the First Capital merger, linked quarter loan growth was 1.36% on an annualized basis. Excluding banking centers acquired within the past year, internally generated linked quarter loan growth was 5.55% on an annualized basis.

 

Balance Sheet Data (at period end)    Mar 31, 2005
    Dec 31, 2004
(In Thousands)    (Unaudited)    (Unaudited)

Loans:

              

Acquired with FirstCapital

    $ 461,113    $ 0

Acquired with 3Q04 acquisitions

      179,420      187,678

All other

      859,605      847,835
    
  

Total Loans

    $ 1,500,138    $ 1,035,513
    
  

Deposits:

              

Assumed with FirstCapital

    $ 604,584    $ 0

Assumed with 3Q04 acquisitions

      213,627      227,237

All other

      2,075,470      2,089,839
    
  

Total Deposits

    $ 2,893,681    $ 2,317,076
    
  

 

Deposits at March 31, 2005 were $2.894 billion, an increase of $770.8 million or 36.3%, compared with $2.123 billion at March 31, 2004. As reflected in the table above, linked quarter deposit growth for the first quarter of 2005 was impacted by the deposits assumed as a part of the First

 

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Capital merger. Excluding deposits assumed as a part of the First Capital merger, deposits declined linked quarter by 1.21%. Approximately half of the decline in deposits is related to high cost deposits from banking centers acquired within the past year.

 

Average loans increased 55.6% or $428.5 million to $1.199 billion for the quarter ended March 31, 2005 compared with $770.8 million for the same period of 2004. The provision for credit losses was $120,000 for the three months ended March 31, 2005 and March 31, 2004.

 

Non-performing assets totaled $3.447 million or 0.23% of total loans and ORE at March 31, 2005 compared with $610,000 or 0.08% of total loans and ORE at March 31, 2004. At March 31, 2005, the allowance for credit losses was 1.13% of total loans, compared with 1.36% at March 31, 2004. Out of the total non-performing assets, 96.7% were held by banks that we have acquired within the past two years.

 

At March 31, 2005, Prosperity had $3.480 billion in total assets, $1.500 billion in loans, $2.894 billion in deposits, and approximately 210,000 deposit and loan accounts. Assets, loans and deposits at March 31, 2005 grew by 42.1%, 94.8% and 36.3%, respectively, compared with their levels at March 31, 2004.

 

Conference Call

 

Prosperity’s management team will host a conference call on Friday, April 15, 2005 at 10:30 a.m. Eastern Daylight Time (9:30 a.m. Central Daylight Time) to discuss their earnings results, the recently completed merger with First Capital Bankers, Inc., business trends and their outlook for 2005. Individuals and investment professionals may participate in the call by dialing 1-800-362-0571.

 

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity’s website at www.prosperitybanktx.com. The webcast may be accessed directly from Prosperity’s Investor Relations page by clicking on the “1st Quarter Results and Webcast” link.

 

Date of Annual Meeting

 

The Annual Meeting of Shareholders of Prosperity Bancshares® will be held on Tuesday, April 19, 2005 at Prosperity Bank’s River Oaks Banking Center at Prosperity Bank Plaza, 4295 San Felipe, Houston, Texas at 10:00 a.m. Central Daylight Time.

 

Acquisition of Liberty Bank

 

On August 1, 2004, Prosperity completed the acquisition of Liberty Bancshares, Inc. and its subsidiary, Liberty Bank, ssb, in a stock and cash transaction. Liberty Bank operated six (6) offices in Austin, Texas, all of which became full service banking centers of Prosperity Bank.

 

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Acquisition of Village Bank & Trust

 

On August 1, 2004, Prosperity completed the acquisition of Village Bank & Trust, ssb in a cash transaction. Village Bank & Trust operated one (1) office in Austin, Texas, which became a full service banking center of Prosperity Bank.

 

Acquisition of FirstCapital Bank

 

On March 1, 2005, Prosperity completed the acquisition of First Capital Bankers, Inc. and its Corpus Christi, Texas-based subsidiary bank, FirstCapital Bank, ssb. FirstCapital operated thirty-one (31) offices from Kingsville, south of Corpus Christi, northward to Houston. Four (4) offices were consolidated with nearby banking centers during March 2005.

 

Prosperity Bancshares, Inc.®

 

Prosperity Bancshares®, a $3.5 billion Houston, Texas based regional financial holding company, formed in 1983, was named to the Keefe Bruyette & Woods, Inc. 2004 Honor Roll for achieving exceptional earnings per share growth for the past 10 years.

 

Operating under a community banking philosophy, Prosperity seeks 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 consumers and small and medium sized businesses. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services at www.prosperitybanktx.com, Retail Brokerage Services, MasterMoney Debit Cards, and 24 hour voice response banking. Prosperity currently operates eighty-five (85) full service banking locations, thirty-three (33) in the Houston CMSA; sixteen (16) in the Corpus Christi area; eleven (11) in the Dallas area; seven (7) in the Austin area; and eighteen (18) in fifteen contiguous counties south and southwest of Houston generally along the NAFTA highway.

 

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Prosperity Bank® operates the following full service banking centers:

 

Austin Area—   Corpus Christi Area—   Houston Area—   South Texas Area—
Allandale   Airline   Aldine   Bay City
Congress   Alameda   Bellaire   Beeville
Lakeway       CityWest   Cuero
Oak Hill   Carmel   Copperfield   East Bernard
Research Blvd   Everhart   Cypress   Edna
Riverside   Northwest   Downtown   El Campo
William Cannon   Saratoga   Fairfield   Goliad
    Water Street   Gladebrook   Gonzales
Dallas Area—   Woodlawn   Heights   Hallettsville
Abrams Centre   Alice   Highway 6   Palacios
Camp Wisdom   Aransas Pass   Holcombe   Port Lavaca
Kiest   Kingsville   Medical Center   Seguin
Preston Road   Mathis   Memorial   Victoria
Turtle Creek   Port Aransas   Midtown   Victoria—Navarro
Westmoreland   Portland   Post Oak   Victoria—North
Blooming Grove   Rockport   River Oaks   Wharton
Cedar Hill   Sinton   Tanglewood   Yoakum
Corsicana       Waugh Drive   Yorktown
Ennis       Westheimer    
Red Oak       Woodcreek    
        Angleton    
        Clear Lake    
        Cleveland    
        Dayton    
        Galveston    
        Hitchcock    
        Liberty    
        Magnolia    
        Mont Belvieu    
        Needville    
        Sweeny    
        West Columbia    
        Winnie    

 

—  —  —

 

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by our 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, that may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include whether we can: continue to sustain our current internal growth rate or our total growth rate; successfully close and integrate acquisitions; continue to provide products and services that appeal to our customers; continue to have access to the debt and equity capital we need to sustain our growth; and achieve our sales objectives. Other risks include the possibility that credit quality could

 

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deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate fluctuations and interest rate fluctuations; weather; and the stock price volatility associated with “small-cap” companies. These and various other factors are discussed in our most recent Annual Report on Form 10-K.

 

Copies of Prosperity Bancshares’s® SEC filings may be downloaded from the Internet at no charge from www.prosperitybanktx.com.

 

—  —  —

 

Prosperity Bancshares, Inc.®

Financial Highlights

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

 

     Three Months Ended
     Mar 31,
2005
    Mar 31,
2004
    Dec 31,
2004
    Dec 31,
2003
     (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)

Selected Earnings and Per Share Data

                            

Total interest income

      34,033      26,372      30,308      25,053

Total interest expense

      9,556      7,025      8,106      6,647
    
  
  
  

Net interest income

      24,477      19,347      22,202      18,406

Provision for credit losses

      120      120      220      123
    
  
  
  

Net interest income after provision for credit losses

      24,357      19,227      21,982      18,283

Net interest income tax-equivalent

      24,830      19,852      22,581      18,919

Total non-interest income

      6,533      5,272      6,233      4,793

Total non-interest expense

      15,834      12,459      13,987      12,456
    
  
  
  

Net earnings before taxes

      15,056      12,040      14,228      10,620

Federal income taxes

      4,502      3,977      4,892      3,427
    
  
  
  

Net income

    $ 10,554    $ 8,063    $ 9,336    $ 7,193
    
  
  
  

Basic earnings per share

    $ 0.44    $ 0.39    $ 0.42    $ 0.36

Diluted earnings per share

    $ 0.43    $ 0.38    $ 0.41    $ 0.35

Period end shares outstanding

      27,476      20,945      22,381      20,930

Weighted average shares outstanding (basic)

      24,080      20,937      22,380      20,046

Weighted average shares outstanding (diluted)

      24,357      21,233      22,660      20,357

 

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Prosperity Bancshares, Inc.®

Financial Highlights

(Dollars in thousands)

 

     Three Months Ended
  
     Mar 31,
2005
     Mar 31,
2004
    

Dec 31,

2004

    

Dec 31,

2003

  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Balance Sheet Averages

                                 

Total loans

    $ 1,199,290     $ 770,811     $ 1,013,088     $ 738,512  

Investment securities

      1,365,239       1,393,297       1,325,703       1,284,265  

Fed funds sold and other earning assets

      75,236       24,780       99,164       31,572  
    
 
 
 

Total earning assets

      2,639,765       2,188,888       2,437,955       2,054,349  

Allowance for credit losses

      (14,419 )     (10,314 )     (12,961 )     (9,940 )

Cash and due from banks

      65,603       60,976       58,245       57,618  

Goodwill

      190,071       116,727       151,523       90,252  

Core Deposit Intangibles (CDI)

      11,383       7,920       12,392       4,443  

Other real estate

      389       167       294       451  

Fixed assets, net

      43,175       34,119       36,191       32,592  

Other assets

      40,807       19,849       21,645       21,576  
    
 
 
 

Total assets

    $ 2,976,774     $ 2,418,332     $ 2,705,284     $ 2,251,341  
    
 
 
 

Non-interest bearing deposits

    $ 531,069     $ 429,390     $ 529,633     $ 410,697  

Interest bearing deposits

      1,991,458       1,662,462       1,795,257       1,541,243  
    
 
 
 

Total deposits

      2,522,527       2,091,852       2,324,890       1,951,940  

Federal funds purchased and interest bearing liabilities

      48,185       35,277       36,633       51,431  

Junior subordinated debentures

      56,874       59,804       57,741       49,065  

Other liabilities

      21,252       8,036       13,119       7,261  

Shareholders’ equity(A)

      327,936       223,363       272,901       191,644  
    
 
 
 

Total liabilities and equity

    $ 2,976,774     $ 2,418,332     $ 2,705,284     $ 2,251,341  
    
 
 
 

 

(A) Includes ($3,650), $1,839, ($2,537) and $1,712 in after tax unrealized (losses)/gains on available for sale securities for the three month periods ending March 31, 2005, March 31, 2004, December 31, 2004 and December 31, 2003, respectively.

 

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Prosperity Bancshares, Inc.®

Financial Highlights

(Dollars in thousands)

 

     Three Months Ended
     Mar 31,
2005
    Mar 31,
2004
    Dec 31,
2004
    Dec 31,
2003
     (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)

Income Statement Data

                            

Interest on loans

    $ 19,670    $ 12,313    $ 16,557    $ 12,056

Interest on securities

      13,921      14,005      13,260      12,925

Interest on federal funds sold and other earning assets

      442      54      491      72
    
  
  
  

Total interest income

      34,033      26,372      30,308      25,053

Interest expense – deposits

      8,271      5,781      6,803      5,559

Interest expense – debentures

      889      996      1,035      787

Interest expense – other

      396      248      268      301
    
  
  
  

Total interest expense

      9,556      7,025      8,106      6,647
    
  
  
  

Net interest income(B)

      24,477      19,347      22,202      18,406

Provision for credit losses

      120      120      220      123
    
  
  
  

Net interest income after provision for credit losses

      24,357      19,227      21,982      18,283

Service charges on deposit accounts

      5,408      4,760      5,388      4,088

Net gain on sale of assets

      53      23      81      112

Gain on sale of securities

      0      0      0      0

Other non-interest income

      1,072      489      764      593
    
  
  
  

Total non-interest income

      6,533      5,272      6,233      4,793

Salaries and benefits(C)

      8,531      6,704      7,402      6,479

CDI amortization

      723      383      561      228

Net occupancy and equipment

      1,371      1,043      1,467      1,485

Depreciation

      970      701      725      680

Data processing and software amortization

      596      447      563      400

Other non-interest expenses

      3,643      3,181      3,269      3,184
    
  
  
  

Total non-interest expenses

      15,834      12,459      13,987      12,456

Net earnings before taxes

      15,056      12,040      14,228      10,620
    
  
  
  

Federal income taxes

      4,502      3,977      4,892      3,427
    
  
  
  

Net income available to common shareholders

    $ 10,554    $ 8,063    $ 9,336    $ 7,193
    
  
  
  

 

(B) Net interest income on a tax equivalent basis would be $24,830, $19,852, $22,581 and $18,919 for the three months ended March 31, 2005, March 31, 2004, December 31, 2004 and December 31, 2003, respectively.

 

(C) Salaries and benefits includes equity compensation expenses of $130, $0, $96 and ($10) for the three months ended March 31, 2005, March 31, 2004, December 31, 2004 and December 31, 2003, respectively.

 

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Prosperity Bancshares, Inc.®

Financial Highlights

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

 

     As of and For the Three Months Ended
     Mar 31,
2005
     Mar 31,
2004
    Dec 31,
2004
     Dec 31,
2003
     (Unaudited)     (Unaudited)    (Unaudited)     (Unaudited)

Common Share and Other Data

                              

Employees – FTE

      926       612      653       629

Book value per share

    $ 15.51     $ 10.79    $ 12.32     $ 10.49

Tangible book value per share

    $ 5.68     $ 4.84    $ 4.96     $ 4.53

Period end shares outstanding

      27,476       20,945      22,381       20,930

Weighted average shares outstanding (basic)

      24,080       20,937      22,380       20,046

Weighted average shares outstanding (diluted)

      24,357       21,233      22,660       20,357

Non-accrual loans

    $ 997     $ 2    $ 297     $ 2

Accruing loans 90 days or more days past due

      1,730       523      1,083       679

Restructured loans

      0       0      0       0
    
 
  
 

Total non-performing loans

      2,727       525      1,380       681

Repossessed assets

      0       5      0       40

Other real estate

      720       80      341       246
    
 
  
 

Total non-performing assets

    $ 3,447     $ 610    $ 1,721     $ 967

Allowance for credit losses at end of period

    $ 16,934     $ 10,460    $ 13,105     $ 10,571

Net (recoveries) / charge-offs

    $ (106 )   $ 5    $ (25 )   $ 172

Basic earnings per share

    $ 0.44     $ 0.39    $ 0.42     $ 0.36

Diluted earnings per share

    $ 0.43     $ 0.38    $ 0.41     $ 0.35

 

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Prosperity Bancshares, Inc.®

Financial Highlights

 

     Three Months Ended
  
     Mar 31,
2005
     Mar 31,
2004
     Dec 31,
2004
     Dec 31,
2003
  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Performance Ratios

                                 

Return on average assets (annualized)

      1.42 %     1.33 %     1.38 %     1.28 %

Return on average common equity (annualized)

      12.87 %     14.44 %     13.68 %     15.01 %

Return on average tangible common equity (annualized)

      33.38 %     32.67 %     34.26 %     29.68 %

Net interest margin (tax equivalent) (annualized)

      3.76 %     3.63 %     3.70 %     3.68 %

Efficiency ratio(D)

      51.06 %     50.60 %     49.19 %     53.69 %

Asset Quality Ratios

                                 

Non-performing assets to average earning assets

      0.13 %     0.03 %     0.07 %     0.05 %

Non-performing assets to loans and other real estate

      0.23 %     0.08 %     0.17 %     0.13 %

Net (recoveries) / charge-offs to average loans

      (0.01 %)     0.00 %     0.00 %     0.02 %

Allowance for credit losses to total loans

      1.13 %     1.36 %     1.27 %     1.34 %

Common Stock Market Price

                                 

High

    $ 29.32     $ 25.15     $ 29.53     $ 24.35  

Low

    $ 25.50     $ 22.30     $ 26.09     $ 20.75  

Period end market price

    $ 26.49     $ 23.67     $ 29.21     $ 22.64  

 

(D) Calculated by dividing total non-interest expense (excluding securities losses and credit loss provisions) by net interest income plus non-interest income (excluding securities gains). Additionally, taxes are not part of this calculation.

 

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Prosperity Bancshares, Inc.®

Financial Highlights

(Dollars in thousands)

 

     Mar 31,
2005
    

Dec 31,

2004

     Sept 30,
2004
     June 30,
2004
     Mar 31,
2004
  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Balance Sheet Data (at period end)

                                         

Total loans

    $ 1,500,138     $ 1,035,513     $ 1,007,420     $ 790,920     $ 770,223  

Investment securities(E)

      1,486,463       1,302,792       1,353,578       1,418,364       1,426,636  

Federal funds sold and other earning assets

      55,992       79,350       72,595       7,849       28,323  
    
 
 
 
 

Total earning assets

      3,042,593       2,417,655       2,433,593       2,217,133       2,225,182  

Allowance for credit losses

      (16,934 )     (13,105 )     (12,861 )     (10,371 )     (10,460 )

Cash and due from banks

      71,696       58,760       60,874       48,782       55,524  

Goodwill

      245,256       153,180       150,585       116,574       116,123  

Core deposit intangibles

      24,883       11,492       13,300       8,080       8,461  

Other real estate

      720       341       535       48       80  

Fixed assets, net

      49,996       35,793       36,331       32,762       33,651  

Other assets

      61,537       33,112       30,957       21,336       20,992  
    
 
 
 
 

Total assets

    $ 3,479,747     $ 2,697,228     $ 2,713,314     $ 2,434,344     $ 2,449,553  
    
 
 
 
 

Demand deposits

    $ 592,238     $ 518,358     $ 527,845     $ 444,067     $ 443,137  

Interest bearing deposits

      2,301,443       1,798,718       1,799,434       1,635,850       1,679,724  
    
 
 
 
 

Total deposits

      2,893,681       2,317,076       2,327,279       2,079,917       2,122,861  

Federal funds purchased and other interest bearing liabilities

      69,269       38,174       41,468       58,940       30,578  

Junior subordinated debentures

      75,775       47,424       59,804       59,804       59,804  

Other liabilities

      14,874       18,907       15,498       7,457       10,383  
    
 
 
 
 

Total liabilities

      3,053,599       2,421,581       2,444,049       2,206,118       2,223,626  

Shareholders’ equity(F)

      426,148       275,647       269,265       228,226       225,927  
    
 
 
 
 

Total liabilities and equity

    $ 3,479,747     $ 2,697,228     $ 2,713,314     $ 2,434,344     $ 2,449,553  
    
 
 
 
 

 

(E) Includes ($6,148), ($4,768), ($2,863), ($4,483), and $2,783 in unrealized (losses)/gains on available for sale securities for the quarterly periods ending March 31, 2005, December 31, 2004, September 30, 2004, June 30, 2004 and March 31, 2004, respectively.

 

(F) Includes ($3,996), ($3,099), ($1,861), ($2,914) and $1,809 in after tax unrealized (losses)/gains on available for sale securities for the quarterly periods ending March 31, 2005, December 31, 2004, September 30, 2004, June 30, 2004, March 31, 2004, respectively.

 

Page 12 of 17

Prosperity Bancshares, Inc.®

Financial Highlights

 

     Three Months Ended
  
     Mar 31,
2005
     Dec 31,
2004
     Sept 30,
2004
     Jun 30,
2004
     Mar 31,
2004
  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Comparative Quarterly Asset

Quality, Performance & Capital Ratios

 

 

                        

Return on average assets (annualized)

    1.42 %   1.38 %   1.37 %   1.37 %   1.33 %

Return on average common equity (annualized)

    12.87 %   13.68 %   14.42 %   14.63 %   14.44 %

Return on average tangible equity (annualized)

    33.38 %   34.26 %   34.50 %   32.05 %   32.67 %

Net interest margin (tax equivalent) (annualized)

    3.76 %   3.70 %   3.64 %   3.55 %   3.63 %

Efficiency ratio

    51.06 %   49.19 %   48.55 %   48.81 %   50.60 %

Non-performing assets to average earning assets

    0.13 %   0.07 %   0.11 %   0.07 %   0.03 %

Non-performing assets to loans and other real estate

    0.23 %   0.17 %   0.25 %   0.20 %   0.08 %

Net (recoveries) / charge-offs to average loans

    (0.01 %)   0.00 %   0.03 %   0.03 %   0.00 %

Allowance for credit losses to total loans

    1.13 %   1.27 %   1.28 %   1.31 %   1.36 %

Tier 1 risk-based capital

    14.51 %   13.56 %   14.24 %   17.40 %   16.68 %

Total risk-based capital

    15.57 %   14.67 %   15.35 %   18.50 %   17.78 %

Tier 1 leverage capital

    8.63 %   6.30 %   6.77 %   7.10 %   6.87 %

Tangible equity to tangible assets

    4.86 %   4.38 %   4.14 %   4.48 %   4.36 %

Equity to assets

    12.25 %   10.22 %   9.94 %   9.38 %   9.23 %

 

Page 13 of 17

Prosperity Bancshares, Inc.®

Supplemental Financial Data (Unaudited)

(Dollars in thousands)

 

     Three Months Ended Mar 31, 2005
  
     Average
Balance
     Interest
Earned/
Interest
Paid
    Average
Yield/
Rate
  

YIELD ANALYSIS

                      

Interest Earning Assets:

                      

Loans

    $ 1,199,290     $ 19,670    6.56 %

Investment securities

      1,365,239       13,921    4.08 %

Federal funds sold and other temporary investments

      75,236       442    2.35 %
    
 
      

Total interest earning assets

      2,639,765     $ 34,033    5.16 %
            
      

Allowance for credit losses

      (14,419 )             

Non-interest earning assets

      351,428               
    
            

Total assets

    $ 2,976,774               
    
            

Interest Bearing Liabilities:

                      

Interest bearing demand deposits

    $ 510,973     $ 1,303    1.02 %

Savings and money market deposits

      596,696       1,725    1.16 %

Certificates and other time deposits

      883,789       5,243    2.37 %

Junior subordinated debentures

      56,874       889    6.25 %

Federal funds purchased and other borrowings

      48,185       396    3.29 %
    
 
      

Total Interest bearing liabilities

      2,096,517     $ 9,556    1.82 %
            
      

Non-interest bearing liabilities:

                      

Non-interest bearing demand deposits

      531,069               

Other liabilities

      21,252               
    
            

Total liabilities

      2,648,838               

Shareholders’ equity

      327,936               
    
            

Total liabilities and shareholders’ equity

    $ 2,976,774               
    
            

Net Interest Income & Margin

            $ 24,477    3.71 %
            
      

Net Interest Income & Margin (tax equivalent)

            $ 24,830    3.76 %
            
      

 

Page 14 of 17

Prosperity Bancshares, Inc.®

Supplemental Financial Data (Unaudited)

(Dollars in thousands)

 

     Three Months Ended Mar 31, 2004
  
     Average
Balance
     Interest
Earned/
Interest
Paid
    Average
Yield/
Rate
  

YIELD ANALYSIS

                      

Interest Earning Assets:

                      

Loans

    $ 770,811     $ 12,313    6.39 %

Investment securities

      1,393,297       14,005    4.02 %

Federal funds sold and other temporary investments

      24,780       54    0.87 %
    
 
  

Total interest earning assets

      2,188,888     $ 26,372    4.82 %
            
      

Allowance for credit losses

      (10,314 )             

Non-interest earning assets

      239,758               
    
            

Total assets

    $ 2,418,332               
    
            

Interest Bearing Liabilities:

                      

Interest bearing demand deposits

    $ 490,935     $ 1,255    1.02 %

Savings and money market deposits

      471,630       895    0.76 %

Certificates and other time deposits

      699,897       3,631    2.08 %

Junior subordinated debentures

      59,804       996    6.66 %

Federal funds purchased and other borrowings

      35,277       248    2.81 %
    
 
      

Total Interest bearing liabilities

      1,757,543     $ 7,025    1.60 %
            
      

Non-interest bearing liabilities:

                      

Non-interest bearing demand deposits

      429,390               

Other liabilities

      8,036               
    
            

Total liabilities

      2,194,969               

Shareholders’ equity

      223,363               
    
            

Total liabilities and shareholders’ equity

    $ 2,418,332               
    
            

Net Interest Income & Margin

            $ 19,347    3.54 %
            
      

Net Interest Income & Margin (tax equivalent)

            $ 19,852    3.63 %
            
      

 

Page 15 of 17

Prosperity Bancshares, Inc.®

Supplemental Financial Data (Unaudited)

(Dollars in thousands)

 

     Three Months Ended Dec 31, 2004
  
     Average
Balance
     Interest
Earned/
Interest
Paid
    Average
Yield/
Rate
  

YIELD ANALYSIS

                      

Interest Earning Assets:

                      

Loans

    $ 1,013,088     $ 16,557    6.54 %

Investment securities

      1,325,703       13,260    4.00 %

Federal funds sold and other temporary investments

      99,164       491    1.98 %
    
 
      

Total interest earning assets

      2,437,955     $ 30,308    4.97 %
            
      

Allowance for credit losses

      (12,961 )             

Non-interest earning assets

      280,290               
    
            

Total assets

    $ 2,705,284               
    
            

Interest Bearing Liabilities:

                      

Interest bearing demand deposits

    $ 504,637     $ 1,338    1.06 %

Savings and money market deposits

      522,135       1,187    0.91 %

Certificates and other time deposits

      768,485       4,278    2.23 %

Junior subordinated debentures

      57,741       1,035    7.17 %

Federal funds purchased and other borrowings

      36,633       268    2.93 %
    
 
      

Total Interest bearing liabilities

      1,889,631     $ 8,106    1.72 %
            
      

Non-interest bearing liabilities:

                      

Non-interest bearing demand deposits

      529,633               

Other liabilities

      13,119               
    
            

Total liabilities

      2,432,383               

Shareholders’ equity

      272,901               
    
            

Total liabilities and shareholders’ equity

    $ 2,705,284               
    
            

Net Interest Income & Margin

            $ 22,202    3.64 %
            
      

Net Interest Income & Margin (tax equivalent)

            $ 22,581    3.70 %
            
      

 

Page 16 of 17

Prosperity Bancshares, Inc.®

Supplemental Financial Data (Unaudited)

(Dollars in thousands)

 

     Three Months Ended Dec 31, 2003
  
     Average
Balance
     Interest
Earned/
Interest
Paid
    Average
Yield/
Rate
  

YIELD ANALYSIS

                      

Interest Earning Assets:

                      

Loans

    $ 738,512     $ 12,056    6.53 %

Investment securities

      1,284,265       12,925    4.03 %

Federal funds sold and other temporary investments

      31,572       72    0.91 %
    
 
      

Total interest earning assets

      2,054,349     $ 25,053    4.88 %
            
      

Allowance for credit losses

      (9,940 )             

Non-interest earning assets

      206,932               
    
            

Total assets

    $ 2,251,341               
    
            

Interest Bearing Liabilities:

                      

Interest bearing demand deposits

    $ 422,937     $ 1,107    1.05 %

Savings and money market deposits

      457,803       884    0.77 %

Certificates and other time deposits

      660,503       3,568    2.16 %

Junior subordinated debentures

      49,065       787    6.42 %

Federal funds purchased and other borrowings

      51,431       301    2.34 %
    
 
      

Total Interest bearing liabilities

      1,641,739     $ 6,647    1.62 %
            
      

Non-interest bearing liabilities:

                      

Non-interest bearing demand deposits

      410,697               

Other liabilities

      7,261               
    
            

Total liabilities

      2,059,697               

Shareholders’ equity

      191,644               
    
            

Total liabilities and shareholders’ equity

    $ 2,251,341               
    
            

Net Interest Income & Margin

            $ 18,406    3.58 %
            
      

Net Interest Income & Margin (tax equivalent)

            $ 18,919    3.68 %
            
      

 

Page 17 of 17