8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): December 23, 2013

PROSPERITY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Texas	001-35388	74-2331986
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4295 San Felipe

Houston, Texas 77027

(Address of principal executive offices including zip code)

Registrant's telephone number, including area code: (713) 693-9300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On July 1, 2012, Prosperity Bancshares, Inc. (“Prosperity”), the parent company of Prosperity Bank, El Campo, Texas, acquired American State Financial Corporation (“American State”), a Texas corporation, and parent company of American State Bank, Lubbock, Texas, pursuant to the terms of an Agreement and Plan of Reorganization dated February 26, 2012.

Prosperity is filing this Current Report on Form 8-K to provide a means for incorporation by reference of the contents of Item 9.01 in future filings with the Securities and Exchange Commission.

Item 9.01 Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

The following unaudited pro forma consolidated combined financial information of Prosperity is attached hereto as Exhibit 99.1 and incorporated by reference herein:

• Unaudited Pro Forma Consolidated Combined Statement of Income for the year ended December 31, 2012.

• Notes to Unaudited Pro Forma Consolidated Combined Financial Information.

(d) Exhibits. The following are filed as exhibits to this Current Report on Form 8-K:

Exhibit Number	Description of Exhibit
99.1	Unaudited Pro Forma Consolidated Combined Financial Information

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PROSPERITY BANCSHARES, INC.
	(Registrant)
Dated: December 23, 2013	By:	/s/  Charlotte M. Rasche
		Charlotte M. Rasche
		Executive Vice President and General Counsel

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.1	Unaudited Pro Forma Consolidated Combined Financial Information

EX-99.1

Exhibit 99.1

UNAUDITED PRO FORMA CONSOLIDATED COMBINED FINANCIAL INFORMATION OF PROSPERITY

The following unaudited pro forma consolidated combined statement of income of Prosperity for the year ended December 31, 2012, is presented to show the impact on Prosperity’s historical financial position and results of operations of the completion by Prosperity of the American State Financial Corporation (“American State”) acquisition, which was completed on July 1, 2012. The unaudited pro forma consolidated combined statement of income does not reflect the pro forma effect of any other acquisition by Prosperity completed during the year ended December 31, 2012.

As a result of the American State merger, shareholders of American State received 3.4110 shares of Prosperity common stock, with cash paid for fractional share interests, and $71.42 in cash, for each share of American State common stock they owned.

The unaudited pro forma consolidated combined statement of income assumes that the acquisition was completed on January 1, 2012. The adjustments are based on information available and certain assumptions that Prosperity believes are reasonable. Management has not identified, quantified or evaluated any material restructuring costs at this time and no such costs or any cost savings are reflected in the pro forma consolidated combined financial statements.

The following information should be read in conjunction with and is qualified in its entirety by Prosperity’s consolidated financial statements and accompanying notes.

The unaudited pro forma consolidated combined financial information is intended for informational purposes and is not necessarily indicative of the future financial position or future operating results of the combined company or of the financial position or operating results of the combined company that would have actually occurred had the acquisition been in effect as of the date or for the period presented.

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Unaudited Pro Forma Consolidated Combined Statement of Income

For the Year Ended December 31, 2012^(a)

	Prosperity Historical		American State Financial Corporation Historical		Adjusted Prosperity Proforma Subtotal		Pro Forma Adjustments			Pro Forma Combined
	(In thousands, except per share data)
Interest income:
Loans, including fees	$	271,324	$	32,159	$	303,483	$	23,607	(b)	$	327,090
Securities		148,374		22,440		170,814		(6,852	)(c)		163,962
Federal funds sold and other temporary investments		144		104		248		—			248
Total interest income		419,842		54,703		474,545		16,756			491,301
Interest expense:
Deposits		34,486		4,295		38,781		—			38,781
Federal funds purchased, other borrowings and securities sold under repurchase agreements		2,057		622		2,679		—			2,679
Junior subordinated debentures		2,593		—		2,593		—			2,593
Total interest expense		39,136		4,917		44,053		—			44,053
Net interest income		380,706		49,786		430,492		16,756			447,248
Provision for credit losses		6,100		1,576		7,676					7,676
Net interest income after provision for credit losses		374,606		48,210		422,816		16,756			439,572
Noninterest income:
Customer service fees		61,282		9,406		70,688		—			70,688
Other		14,253		9,264		23,517		—			23,517
Gain on sale of loans		—		2,099		2,099		—			2,099
Gain on sale of securities		—		45,889		45,889		—			45,889
Total noninterest income		75,535		66,658		142,193		—			142,193
Noninterest expense:
Salaries and employee benefits		115,505		32,134		147,639		(3,511	)(d)		144,128
Net occupancy expense and depreciation		25,398		3,133		28,531		—			28,531
Data processing		9,445		1,136		10,581		(682	)(d)		9,899
Core deposit intangible amortization		7,229		25		7,254		883	(e)		8,137
Other		40,880		30,702		71,582		(2,530	)(d)		69,502
Total noninterest expense		198,457		67,130		265,587		(5,840	)		259,747
Income before federal income taxes		251,684		47,738		299,422		22,596			322,018
Provision for federal income taxes		83,783		16,115		99,898		7,909	(f)		107,807
Net income	$	167,901	$	31,623	$	199,524	$	14,687		$	214,211
Basic earnings per share:
Earnings per share	$	3.24	$	12.65	$	3.93				$	3.77
Weighted average shares outstanding		51,794		2,499		50,770					56,881
Diluted earnings per share:
Earnings per share	$	3.23	$	12.65	$	3.92				$	3.76
Weighted average shares outstanding		51,941		2,499		50,924					57,035

See accompanying notes to unaudited pro forma consolidated combined financial information.

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Notes to Unaudited Pro Forma Consolidated Combined Financial Information

(dollars in thousands)

Note 1. Estimated Operational Cost Savings

Prosperity anticipates operational cost savings in connection with the acquisition of American State. Prosperity anticipates that these savings will occur through the combination of back office operations and elimination of duplicate general operations, administrative and salary and benefits expense. Estimated cost savings are not presented as part of the pro forma adjustments and there can be no assurance they will be achieved in the amount or manner currently contemplated.

Note 2. Anticipated Reduction in Fee Income

Prosperity anticipates loss of income related to reduced NSF fee income and debit and ATM card income. The combined company will be subject to the Durbin Act which imposes limits on debit and ATM card income. Such amounts are not presented as part of the pro forma adjustments.

Note 3. Pro forma Adjustments and Assumptions:

The following pro forma adjustments have been reflected in the unaudited pro forma consolidated combined income statement. All adjustments are based on current assumptions and valuations, which are subject to change.

(a) The closing date of the ASB transaction is as of July 1, 2012 and as such the historical data is reported through the closing date or December 31, 2012, whichever is earliest.

(b) Loans are evaluated for fair value adjustment in accordance with the acquisition method of accounting under accounting principles generally accepted in the United States of America. This adjustment represents the full year effect of estimated accretion related to the write-down of loans acquired in the American State acquisition not already included in Prosperity’s historical information.

(c) This adjustment represents the estimated full twelve month effect of amortization of $6.6 million related to the write-up of American State’s securities to market value as part of the purchase accounting transactions and the estimated full year effect of loss of investment income related to the cash portion of the merger consideration in the American State acquisition not already included in Prosperity’s historical information, using an assumed reinvestment rate of 0.25% and calculated as follows:

Cash portion of American State merger consideration	$	178,500
Assumed annual federal funds reinvestment rate		0.25	%
Total annual adjustment to interest income	$	446
Full year effect to Prosperity (six months)	$	223
Total loss of investment income for the year ended December 31, 2012	$	223

(d) This adjustment represents the reversal of one-time merger related expenses which are included in Prosperity’s historical numbers.

(e) This adjustment represents the full twelve month effect of amortization not already included in Prosperity’s historical information on core deposit intangibles of $12.4 million that were acquired in the acquisition of American State and amortized on an accelerated basis over ten years.

(f) This adjustment represents the net federal income tax effect of the pro forma adjustments using Prosperity’s statutory tax rate of 35.0%.

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