Exhibit 99.1

 

PRESS RELEASE	For more information contact:
Prosperity Bancshares, Inc.®	David Zalman
Prosperity Bank Plaza	Chairman and Chief Executive Officer
4295 San Felipe	281.269.7199
Houston, Texas 77027	david.zalman@prosperitybankusa.com

 

FOR IMMEDIATE RELEASE

 

Prosperity Bancshares, Inc.^®

REPORTS SECOND QUARTER

2016 EARNINGS

 

●

Second quarter 2016 earnings per share (diluted) of $0.98

●

Second quarter net income of $68.071 million

●

Nonperforming assets remain low at 0.27% of second quarter average earning assets

●

Return (annualized) on second quarter average assets of 1.24%

●

Second quarter efficiency ratio of 42.46%

●

Returns (annualized) on second quarter average common equity of 7.70% and average tangible common equity of 17.15%(1)

 

HOUSTON, July 27, 2016. Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, “Prosperity”), reported net income for the quarter ended June 30, 2016 of $68.071 million or $0.98 per diluted common share. Additionally, nonperforming assets remain low at 0.27% of second quarter average earning assets.

 

“I am pleased to share the positive earnings we had for the second quarter of 2016, despite a large provision for credit losses and continued low interest rates. We showed impressive annualized returns on second quarter average tangible common equity of 17.15% and on second quarter average assets of 1.24%. Our earnings were impacted by a $6.0 million provision for credit losses, larger than our provision for this same period in 2015,” said David Zalman, Prosperity’s Chairman and Chief Executive Officer.

 

“Prosperity operates in markets across Texas and Oklahoma, some of which have been impacted more than others by the downturn in the energy industry. We have experienced solid loan growth in the first six months of 2016 in our Central Texas, Bryan/College Station, Houston and Dallas/Ft. Worth areas, which have offset the markets affected more by the energy industry, such as West Texas, South Texas and Oklahoma. We believe that we have seen the bottom in oil prices and that the energy industry should start experiencing job recoveries by the first quarter of 2017,” continued Zalman.

 

“I am amazed at the resiliency in the markets we serve. Austin, Dallas and San Antonio are three of the ten fastest growing cities in the U.S. The Texas unemployment rate held steady in May 2016 at 4.4%, which is lower than the U.S. rate of 4.7%, while the Oklahoma unemployment rate was 4.7% in May, in line with the U.S. rate. Home prices in Texas continue to rise, partly due to solid demand and low inventories, while home prices in Oklahoma also rose slightly,” added Zalman.

_____________

(1)Refer to the “Notes to Selected Financial Data” at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure.

 

 

“I am very optimistic about our future. We believe that the hard work of our entire team will help our customers grow and in turn increase profitability. We will continue to focus on running one of the most efficient banks in the country, maintaining our solid asset quality and enhancing shareholder value,” concluded Zalman.

  

Results of Operations for the Three Months Ended June 30, 2016

 

Net income was $68.071 million for the three months ended June 30, 2016 compared with $71.932 million for the same period in 2015. Net income per diluted common share was $0.98 for the three months ended June 30, 2016 compared with $1.03 for the same period in 2015. Net income (excluding purchase accounting adjustments) was $62.359 million for the quarter ended June 30, 2016 compared with $63.800 million for the quarter ended June 30, 2015. Net income per diluted common share (excluding purchase accounting adjustments) was $0.90 for the three months ended June 30, 2016 compared with $0.91 for the three months ended June 30, 2015. The reconciliation of these non-GAAP financial measures is shown on page 13. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2016 were 1.24%, 7.70% and 17.15%⁽¹⁾, respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and taxes) was 42.46% for the three months ended June 30, 2016.

 

Net interest income before provision for credit losses for the quarter ended June 30, 2016 was $158.467 million compared with $158.239 million during the same period in 2015, an increase of $228 thousand or 0.1%. Linked quarter net interest income before provision for credit losses decreased to $158.467 million compared with $166.257 million during the three months ended March 31, 2016, primarily due to a decrease in loan discount accretion of $5.190 million and a decrease in average interest-earning assets of 1.3% for the three months ended June 30, 2016.

 

The net interest margin on a tax equivalent basis was 3.37% for the three months ended June 30, 2016, compared with 3.39% for the same period in 2015. Linked quarter net interest margin on a tax equivalent basis was 3.37% for the three months ended June 30, 2016 compared with 3.48% for the three months ended March 31, 2016. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis was 3.19% for the three months ended June 30, 2016, compared with 3.13% for the same period in 2015 and 3.21% for the three months ended March 31, 2016. The reconciliation of these non-GAAP financial measures is shown on page 13.

 

Noninterest income was $28.473 million for the three months ended June 30, 2016 compared with $30.297 million for the same period in 2015, a decrease of $1.824 million or 6.0%. On a linked quarter basis, noninterest income decreased $2.320 million or 7.5% compared with the quarter ended March 31, 2016.

 

Noninterest expense was $79.235 million for the three months ended June 30, 2016 compared with $79.735 million for the same period in 2015, a decrease of $500 thousand or 0.6%. On a linked quarter basis, noninterest expense decreased $1.293 million or 1.6% compared with the quarter ended March 31, 2016.

 

Results of Operations for the Six Months ended June 30, 2016

 

Net income was $137.022 million for the six months ended June 30, 2016 compared with $145.573 million for the same period in 2015. Net income per diluted common share was $1.96 for the six months ended June 30, 2016 compared with $2.08 for the same period in 2015. Net income (excluding purchase accounting adjustments) was $122.598 million for the six months ended June 30, 2016 compared with $125.183 million for the six months ended June 30, 2015. Net income per diluted common share (excluding purchase accounting adjustments) was $1.75 for the six months ended June 30, 2016 compared with $1.79 for the six months ended June 30, 2015. The reconciliation of these non-GAAP financial measures is shown on page 13. Annualized returns on average assets, average common equity and average tangible common equity for the six months ended June 30, 2016 were 1.24%, 7.77% and 17.37%⁽¹⁾, respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and securities and taxes) was 41.75% for the six months ended June 30, 2016.

 

Net interest income before provision for credit losses for the six months ended June 30, 2016 was $324.724 million compared with $321.144 million for the same period in 2015, an increase of $3.580 million or 1.1%. The change was primarily due to an increase of 2.6% in average interest-earning assets, partially offset by a decrease in loan discount accretion of $9.451 million for the six months ended June 30, 2016. The net interest margin on a tax equivalent basis for the six months ended June 30, 2016 was 3.43% compared with 3.48% for the same period in 2015. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis was 3.20% for the six months ended June 30, 2016 compared with 3.15% for the same period in 2015. The reconciliation of these non-GAAP financial measures is shown on page 13.

 

 

Noninterest income was $59.266 million for the six months ended June 30, 2016 compared with $58.718 million for the same period in 2015, an increase of $548 thousand or 0.9%. Noninterest expense was $159.763 million for the six months ended June 30, 2016 compared with $159.197 million for the same period in 2015, an increase of $566 thousand or 0.4%. One-time pretax merger related expenses of $658 thousand related to the Tradition acquisition were recorded during the six months ended June 30, 2016.

 

Balance Sheet Information

 

At June 30, 2016, Prosperity had $21.796 billion in total assets, an increase of $110.023 million or 0.5%, compared with $21.686 billion at June 30, 2015.

 

Loans at June 30, 2016 were $9.650 billion, an increase of $535.673 million or 5.9%, compared with $9.114 billion at June 30, 2015. Linked quarter loans decreased $4.400 million from $9.654 billion at March 31, 2016.

 

As part of its commercial and industrial lending activities, Prosperity extends credit to oil and gas production and service companies. Oil and gas production loans are loans to companies directly involved in the exploration and/or production of oil and gas. Oil and gas service loans are loans to companies that provide services for oil and gas production and exploration. At June 30, 2016, oil and gas loans totaled $328.409 million or 3.4% of total loans, of which $156.734 million were to production companies and $171.675 million were to service companies. This compares with total oil and gas loans of $433.439 million or 4.8% of total loans at June 30, 2015, of which $216.898 million were to production companies and $216.541 million were to service companies. On a linked quarter basis, oil and gas loans decreased $34.417 million, from $362.826 million or 3.8% of total loans at March 31, 2016, of which $166.422 million were production loans and $196.404 million were service loans.

 

Deposits at June 30, 2016 were $17.219 billion, an increase of $217.481 million or 1.3%, compared with $17.002 billion at June 30, 2015. Linked quarter deposits decreased $653.621 million or 3.7% from $17.873 billion at March 31, 2016. The decrease primarily resulted from lower deposit balances for Prosperity’s over 400 public fund customers due largely to seasonality.

 

The table below provides detail on the impact of loans acquired and deposits assumed in the acquisition of Tradition completed on January 1, 2016:

 

 

Balance Sheet Data (at period end)

(In thousands)

		Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Sep 30, 2015				Jun 30, 2015
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Loans acquired (including new production since acquisition date):
Tradition		$	233,340			$	232,160			$	-			$	-			$	-
All other loans			9,416,668				9,422,248				9,438,589				9,204,988				9,114,335
Total loans		$	9,650,008			$	9,654,408			$	9,438,589			$	9,204,988			$	9,114,335
Deposits assumed (including new deposits since acquisition date):
Tradition		$	440,110			$	476,203			$	-			$	-			$	-
All other deposits			16,779,035				17,396,563				17,681,119				16,939,937				17,001,664
Total deposits		$	17,219,145			$	17,872,766			$	17,681,119			$	16,939,937			$	17,001,664

 

 

Excluding loans acquired in the Tradition acquisition and new production at the acquired banking centers since the acquisition date, loans at June 30, 2016 increased $302.333 million or 3.3% compared with June 30, 2015 and, on a linked quarter basis, decreased $5.580 million or 0.1%.

 

Excluding deposits assumed in the Tradition acquisition and new deposits generated at the acquired banking centers since the acquisition date, deposits at June 30, 2016 decreased $222.629 million or 1.3% compared with June 30, 2015 and, on a linked quarter basis, decreased $617.528 million or 3.5%.

 

 

Asset Quality

 

Nonperforming assets totaled $52.130 million or 0.27% of quarterly average interest-earning assets at June 30, 2016, compared with $35.119 million or 0.19% of quarterly average interest-earning assets at June 30, 2015, and $56.985 million or 0.29% of quarterly average interest-earning assets at March 31, 2016.

 

The allowance for credit losses was 0.87% of total loans at June 30, 2016, 0.89% of total loans at June 30, 2015 and 0.87% of total loans at March 31, 2016. Excluding loans acquired that are accounted for under FASB Accounting Standards Codification (“ASC”) Topics 310-20 and 310-30, the allowance for credit losses was 1.01% of remaining loans as of June 30, 2016, compared with 1.09% at June 30, 2015 and 1.03% at March 31, 2016⁽¹⁾.

 

The provision for credit losses was $6.000 million for the three months ended June 30, 2016 compared with $500 thousand for the three months ended June 30, 2015 and $14.000 million for the three months ended March 31, 2016. The provision for credit losses was $20.000 million for the six months ended June 30, 2016 compared with $1.750 million for the six months ended June 30, 2015.

 

Net charge-offs were $5.888 million for the three months ended June 30, 2016 compared with $491 thousand for the three months ended June 30, 2015 and $11.670 million for the three months ended March 31, 2016. Net charge-offs for the second quarter of 2016 were primarily comprised of one energy loan and an additional charge on one agricultural loan. Net charge-offs were $17.558 million for the six months ended June 30, 2016 compared with $1.540 million for the six months ended June 30, 2015.

 

Conference Call

 

Prosperity’s management team will host a conference call on Wednesday, July 27, 2016 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time) to discuss Prosperity’s second quarter 2016 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383. The elite entry number is 7002992.

 

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity’s website at www.prosperitybankusa.com. The webcast may be accessed directly from Prosperity’s home page by clicking the “Investor Relations” tab and then the “Presentations & Calls” link.

 

Non-GAAP Financial Measures

 

Prosperity’s management uses certain non−GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio. Further, as a result of acquisitions, and the related purchase accounting adjustments, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its net income and earnings per share (excluding purchase accounting adjustments) and its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20, “Receivables-Nonrefundable Fees and Other Costs” and 310-30, “Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality”). Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity’s financial results and Prosperity believes that its presentation, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting Prosperity’s business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP measures should not be considered a substitute for, nor of greater importance than, GAAP basis measures and results and Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. Please refer to page 13 and the “Notes to Selected Financial Data” at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures.

 

Dividend

 

Prosperity Bancshares, Inc. (“Prosperity Bancshares”) declared a third quarter cash dividend of $0.30 per share, to be paid on October 3, 2016 to all shareholders of record as of September 16, 2016.

 

 

Stock Repurchase Program

 

On January 27, 2016, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 3.54 million shares, of its outstanding common stock may be acquired over the next twelve months at the discretion of management.  As of June 30, 2016, Prosperity Bancshares had repurchased an aggregate of 1.24 million shares of its common stock under this program at an average weighted average price of $40.98 per share. During the second quarter of 2016, Prosperity Bancshares repurchased 85 thousand shares of its common stock at an average weighted price of $45.40 per share. 

 

Acquisition of Tradition Bancshares, Inc.

 

On January 1, 2016, Prosperity Bancshares completed the acquisition of Tradition Bancshares, Inc. and its wholly-owned subsidiary Tradition Bank headquartered in Houston, Texas. Tradition Bank operated 7 banking offices in the Houston, Texas area, including its main office in Bellaire, 3 banking centers in Katy and 1 banking center in The Woodlands. As of December 31, 2015, Tradition Bancshares, Inc., on a consolidated basis, reported total assets of $547.963 million, total loans of $253.315 million, total deposits of $488.928 million and shareholders’ equity of $43.103 million.

 

Under the terms of the definitive agreement, Prosperity Bancshares issued 679,528 shares of Prosperity Bancshares common stock plus $39.0 million in cash for all outstanding shares of Tradition Bancshares, Inc. capital stock.

 

Prosperity Bancshares, Inc. ^®

 

As of June 30, 2016, Prosperity Bancshares, Inc. ^® is a $21.796 billion Houston, Texas based regional financial holding company, formed in 1983. Operating under a community banking philosophy and seeking 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 small and medium sized businesses and consumers. In addition to established banking products, Prosperity offers a complete line of services including: Internet Banking services at www.prosperitybankusa.com, Retail Brokerage Services, Credit Cards, MasterMoney Debit Cards, 24 hour voice response banking, Trust and Wealth Management, Mortgage Services, Cash Management and Mobile Banking.

 

Prosperity currently operates 245 full-service banking locations: 65 in the Houston area, including The Woodlands; 29 in the South Texas area including Corpus Christi and Victoria; 36 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area, 6 in the Central Oklahoma area and 8 in the Tulsa, Oklahoma area.

 

 

Bryan/College Station Area -		Fort Worth -		Uptown		West Texas Area -
Bryan		Haltom City		Waugh Drive		Abilene -
Bryan-29th Street		Keller		Westheimer		Antilley Road
Bryan-East		Roanoke		West University		Barrow Street
Bryan-North		Stockyards		Woodcreek		Cypress Street
Caldwell						Judge Ely
College Station		Other Dallas/Fort Worth Area		Other Houston Area		Mockingbird
Crescent Point		Locations -		Locations -
Hearne		Arlington		Angleton		Lubbock -
Huntsville		Azle		Bay City		4th Street
Madisonville		Ennis		Beaumont		66th Street
Navasota		Gainesville		Cinco Ranch		82nd Street
New Waverly		Glen Rose		Cleveland		86th Street
Rock Prairie		Granbury		East Bernard		98th Street
Southwest Parkway		Mesquite		El Campo		Avenue Q
Tower Point		Muenster		Dayton		North University
Wellborn Road		Sanger		Galveston		Texas Tech Student Union
		Waxahachie		Groves
Central Texas Area -		Weatherford		Hempstead		Midland -
Austin -				Hitchcock		Wadley
Allandale		East Texas Area -		Katy-Spring Green		Wall Street
Cedar Park		Athens		Liberty
Congress		Blooming Grove		Magnolia		Odessa -
Lakeway		Canton		Magnolia Parkway		Grandview
Liberty Hill		Carthage		Mont Belvieu		Grant
Northland		Corsicana		Nederland		Kermit Highway
Oak Hill		Crockett		Needville		Parkway
Research Blvd		Eustace		Rosenberg
Westlake		Gilmer		Shadow Creek		Other West Texas Area Locations -
		Grapeland		Spring		Big Spring
Other Central Texas Area Locations -		Gun Barrel City		The Woodlands-College Park		Brownfield
Bastrop		Jacksonville		The Woodlands-I-45		Brownwood
Canyon Lake		Kerens		The Woodlands-Research Forest		Cisco
Dime Box		Longview		Tomball		Comanche
Dripping Springs		Mount Vernon		Waller		Early
Elgin		Palestine		West Columbia		Floydada
Flatonia		Rusk		Wharton		Gorman
Georgetown		Seven Points		Winnie		Levelland
Gruene		Teague		Wirt		Littlefield
Kingsland		Tyler-Beckham				Merkel
La Grange		Tyler-South Broadway		South Texas Area -		Plainview
Lexington		Tyler-University		Corpus Christi -		San Angelo
New Braunfels		Winnsboro		Calallen		Slaton
Pleasanton				Carmel		Snyder
Round Rock		Houston Area -		Northwest
San Antonio		Houston -		Saratoga		Oklahoma
Schulenburg		Aldine		Timbergate		Central Oklahoma Area-
Seguin		Alief		Water Street		Oklahoma City -
Smithville		Bellaire (Tradition)				23rd Street
Thorndale		Beltway		Other South Texas Area		Expressway
Weimar		Clear Lake		Locations -		I-240
		Copperfield		Alice		Memorial
Dallas/Fort Worth Area -		Cypress		Aransas Pass
Dallas -		Downtown		Beeville		Other Central Oklahoma Area
Abrams Centre		Eastex		Colony Creek		Locations -
Balch Springs		Fairfield		Cuero		Edmond
Camp Wisdom		First Colony		Edna		Norman
Cedar Hill		Fry Road		Goliad
Dallas – Central Expressway		Gessner		Gonzales		Tulsa Area-
Forest Park		Gladebrook		Hallettsville		Tulsa -
Frisco		Grand Parkway		Kingsville		Garnett
Frisco-West		Heights		Mathis		Harvard
Kiest		Highway 6 West		Padre Island		Memorial
McKinney		Little York		Palacios		Sheridan
McKinney-Stonebridge		Medical Center		Port Lavaca		S. Harvard
Midway		Memorial Drive		Portland		Utica Tower
Northwest Highway		Northside		Rockport		Yale
Plano		Pasadena		Sinton
Preston Forest		Pecan Grove		Taft		Other Tulsa Area Locations -
Preston Road		Pin Oak		Victoria		Owasso
Red Oak		River Oaks		Victoria-Navarro
Sachse		Sugar Land		Victoria-North
The Colony		SW Medical Center		Yoakum
Turtle Creek		Tanglewood		Yorktown
Westmoreland		The Plaza

 

- - -

 

 

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity’s 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, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity’s securities portfolio; 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, interest rate and commodity price fluctuations; and weather. These and various other factors are discussed in Prosperity Bancshares’ Annual Report on Form 10-K for the year ended December 31, 2015 and other reports and statements Prosperity Bancshares has filed with the SEC. Copies of the SEC filings for Prosperity Bancshares^® may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

 

  

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(In thousands)

 

		Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Sep 30, 2015				Jun 30, 2015
Balance Sheet Data
(at period end)
Total loans		$	9,650,008			$	9,654,408			$	9,438,589			$	9,204,988			$	9,114,335
Investment securities(A)			9,274,651				9,448,704				9,502,427				9,530,761				9,698,079
Federal funds sold			484				1,386				1,418				996				1,451
Allowance for credit losses			(83,826	)			(83,714	)			(81,384	)			(81,003	)			(80,972	)
Cash and due from banks			333,208				334,592				562,544				300,230				353,047
Goodwill			1,903,451				1,903,451				1,868,827				1,881,955				1,881,955
Core deposit intangibles, net			44,861				47,195				49,417				51,712				54,068
Other real estate owned			15,677				16,695				2,963				3,271				2,806
Fixed assets, net			273,104				277,951				267,996				271,650				275,347
Other assets			384,692				377,677				424,419				402,676				386,171
Total assets		$	21,796,310			$	21,978,345			$	22,037,216			$	21,567,236			$	21,686,287
Noninterest-bearing deposits		$	5,016,637			$	5,112,943			$	5,136,579			$	5,093,175			$	5,040,628
Interest-bearing deposits			12,202,508				12,759,823				12,544,540				11,846,762				11,961,036
Total deposits			17,219,145				17,872,766				17,681,119				16,939,937				17,001,664
Other borrowings			606,049				186,225				491,399				786,571				886,741
Securities sold under repurchase agreements			320,001				304,204				315,253				310,038				334,189
Junior subordinated debentures			-				7,217				-				-				-
Other liabilities			106,531				108,873				86,535				119,451				106,408
Total liabilities			18,251,726				18,479,285				18,574,306				18,155,997				18,329,002
Shareholders' equity(B)			3,544,584				3,499,060				3,462,910				3,411,239				3,357,285
Total liabilities and equity		$	21,796,310			$	21,978,345			$	22,037,216			$	21,567,236			$	21,686,287

 

(A) Includes $2,496, $3,286, $3,138, $3,788 and $4,655 in unrealized gains on available for sale securities for the quarterly periods ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively.

 

(B) Includes $1,623, $2,136, $2,040, $2,462 and $3,026 in after-tax unrealized gains on available for sale securities for the quarterly periods ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively.

  

  

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(In thousands)

 

		Three Months Ended																				Year-to-Date
		Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Sep 30, 2015				Jun 30, 2015				Jun 30, 2016				Jun 30, 2015
Income Statement Data
Interest income:
Loans		$	118,297			$	124,522			$	114,234			$	116,911			$	119,404			$	242,819			$	244,282
Securities(C)			51,097				52,573				48,301				48,610				48,530				103,670				97,092
Federal funds sold and other earning assets			65				96				37				22				47				161				212
Total interest income			169,459				177,191				162,572				165,543				167,981				346,650				341,586
Interest expense:
Deposits			10,045				10,206				8,575				8,753				9,169				20,251				18,746
Other borrowings			710				482				541				473				365				1,192				494
Securities sold under repurchase agreements			234				212				198				209				208				446				411
Junior subordinated debentures			3				34				-				-				-				37				791
Total interest expense			10,992				10,934				9,314				9,435				9,742				21,926				20,442
Net interest income			158,467				166,257				153,258				156,108				158,239				324,724				321,144
Provision for credit losses			6,000				14,000				500				5,310				500				20,000				1,750
Net interest income after provision for credit losses			152,467				152,257				152,758				150,798				157,739				304,724				319,394
Noninterest income:
Nonsufficient funds (NSF) fees			8,031				8,189				8,974				9,082				8,310				16,220				16,228
Credit card, debit card and ATM card income			5,929				5,827				5,938				5,955				6,003				11,756				11,641
Service charges on deposit accounts			4,610				4,590				4,289				4,438				4,189				9,200				8,368
Trust income			1,762				2,027				1,988				1,986				2,047				3,789				4,056
Mortgage income			1,772				1,471				1,289				1,770				1,513				3,243				2,661
Brokerage income			1,286				1,290				1,407				1,596				1,541				2,576				2,950
Bank owned life insurance income			1,473				1,383				1,394				1,384				1,390				2,856				2,770
Net gain on sale of assets			332				1,020				581				173				270				1,352				1,649
Other noninterest income			3,278				4,996				4,423				5,396				5,034				8,274				8,395
Total noninterest income			28,473				30,793				30,283				31,780				30,297				59,266				58,718
Noninterest expense:
Salaries and benefits			48,224				50,114				48,500				46,587				47,819				98,338				97,785
Net occupancy and equipment			5,741				5,624				5,774				6,088				5,812				11,365				11,776
Credit and debit card, data processing and software amortization			4,164				4,430				3,996				3,924				4,045				8,594				7,862
Regulatory assessments and FDIC insurance			3,447				3,430				2,460				3,366				4,253				6,877				8,607
Core deposit intangibles amortization			2,334				2,222				2,295				2,356				2,390				4,556				4,879
Depreciation			3,286				3,349				3,310				3,313				3,420				6,635				6,336
Communications			2,981				2,939				2,814				2,663				2,835				5,920				5,644
Other real estate expense			50				42				241				123				129				92				261
Net loss (gain) on sale of other real estate			347				(14	)			52				(68	)			(32	)			333				(18	)
Other noninterest expense			8,661				8,392				8,467				8,078				9,064				17,053				16,065
Total noninterest expense			79,235				80,528				77,909				76,430				79,735				159,763				159,197
Income before income taxes			101,705				102,522				105,132				106,148				108,301				204,227				218,915
Provision for income taxes			33,634				33,571				34,657				35,550				36,369				67,205				73,342
Net income available to common shareholders		$	68,071			$	68,951			$	70,475			$	70,598			$	71,932			$	137,022			$	145,573

 

(C) Interest income on securities was reduced by net premium amortization of $10,407, $10,253, $13,775, $14,845 and $15,466 for the three month periods ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively, and $20,660 and $29,610 for the six month periods ended June 30, 2016 and June 30, 2015, respectively.

 

  

Prosperity Bancshares, Inc. ^®

Financial Highlights (Unaudited)

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

 

		Three Months Ended																				Year-to-Date
		Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Sep 30, 2015				Jun 30, 2015				Jun 30, 2016				Jun 30, 2015
Profitability
Net income		$	68,071			$	68,951			$	70,475			$	70,598			$	71,932			$	137,022			$	145,573
Basic earnings per share		$	0.98			$	0.98			$	1.01			$	1.01			$	1.03			$	1.96			$	2.08
Diluted earnings per share		$	0.98			$	0.98			$	1.01			$	1.01			$	1.03			$	1.96			$	2.08
Return on average assets (D)			1.24	%			1.24	%			1.30	%			1.30	%			1.33	%			1.24	%			1.35	%
Return on average common equity (D)			7.70	%			7.85	%			8.17	%			8.31	%			8.61	%			7.77	%			8.80	%
Return on average tangible common equity (D) (E)			17.15	%			17.60	%			18.56	%			19.30	%			20.49	%			17.37	%			21.16	%
Tax equivalent net interest margin (F)			3.37	%			3.48	%			3.24	%			3.30	%			3.39	%			3.43	%			3.48	%
Efficiency ratio(G)			42.46	%			41.08	%			42.58	%			40.72	%			42.35	%			41.75	%			42.09	%
Liquidity and Capital Ratios
Equity to assets			16.26	%			15.92	%			15.71	%			15.82	%			15.48	%			16.26	%			15.48	%
Common equity tier 1 capital			13.66	%			13.20	%			13.55	%			13.37	%			12.91	%			13.66	%			12.91	%
Tier 1 risk-based capital			13.66	%			13.20	%			13.55	%			13.37	%			12.91	%			13.66	%			12.91	%
Total risk-based capital			14.37	%			13.90	%			14.25	%			14.09	%			13.63	%			14.37	%			13.63	%
Tier 1 leverage capital			8.11	%			7.70	%			7.97	%			7.65	%			7.35	%			8.11	%			7.35	%
Period end tangible equity to period end tangible assets(E)			8.04	%			7.73	%			7.68	%			7.53	%			7.20	%			8.04	%			7.20	%
Other Data
Weighted-average shares used in computing earnings per share
Basic			69,565				70,174				70,021				70,041				70,037				69,869				70,035
Diluted			69,574				70,181				70,032				70,053				70,053				69,877				70,054
Period end shares outstanding			69,480				69,543				70,022				70,040				70,040				69,480				70,040
Cash dividends paid per common share		$	0.3000			$	0.3000			$	0.3000			$	0.2725			$	0.2725			$	0.6000			$	0.5450
Book value per share		$	51.02			$	50.32			$	49.45			$	48.70			$	47.93			$	51.02			$	47.93
Tangible book value per share(E)		$	22.97			$	22.27			$	22.06			$	21.10			$	20.29			$	22.97			$	20.29
Common Stock Market Price
High		$	54.57			$	47.50			$	57.04			$	59.97			$	59.30			$	54.57			$	59.30
Low			43.28				33.57				46.23				43.76				50.91				33.57				45.01
Period end closing price			50.99				46.39				47.86				49.11				57.74				50.99				57.74
Employees – FTE			3,106				3,132				3,037				3,051				3,065				3,106				3,065
Number of banking centers			245				246				241				244				245				245				245

 

(D) Interim periods annualized.

(E) Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure.

(F) Net interest margin for all periods presented is based on average balances on an actual 365 day or 366 day basis.

(G) Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale of assets. Additionally, taxes are not part of this calculation.

 

   

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Jun 30, 2016													Mar 31, 2016													Jun 30, 2015
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(J)		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(J)		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(J)
YIELD ANALYSIS
Interest-Earning Assets:
Loans		$	9,660,065			$	118,297				4.93	%			$	9,700,554			$	124,522				5.16	%			$	9,133,625			$	119,404				5.24	%
Investment securities			9,436,896				51,097				2.18	%	(H)			9,630,496				52,573				2.20	%	(H)			9,688,961				48,530				2.01	%	(H)
Federal funds sold and other earning assets			68,268				65				0.38	%				80,400				96				0.48	%				79,659				47				0.24	%
Total interest-earning assets			19,165,229				169,459				3.56	%				19,411,450				177,191				3.67	%				18,902,245				167,981				3.56	%
Allowance for credit losses			(83,036	)												(83,883	)												(80,868	)
Noninterest-earning assets			2,826,205													2,937,937													2,817,644
Total assets		$	21,908,398												$	22,265,504												$	21,639,021
Interest-Bearing Liabilities:
Interest-bearing demand deposits		$	4,108,305			$	2,569				0.25	%			$	4,442,652			$	2,784				0.25	%			$	3,891,682			$	2,227				0.23	%
Savings and money market deposits			5,734,739				3,832				0.27	%				5,820,161				3,885				0.27	%				5,476,931				3,374				0.25	%
Certificates and other time deposits			2,517,896				3,644				0.58	%				2,577,676				3,537				0.55	%				2,821,058				3,568				0.51	%
Other borrowings			489,616				710				0.58	%				361,778				482				0.54	%				684,371				365				0.21	%
Securities sold under repurchase agreements			322,274				234				0.29	%				306,192				212				0.28	%				333,220				208				0.25	%
Junior subordinated debentures			555				3				2.17	%				7,217				34				1.89	%				-				-				—
Total interest-bearing liabilities			13,173,385				10,992				0.34	%	(I)			13,515,676				10,934				0.33	%	(I)			13,207,262				9,742				0.30	%	(I)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			5,099,736													5,085,456													4,992,301
Other liabilities			98,023													149,379													98,133
Total liabilities			18,371,144													18,750,511													18,297,696
Shareholders' equity			3,537,254													3,514,993													3,341,325
Total liabilities and shareholders' equity		$	21,908,398												$	22,265,504												$	21,639,021
Net interest income and margin						$	158,467				3.33	%							$	166,257				3.44	%							$	158,239				3.36	%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							1,968													1,836													1,563
Net interest income and margin (tax equivalent basis)						$	160,435				3.37	%							$	168,093				3.48	%							$	159,802				3.39	%

 

(H) Yield on securities was impacted by net premium amortization of $10,407, $10,253 and $15,466 for the three month periods ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively.

(I) Total cost of funds, including noninterest bearing deposits, was 0.24%, 0.24% and 0.21% for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively.

(J) Annualized and based on an actual 365 day or 366 day basis.

 

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Year-to-Date
		Jun 30, 2016													Jun 30, 2015
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(M)		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(M)
YIELD ANALYSIS
Interest-Earning Assets:
Loans		$	9,680,309			$	242,819				5.04	%			$	9,161,349			$	244,282				5.38	%
Investment securities			9,533,696				103,670				2.19	%	(K)			9,466,434				97,092				2.07	%	(K)
Federal funds sold and other earning assets			74,334				161				0.44	%				173,147				212				0.25	%
Total interest-earning assets			19,288,339				346,650				3.61	%				18,800,930			$	341,586				3.66	%
Allowance for credit losses			(83,459	)												(80,775	)
Noninterest-earning assets			2,882,072													2,843,739
Total assets		$	22,086,952												$	21,563,894
Interest-Bearing Liabilities:
Interest-bearing demand deposits		$	4,275,478			$	5,353				0.25	%			$	4,034,489			$	4,810				0.24	%
Savings and money market deposits			5,777,450				7,717				0.27	%				5,509,326				6,779				0.25	%
Certificates and other time deposits			2,547,786				7,181				0.57	%				2,888,176				7,157				0.50	%
Other borrowings			425,697				1,192				0.56	%				379,936				494				0.26	%
Securities sold under repurchase agreements			314,233				446				0.29	%				336,824				411				0.25	%
Junior subordinated debentures			3,886				37				1.91	%				59,374				791				2.69	%
Total interest-bearing liabilities			13,344,530				21,926				0.33	%	(L)			13,208,125				20,442				0.31	%	(L)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			5,092,596													4,946,138
Other liabilities			123,700													99,375
Total liabilities			18,560,826													18,253,638
Shareholders' equity			3,526,126													3,310,256
Total liabilities and shareholders' equity		$	22,086,952												$	21,563,894
Net interest income and margin						$	324,724				3.39	%							$	321,144				3.44	%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							3,804													3,227
Net interest income and margin (tax equivalent basis)						$	328,528				3.43	%							$	324,371				3.48	%

 

(K) Yield on securities was impacted by net premium amortization of $20,660 and $29,610 for the six month periods ended June 30, 2016 and 2015, respectively.

(L) Total cost of funds, including noninterest bearing deposits, was 0.24% and 0.23% for the six month periods ended June 30, 2016 and 2015, respectively.

(M) Annualized and based on an actual 365 or 366 day basis.

 

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands, except per share data)

 

		Three Months Ended																				Year -to-Date
		Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Sep 30, 2015				Jun 30, 2015				Jun 30, 2016				Jun 30, 2015
Adjustment to Loan Yield (N)
Interest on loans, as reported		$	118,297			$	124,522			$	114,234			$	116,911			$	119,404			$	242,819			$	244,282
Purchase accounting adjustment- loan discount accretion
ASC 310-20			(5,833	)			(6,663	)			(6,066	)			(7,060	)			(10,388	)			(12,496	)			(21,101	)
ASC 310-30			(3,471	)			(7,831	)			(1,773	)			(3,974	)			(3,214	)			(11,302	)			(12,148	)
Total			(9,304	)			(14,494	)			(7,839	)			(11,034	)			(13,602	)			(23,798	)			(33,249	)
Interest on loans excluding discount accretion		$	108,993			$	110,028			$	106,395			$	105,877			$	105,802			$	219,021			$	211,033
Average loans		$	9,660,065			$	9,700,554			$	9,322,399			$	9,156,679			$	9,133,625			$	9,680,309			$	9,161,349
Loan yield excluding purchase accounting adjustment			4.54	%			4.56	%			4.53	%			4.59	%			4.65	%			4.55	%			4.65	%
Loan yield, as reported			4.93	%			5.16	%			4.86	%			5.07	%			5.24	%			5.04	%			5.38	%
Adjustment to Securities Yield (N)
Interest on securities, as reported		$	51,097			$	52,573			$	48,301			$	48,610			$	48,530			$	103,670			$	97,092
Purchase accounting adjustment-securities amortization			948				1,722				1,578				1,565				1,579				2,670				3,226
Interest on securities excluding amortization		$	52,045			$	54,295			$	49,879			$	50,175			$	50,109			$	106,340			$	100,318
Average securities		$	9,436,896			$	9,630,496			$	9,524,084			$	9,706,373			$	9,688,961			$	9,533,696			$	9,466,434
Securities yield excluding purchase accounting adjustment			2.22	%			2.27	%			2.08	%			2.05	%			2.07	%			2.24	%			2.14	%
Securities yield, as reported			2.18	%			2.20	%			2.01	%			1.99	%			2.01	%			2.19	%			2.07	%
Adjustment to Time Deposits Yield (N)
Interest on time deposits, as reported		$	3,644			$	3,537			$	3,253			$	3,400			$	3,568			$	7,181			$	7,157
Purchase accounting adjustment- time deposit amortization			178				182				195				220				220				360				640
Interest on time deposits excluding amortization		$	3,822			$	3,719			$	3,448			$	3,620			$	3,788			$	7,541			$	7,797
Average time deposits		$	2,517,896			$	2,577,676			$	2,560,527			$	2,685,346			$	2,821,058			$	2,547,786			$	2,888,176
Time deposits yield excluding purchase accounting adjustment			0.61	%			0.58	%			0.53	%			0.53	%			0.54	%			0.60	%			0.54	%
Time deposits yield, as reported			0.58	%			0.55	%			0.50	%			0.50	%			0.51	%			0.57	%			0.50	%
Net Interest Margin (tax equivalent basis, excluding purchase accounting adjustments to yield) (N)			3.19	%			3.21	%			3.11	%			3.10	%			3.13	%			3.20	%			3.15	%
Net Interest Margin (tax equivalent basis), as reported			3.37	%			3.48	%			3.24	%			3.30	%			3.39	%			3.43	%			3.48	%
Net income available to common shareholders, as reported		$	68,071			$	68,951			$	70,475			$	70,598			$	71,932			$	137,022			$	145,573
Less: Purchase accounting adjustments, net of tax (O)			(5,712	)			(8,712	)			(4,328	)			(6,444	)			(8,132	)			(14,424	)			(20,390	)
Net income available to common shareholders, excluding purchase accounting adjustments (N)		$	62,359			$	60,239			$	66,147			$	64,154			$	63,800			$	122,598			$	125,183
Basic earnings per share, excluding purchase accounting adjusments (N)		$	0.90			$	0.86			$	0.94			$	0.92			$	0.91			$	1.75			$	1.79
Diluted earnings per share, excluding purchase accounting adjustments (N)		$	0.90			$	0.86			$	0.94			$	0.92			$	0.91			$	1.75			$	1.79

  

 

		Acquired Loans Accounted for Under ASC 310-20												Acquired Loans Accounted for Under ASC 310-30												Total Loans Accounted for Under ASC 310-20 and 310-30
		Balance at Acquisition Date				Balance at Mar 31, 2016				Balance at Jun 30, 2016				Balance at Acquisition Date				Balance at Mar 31, 2016				Balance at Jun 30, 2016				Balance at Acquisition Date					Balance at Mar 31, 2016				Balance at Jun 30, 2016
Loan marks:
Previously acquired banks (P)		$	225,589			$	47,386			$	41,851			$	131,906			$	27,928			$	26,010			$	357,495				$	75,314			$	67,861
2016 acquisition (Q)			3,491				3,123				2,821				10,222				6,126				4,469				13,713					9,249				7,290
Total			229,080				50,509				44,672				142,128				34,054				30,479				371,208					84,563				75,151
Acquired portfolio loan balances:
Previously acquired banks (P)			5,456,934				1,289,661				1,181,003				255,846				60,917				56,223				5,712,780					1,350,578				1,237,226
2016 acquisition (Q)			234,064				216,631				201,687				19,375				12,673				9,348				253,439					229,304				211,035
Total			5,690,998				1,506,292				1,382,690				275,221				73,590				65,571				5,966,219		(R)			1,579,882				1,448,261
Acquired portfolio loan balances less loan marks		$	5,461,918			$	1,455,783			$	1,338,018			$	133,093			$	39,536			$	35,092			$	5,595,011				$	1,495,319			$	1,373,110

 

(N) Non-GAAP financial measure.

(O) Using effective tax rate of 33.1%, 32.7%, 33.0%, 33.5% and 33.6% for the three month periods ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively, and 32.9% and 33.5% for the six month periods ended June 30, 2016 and 2015, respectively.

(P) Includes Bank of Texas, Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank and The F&M Bank & Trust Company.

(Q) Tradition Bank was acquired on January 1, 2016. During the first quarter of 2016, Tradition Bank added $253.4 million in loans with related purchase accounting adjustments of $13.7 million at acquisition date.

(R) Actual principal balances acquired.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Sep 30, 2015				Jun 30, 2015
YIELD TREND (S)
Interest-Earning Assets:
Loans			4.93	%			5.16	%			4.86	%			5.07	%			5.24	%
Investment securities (T)			2.18	%			2.20	%			2.01	%			1.99	%			2.01	%
Federal funds sold and other earning assets			0.38	%			0.48	%			0.22	%			0.16	%			0.24	%
Total interest-earning assets			3.56	%			3.67	%			3.41	%			3.47	%			3.56	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits			0.25	%			0.25	%			0.21	%			0.21	%			0.23	%
Savings and money market deposits			0.27	%			0.27	%			0.24	%			0.24	%			0.25	%
Certificates and other time deposits			0.58	%			0.55	%			0.50	%			0.50	%			0.51	%
Other borrowings			0.58	%			0.54	%			0.26	%			0.21	%			0.21	%
Securities sold under repurchase agreements			0.29	%			0.28	%			0.25	%			0.25	%			0.25	%
Junior subordinated debentures			2.17	%			1.89	%			—				—				—
Total interest-bearing liabilities			0.34	%			0.33	%			0.28	%			0.29	%			0.30	%
Net Interest Margin			3.33	%			3.44	%			3.22	%			3.27	%			3.36	%
Net Interest Margin (tax equivalent)			3.37	%			3.48	%			3.24	%			3.30	%			3.39	%

 

(S) Annualized and based on average balances on an actual 365 day or 366 day basis.

(T) Yield on securities was impacted by net premium amortization of $10,407, $10,253, $13,775, $14,845 and $15,466 for the three month periods ended June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended
		Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Sep 30, 2015				Jun 30, 2015
Balance Sheet Averages
Total loans		$	9,660,065			$	9,700,554			$	9,322,399			$	9,156,679			$	9,133,625
Investment securities			9,436,896				9,630,496				9,524,084				9,706,373				9,688,961
Federal funds sold and other earning assets			68,268				80,400				65,695				55,000				79,659
Total interest-earning assets			19,165,229				19,411,450				18,912,178				18,918,052				18,902,245
Allowance for credit losses			(83,036	)			(83,883	)			(81,230	)			(80,793	)			(80,868	)
Cash and due from banks			227,570				274,535				257,986				237,191				241,110
Goodwill			1,903,451				1,899,667				1,881,812				1,881,955				1,881,955
Core deposit intangibles, net			46,059				48,314				50,545				52,909				55,245
Other real estate			15,549				6,077				3,014				3,096				2,972
Fixed assets, net			276,727				279,179				270,800				273,818				276,761
Other assets			356,849				430,165				390,011				370,181				359,601
Total assets		$	21,908,398			$	22,265,504			$	21,685,116			$	21,656,409			$	21,639,021
Noninterest-bearing deposits		$	5,099,736			$	5,085,456			$	5,124,630			$	5,078,234			$	4,992,301
Interest-bearing demand deposits			4,108,305				4,442,652				3,767,138				3,663,114				3,891,682
Savings and money market deposits			5,734,739				5,820,161				5,511,240				5,492,326				5,476,931
Certificates and other time deposits			2,517,896				2,577,676				2,560,527				2,685,346				2,821,058
Total deposits			17,460,676				17,925,945				16,963,535				16,919,020				17,181,972
Other borrowings			489,616				361,778				839,164				886,787				684,371
Securities sold under repurchase agreements			322,274				306,192				314,278				331,286				333,220
Junior subordinated debentures			555				7,217				-				-				-
Other liabilities			98,023				149,379				116,860				121,360				98,133
Shareholders' equity			3,537,254				3,514,993				3,451,279				3,397,956				3,341,325
Total liabilities and equity		$	21,908,398			$	22,265,504			$	21,685,116			$	21,656,409			$	21,639,021

 

 

 

  Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Jun 30, 2016								Mar 31, 2016								Dec 31, 2015								Sep 30, 2015								Jun 30, 2015
Period End Balances
Loan Portfolio
Commercial and industrial		$	1,299,310				13.5	%		$	1,337,189				14.9	%		$	1,293,162				14.9	%		$	1,243,656				14.9	%		$	1,221,078				14.7	%
Construction, land development and other land loans			1,167,286				12.1	%			1,173,524				12.2	%			1,073,198				11.4	%			1,072,985				11.7	%			1,068,056				11.7	%
1-4 family residential			2,424,868				25.1	%			2,379,503				24.6	%			2,360,798				25.0	%			2,318,841				25.2	%			2,289,114				25.1	%
Home equity			283,212				2.9	%			283,686				2.9	%			279,867				2.9	%			277,744				3.0	%			273,538				3.0	%
Commercial real estate (includes multi-family residential)			3,229,556				33.5	%			3,229,706				33.5	%			3,131,083				33.2	%			2,992,726				32.5	%			2,958,239				32.5	%
Agriculture (includes farmland)			657,633				6.8	%			641,293				6.6	%			648,818				6.9	%			618,563				6.7	%			600,745				6.6	%
Consumer and other			259,734				2.7	%			246,681				1.5	%			252,579				1.5	%			275,297				1.6	%			270,126				1.6	%
Energy			328,409				3.4	%			362,826				3.8	%			399,084				4.2	%			405,176				4.4	%			433,439				4.8	%
Total loans		$	9,650,008							$	9,654,408							$	9,438,589							$	9,204,988							$	9,114,335
Deposit Types
Noninterest-bearing DDA		$	5,016,637				29.1	%		$	5,112,943				28.6	%		$	5,136,579				29.1	%		$	5,093,175				30.1	%		$	5,040,628				29.7	%
Interest-bearing DDA			3,976,839				23.1	%			4,382,999				24.5	%			4,481,575				25.3	%			3,604,798				21.3	%			3,746,939				22.0	%
Money market			3,687,602				21.4	%			3,812,420				21.3	%			3,639,187				20.6	%			3,716,094				21.9	%			3,607,000				21.2	%
Savings			2,022,327				11.8	%			2,017,980				11.3	%			1,940,855				11.0	%			1,896,725				11.2	%			1,853,322				10.9	%
Certificates and other time deposits			2,515,740				14.6	%			2,546,424				14.3	%			2,482,923				14.0	%			2,629,145				15.5	%			2,753,775				16.2	%
Total deposits		$	17,219,145							$	17,872,766							$	17,681,119							$	16,939,937							$	17,001,664
Loan to Deposit Ratio			56.0	%							54.0	%							53.4	%							54.3	%							53.6	%
Construction Loans
Single family residential construction		$	410,456				35.0	%		$	407,519				34.5	%		$	353,706				32.9	%		$	351,169				32.6	%		$	354,211				33.0	%
Land development			85,488				7.3	%			84,141				7.1	%			88,239				8.2	%			84,040				7.8	%			84,864				7.9	%
Raw land			161,402				13.8	%			174,546				14.8	%			153,274				14.3	%			143,955				13.4	%			145,885				13.6	%
Residential lots			131,807				11.3	%			126,881				10.8	%			130,596				12.1	%			131,793				12.3	%			127,671				11.9	%
Commercial lots			83,725				7.1	%			80,286				6.8	%			87,375				8.1	%			84,162				7.8	%			87,719				8.2	%
Commercial construction and other			298,713				25.5	%			306,742				26.0	%			262,783				24.4	%			281,231				26.1	%			271,833				25.4	%
Net unaccreted discount			(4,305	)							(6,591	)							(2,775	)							(3,365	)							(4,127	)
Total construction loans		$	1,167,286							$	1,173,524							$	1,073,198							$	1,072,985							$	1,068,056

 

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of June 30, 2016

 

Collateral Type		Houston				Dallas				Austin				OK City				Tulsa				Other (U)				Total
Shopping center/retail		$	205,200			$	44,092			$	29,506			$	28,670			$	27,653			$	114,698			$	449,819
Commercial & industrial buildings			83,725				31,233				10,056				11,390				9,486				68,714				214,604
Office buildings			84,554				133,602				18,556				39,153				7,519				80,473				363,857
Medical buildings			52,530				8,724				53				27,820				8,101				57,047				154,275
Apartment buildings			47,711				12,954				13,235				17,507				11,719				80,242				183,368
Hotel			29,470				32,435				11,815				24,588				-				89,596				187,904
Other			76,413				11,168				18,123				8,751				10,439				73,867				198,761
Total		$	579,603			$	274,208			$	101,344			$	157,879			$	74,917			$	564,637			$	1,752,588		(V)

 

(U) Includes other MSA and non-MSA regions.

(V) Represents a portion of total commercial real estate loans of $3.230 billion as of June 30, 2016.

 

 

 

 

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

		Three Months Ended																				Year-to-Date
		Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Sep 30, 2015				Jun 30, 2015				Jun 30, 2016				Jun 30, 2015
Asset Quality
Nonaccrual loans		$	29,547			$	39,036			$	39,711			$	44,935			$	31,987			$	29,547			$	31,987
Accruing loans 90 or more days past due			6,822				1,093				614				261				153				6,822				153
Total nonperforming loans			36,369				40,129				40,325				45,196				32,140				36,369				32,140
Repossessed assets			84				161				171				161				173				84				173
Other real estate			15,677				16,695				2,963				3,271				2,806				15,677				2,806
Total nonperforming assets		$	52,130			$	56,985			$	43,459			$	48,628			$	35,119			$	52,130			$	35,119
Nonperforming assets:
Commercial and industrial (includes energy)		$	16,822			$	18,835			$	22,275			$	26,200			$	20,295			$	16,822			$	20,295
Construction, land development and other land loans			1,606				2,913				134				475				813				1,606				813
1-4 family residential (includes home equity)			5,016				6,226				4,692				4,766				5,124				5,016				5,124
Commercial real estate (includes multi-family residential)			26,651				22,208				15,836				16,485				7,939				26,651				7,939
Agriculture (includes farmland)			1,682				6,578				208				376				605				1,682				605
Consumer and other			353				225				314				326				343				353				343
Total		$	52,130			$	56,985			$	43,459			$	48,628			$	35,119			$	52,130			$	35,119
Number of loans/properties			166				168				147				159				161				166				161
Allowance for credit losses at end of period		$	83,826			$	83,714			$	81,384			$	81,003			$	80,972			$	83,826			$	80,972
Net charge-offs:
Commercial and industrial (includes energy)		$	4,109			$	4,396			$	(528	)		$	4,426			$	(28	)		$	8,505			$	476
Construction, land development and other land loans			(25	)			(186	)			(109	)			173				(2	)			(211	)			143
1-4 family residential (includes home equity)			(78	)			30				1				110				12				(48	)			98
Commercial real estate (includes multi-family residential)			197				59				194				53				114				256				147
Agriculture (includes farmland)			(655	)			6,962				(77	)			(40	)			(65	)			6,307				(143	)
Consumer and other			2,340				409				638				557				460				2,749				819
Total		$	5,888			$	11,670			$	119			$	5,279			$	491			$	17,558			$	1,540
Asset Quality Ratios
Nonperforming assets to average earning assets			0.27	%			0.29	%			0.23	%			0.26	%			0.19	%			0.27	%			0.19	%
Nonperforming assets to loans and other real estate			0.54	%			0.59	%			0.46	%			0.53	%			0.39	%			0.54	%			0.39	%
Net charge-offs to average loans (annualized)			0.24	%			0.48	%			0.01	%			0.23	%			0.02	%			0.36	%			0.03	%
Allowance for credit losses to total loans			0.87	%			0.87	%			0.86	%			0.88	%			0.89	%			0.87	%			0.89	%
Allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30) (E)			1.01	%			1.03	%			1.01	%			1.06	%			1.09	%			1.01	%			1.09	%

 

  

Prosperity Bancshares, Inc.^®

Notes to Selected Financial Data (Unaudited)

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

 

Consolidated Financial Highlights

 

NOTES TO SELECTED FINANCIAL DATA

 

Prosperity’s management uses certain non−GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity and the tangible equity to tangible assets ratio for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP measures and ratios that exclude the impact of these items to evaluate its net income and earnings per share (each excluding purchase accounting adjustments) and its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30). Prosperity has included information below and on page 13 of this Earnings Release relating to these non-GAAP financial measures for the applicable periods presented.

 

		Three Months Ended																				Year-to-Date
		Jun 30, 2016				Mar 31, 2016				Dec 31, 2015				Sep 30, 2015				Jun 30, 2015				Jun 30, 2016				Jun 30, 2015
Return on average tangible common equity:
Net income		$	68,071			$	68,951			$	70,475			$	70,598			$	71,932			$	137,022			$	145,573
Average shareholders' equity		$	3,537,254			$	3,514,993			$	3,451,279			$	3,397,956			$	3,341,325			$	3,526,126			$	3,310,256
Less: Average goodwill and other intangible assets			(1,949,510	)			(1,947,981	)			(1,932,357	)			(1,934,864	)			(1,937,200	)			(1,948,746	)			(1,934,595	)
Average tangible shareholders’ equity		$	1,587,744			$	1,567,012			$	1,518,922			$	1,463,092			$	1,404,125			$	1,577,380			$	1,375,661
Return on average tangible common equity:			17.15	%			17.60	%			18.56	%			19.30	%			20.49	%			17.37	%			21.16	%
Tangible book value per share:
Shareholders’ equity		$	3,544,584			$	3,499,060			$	3,462,910			$	3,411,239			$	3,357,285			$	3,544,584			$	3,357,285
Less: Goodwill and other intangible assets			(1,948,312	)			(1,950,646	)			(1,918,244	)			(1,933,667	)			(1,936,023	)			(1,948,312	)			(1,936,023	)
Tangible shareholders’ equity		$	1,596,272			$	1,548,414			$	1,544,666			$	1,477,572			$	1,421,262			$	1,596,272			$	1,421,262
Period end shares outstanding			69,480				69,543				70,022				70,040				70,040				69,480				70,040
Tangible book value per share:		$	22.97			$	22.27			$	22.06			$	21.10			$	20.29			$	22.97			$	20.29
Period end tangible equity to period end tangible assets ratio:
Tangible shareholders’ equity		$	1,596,272			$	1,548,414			$	1,544,666			$	1,477,572			$	1,421,262			$	1,596,272			$	1,421,262
Total assets		$	21,796,310			$	21,978,345			$	22,037,216			$	21,567,236			$	21,686,287			$	21,796,310			$	21,686,287
Less: Goodwill and other intangible assets			(1,948,312	)			(1,950,646	)			(1,918,244	)			(1,933,667	)			(1,936,023	)			(1,948,312	)			(1,936,023	)
Tangible assets		$	19,847,998			$	20,027,699			$	20,118,972			$	19,633,569			$	19,750,264			$	19,847,998			$	19,750,264
Period end tangible equity to period end tangible assets ratio:			8.04	%			7.73	%			7.68	%			7.53	%			7.20	%			8.04	%			7.20	%
Allowance for credit losses to total loans, excluding acquired loans:
Allowance for credit losses		$	83,826			$	83,714			$	81,384			$	81,003			$	80,972			$	83,826			$	80,972
Total loans		$	9,650,008			$	9,654,408			$	9,438,589			$	9,204,988			$	9,114,335			$	9,650,008			$	9,114,335
Less: Fair value of acquired loans (acquired portfolio loan balances less loan marks)		$	1,373,110			$	1,495,319			$	1,415,593			$	1,541,369			$	1,705,552			$	1,373,110			$	1,705,552
Total loans less acquired loans		$	8,276,898			$	8,159,089			$	8,022,996			$	7,663,619			$	7,408,783			$	8,276,898			$	7,408,783
Allowance for credit losses to total loans, excluding acquired loans (non-GAAP basis)			1.01	%			1.03	%			1.01	%			1.06	%			1.09	%			1.01	%			1.09	%

 

 

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