Filed by Prosperity Bancshares, Inc. pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934

Subject Company: LegacyTexas Financial Group, Inc.

Commission File Number: 001-34737

 

 

PRESS RELEASE

For more information contact:

 

 

Prosperity Bancshares, Inc.®

Cullen Zalman

Prosperity Bank Plaza

Vice President – Banking and Corporate Activities

4295 San Felipe

281.269.7199

Houston, Texas 77027

cullen.zalman@prosperitybankusa.com

FOR IMMEDIATE RELEASE

PROSPERITY BANCSHARES, INC.®

REPORTS THIRD QUARTER

2019 EARNINGS

 

 

Third quarter earnings per common share (diluted) of $1.19

 

Third quarter net income of $81.758 million

 

Nonperforming assets remain low at 0.26% of third quarter average interest-earning assets

 

Return (annualized) on third quarter average assets of 1.47%

 

Returns (annualized) on third quarter average common equity of 7.89% and average tangible common equity of 14.77%‍(1)

 

Loans increased $85.970 million or 3.2% (annualized) during the third quarter 2019

 

Increase in dividend of 12.2% to $0.46 for the fourth quarter 2019

 

Received all necessary regulatory approvals for the pending merger with LegacyTexas Financial Group, Inc.

HOUSTON, October 23, 2019. Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, “Prosperity”), reported net income for the quarter ended September 30, 2019 of $81.758 million compared with $82.523 million for the same period in 2018. Net income per diluted common share increased to $1.19 compared with $1.18 for the same period in 2018. Additionally, loans increased 3.2% (annualized) during the third quarter 2019 and nonperforming assets remain low at 0.26% of third quarter average interest-earning assets.

 

“I am very excited with all that is going on at Prosperity.  We had strong financial results in the third quarter, with net income of $81.758 million, return on average assets of 1.47% annualized and return on average tangible common equity of 14.77% annualized.  We were pleased with the net interest margin on a tax equivalent basis of 3.16% for the third quarter 2019, compared with 3.15% for the same period in 2018 and 3.16% on a linked quarter basis for the second quarter 2019,” said David Zalman, Prosperity’s Chairman and Chief Executive Officer.

 

“Additionally, our board of directors voted to increase the fourth quarter dividend to $0.46 per share, a 12.2% increase.  Our company continues to perform well and we want to share that success with our shareholders,” continued Zalman.

 

“Completion of our merger with LegacyTexas Financial Group remains on schedule, as we have received all required regulatory approvals and shareholder meetings for each company are scheduled for next week. The management teams from both companies meet on a weekly basis and share many similar viewpoints.  Both Legacy’s and our goal is to develop people to be the next generation of leaders, make every customer’s experience easy and enjoyable and operate in a safe and sound manner.  We want to expand our use

______________

(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 to the nearest GAAP financial measure.

Page 1 of 18


 

of technology and digital products, making it easier for our customers to do business and continue to enhance shareholder value,” added Zalman.

 

“We believe our customers remain positive about the economy.  In Texas and Oklahoma, unemployment remains low and demand at businesses is good.  In my personal opinion, the economy in our market areas remains sustainable. I want to thank all of our associates, directors, customers and shareholders for helping us to achieve the success we have had over the years,” concluded Zalman.

 

Results of Operations for the Three Months Ended September 30, 2019

Net income was $81.758 million(2) for the three months ended September 30, 2019 compared with $82.523 million(3) for the same period in 2018. Net income per diluted common share was $1.19 for the three months ended September 30, 2019 compared with $1.18 for the same period in 2018. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended September 30, 2019 were 1.47%, 7.89% and 14.77%(1), respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains on the sale of assets and taxes) was 43.70%(1) for the three months ended September 30, 2019.

 

Net interest income before provision for credit losses for the three months ended September 30, 2019 was $153.990 million compared with $157.319 million for the same period in 2018, a decrease of $3.329 million or 2.1%. This change was primarily due to higher rates on interest-bearing liabilities and lower investment securities balances, partially offset by an increase in loan balances and loan yield. On a linked quarter basis, net interest income before provision for credit losses was $153.990 million compared with $154.838 million for the three months ended June 30, 2019.

The net interest margin on a tax equivalent basis was 3.16% for the three months ended September 30, 2019 compared with 3.15% for the same period in 2018. On a linked quarter basis, the net interest margin remained unchanged at 3.16% compared with the three months ended June 30, 2019.

Noninterest income was $30.673 million for the three months ended September 30, 2019 compared with $30.624 million for the same period in 2018. On a linked quarter basis, noninterest income increased $715 thousand or 2.4% to $30.673 million compared with $29.958 million for the three months ended June 30, 2019. This increase was primarily due to an increase in nonsufficient funds fees.

Noninterest expense was $80.699 million for the three months ended September 30, 2019 compared with $81.760 million for the same period in 2018, a decrease of $1.061 million or 1.3%. This change was primarily due to decreases in regulatory assessments and FDIC insurance and other noninterest expense, partially offset by an increase in salaries and benefits. On a linked quarter basis, noninterest expense decreased $122 thousand or 0.2% to $80.699 million compared with $80.821 million for the three months ended June 30, 2019.

Results of Operations for the Nine Months Ended September 30, 2019

Net income was $246.418 million(4) for the nine months ended September 30, 2019 compared with $238.481 million(5) for the same period in 2018, an increase of $7.937 million or 3.3%. Net income per diluted common share was $3.55 for the nine months ended September 30, 2019 compared with $3.42 for the same period in 2018, an increase of 3.8%. Annualized returns on average assets, average common equity and average tangible common equity for the nine months ended September 30, 2019 were 1.47%, 7.95% and 14.94%(1), respectively. Prosperity’s efficiency ratio (excluding credit loss provisions, net gains and losses on the sale of assets and taxes) was 43.46%(1) for the nine months ended September 30, 2019.

Net interest income before provision for credit losses for the nine months ended September 30, 2019 was $463.739 million compared with $472.345 million for the same period in 2018, a decrease of $8.606 million or 1.8%. This change was primarily due to higher rates on deposits, lower investment securities balances, a decrease in loan discount accretion and the collection of previously identified troubled assets during the second quarter of 2018. This change was partially offset by an increase in loan balances and higher loan yields.

The net interest margin on a tax equivalent basis for the nine months ended September 30, 2019 was 3.17% compared with 3.20% for the same period in 2018. This change was primarily due to a decrease in loan discount accretion of $6.703 million and the collection of previously identified troubled assets during the second quarter of 2018.

______________

(2)

Includes purchase accounting adjustments of $895 thousand, net of tax, primarily comprised of loan discount accretion of $1.283 million for the three months ended September 30, 2019.

(3)

Includes purchase accounting adjustments of $2.514 million, net of tax, primarily comprised of loan discount accretion of $3.457 million for the three months ended September 30, 2018.

(4)

Includes purchase accounting adjustments of $2.909 million, net of tax, primarily comprised of loan discount accretion of $4.303 million for the nine months ended September 30, 2019.

(5)

Includes purchase accounting adjustments of $7.971 million, net of tax, primarily comprised of loan discount accretion of $11.006 million for the nine months ended September 30, 2018.

Page 2 of 18


 

Noninterest income was $88.775 million for the nine months ended September 30, 2019 compared with $86.933 million for the same period in 2018, an increase of $1.842 million or 2.1%. This increase was primarily due to an increase in other noninterest income.

Noninterest expense was $240.091 million for the nine months ended September 30, 2019 compared with $245.416 million for the same period in 2018, a decrease of $5.325 million or 2.2%. This change was primarily due to decreases in regulatory assessments and FDIC insurance and other noninterest expense.

Balance Sheet Information

At September 30, 2019, Prosperity had $22.093 billion in total assets, a decrease of $519.766 million or 2.3%, compared with $22.613 billion at September 30, 2018.

Loans at September 30, 2019 were $10.673 billion, an increase of $380.499 million or 3.7%, compared with $10.293 billion at September 30, 2018. Linked quarter loans increased $85.970 million or 0.8% (3.2% annualized) from $10.587 billion at June 30, 2019.

Deposits at September 30, 2019 were $16.930 billion, an increase of $196.156 million or 1.2%, compared with $16.734 billion at September 30, 2018. Linked quarter deposits increased $42.291 million or 0.3% from $16.888 billion at June 30, 2019.

Asset Quality

Nonperforming assets totaled $51.157 million or 0.26% of quarterly average interest-earning assets at September 30, 2019, compared with $16.777 million or 0.08% of quarterly average interest-earning assets at September 30, 2018, and $41.558 million or 0.21% of quarterly average interest-earning assets at June 30, 2019. The increase during the third quarter 2019 was primarily due to the addition of two commercial real estate loans.

The allowance for credit losses was $87.061 million or 0.82% of total loans at September 30, 2019, $85.996 million or 0.84% of total loans at September 30, 2018 and $87.006 million or 0.82% of total loans at June 30, 2019. 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 0.85%(1) of remaining loans as of September 30, 2019, compared with 0.88%(1) at September 30, 2018 and 0.86%(1) at June 30, 2019.

The provision for credit losses was $1.100 million for the three months ended September 30, 2019 compared with $2.350 million for the three months ended September 30, 2018 and $800 thousand for the three months ended June 30, 2019. The provision for credit losses was $2.600 million for the nine months ended September 30, 2019 compared with $15.350 million for the nine months ended September 30, 2018.

Net charge-offs were $1.046 million for the three months ended September 30, 2019 compared with net charge-offs of $1.318 million for the three months ended September 30, 2018 and net recoveries of $115 thousand for the three months ended June 30, 2019. Net charge-offs were $1.980 million for the nine months ended September 30, 2019 compared with $13.395 million for the nine months ended September 30, 2018.

Dividend

Prosperity Bancshares declared a fourth quarter cash dividend of $0.46 per share to be paid on January 2, 2020 to all shareholders of record as of December 16, 2019.

Stock Repurchase Program

On January 19, 2018, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 3.47 million shares, of its outstanding common stock may be acquired over a two-year period expiring on January 16, 2020, at the discretion of management. Prosperity Bancshares repurchased 654.6 thousand shares of its common stock at an average weighted price of $63.59 per share during the three months ended September 30, 2019 and 1.473 million shares of its common stock at an average weighted price of $64.10 per share during the nine months ended September 30, 2019.

Page 3 of 18


 

Pending Merger with LegacyTexas Financial Group, Inc.

On June 17, 2019 Prosperity Bancshares and LegacyTexas Financial Group, Inc. (“LegacyTexas”) jointly announced the signing of a definitive agreement whereby LegacyTexas, the parent company of LegacyTexas Bank will merge into Prosperity. LegacyTexas Bank operates 42 locations in 19 North Texas cities in and around the Dallas-Fort Worth area. As of September 30, 2019, LegacyTexas, on a consolidated basis, reported total assets of $10.5 billion, total gross loans of $9.1 billion and total deposits of $6.5 billion.

Under the terms of the merger agreement, stockholders of LegacyTexas will receive 0.5280 shares of Prosperity common stock and $6.28 cash for each LegacyTexas share. Consummation of the merger is subject to certain conditions, including the approval by the shareholders of Prosperity Bancshares and LegacyTexas and customary regulatory approvals. Based on Prosperity’s closing price of $67.24 on June 14, 2019, the total consideration was valued at approximately $2.1 billion, or approximately $41.78 per share.

Conference Call

Prosperity’s management team will host a conference call on Wednesday, October 23, 2019 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity’s third quarter 2019 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The elite entry number is 6181935.

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 from Prosperity’s home page by selecting “Presentations & Calls” from the drop-down menu on the Investor Relations tab and following the instructions.

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, tangible equity to tangible assets ratio and the efficiency ratio, excluding net gains and losses on the sale of assets and securities. Further, as a result of acquisitions and the related purchase accounting adjustments, Prosperity uses certain non-GAAP financial measures and ratios that exclude the impact of these items to evaluate 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 that their presentation, together with the accompanying reconciliations, provides a more 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 financial measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP financial measures should not be considered a substitute for, nor of greater importance than, GAAP basis financial measures and results; 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 the “Notes to Selected Financial Data” at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures to the nearest respective GAAP financial measures.

Prosperity Bancshares, Inc. ®

As of September 30, 2019, Prosperity Bancshares, Inc. ® is a $22.093 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 financial services including: Internet Banking services at www.prosperitybankusa.com, Retail Brokerage Services, Credit Cards, Debit Cards, 24 hour voice response banking, Trust and Wealth Management, Mortgage Services, Cash Management and Mobile Banking.

As of September 30, 2019, Prosperity operated 243 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 33 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.

Page 4 of 18


 

Cautionary Notes on Forward-Looking Statements

This communication contains, and the remarks by Prosperity’s management on the conference call may contain, statements which, to the extent they are not statements of historical fact, constitute “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, oral or written forward-looking statements may also be included in other information released to the public. Such statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,” “is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,” “will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will result,” “would be,” variations of such words or phrases (including where the word “could,” “may,” or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. These forward-looking statements may include information about Prosperity’s and LegacyTexas’s possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity’s or LegacyTexas’s future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity’s and LegacyTexas’s loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity’s or LegacyTexas’s future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity’s or LegacyTexas’s operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement. The forward-looking statements are based on expectations and assumptions Prosperity and LegacyTexas currently believe to be valid. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Many possible events or factors could adversely affect the future financial results and performance of Prosperity, LegacyTexas or the combined company and could cause those results or performance to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, among others: the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the merger agreement, the outcome of any legal proceedings that may be instituted against Prosperity or LegacyTexas, delays in completing the transaction, the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) or shareholder approvals or to satisfy any of the other conditions to the transaction on a timely basis or at all, the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors generally, or specifically in the Dallas/Fort Worth area where LegacyTexas does a majority of its business and Prosperity has a significant presence, the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, diversion of management’s attention from ongoing business operations and opportunities, potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction, Prosperity’s ability to complete the acquisition and integration of LegacyTexas successfully, and the dilution caused by Prosperity’s issuance of additional shares of its common stock in connection with the transaction. Each of Prosperity and LegacyTexas disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Further information on Prosperity, LegacyTexas and factors which could affect the forward-looking statements contained herein can be found in Prosperity’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, its Quarterly Report on Form 10-Q for the three- and six-month periods ended June 30, 2019 and its other filings with the Securities and Exchange Commission (“SEC”), and in LegacyTexas’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, its Quarterly Report on Form 10-Q for the three- and six-month periods ended June 30, 2019 and its other filings with the SEC.

Additional Information about the Merger and Where to Find It

In connection with the proposed merger of LegacyTexas into Prosperity, Prosperity has filed with the SEC a registration statement on Form S-4 to register the shares of Prosperity common stock to be issued to the stockholders of LegacyTexas. The registration statement includes a joint proxy statement/prospectus which has been sent to the stockholders of LegacyTexas and the shareholders of Prosperity seeking their approval of the proposed transaction.

WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY, LEGACYTEXAS AND THE PROPOSED TRANSACTION.

Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. Documents filed with the SEC by Prosperity will be available free of charge by directing a request by telephone or mail to Prosperity Bancshares, Inc., Prosperity Bank Plaza, 4295 San Felipe, Houston, Texas 77027 Attn: Investor Relations, (281) 269-7199 and documents filed with the SEC by LegacyTexas will be available free of charge by directing a request by telephone or mail to LegacyTexas Financial Group, Inc., 5851 Legacy Circle, Suite 1200, Plano, Texas 75024, (972) 578-5000.

Page 5 of 18


 

Participants in the Solicitation

Prosperity, LegacyTexas and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Prosperity and the stockholders of LegacyTexas in connection with the proposed transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, is included in the joint proxy statement/prospectus regarding the proposed transaction filed with the SEC by Prosperity and LegacyTexas. Additional information about Prosperity and its directors and executive officers may be found in the definitive proxy statement of Prosperity relating to its 2019 Annual Meeting of Shareholders filed with the SEC on March 14, 2019, and other documents filed by Prosperity with the SEC. Additional information about LegacyTexas and its directors and executive officers may be found in the definitive proxy statement of LegacyTexas relating to its 2019 Annual Meeting of Stockholders filed with the SEC on April 12, 2019, and other documents filed by LegacyTexas with the SEC. These documents can be obtained free of charge from the sources described above.

No Offer or Solicitation

This communication is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or sell, or the solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, invitation, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

Page 6 of 18


 

Bryan/College Station Area -

 

Keller

 

West University

 

Taft

Bryan

 

Roanoke

 

Woodcreek

 

Yoakum

Bryan-29th Street

 

Stockyards

 

 

 

Yorktown

Bryan-East

 

 

 

Katy -

 

 

Bryan-North

 

Other Dallas/Fort Worth Area

 

Cinco Ranch

 

West Texas Area -

Caldwell

 

Locations -

 

Katy-Spring Green

 

Abilene -

College Station

 

Arlington

 

 

 

Antilley Road

Crescent Point

 

Azle

 

The Woodlands -

 

Barrow Street

Hearne

 

Ennis

 

The Woodlands-College Park

 

Cypress Street

Huntsville

 

Gainesville

 

The Woodlands-I-45

 

Judge Ely

Madisonville

 

Glen Rose

 

The Woodlands-Research Forest

 

Mockingbird

Navasota

 

Granbury

 

 

 

 

New Waverly

 

Mesquite

 

Other Houston Area

 

Lubbock -

Rock Prairie

 

Muenster

 

Locations -

 

4th Street

Southwest Parkway

 

Sanger

 

Angleton

 

66th Street

Tower Point

 

Waxahachie

 

Bay City

 

82nd Street

Wellborn Road

 

Weatherford

 

Beaumont

 

86th Street

 

 

 

 

Cleveland

 

98th Street

Central Texas Area -

 

East Texas Area -

 

East Bernard

 

Avenue Q

Austin -

 

Athens

 

El Campo

 

North University

Allandale

 

Blooming Grove

 

Dayton

 

Texas Tech Student Union

Cedar Park

 

Canton

 

Galveston

 

 

Congress

 

Carthage

 

Groves

 

Midland -

Lakeway

 

Corsicana

 

Hempstead

 

Wadley

Liberty Hill

 

Crockett

 

Hitchcock

 

Wall Street

Northland

 

Eustace

 

Liberty

 

 

Oak Hill

 

Gilmer

 

Magnolia

 

Odessa -

Research Blvd

 

Grapeland

 

Magnolia Parkway

 

Grandview

Westlake

 

Gun Barrel City

 

Mont Belvieu

 

Grant

 

 

Jacksonville

 

Nederland

 

Kermit Highway

Other Central Texas Area

 

Kerens

 

Needville

 

Parkway

Locations -

 

Longview

 

Rosenberg

 

 

Bastrop

 

Mount Vernon

 

Shadow Creek

 

Other West Texas Area

Canyon Lake

 

Palestine

 

Spring

 

Locations -

Dime Box

 

Rusk

 

Tomball

 

Big Spring

Dripping Springs

 

Seven Points

 

Waller

 

Brownfield

Elgin

 

Teague

 

West Columbia

 

Brownwood

Flatonia

 

Tyler-Beckham

 

Wharton

 

Cisco

Georgetown

 

Tyler-South Broadway

 

Winnie

 

Comanche

Gruene

 

Tyler-University

 

Wirt

 

Early

Kingsland

 

Winnsboro

 

 

 

Floydada

La Grange

 

 

 

South Texas Area -

 

Gorman

Lexington

 

Houston Area -

 

Corpus Christi -

 

Levelland

New Braunfels

 

Houston -

 

Calallen

 

Littlefield

Pleasanton

 

Aldine

 

Carmel

 

Merkel

Round Rock

 

Alief

 

Northwest

 

Plainview

San Antonio

 

Bellaire

 

Saratoga

 

San Angelo

Schulenburg

 

Beltway

 

Timbergate

 

Slaton

Seguin

 

Clear Lake

 

Water Street

 

Snyder

Smithville

 

Copperfield

 

 

 

 

Thorndale

 

Cypress

 

Victoria -

 

Oklahoma

Weimar

 

Downtown

 

Victoria Main

 

Central Oklahoma Area-

 

 

Eastex

 

Victoria-Navarro

 

Oklahoma City -

Dallas/Fort Worth Area -

 

Fairfield

 

Victoria-North

 

23rd Street

Dallas -

 

First Colony

 

Victoria Salem

 

Expressway

Abrams Centre

 

Fry Road

 

 

 

I-240

Balch Springs

 

Gessner

 

Other South Texas Area

 

Memorial

Camp Wisdom

 

Gladebrook

 

Locations -

 

 

Cedar Hill

 

Grand Parkway

 

Alice

 

Other Central Oklahoma Area

Frisco

 

Heights

 

Aransas Pass

 

Locations -

Frisco-West

 

Highway 6 West

 

Beeville

 

Edmond

Kiest

 

Little York

 

Colony Creek

 

Norman

McKinney

 

Medical Center

 

Cuero

 

 

McKinney-Stonebridge

 

Memorial Drive

 

Edna

 

Tulsa Area-

Midway

 

Northside

 

Goliad

 

Tulsa -

Plano

 

Pasadena

 

Gonzales

 

Garnett

Preston Forest

 

Pecan Grove

 

Hallettsville

 

Harvard

Preston Road

 

Pin Oak

 

Kingsville

 

Memorial

Red Oak

 

River Oaks

 

Mathis

 

Sheridan

Sachse

 

Sugar Land

 

Padre Island

 

S. Harvard

The Colony

 

SW Medical Center

 

Palacios

 

Utica Tower

Turtle Creek

 

Tanglewood

 

Port Lavaca

 

Yale

Westmoreland

 

The Plaza

 

Portland

 

 

 

 

Uptown

 

Rockport

 

Other Tulsa Area Locations -

Fort Worth -

 

Waugh Drive

 

Sinton

 

Owasso

Haltom City

 

Westheimer

 

 

 

 

 - - -

Page 7 of 18


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

 

 

 

Sep 30, 2019

 

 

Jun 30, 2019

 

 

Mar 31, 2019

 

 

Dec 31, 2018

 

 

Sep 30, 2018

 

Balance Sheet Data (at period end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

10,673,345

 

 

$

10,587,375

 

 

$

10,414,022

 

 

$

10,370,313

 

 

$

10,292,846

 

Investment securities(A)

 

 

8,495,206

 

 

 

8,951,940

 

 

 

9,137,645

 

 

 

9,408,966

 

 

 

9,504,733

 

Federal funds sold

 

 

521

 

 

 

555

 

 

 

566

 

 

 

552

 

 

 

639

 

Allowance for credit losses

 

 

(87,061

)

 

 

(87,006

)

 

 

(86,091

)

 

 

(86,440

)

 

 

(85,996

)

Cash and due from banks

 

 

420,359

 

 

 

302,069

 

 

 

291,498

 

 

 

410,575

 

 

 

293,831

 

Goodwill

 

 

1,900,845

 

 

 

1,900,845

 

 

 

1,900,845

 

 

 

1,900,845

 

 

 

1,900,845

 

Core deposit intangibles, net

 

 

29,051

 

 

 

30,299

 

 

 

31,564

 

 

 

32,883

 

 

 

34,295

 

Other real estate owned

 

 

815

 

 

 

2,005

 

 

 

2,096

 

 

 

1,805

 

 

 

889

 

Fixed assets, net

 

 

263,703

 

 

 

262,479

 

 

 

257,595

 

 

 

257,046

 

 

 

256,426

 

Other assets

 

 

396,033

 

 

 

424,660

 

 

 

404,501

 

 

 

396,857

 

 

 

414,075

 

Total assets

 

$

22,092,817

 

 

$

22,375,221

 

 

$

22,354,241

 

 

$

22,693,402

 

 

$

22,612,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

5,784,002

 

 

$

5,691,236

 

 

$

5,673,707

 

 

$

5,666,115

 

 

$

5,700,242

 

Interest-bearing deposits

 

 

11,145,918

 

 

 

11,196,393

 

 

 

11,524,063

 

 

 

11,590,443

 

 

 

11,033,522

 

Total deposits

 

 

16,929,920

 

 

 

16,887,629

 

 

 

17,197,770

 

 

 

17,256,558

 

 

 

16,733,764

 

Other borrowings

 

 

600,795

 

 

 

940,874

 

 

 

680,952

 

 

 

1,031,126

 

 

 

1,501,207

 

Securities sold under repurchase agreements

 

 

311,404

 

 

 

313,825

 

 

 

254,573

 

 

 

284,720

 

 

 

297,126

 

Other liabilities

 

 

123,892

 

 

 

104,998

 

 

 

111,156

 

 

 

68,174

 

 

 

84,789

 

Total liabilities

 

 

17,966,011

 

 

 

18,247,326

 

 

 

18,244,451

 

 

 

18,640,578

 

 

 

18,616,886

 

Shareholders' equity(B)

 

 

4,126,806

 

 

 

4,127,895

 

 

 

4,109,790

 

 

 

4,052,824

 

 

 

3,995,697

 

Total liabilities and equity

 

$

22,092,817

 

 

$

22,375,221

 

 

$

22,354,241

 

 

$

22,693,402

 

 

$

22,612,583

 

 

(A) Includes $49, $1,611, $895, $392 and $586 in unrealized gains on available for sale securities for the quarterly periods ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, respectively.

(B) Includes $38, $1,273, $706, $310, and $463 in after-tax unrealized gains on available for sale securities for the quarterly periods ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, respectively.

 

Page 8 of 18


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Year-to-Date

 

 

 

Sep 30, 2019

 

 

Jun 30, 2019

 

 

Mar 31, 2019

 

 

Dec 31, 2018

 

 

Sep 30, 2018

 

 

Sep 30, 2019

 

 

Sep 30, 2018

 

Income Statement Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

134,943

 

 

$

133,525

 

 

$

130,065

 

 

$

130,627

 

 

$

128,645

 

 

$

398,533

 

 

$

373,336

 

Securities(C)

 

 

50,872

 

 

 

53,944

 

 

 

55,648

 

 

 

56,170

 

 

 

55,705

 

 

 

160,464

 

 

 

165,739

 

Federal funds sold and other earning assets

 

 

363

 

 

 

318

 

 

 

402

 

 

 

397

 

 

 

326

 

 

 

1,083

 

 

 

940

 

Total interest income

 

 

186,178

 

 

 

187,787

 

 

 

186,115

 

 

 

187,194

 

 

 

184,676

 

 

 

560,080

 

 

 

540,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

26,939

 

 

 

26,562

 

 

 

25,128

 

 

 

21,643

 

 

 

19,208

 

 

 

78,629

 

 

 

49,741

 

Other borrowings

 

 

4,335

 

 

 

5,556

 

 

 

5,317

 

 

 

7,639

 

 

 

7,583

 

 

 

15,208

 

 

 

16,602

 

Securities sold under repurchase agreements

 

 

914

 

 

 

831

 

 

 

759

 

 

 

664

 

 

 

566

 

 

 

2,504

 

 

 

1,327

 

Total interest expense

 

 

32,188

 

 

 

32,949

 

 

 

31,204

 

 

 

29,946

 

 

 

27,357

 

 

 

96,341

 

 

 

67,670

 

Net interest income

 

 

153,990

 

 

 

154,838

 

 

 

154,911

 

 

 

157,248

 

 

 

157,319

 

 

 

463,739

 

 

 

472,345

 

Provision for credit losses

 

 

1,100

 

 

 

800

 

 

 

700

 

 

 

1,000

 

 

 

2,350

 

 

 

2,600

 

 

 

15,350

 

Net interest income after provision for credit losses

 

 

152,890

 

 

 

154,038

 

 

 

154,211

 

 

 

156,248

 

 

 

154,969

 

 

 

461,139

 

 

 

456,995

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonsufficient funds (NSF) fees

 

 

8,835

 

 

 

7,973

 

 

 

7,816

 

 

 

8,902

 

 

 

8,606

 

 

 

24,624

 

 

 

24,261

 

Credit card, debit card and ATM card income

 

 

6,688

 

 

 

6,480

 

 

 

5,971

 

 

 

6,508

 

 

 

6,242

 

 

 

19,139

 

 

 

18,538

 

Service charges on deposit accounts

 

 

5,020

 

 

 

4,989

 

 

 

4,998

 

 

 

5,090

 

 

 

5,137

 

 

 

15,007

 

 

 

15,562

 

Trust income

 

 

2,492

 

 

 

2,558

 

 

 

2,595

 

 

 

2,507

 

 

 

2,692

 

 

 

7,645

 

 

 

7,671

 

Mortgage income

 

 

839

 

 

 

990

 

 

 

722

 

 

 

627

 

 

 

856

 

 

 

2,551

 

 

 

2,728

 

Brokerage income

 

 

522

 

 

 

541

 

 

 

673

 

 

 

521

 

 

 

784

 

 

 

1,736

 

 

 

2,096

 

Bank owned life insurance income

 

 

1,314

 

 

 

1,321

 

 

 

1,289

 

 

 

1,330

 

 

 

1,326

 

 

 

3,924

 

 

 

3,954

 

Net (loss) gain on sale of assets

 

 

(3

)

 

 

2

 

 

 

58

 

 

 

(715

)

 

 

4

 

 

 

57

 

 

 

(40

)

Net loss on sale of securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

Other noninterest income

 

 

4,966

 

 

 

5,104

 

 

 

4,022

 

 

 

4,309

 

 

 

4,977

 

 

 

14,092

 

 

 

12,176

 

Total noninterest income

 

 

30,673

 

 

 

29,958

 

 

 

28,144

 

 

 

29,079

 

 

 

30,624

 

 

 

88,775

 

 

 

86,933

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

52,978

 

 

 

52,941

 

 

 

51,073

 

 

 

51,852

 

 

 

51,906

 

 

 

156,992

 

 

 

155,665

 

Net occupancy and equipment

 

 

5,607

 

 

 

5,492

 

 

 

5,466

 

 

 

5,651

 

 

 

5,808

 

 

 

16,565

 

 

 

17,109

 

Credit and debit card, data processing and software amortization

 

 

4,989

 

 

 

4,904

 

 

 

4,573

 

 

 

4,474

 

 

 

4,512

 

 

 

14,466

 

 

 

13,316

 

Regulatory assessments and FDIC insurance

 

 

1,814

 

 

 

2,325

 

 

 

2,374

 

 

 

2,764

 

 

 

3,347

 

 

 

6,513

 

 

 

10,497

 

Core deposit intangibles amortization

 

 

1,248

 

 

 

1,265

 

 

 

1,319

 

 

 

1,412

 

 

 

1,478

 

 

 

3,832

 

 

 

4,547

 

Depreciation

 

 

3,286

 

 

 

3,111

 

 

 

3,104

 

 

 

3,139

 

 

 

3,139

 

 

 

9,501

 

 

 

9,226

 

Communications

 

 

2,214

 

 

 

2,183

 

 

 

2,270

 

 

 

2,404

 

 

 

2,442

 

 

 

6,667

 

 

 

7,628

 

Other real estate expense

 

 

68

 

 

 

120

 

 

 

83

 

 

 

110

 

 

 

219

 

 

 

271

 

 

 

391

 

Net (gain) loss on sale or write-down of other real estate

 

 

(115

)

 

 

(54

)

 

 

(177

)

 

 

91

 

 

 

(2

)

 

 

(346

)

 

 

130

 

Other noninterest expense

 

 

8,610

 

 

 

8,534

 

 

 

8,486

 

 

 

8,907

 

 

 

8,911

 

 

 

25,630

 

 

 

26,907

 

Total noninterest expense

 

 

80,699

 

 

 

80,821

 

 

 

78,571

 

 

 

80,804

 

 

 

81,760

 

 

 

240,091

 

 

 

245,416

 

Income before income taxes

 

 

102,864

 

 

 

103,175

 

 

 

103,784

 

 

 

104,523

 

 

 

103,833

 

 

 

309,823

 

 

 

298,512

 

Provision for income taxes

 

 

21,106

 

 

 

20,917

 

 

 

21,382

 

 

 

21,192

 

 

 

21,310

 

 

 

63,405

 

 

 

60,031

 

Net income available to common shareholders

 

$

81,758

 

 

$

82,258

 

 

$

82,402

 

 

$

83,331

 

 

$

82,523

 

 

$

246,418

 

 

$

238,481

 

 

(C) Interest income on securities was reduced by net premium amortization of $8,027, $7,607, $6,589, $7,338 and $8,073 for the three-month periods ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, respectively, and $22,223 and $24,276 for the nine-month periods ended September 30, 2019 and September 30, 2018, respectively.

Page 9 of 18


 

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

 

 

 

Sep 30, 2019

 

 

Jun 30, 2019

 

 

Mar 31, 2019

 

 

Dec 31, 2018

 

 

Sep 30, 2018

 

 

Sep 30, 2019

 

 

Sep 30, 2018

 

Profitability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (D) (E)

 

$

81,758

 

 

$

82,258

 

 

$

82,402

 

 

$

83,331

 

 

$

82,523

 

 

$

246,418

 

 

$

238,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

1.19

 

 

$

1.18

 

 

$

1.18

 

 

$

1.19

 

 

$

1.18

 

 

$

3.55

 

 

$

3.42

 

Diluted earnings per share

 

$

1.19

 

 

$

1.18