Compass Bank Fees Charges Nsf

Prosperity Bancshares, Inc. Reports Strong Second Quarter Earnings.

– 2Q12 Earnings Per Share of $0.78 (
diluted
  
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.

2. To lessen the force, strength, purity, or brilliance of, especially by admixture.
) – an increase of
4.0%

– 2012
YTD

See year to date (YTD).
 loan growth of 4.9% (9.8%
annualized

Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared.
)

– 2012 YTD deposit growth of 4.1% (8.3% annualized)


Tangible

 Common Equity Ratio of 7.08%

– Non-Performing Assets remain low at 0.12% of 2Q12 Average
Earning
Assets

 

HOUSTON
 city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837.
Economy

The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry;
,
July
 see month.
 27, 2012 /PRNewswire/ — Prosperity Bancshares,
Inc.[sup.](
NYSE

: PB), the parent company of Prosperity Bank[sup.],
reported net income for the quarter ended June 30, 2012 of $36.972
million or $0.78 per diluted common share, an increase in net income of
$1.880 million or 5.4%, compared with $35.092 million or $0.75 per
diluted common share for the same period in 2011.

“I am very pleased to be able to announce our outstanding
results for the second quarter of 2012, particularly during the current
economic environment when our industry is so challenged,” commented
David
Zalman

, Chairman and Chief Executive Officer. “I am proud of
our team of bankers and their ability to attract quality customers to
our bank. In fact, over the past three months, our lenders produced more
loans than we have ever produced during a calendar quarter in the
history of our bank.”

“During the past quarter, we completed our merger with Billy
and
Cathy

 Allen’s team at The Bank
Arlington
 county (1990 pop. 170,936), N Va., across the Potomac River from Washington, D.C. Arlington is a residential and commercial suburb of Washington.
. This additional
location in the Dallas/Fort Worth CMSA will allow us to continue our
growth in that market. On July 1, we completed our merger with American
State Financial Corporation. W.R. Collier and his team provide us with
an excellent platform for future growth in West Texas. We now have major
operations in
Lubbock
 city (1990 pop. 186,206), seat of Lubbock co., NW Tex.; inc. 1909. In the Llano Estacado region on a branch of the Brazos River, it was settled in 1879 by Quakers.
, Midland/Odessa and Abilene and believe the
American State Bank leadership team, including
Mike Epps

, Tony
Whitehead,
Mike Marshall

 and
Gary
 city (1990 pop. 116,646), Lake co., NW Ind., a port of entry on Lake Michigan; inc. 1909. Gary was founded by the U.S. Steel Corporation, which purchased the land in 1905 and landscaped it for a city.
 
Galbraith
   , John Kenneth Born 1908.

Canadian-born American economist, writer, and diplomat who served as U.S. ambassador to India (1961-1963). His works include The Great Crash (1955).

Noun 1.
, brings vast knowledge of
these markets to our team. Finally, we are excited about our recently
announced, and fifth in the past year, merger agreement with Community
National Bank in Bellaire, Texas, located in the heart of the Houston
MSA.
Randy

 Dobbs and
John James

 along with their team will help us
continue our growth in Houston,” continued Zalman.

“While we are excited about our recent mergers, our team
remains focused on growing our bank by providing the highest level of
service to our customers. We remain excited about our future and strive
to continue building shareholder value,” concluded Zalman.

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. Prosperity has included in this Earnings
Release information
relating to
 relate prep

 relate prep → ,  
 these non-GAAP financial measures for
the applicable periods presented. 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.

Results of operations for the three months ended June 30, 2012

For the three months ended June 30, 2012, net income was $36.972
million compared with $35.092 million for the same period in 2011. Net
income per diluted common share was $0.78 for the three months ended
June 30, 2012 and $0.75 for the same period in 2011. Returns on average
assets, average common equity and average tangible common equity, each
on an annualized basis, for the three months ended June 30, 2012 were
1.35%, 9.06% and 21.70%, respectively. Prosperity’s efficiency
ratio (excluding net gains and losses on the sale of securities and
assets) was 41.94% for the three months ended June 30, 2012.

Net interest income before provision for credit losses for the
quarter ended June 30, 2012 increased 0.04% to $83.666 million compared
with $83.630 million during the same period in 2011. The net interest
margin on a tax equivalent basis decreased to 3.55% for the three months
ended June 30, 2012 compared with 4.06% for the same period in 2011. On
a linked quarter basis, the tax equivalent net interest margin decreased
nine basis points to 3.55% for the three months ended June 30, 2012 from
3.64% reported for the three months ended March 31, 2012.

Non-interest income increased $126,000 or 0.9% to $13.656 million
for the three months ended June 30, 2012 compared with $13.530 million
during the same period in 2011. The change was due to an increase in

debit card
 card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser’s checking account. They can also be used at automated teller machines for withdrawing cash from the user’s checking account.
 and
ATM card

 income and a decrease in loss on sale of
securities partially offset by a reduction in
NSF

 fees.

Non-interest expense decreased $1.7 million or 4.1% to $40.788
million for the three months ended June 30, 2012 compared with $42.514
million during the same period in 2011. The decrease was primarily

attributable

 to a reduction in
regulatory
  
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.

2.
 assessments and
FDIC

See Federal Deposit Insurance Corporation (FDIC).
 insurance.

Average loans increased 7.8% or $283.096 million to $3.914 billion
for the quarter ended June 30, 2012 compared with $3.631 billion for the
same period of 2011. Linked quarter average loans increased 2.5% or
$95.361 million from $3.819 billion at March 31, 2012.

Average deposits increased 8.8% or $683.271 million to $8.436
billion for the quarter ended June 30, 2012 compared with $7.752 billion
for the same period of 2011. Linked quarter average deposits increased
0.09% or $7.160 million from $8.429 billion at March 31, 2012.

Loans at June 30, 2012 were $3.950 billion, an increase of $285.084
million or 7.8%, compared with $3.665 billion at June 30, 2011 and an
increase of $184.426 million or 4.9% (9.8% annualized) compared with
$3.766 billion at
December
 see month.
 31, 2011. Linked quarter loans increased
$75.470 million or 1.9% (7.8% annualized) at June 30, 2012 compared with
loans of $3.875 billion at March 31, 2012. As reflected in the table
below, loan growth was impacted by the acquisition of Texas Bankers,
Inc. and The Bank Arlington. Excluding loans acquired in these
acquisitions, year to date loan growth increased 7.1% on an annualized
basis.

Deposits at June 30, 2012 were $8.395 billion, an increase of
$726.890 million or 9.5%, compared with $7.668 billion at June 30, 2011
and an increase of $334.328 million or 4.1% (8.3% annualized) compared
with $8.060 billion at December 31, 2011. Linked quarter deposits
decreased $149.869 million or 1.8% at June 30, 2012 compared with
deposits of $8.544 billion at March 31, 2012. As reflected in the table
below, deposit growth was impacted by the acquisition of Texas Bankers,
Inc. and The Bank Arlington. Excluding deposits assumed in these
acquisitions, year to date deposit growth increased 5.9% on an
annualized basis.

The table below provides detail on loans acquired and deposits
assumed in the Texas Bankers, Inc. and The Bank Arlington transactions
completed on
January
 see month.
 1, 2012 and April 1, 2012, respectively:

At June 30, 2012, Prosperity had $10.737 billion in total assets,
$3.950 billion in loans and $8.395 billion in deposits. Assets, loans
and deposits at June 30, 2012 increased 11.2%, 7.8% and 9.5%,
respectively, compared with June 30, 2011.

Results of operations for the six months ended June 30, 2012

For the six months ended June 30, 2012, net income was $73.459
million compared with $68.970 million for the same period in 2011. Net
income per diluted common share was $1.55 for the six months ended June
30, 2012 compared with $1.47 for the same period in 2011. Returns on
average assets, average common equity and average tangible common
equity, each on an annualized basis, for the six months ended June 30,
2012 were 1.37%, 9.10% and 22.12%, respectively. Prosperity’s
efficiency ratio (excluding net gains and losses on the sale of
securities and assets) was 42.09% for the six months ended June 30,
2012.

Net interest income before provision for credit losses for the six
months ended June 30, 2012 increased $1.469 million or 0.9%, to $165.512
million compared with $164.043 million during the same period in 2011.
The increase was attributable primarily to a 13.0% increase in average
earning assets over the same period.

Non-interest income increased $204,000 or 0.7% to $27.601 million
for the six months ended June 30, 2012 compared with $27.397 million for
the same period in 2011. The increase was mainly due to an increase in
ATM and debit card income and a decrease in net loss on the sale of
other real estate and net loss on sale of securities partially offset by
a decrease in NSF fees.

Non-interest expense decreased $2.962 million or 3.5% to $81.247
million for the six months ended June 30, 2012 compared with $84.209
million for the same period in 2011. The decrease was primarily
attributable to a decrease in regulatory assessments and FDIC insurance,
partially offset by an increase in other real estate expense.

Asset Quality

Non-performing assets totaled $11.873 million or 0.12% of average
earning assets for the three months ended June 30, 2012 compared with
$12.680 million or 0.15% of average earning assets for the three months
ended June 30, 2011, and $14.873 million or 0.16% of average earnings
assets for the three months March 31, 2012. The allowance for credit
losses was 1.28% of total loans at June 30, 2012 compared with 1.42% at
June 30, 2011 and 1.33% of total loans at March 31, 2012.

The provision for credit losses was $600,000 for the three months
ended June 30, 2012 compared to $1.400 million for the three months
ended June 30, 2011. Net charge offs were $1.860 million for the three
months ended June 30, 2012 compared to $1.229 million for the three
months ended June 30, 2011.

The provision for credit losses was $750,000 for the six months
ended June 30, 2012 compared to $3.100 million for the six months ended
June 30, 2011. Net charge offs were $1.962 million for the six months
ended June 30, 2012 compared to $2.753 million for the six months ended
June 30, 2011.

Conference Call

Prosperity’s management team will host a conference call on

Friday
 see Sabbath; week.


Friday

young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe]

See : Servant
, July 27, 2012 at 10:30 a.m. Eastern Daylight Time (9:30 a.m.
Central Daylight Time) to discuss Prosperity’s second quarter
earnings. Individuals and investment professionals may participate in
the call by dialing 800-894-5910, the reference code is PBTX.

Alternatively, individuals may listen to the live webcast of the
presentation by visiting Prosperity’s website at
www.prosperitybanktx.com. The webcast may be accessed directly from
Prosperity’s home page under News and Events.

Pending Acquisition of Community National Bank

On June 27, 2012, Prosperity announced the signing of a definitive
agreement to acquire Community National Bank, Bellaire, Texas. This is
the fifth acquisition announced by Prosperity within the past nine
months. Community National Bank operates one (1) banking office in
Bellaire, Texas, in the Houston Metropolitan Area. As of June 30, 2012,
Community National Bank reported total assets of $180.6 million, total
loans of $68.6 million and total deposits of $162.6 million.

Under the terms of the definitive agreement, Prosperity will issue
up to 372,396 shares of Prosperity common stock plus $11.4 million in
cash for all outstanding shares of Community National Bank capital
stock, subject to certain conditions and potential adjustments. The
transaction is subject to customary closing conditions, including the
receipt of regulatory approvals and approval of the Community National
Bank shareholders.

Pending Acquisition of East Texas
Financial Services

, Inc.

On December 9, 2011, Prosperity entered into a definitive agreement
to acquire East Texas Financial Services, Inc. (
OTC

See over-the-counter market (OTC).
 BB: FFBT) and its
wholly-owned subsidiary, First Federal Bank Texas
(“Firstbank”). Firstbank operates four (4) banking offices in
the
Tyler
 city (1990 pop. 75,450), seat of Smith co., E Tex.; inc. 1850. In the heart of the rich East Texas oil field, Tyler has refineries and other oil-based industries.
 MSA, including three locations in
Tyler, Texas

 and one
location in
Gilmer, Texas

. As of June 30, 2012, Firstbank reported total
assets of $196.2 million, total loans of $143.6 million and total
deposits of $120.9 million.

Under the terms of the definitive agreement, Prosperity will issue
up to 531,000 shares of Company common stock for all outstanding shares
of East Texas Financial Services capital stock, subject to certain
conditions and potential adjustments. The transaction is subject to
customary closing conditions, including the receipt of regulatory
approvals and approval of the stockholders of East Texas Financial
Services. On May 4, 2012, East Texas Financial Services and each of its
directors were named defendants in a suit brought by East Texas
Financial Corporation (”
ETFC

“), a shareholder of East Texas
Financial Services, to block the proposed merger. The suit was
dismissed
  
tr.v. dis·missed, dis·miss·ing, dis·miss·es
1. To end the employment or service of; discharge.

2.
 on July 18, 2012. The closing date of the transaction is uncertain at
this time.

Acquisition of American State Financial Corporation

On July 1, 2012, Prosperity completed the previously announced
acquisition of American State Financial Corporation and its
wholly owned
subsidiary

 American State Bank (collectively referred to as

ASB

ASB Anti-Social Behaviour
ASB Accounting Standards Board
ASB Aarhus School of Business
“). American State Bank operated thirty-seven (37) full
service banking offices in eighteen (18) counties across West Texas. As
of June 30, 2012, ASB, on a
consolidated
  
v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates

v.tr.
1. To unite into one system or whole; combine:
 basis, reported total assets of
$3.16 billion, total loans of $1.24 billion and total deposits of $2.51
billion.

Under the terms of the agreement, Prosperity issued 8,524,835 shares
of Prosperity common stock plus $178.5 million in cash for all
outstanding shares of American State Financial Corporation capital stock
which resulted in a premium of $240.4 million.

Acquisition of The Bank Arlington

On April 1, 2012, Prosperity completed the previously announced
acquisition of The Bank Arlington. The Bank Arlington operated one (1)
banking office in
Arlington, Texas

, in the Dallas/Fort Worth CMSA. As of
March 31, 2012, The Bank Arlington reported total assets of $37.3
million, total loans of $22.8 million and total deposits of $33.2
million.

Under the terms of the agreement, Prosperity issued 135,389 shares
of Prosperity common stock for all outstanding shares of The Bank
Arlington capital stock which resulted in a premium of $2.8 million.

Acquisition of Texas Bankers, Inc.

On January 1, 2012, Prosperity completed the previously announced
acquisition of Texas Bankers, Inc. and its wholly-owned subsidiary, Bank
of Texas,
Austin

1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum
, Texas. The three (3) Bank of Texas banking offices in
the Austin, Texas CMSA consisted of a location in Rollingwood, which was
consolidated with Prosperity’s
Westlake
 city (1990 pop. 27,018), Cuyahoga co., NE Ohio, a suburb of Cleveland; inc. as a city 1956. A growing city, its various manufactures include ink and plastics.
 location and remains in
Bank of Texas’ Rollingwood banking office; one banking center in

downtown

 Austin, which was consolidated into Prosperity’s downtown
Austin location; and another banking center in
Thorndale

. Prosperity now
operates thirty-four (34) banking centers in the Central Texas area
including Austin and
San Antonio
 , city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837.
. Texas Bankers, Inc. reported, on a
consolidated basis, total assets of $77.0 million, total loans of $27.6
million and total deposits of $70.4 million as of December 31, 2011.

Under the terms of the agreement, Prosperity issued 314,953 shares
of Prosperity common stock for all outstanding shares of Texas Bankers
capital stock which resulted in a premium of $5.2 million.

Prosperity Bancshares, Inc.[sup.]

Prosperity Bancshares Inc.[sup.], recently named
“America’s Best Bank” by
Forbes
   , B(ertie) C(harles) 1880-1954.

American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes
, is a $13.9 billion

Houston, Texas
/) is the largest city in the state of Texas and the
 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 http://www.prosperitybanktx.com, Retail
Brokerage

 Services, MasterMoney
Debit

 Cards, and 24 hour voice response banking.
Prosperity currently operates two hundred thirteen (213) full service
banking locations;
fifty-nine

 (59) in the Houston area; twenty (20) in
the South Texas area including
Corpus Christi
 [Lat.,=body of Christ], feast of the Western Church, observed on the Thursday after Trinity Sunday (or on the following Sunday).
 and Victoria; thirty-five
(35) in the Dallas/Fort Worth area;
twenty-one
 see blackjack.
 (21) in the East Texas
area; thirty-four (34) in the Central Texas area including Austin and
San Antonio; thirty-four (34) in the West Texas area including Lubbock,
Midland/Odessa and Abilene; and ten (10) in the Bryan/College Station
area.

In connection with the proposed merger of Community National Bank
into Prosperity Bank, Prosperity will file with the Securities and
Exchange Commission a registration statement on Form S-4 to register the
shares of Prosperity’s common stock to be issued to the
shareholders of Community National Bank. The registration statement will
include a
proxy

 statement/prospectus which will be sent to the
shareholders of Community National Bank seeking their approval of the
proposed transaction.

WE
URGE

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

In connection with the proposed merger of East Texas Financial
Services, Inc. into Prosperity, Prosperity has filed with the Securities
and Exchange Commission a registration statement on Form S-4 to register
the shares of Prosperity’s common stock to be issued to the
stockholders of East Texas Financial Services. The registration
statement includes a proxy statement/prospectus which was sent to the
stockholders of East Texas Financial Services seeking their approval of
the proposed transaction.

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

Investors and security holders may obtain free copies of these
documents through the website maintained by the Securities and Exchange
Commission 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
 or  
,
4295
San Felipe
 , pueblo (1990 pop. 1,557), Sandoval co., N central N.Mex., on the Rio Grande; founded early 18th cent. The inhabitants are Pueblo of the Keresan linguistic family. Ceremonial dances are held there in spring and winter.
, Houston, Texas 77027 Attn:
Investor Relations

.
Prosperity’s telephone number is (281) 269-7199.


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, and its subsidiaries. These
forward-looking statements are not guarantees of future performance and
are subject to risks and uncertainties, many of which are outside of
Prosperity’s control, that may cause actual results to differ
materially from those expressed or
implied

 by the forward-looking
statements. These risks and uncertainties include 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

v.
1. To grow worse in function or condition.

2. To weaken or disintegrate.
; actions of competitors; changes
in laws and regulations (including changes in governmental
interpretations of regulations and changes in accounting standards); a

deterioration

n.
The process or condition of becoming worse.
 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 fluctuations and interest
rate fluctuations; weather; and the stock price
volatility

 associated
with ”
small-cap

1. Of or relating to the common stock of a relatively small firm having little equity and few shares of common stock
” companies. These and various other factors
are discussed in Prosperity’s Annual Report on Form 10-K for the
year ended December 31, 2011 and other reports and statements Prosperity
has filed with the SEC. Copies of the SEC filings for Prosperity
Bancshares[sup.] may be downloaded from the Internet at no charge from
www.prosperitybanktx.com .

SOURCE Prosperity Bancshares, Inc.