Prosperity Bancshares, Inc. · NYSE:PB
Prosperity Bancshares — Merger or Acquisition (August 2006)
43 slides from Prosperity Bancshares's merger presentation, Aug 2, 2006
Slide 1: Prosperity Bancshares, Inc.
Exhibit 99.1 —PRO BANCSHARES, INC: ankers... not just a bank: 7 =
Slide 2: Safe Harbor Statement
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 The statements contained in this presentation which are not historical facts contain forward- looking information with respect to plans, projections, or future performance of Prosperity Bancshares, Inc. and its subsid
Slide 3: Safe Harbor Statement
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 RELEVANT DOCUMENTS TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY, TEXAS UNITED AND THE PROPOSED TRANSA
Slide 4: Prosperity is . . . . a Track Record of Success
Prosperity is . . . . a Track Record of Success • A $4.5 billion Texas based Financial Holding Company rd • 3 largest Texas based commercial bank by deposit size • Strong balance sheet growth – 10 year CAGR of 33% loans, 30% deposits, and 31% assets • Strong earnings growth – 10 year CAGR of 18% for
Slide 5: Banking Center Locations
Banking Center Locations 88 Full Service Locations 38 in Houston CMSA 15 in Corpus Christi area 11 in Dallas/Fort Worth area 5 in Austin area 2 in East Texas 17 in South Texas Southwest of Houston Total Population: Texas: 22,293,020 77% of total loans Population (CMSA) and Houston: 5,106,853 Dallas:
Slide 6: Balance Sheet Summary
Balance Sheet Summary As Originally Reported $5,100 $4,800 $800 $4,500 Total footings as of 6/30/06 $4,200 $700 Loans = $2.2 billion $3,900 Deposits = $3.6 billion $3,600 $600 $3,300 Assets = $4.5 billion $3,000 $500 $2,700 $2,400 $400 $2,100 Loans $1,800 $300 Deposits $1,500 Assets $1,200 $200 $900
Slide 7: EPS Growth
EPS Growth Diluted $2.00 Net income 5 and 10 year $1.77 EPS 10 year $1.75 CAGR = 18% CAGR = 43% and 35% respectively $1.59 $1.50 $1.36 $1.22 $1.25 $1.00 $0.74 $0.79 $0.75 $0.44 $0.48 $0.50 $0.25 $0.00 2000 2001 2002 2003 2004 2005 2Q 2005 2Q 2006 7
Slide 8: Net Interest Income and Margin (fte)
Net Interest Income and Margin (fte) $40 3.83% 3.82% 3.82% $35 3.82% 3.81% 3.81% 3.81% $30 3.81% 3.80% $25 3.79% $20 3.77% 3.78% $15 3.77% $10 Net Interest Margin 2005 3.81% Net Interest Income 3.76% $5 Net Interest 3.75% Margin $0 3.74% 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 In millions 8
Slide 9: Non-interest Income Growth
Non-interest Income Growth 35 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2Q05 2Q06 In millions 9
Slide 10: Efficiency Ratio
Efficiency Ratio 55.00% 4 acquisitions $426 million assets acquired 2 acquisitions 52.50% $846 million 51.82% assets acquired 50.39% 50.00% 1 acquisition 48.93% $1.1 billion 49.41% assets acquired 47.50% 5 acquisitions 2 acquisitions 47.24% $507 million $296 million assets acquired assets acquired 4
Slide 11: Loan Growth
Loan Growth 2,400 65.00% 2,200 2Q06 Organic Loan Growth = 15.3% 2,000 60.00% Average Organic Loan Growth 1,800 for the last 2 years = 8% 55.00% 1,600 1,400 50.00% 1,200 1,000 45.00% 800 40.00% 600 Loans 400 35.00% Loan / Deposit 200 Ratio 0 30.00% 2000 2001 2002 2003 2004 2005 2Q06 Loan/deposit rati
Slide 12: Loan Composition
Loan Composition June 30, 2006 Total Loans $2,204,792 Commercial $297,230 13.5% Construction $396,246 18.0% Commercial Real Estate $934,554 42.4% 1-4 Family Home Residential Equity Agriculture Consumer $373,783 $64,540 $67,007 $71,432 17.0% 2.9% 3.0% 3.2% In millions 12
Slide 13: Historical Loan Composition
Historical Loan Composition 12/31/2002 12/31/2003 12/31/2004 12/31/2005 6/30/2006 CAGR Loan Composition Commercial $ 93.8 13.8% $ 94.0 12.2% $ 144.4 13.9% $ 222.8 14.4% $ 297.2 13.5% 39.0% Construction $ 52.4 7.7% $ 36.5 4.7% $ 109.6 10.6% $ 206.7 13.4% $ 396.3 18.0% 78.3% 1-4 Family Residential $ 2
Slide 14: Asset Quality – NPA/Loans + OREO
Asset Quality – NPA/Loans + OREO 1.10% 0.90% 0.70% 0.50% PRSP NPA / Loans Peer NPA / Loans 0.30% 0.10% 2000 2001 2002 2003 2004 2005 Y-T-D 06 -0.10% Texas Peer Group Includes: CFR, FFIN, FBTX, IBOC, MCBI, SBSI, SNBI, SBIB, SBIT, TCBI, TRBS, TXUI 14
Slide 15: Asset Quality - NCO/Average Loans
Asset Quality - NCO/Average Loans 0.50% 0.40% 0.30% 0.20% PRSP NCO / Loans Peer NCO / Loans 0.10% 0.00% 2000 2001 2002 2003 2004 2005 Y-T-D 06 -0.10% Texas Peer Group Includes: CFR, FFIN, FBTX, IBOC, MCBI, SBSI, SNBI, SBIB, SBIT, TCBI, TRBS, TXUI 15
Slide 16: Bond Portfolio
Bond Portfolio June 30, 2006 US Agencies & Total Market Value of Investment Corporate & Treasury Securities $1,643,412 Other $319,022 CMOs $11,252 • Approx. annual cash 19.32% $308,219 Municipals 0.68% flow $325 million 18.67% $56,634 • Effective duration 3.43% 2.9 years Preferred $24,000 Portfolio
Slide 17: Deposit Composition
Deposit Composition June 30, 2006 Total Deposits $3,640,000 CDs & IRAs >$100,000 Non-interest $617,029 bearing DDA CDs & IRAs 17.0% $839,317 <$100,000 23.1% $598,038 16.4% Interest Bearing DDA $655,081 MMA & 18.0% Savings $930,535 25.5% In millions 17
Slide 18: Merger & Acquisition History
Merger & Acquisition History $35 05/02/02 09/12/05 06/21/99 Paradigm Bank 10/26/04 First State Bank 08/15/02 South Texas Bancshares, Inc. Deal Value: $41.6 FirstCapital Bank Deal Value: $7.3 $30 Deal Value: $23.4 Location: Houston First National Bank Deal Value: $135.7 Location: Grapeland Location:
Slide 19: Total Return Performance
Total Return Performance 600% $100,000 invested in PRSP at 500% IPO on 11/12/1998 was worth $ 542,300 on 3/31/2006 400% 300% 200% 100% 0% Prosperity Bancshares Inc. (+442.3%) Russell 3000 (+40.9%) NASDAQ Bank Index (+80.5%) Source: CRSP, Center for Research in Security Prices, Graduate School of Bus
Slide 20: Contact Information
Contact Information Corporate Headquarters Investor Contacts Prosperity Bank Plaza David Zalman 4295 San Felipe Chairman & Chief Executive Officer Houston, Texas 77027 979.543.2200 david.zalman@prosperitybanktx.com 281.269.7199 Telephone Dan Rollins 281.269-7222 Fax President & Chief Operating Offic
Slide 21: KBW Presentation –7/31/06
KBW Presentation –7/31/06
Slide 22: Financial Highlights
Financial Highlights As Originally Reported (Dollars in thousands, except EPS) 2002 2003 2004 2005 2Q05 2Q06 Assets $1,823,286 $2,400,487 $2,697,228 $3,585,982 $3,446,816 $4,531,951 Loans $679,559 $770,053 $1,035,513 $1,542,125 $1,520,175 $2,204,792 Deposits $1,586,611 $2,083,748 $2,317,076 $2,920,3
Slide 23: PRSP Acquisitions
PRSP Acquisitions At Announcement Sellers' PRSP Sellers' Assets Deal Date of Accounting Assets Assets Contribution Value Announcement Seller City State Type Consideration Method ($000) ($000) (%) ($000) 11/16/05 SNB Bancshares, Inc. Houston TX Bank Common Stock Purchase 3,529,468 1,121,000 21.7 242.
Slide 24: Projected Population Change
Projected Population Change 2005-2010 (%) 12.00% 10.86% 10.58% 10.00% 8.00% 6.26% 6.00% 4.00% 2.00% 0.00% PRSP Pro Forma * Texas Average National Average * Pro Forma includes the acquisition of TXUI Growth Rates are deposits rated by County Source: SNL Financial 24
Slide 25: The Greater Houston Market
The Greater Houston Market • A metropolitan region of 5.4 million that is projected to grow 15.0% from 2005 to 2010 • Houston is the 4th largest city in the US • Harris County is Texas’ largest deposit market with $85.8 billion in total deposits • Home to 24 FORTUNE 500 companies • Port of Houston c
Slide 26: Fort Bend County
Fort Bend County • Fast-growing county with an attractive customer base – 26.6% historical population growth for 2000 – 2005 Versus 10.8% for Texas and 6.2% for the U.S. – 27.6% projected population growth for 2005 – 2010 Versus 10.6% for Texas and 6.3% for the U.S. • Ranks second in the nation for
Slide 27: The Dallas/Fort Worth Market
The Dallas/Fort Worth Market • Fort Worth is Texas’ third largest deposit market • A metropolitan region of 5.9 million that is projected to grow 13.9% from 2005 to 2010 – Tarrant County will lead the region’s population growth, adding up to 800,000 people by 2030 • New residents and businesses are
Slide 28: Other Significant Markets
Other Significant Markets The Victoria Market The Corpus Christi Market • Known as the South Texas Crossroads, • 8th Largest City in Texas Victoria is located at the intersection of three major US highways: 77, 87 and 59 • 7th Largest Port in the US; Employs (the future I-69) 40,000 Texans and provi
Slide 29: Other Significant Markets
Other Significant Markets The Bryan / College Station Market The Austin / Round Rock Market • Current population of more than 200,000 • A metropolitan region of 1.4 million that is that is projected to grow 9.6% from 2005 projected to grow 16.2% from 2005 to to 2010 2010 • Home to the fourth largest
Slide 30: 2Q06 Presentation –7/31/06
2Q06 Presentation –7/31/06
Slide 31: Acquisition of Texas United Bancshares, July 20, 2006
Acquisition of July 20, 2006
Slide 32: Strengthens the Franchise
Strengthens the Franchise • Creates a company with more than $6.0 billion in assets, the third largest independent Texas-based bank • Increases market capitalization to approximately $1.5 billion • Accretive to GAAP and cash EPS within 12 months after operational integration with 20% cost savings •
Slide 33: Strengthens the Franchise
Strengthens the Franchise • Gives Prosperity the #11 deposit market share in Texas • Combined franchise will have 131 banking centers in Texas – #3 position of “brick and mortar” branches among independent Texas banks • Pricing of the transaction is consistent with other bank deals in metropolitan m
Slide 34: Acquisition Summary
Acquisition Summary Acquirer: Prosperity Bancshares, Inc. (PRSP) Acquiree: Texas United Bancshares, Inc. (TXUI) Price Per Share: $32.84 per share (1) Aggregate Value: $357.1 million (1) Consideration: 100% stock Exchange Ratio: 1.0000 Termination Fee: $15.0 million Collar: In the event that PRSP’s s
Slide 35: Transaction Highlights
Transaction Highlights Anticipated Closing: First quarter of 2007 Operational Integration: First half of 2007 Pre-tax Cost Savings: 20.0% Acquisition Price to: (1) Book Value ($15.84 share): 2.07 x Tangible Book Value ($6.58 share): 4.99 x LTM EPS ($1.44): 22.8 x 2006 First Call EPS ($1.49): 22.0 x
Slide 36: Comparable Transactions
Comparable Transactions Texas metropolitan bank transactions with announced deal values over $50 million since January 1, 2004 General Information Transaction Values & Multiples Target Financial Data at Ann. Price/ Price/ Price/ Core 1 Day 1 Month Deal LTM Est. Price/ Tang. Deposit Mkt. Mkt. Tg. Eq.
Slide 37: Pro Forma Banking Center Network
Pro Forma Banking Center Network # of Branches Prosperity Bancshares Inc. 88 Texas United Bancshares, Inc. State Bank 25 GNB Financial NA 7 Gateway National Bank 6 Northwest Bank 5 Total Texas United Branches 43 37
Slide 38: Pro Forma Dallas/Fort Worth Banking Center Network
Pro Forma Dallas/Fort Worth Banking Center Network Prosperity Bancshares Inc. Texas United Bancshares, Inc. GNB Financial NA Gateway National Bank Northwest Bank 38
Slide 39: Texas Deposit Market Share Analysis
Texas Deposit Market Share Analysis Texas Total Total Deposits Market Branch in Market Share Rank Institution Count ($000) (%) 1 JPMorgan Chase & Co. (NY) 418 66,978,768 21.41 2 Bank of America Corp. (NC) 489 40,556,362 12.96 3 Wells Fargo & Co. (CA) 555 24,772,067 7.92 4 Cullen/Frost Bankers Inc. (
Slide 40: One of a Few with a Significant Footprint
One of a Few with a Significant Footprint Top 20 independent Texas banks and thrifts ranked by number of Brick and Mortar branches Rank Company Branches 1. International Bancshares Corporation 163 2. Guaranty Bank 139 Pro Forma PRSP 131 3. Cullen/Frost Bankers, Inc. 103 4. Prosperity Bancshares, Inc
Slide 41: Pro Forma Deposit Composition
Pro Forma Deposit Composition Prosperity Bancshares, Inc. Prosperity Bancshares, Inc. Texas United Bancshares, Inc. 6/30/06 6/30/06 Pro Forma 6/30/06 CDs & IRAs Non-interest CDs & IRAs CDs & IRAs Non-interest Non-interest >$100,000 bearing DDA CDs & IRAs >$100,000 bearing DDA >$100,000 bearing DDA C
Slide 42: Pro Forma Loan Portfolio
Pro Forma Loan Portfolio Prosperity Bancshares, Inc. Prosperity Bancshares, Inc. Texas United Bancshares, Inc. 6/30/06 Pro Forma 6/30/06 6/30/06 Agriculture Agriculture Home Equity Agriculture Consumer 3.0% 5.3% Commercial Home Equity Home Equity 3.9% 2.9% Consumer R.E. 3.2% 3.2% 3.0% Commercial 5.5
Slide 43: TXUI Acquisition Presentation –7/20/06
TXUI Acquisition Presentation –7/20/06
Prosperity Bancshares — Merger or Acquisition (August 2006) on 6ix