Prosperity Bancshares (PB) has reported a 2.39 percent fall in profit for the quarter ended Dec. 31, 2016. The company has earned $68.79 million, or $0.99 a share in the quarter, compared with $70.48 million, or $1.01 a share for the same period last year.
Revenue during the quarter went down marginally by 0.95 percent to $181.31 million from $183.04 million in the previous year period. Net interest income for the quarter rose 0.37 percent over the prior year period to $153.83 million. Non-interest income for the quarter fell 2.67 percent over the last year period to $29.48 million.
Prosperity Bancshares has made provision of $2 million for loan losses during the quarter, up 300 percent from $0.50 million in the same period last year.
Net interest margin improved 2 basis points to 3.26 percent in the quarter from 3.24 percent in the last year period. Efficiency ratio for the quarter deteriorated to 43.29 percent from 42.58 percent in the previous year period. A rise in efficiency ratio suggests a fall in profitability.
"We were pleased with our fourth quarter 2016 performance. Our nonperforming assets decreased 19.7% as the Texas economy continues to improve. Our annualized return on fourth quarter average tangible common equity was 16.33%," said David Zalman, Prosperity's chairman and chief executive officer.
Assets outpace liabilities growth
Total assets stood at $22,331.07 million as on Dec. 31, 2016, up 1.33 percent compared with $22,037.22 million on Dec. 31, 2015. On the other hand, total liabilities stood at $18,688.76 million as on Dec. 31, 2016, up 0.62 percent from $18,574.31 million on Dec. 31, 2015.
Deposits stood at $17,307.30 million as on Dec. 31, 2016, down 2.11 percent compared with $17,681.12 million on Dec. 31, 2015.
Loans to deposits ratio was 55.60 percent for the quarter, up from 53.40 percent for the previous year quarter.
Noninterest-bearing deposit liabilities were $5,190.97 million or 29.99 percent of total deposits on Dec. 31, 2016, compared with $5,136.58 million or 29.05 percent of total deposits on Dec. 31, 2015.
Investments stood at $9,726.09 million as on Dec. 31, 2016, up 2.35 percent or $223.66 million from year-ago. Shareholders equity stood at $3,642.31 million as on Dec. 31, 2016, up 5.18 percent or $179.40 million from year-ago.
Return on average assets moved down 4 basis points to 1.26 percent in the quarter from 1.30 percent in the last year period. At the same time, return on average equity decreased 59 basis points to 7.58 percent in the quarter from 8.17 percent in the last year period.
Credit quality deteriorates
Prosperity Bancshares witnessed a deterioration in credit quality during the quarter. Nonperforming assets moved up 11.14 percent or $4.84 million to $48.30 million on Dec. 31, 2016 from $43.46 million on Dec. 31, 2015. Nonperforming assets to total loans was 0.50 percent in the quarter, up from 0.46 percent in the last year period. Meanwhile, nonperforming assets to total assets was 0.25 percent in the quarter, up from 0.23 percent in the last year period.
Capital ratios improve
Prosperity Bancshares recorded an improvement in capital ratios during the quarter. Tier-1 leverage ratio stood at 8.68 percent for the quarter, up from 7.97 percent for the previous year quarter. Equity to assets ratio was 16.31 percent for the quarter, up from 15.71 percent for the previous year quarter. Book value per share was $52.41 for the quarter, up 5.99 percent or $2.96 compared to $49.45 for the same period last year.
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