The dividend announcement came along with reported third-quarter earnings of $32.2 million, or 69 cents a share, meeting the average estimate of analysts polled by Thomson Reuters.
Earnings increased from $31.7 million, or 68 cents a share, in the second quarter and $29.3 million, or 63 cents a share, during the third quarter of 2009.
The lender has achieved remarkably consistent earnings performance through the credit crisis, with strong asset quality. The return on average assets (ROA) for the third quarter was 1.36%, and the ROA has exceeded 1% for every quarter since the end of 2007, except for the third quarter of 2008 when it was 0.91%, according to SNL Financial.The company said its return on equity for the third quarter was 9.06%. CEO David Zalman said ""We continue to be cautiously optimistic about the Texas economy," adding that the company was "winning new business in all of our markets and we believe the opportunities for future growth are good." Total assets were $9.4 billion as of September 30, increasing 6% over the past year as the company acquired the three Texas branches that U.S. Bancorp (USB). Prosperity then acquired 19 Texas branches in April from First Bank of Creve Coeur, Mo. Net interest income for the third quarter was $77.3 million, reflecting lower credit costs and declining interest expenses as the bank benefitted from a 7% year-over-year increase in non-interest bearing deposits. That improvement was partially offset by declines in non-interest income and an increase in noninterest expenses. The company attributed the decline in noninterest income to increased losses on the sale of repossessed real estate. The increased noninterest expenses were from the acquired branches. The net interest margin - essentially the average yield on loans and investments less the average cost of funds - for the third quarter was 3.97%, down from 4% in the second quarter. John Rodis of Howe Barnes Hoefer & Arnett termed the margin "relatively stable" in light of a 20 basis point decline the previous quarter, which spooked investors as shares declined 11% over the three weeks following the second-quarter earnings release in July.
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