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5 Lean and Mean Bank Stocks

Stocks in this article: BACWFCDFSPBSBNYORITBOFI

5. Prosperity Bancshares

Prosperity Bancshares (PB) of Houston has seen its stock return 46% this year through Friday's close at $60.73.

The shares trade for 3.8 times their reported June 30 tangible book value of $16.05, and for 15.2 times the consensus 2014 earnings estimate of $4.00 a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $3.58. Based on a quarterly payout of 21.5 cents, the shares have a dividend yield of 1.42%.

The company's efficiency ratio during the 12-month period ended Sept. 30 was 42.13%, according to Thomson Reuters Bank Insight.

Prosperity had $16.3 billion in total assets as of June 30. On Aug. 29 the company announced an agreement to acquire F&M Bancorporation of Tulsa, Okla., for roughly $244 million in stock and cash. F&M had $2.4 billion in assets as of June 30, with 10 F&M Bank branches in the Tulsa area and three in Dallas. The deal is expected to close during the first quarter of 2014.

Prosperity also has a deal in place to acquire FVNB Corp. of Victoria, Texas, for about $287.5 million in stock and cash. FVNB had $2.4 billion in assets, with 34 First Victory National Bank offices, including 12 branches in the Houston area, and one loan production office.

Following the announcement of the F&M deal, KBW analyst Jefferson Harralson reiterated his "outperform" rating for Prosperity Bancshares, with a price target of $65, saying in a note to clients that "By our estimates, the deal is 2.8% accretive to 2014 EPS assuming the deal closes at the end of the first quarter and 1.25% accretive to tangible book value ."

For the 12-month period ended June 30, Prosperity's operating return on average assets (ROA) was 1.27%, while its return on average tangible common equity (ROTCE) was 23.43%, according to Thomson Reuters Bank Insight. That's the highest ROTCE among the five efficient bank holding companies listed here, reflecting a relatively low tangible common equity ratio of 6.50% as of June 30.

PB Chart PB data by YCharts

Interested in more on Prosperity Bancshares? See TheStreet Ratings' report card for this stock.

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