A few things went right for Prosperity Bancshares ( PRSP) during the quarter.

Chiefly, the company's net income grew to $26.5 million, or 57 cents per share, in the second quarter. In the year-earlier period, the bank had posted a profit of $23.4 million, or 52 cents per share.

Several analysts surveyed had anticipated earnings to come to 50 cents per share during the quarter.

Shares in the company were trading hands up 1%, at $30.46, soon after the market open Friday.

Net interest income, without taking into account credit losses, grew 40% to $75.5 million, versus $54 million a year ago. The jump came largely from a boost in average earnings assets from the bank's receivership of Franklin Bank deposits, which was closed down by the FDIC at the end of 2008. In a press release, the bank also said that net interest margin fell to 4.04% on a tax-equivalent basis from 4.1% in the year-ago quarter.

Non-interest income for the Houston, Tex.-based bank also grew 16% to $15.1 million, largely because of service charges tied to the Franklin deposits.

Still, credit loss provision for the bank jumped to $6.9 million this quarter, which increased from the $1 million from the year-earlier quarter. Charge-offs on bad loans also grew to $3.5 million this quarter from $1.2 million last year, with specific culprits in construction and commercial real estate.

"During the quarter, we continued to reduce our exposure to construction and development loans while our team of professional bankers continued to attract core deposit customers across the state of Texas," CEO David Zalman said in a statement. "Additionally, excluding recently acquired locations, we experienced linked quarter deposit growth in excess of 16%."

The regional bank is a player in the Texas market, with 158 locations throughout the state and nearly $9 billion in assets. Last fall, the bank decided against taking funds from the federal government's Troubled Asset Relief Program.
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