1. Prosperity Bancshares
Prosperity Bancshares ( PB) of Houston saw its shares return 6% in 2012, closing Monday at $42.00. The three-year total return was 53% and the five-year return was 56%. The shares traded for 2.9 times tangible book value, and for 12.3 times the consensus 2013 EPS estimate of $3.42. The consensus 2014 EPS estimate is $3.52. Based on Monday's close and a quarterly payout of 21.5 cents, the shares had a dividend yield of 2.05%. For the first quarter of 2010 through the third quarter of 2012, Prosperity's return on average tangible common equity was 24.87%. The company in July acquired American State Financial Corp. of Lubbock, Texas, adding about roughly $3.2 billion in total assets and adding 37 branches spread across 18 counties in West Texas. Prosperity Bancshares had $13.7 billion in total assets and 213 branches as of Sept. 30. Third-quarter net income available to common shareholders of $46.2 million, or 82 cents a share, increasing from $37.0 million, or 78 cents a share, in the second quarter, and $36.4 million, or 77 cents a share, in the third quarter of 2011. The third-quarter net interest margin was 3.56%, expanding from 3.55% the previous quarter, but narrowing from 4.03% a year earlier. The third-quarter return on average tangible common equity was 24.58%. FIG Partners analyst Christopher Marinac on Oct. 23 upgraded Pinnacle Financial Partners to an "Outperform," with a price target of $47.25, "based on solid 3Q12 EPS and the initial positive integration of several acquisitions recently by the company," and said that "quarterly EPS have superb opportunity to consistently rise through 2013 given flexibility on NIM-Net Interest Margin and NII-Net Interest Income via loan discount accretion from recent mergers (i.e., as loans already credit marked experience payoffs) and as loans rise relative to securities." Marinac underlined the potential for balance-sheet realignment and margin improvement, saying that "in 3Q12, Loans were only 42% of Average Earning Assets." The analyst also said that "PB continues to run a highly-efficient banking model with less than 42% Expenses-to-Revenues (i.e., Efficiency Ratio) on a core basis in 3Q12," and that there was room for further efficiency improvement, "as cost savings are realized, particularly in the West Texas merger integration." Marinac estimates that Prosperity Bancshares will earn $3.50 a share in 2013. PB data by YCharts
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