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EXHIBIT 99.1
PRESS RELEASE
FOR MORE INFORMATION CONTACT:
PROSPERITY BANCSHARES, INC. Prosperity Bancshares, Inc.
3040 Post Oak Boulevard David Hollaway
Houston, Texas 77056 Chief Financial Officer
979.543.2200
[email protected]
FOR IMMEDIATE RELEASE
PROSPERITY BANCSHARES, INC.
AND COMMERCIAL BANCSHARES, INC.
ANNOUNCE MERGER AGREEMENT
HOUSTON, November 8, 2000. Prosperity Bancshares, Inc. (Nasdaq: PRSP) and
Commercial Bancshares, Inc., Houston, Texas (Commercial) announced today that
they have signed a definitive merger agreement pursuant to which Commercial,
will be merged into Prosperity. The transaction solidifies Prosperity's presence
in the Houston metropolitan market, and is a logical extension of Prosperity's
geographic franchise across Southeast Texas.
Commercial is privately held and is the bank holding company of Heritage Bank,
which operates a total of eleven (11) banking offices; seven (7) (with the
eighth scheduled to open in early 2001) in metropolitan Houston and four (4) in
the nearby Southeast Texas cities of Cleveland, Liberty, Magnolia, and Wharton.
As of September 30, 2000, Commercial had total assets of $428 million, loans of
$155 million, deposits of $385 million and shareholders' equity of $26.9
million.
Under terms of the agreement, Prosperity will issue 2.8 million shares of its
common stock for all outstanding shares of Commercial, and 14,000 shares for all
outstanding options to acquire Commercial common stock, subject to adjustment if
the average price of its common stock during the period of ten trading days
prior to receipt of approval of the transaction from the Federal Reserve Board
is less than $16.00 per share. All outstanding options to purchase Commercial
common stock will be converted to Prosperity options with appropriate
adjustments. Based on the closing price of Prosperity's stock on Tuesday,
November 7, the transaction values Commercial at $53.3 million.
The merger, which is expected to be tax-free to Commercial shareholders, will be
accounted for as a pooling of interests and has been approved by the Boards of
Directors of both companies. The transaction is expected to close before March
31, 2001 and is subject to the results of due diligence and approval by
Commercial and Prosperity shareholders, as well as customary regulatory
approvals. Operational integration is anticipated to occur prior to the end of
the second quarter of 2001.
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Prosperity expects that the result of the merger will be accretive to earnings
one year after operational integration. This estimate does not consider any
anticipated revenue enhancements that may be realized from the merger.
"This merger continues our string of material acquisitions and the combination
will create a $1.1 billion regional community bank with market capitalization of
approximately $150 million. It significantly increases our asset base in
metropolitan Houston - one of the fastest growing metropolitan areas in the
nation, and provides us with an opportunity to enhance our revenues and earnings
over the next several years," commented Tracy T Rudolph, Chairman of the Board
and Chief Executive Officer of Prosperity. Mr. Rudolph announced his planned
retirement as Chairman and CEO to be effective early in 2001. David Zalman,
current President of Prosperity, will take over the duties of CEO when Mr.
Rudolph steps down.
Mr. Rudolph began his banking career, which encompasses over 38 years, at Texas
National Bank which merged with National Bank of Commerce to form Texas Commerce
Bank in 1963. Prior to 1983, when Mr. Rudolph formed Prosperity, he served as
Chairman of the Board and Chief Executive Officer of South Main Bank and of Town
& Country Bank.
"I am extremely pleased and proud of our past performance and have confidence
that the qualified and experienced senior management team we have in place will
be able to continue to build on our past success. David and I have built a team
over the past fourteen years that is poised to lead our organization into the
future. I know our shareholders are in good hands with our experienced
management team and I look forward to continuing to serve as a director,"
commented Rudolph.
"Heritage Bank has a formidable presence in the fast growing Houston market.
This merger is an excellent geographic fit with our existing franchise and will
increase our ability to provide our style of people-to-people banking within the
Houston market," commented Zalman.
"The combination of our organizations will further our strategic goals of
maintaining consistently strong earnings growth by leveraging our product and
service capabilities over an expanded customer base," added David Hollaway,
Prosperity's Chief Financial Officer.
Ned Holmes, Chairman of the Board of Commerical, said, "This marriage is the
right one for Commercial, as it provides significant value to our shareholders,
our customers, our employees, and the communities we serve. Together, our
combined organization will be able to offer our customers a broader and more
sophisticated array of products and services, while continuing to provide the
highest level of customer and community service." Holmes, who will be one of
Prosperity's largest shareholders following the merger, will become Chairman of
the Board of Prosperity upon closing.
Mr. Holmes, a Houston native, was President of Commercial from 1980 to 1986 when
he became Chairman. In addition, he has been associated with a UK public company
since 1980, currently serving as President and CEO of EF International, Inc. and
Laing Properties, Inc. He is also Chairman and CEO of Parkway Investments and
Bovis Homes, Inc. Since 1994, Mr. Holmes has served on the Board of Directors of
Archstone Communities Trust (ASN).
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In addition to land development, construction and banking interests, Mr. Holmes
has been very active in the economic development of the Houston metropolitan
area. He served on The City of Houston Planning Commission from 1983 to 1988. He
became a Commissioner of the Port of Houston Authority in 1987, and served as
Chairman from 1988 to 2000 when he was elected Chairman Emeritus. In addition,
he served as Chairman of the Greater Houston Partnership in 1999.
"Our charge will be to move quickly to integrate our organizations in order to
take advantage of the vibrant Houston economy and strive to continue the
financial performance Prosperity has been able to achieve in the past," added
Mr. Holmes.
Tim Timanus, President and Chief Executive Officer of Commercial added, "We are
excited and pleased to be joining forces with Prosperity. Local decision making,
outstanding customer service and improved products and services make this merger
a good fit for our customers, employees and shareholders. We look forward to
joining the Prosperity team and building on their track record of customer
focused products with local decision makers." Timanus will serve as Executive
Vice President and Chief Operating Officer of Prosperity upon consummation of
the merger.
Upon completion of the transaction, Prosperity will add Ned Holmes, Tim Timanus,
Charles Davis and Virgil Pace as new Directors. Ned Holmes will become Chairman
of the Board; David Zalman will remain as President and assume all CEO
responsibilities; Tim Timanus will become Executive Vice President and COO; and
David Hollaway, CPA will continue as CFO.
Prosperity will be hosting a conference call to discuss the merger at 10:00 a.m.
CST on Thursday, November 9, 2000. You can listen to the live call at
www.firstprosperity.com. To participate in this call, please dial 800-611-1148
at least 15 minutes prior to the start time.
Upon completion of operational integration, Prosperity will have twenty-nine
(29) banking centers in Houston and the surrounding counties with over $1.0
billion in deposits, approximately $396 million in loans and over $1.1 billion
in assets.
Strategic Rationale and Economics
o Financially & strategically attractive
o Quality management team
o Increases pro forma capital
o Substantial accretion to tangible common equity ratio
o Increases pro forma loan loss reserves from 1.25% to 1.37%
o Market expansion opportunity for First Prosperity Bank
o Attractive core deposit franchise; provides platform for growth
o CBI loan to deposit ratio of 40.2%; low risk profile
o CBI efficiency ratio of 72% makes expense saves reasonable
o Transaction Details
o Share exchange ratio: 155.0 shares of PRSP to each CBI share
o Cost Savings: 16% of CBI expense base
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o Accounting Treatment: Pooling of interests
o Expected closing: 1Q 2001
o Integration completion: 2Q 2001
o Valuation (using Prosperity's closing stock price on 11/7/00 of
$18.94)
o Price/book: 1.98x
o Price/tangible Book: 2.02x
o Price to 1999 earnings: 15.8x
o Price to 2000 est.
earnings: 19.0x
o Price to 2001 est.
earnings: 14.8x
o Price/assets 12.5x
o Deposit premium: 6.8%
Prosperity Bancshares, Inc., formed in 1983, is a bank holding company
headquartered in Houston, Texas. Operating under a community banking philosophy,
Prosperity seeks to develop broad customer relationships based on service and
convenience. Prosperity offers a variety of traditional loan and deposit
products to its customers, which consist primarily of consumers and small and
medium sized businesses. In addition to established banking products, Prosperity
offers a complete line of services including: Internet Banking services at
www.firstprosperity.com, Trust Services, MasterMoney Debit Cards, and 24 hour
voice response banking. The bank currently operates eighteen (18) full service
banking locations in the greater Houston metropolitan area and eleven (11)
contiguous counties situated south and southwest of Houston. (Angleton, Bay
City, Beeville, Clear Lake, Cuero, East Bernard, Edna, El Campo, Goliad,
Hitchcock, Houston - Meyerland, Houston - Post Oak, Mathis, Needville, Palacios,
Sweeny, Victoria, and West Columbia.)
XXX
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: THE STATEMENTS CONTAINED IN THIS RELEASE WHICH ARE NOT HISTORICAL FACTS
CONTAIN FORWARD-LOOKING INFORMATION WITH RESPECT TO PLANS, PROJECTIONS OR FUTURE
PERFORMANCE OF PROSPERITY BANCSHARES, INC. AND ITS SUBSIDIARIES. FORWARD-LOOKING
STATEMENTS, WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934, MAY HAVE BEEN MADE IN THIS DOCUMENT. PROSPERITY'S RESULTS MAY DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS FOR A VARIETY OF
REASONS, INCLUDING ACTIONS OF COMPETITORS; CHANGES IN LAWS AND REGULATIONS
(INCLUDING CHANGES IN GOVERNMENTAL INTERPRETATIONS OF REGULATIONS AND CHANGES IN
ACCOUNTING STANDARDS); CUSTOMER AND CONSUMER DEMAND, INCLUDING CUSTOMER AND
CONSUMER RESPONSE TO MARKETING; EFFECTIVENESS OF SPENDING, INVESTMENTS OR
PROGRAMS; FLUCTUATIONS IN THE COST AND AVAILABILITY OF SUPPLY CHAIN RESOURCES;
ECONOMIC CONDITIONS, INCLUDING CURRENCY RATE FLUCTUATIONS; AND WEATHER. THESE
FACTORS ARE MORE FULLY DESCRIBED IN PROSPERITY BANCSHARES, INC.'S FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION.
COPIES OF PROSPERITY BANCSHARES, INC.'S SEC FILINGS MAY BE DOWNLOADED FROM THE
INTERNET AT NO CHARGE FROM FREEEDGAR, A REAL-TIME ACCESS TO SEC FILINGS SITE
LOCATED AT HTTP://WWW.FREEEDGAR.COM.
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