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Prosperity's Zalman Bends His Own Rules in Pricey Deal

July 03, 2013

David Zalman dislikes bidding for banks - but he hates losing out on a target he really wants. The chief executive of Prosperity Bancshares (PB) in Houston gave in just a little to snag the oldest independent bank in Texas, FVNB in Victoria, for $380 million in cash and stock this week. The rising stock price is further proof that the market is more interested in price to earnings, says Dan Bass, a managing director at Performance Trust Capital Partners. The deal is priced at 17.7 times FVNB's earnings; Prosperity trades at 16.5 times its earnings. When adjusted for an expected 25% cost savings, the multiple is closer to 11.7, Bass says.

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