1068851--3/2/2009--PROSPERITY_BANCSHARES

related topics

{condition, economic, financial}

{acquisition, growth, future}

{loan, real, estate}

{stock, price, share}

{loss, insurance, financial}

{system, service, information}

{product, market, service}

{tax, income, asset}

{regulation, government, change}

{provision, law, control}

Risks Associated with the Company s Business If the Company is not able to continue its historical levels of growth, it may not be able to maintain its historical earnings trends. If the Company is unable to manage its growth effectively, its operations could be negatively affected. Difficult market conditions and economic trends have adversely affected the banking industry and could adversely affect the Company s business, financial condition, results of operations and cash flows. Current levels of market volatility are unprecedented and could adversely impact the Company s results of operations and access to capital. Liquidity risk could impair the Company s ability to fund operations and jeopardize its financial condition. If the Company is unable to identify and acquire other financial institutions and successfully integrate its acquired businesses, its business and earnings may be negatively affected. The Company s dependence on loans secured by real estate subjects it to risks relating to fluctuations in the real estate market and related interest rates and legislation that could require additional capital and could adversely affect its financial condition, results of operations and cash flows. The Company s business is subject to interest rate risk and fluctuations in interest rates may adversely affect its earnings and capital levels. The Company s profitability depends significantly on local economic conditions. The Company s allowance for credit losses may not be sufficient to cover actual credit losses, which could adversely affect its earnings. The small to medium-sized businesses that the Company lends to may have fewer resources to weather a downturn in the economy, which may impair a borrower s ability to repay a loan to the Company that could materially harm the Company s operating results. If the goodwill that the Company recorded in connection with a business acquisition becomes impaired, it could require charges to earnings, which would have a negative impact on the Company s financial condition, results of operations and cash flows. The Company may need to raise additional capital in the future and such capital may not be available when needed or at all. An interruption in or breach in security of the Company s information systems may result in a loss of customer business and have an adverse affect on the Company s results of operations, financial condition and cash flows. The business of the Company is dependent on technology and the Company s inability to invest in technological improvements may adversely affect its results of operations, financial condition and cash flows. The Company operates in a highly regulated environment and, as a result, is subject to extensive regulation and supervision; and changes in federal, state and local laws and regulations could adversely affect its financial performance. Risks Associated with the Company s Common Stock The Company s corporate organizational documents and the provisions of Texas law to which it is subject may delay or prevent a change in control of the Company that you may favor. The holders of the Company s junior subordinated debentures have rights that are senior to those of the Company s shareholders.

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1068851--3/2/2009--PROSPERITY_BANCSHARES_INC