Prosperity completed its acquisition of the Houston branches of Banco Popular North America on January 10, 2008, The Bank of Navasota, N.A. on September 1, 2007 and Texas United Bancshares, Inc. on January 31, 2007. The results of operations for these acquisitions have been included in Prosperity''s consolidated financial statements since their respective purchase dates. During the first quarter, Prosperity announced the proposed acquisition of 1st Choice Bank, which has two locations in Houston.

"I am pleased to report another sound quarter of performance by our team," said David Zalman, Prosperity''s Chairman and Chief Executive Officer. "Our strong asset quality along with our style of community banking should continue to help us build value for our shareholders."

Results of operations for the three months ended March 31, 2008

For the three months ended March 31, 2008, net income was $22.938 million compared with $20.229 million for the same period in 2007. Net income per diluted common share was $0.52 for the three months ended March 31, 2008 compared with $0.50 for the same period in 2007. Returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2008 were 1.43%, 8.02% and 27.28%, respectively. Prosperity''s efficiency ratio was 45.06% for the three months ended March 31, 2008.

Net interest income before provision for credit losses for the quarter ended March 31, 2008 increased 12.8% to $51.995 million compared with $46.088 million during the same period in 2007. The increase was attributable primarily to an 8.9% increase in average earning assets.

Non-interest income increased 8.6% to $12.679 million for the three months ended March 31, 2008 compared with $11.671 million for the same period in 2007. The increase was attributable primarily to deposit service charges on the increased number of deposit accounts as a result of the additional banking centers acquired in January 2007, September 2007 and January 2008. Linked quarter non-interest income decreased $569,000.

Non-interest expense increased $1.849 million or 6.8% to $29.120 million for the first quarter of 2008 compared with $27.271 million for the first quarter of 2007. The increase was attributable primarily to the increased operating costs associated with the additional banking centers acquired as a part of the acquisitions completed in January 2007, September 2007 and January 2008. Linked quarter non-interest expense decreased $10.293 million or 26.1%, which was primarily due to a $9.975 million pre-tax impairment write-down on securities in the fourth quarter of 2007.

Balance Sheet Data (at period end) Mar 31, 2008 Dec 31, 2007 Mar 31, 2007 (In Thousands) (Unaudited) (Unaudited) (Unaudited) Loans: Acquired with Texas United Bancshares $934,959 $959,949 $1,091,475 Acquired with The Bank of Navasota 24,339 27,641 0 Acquired with Banco Popular Houston Branches 1,629 0 0 All other 2,200,700 2,155,381 2,156,233 1,561 Total Loans $3,161,627 $3,142,971 $3,247,708 Deposits: Assumed with Texas United Bancshares $1,137,085 $1,154,486 $1,284,945 Assumed with The Bank of Navasota 59,212 61,447 0 Assumed with Banco Popular Houston Branches 117,873 0 0 All other $3,634,548 $3,750,474 $3,643,295 Total Deposits 4,948,718 4,966,407 4,928,240

Loans at March 31, 2008 were $3.162 billion, a decrease of $86.1 million, or 2.7%, compared with $3.248 billion at March 31, 2007. Linked quarter loan growth increased 0.6% or $18.656 million, with loans increasing from $3.143 billion at December 31, 2007 to $3.162 billion at March 31, 2008. As reflected in the table above, linked quarter loan growth for the first quarter of 2008 was impacted by the loans acquired as a part of the acquisitions of Texas United, Navasota and the Banco Popular Houston branches. Excluding the loans acquired as a part of those acquisitions, linked quarter loans increased 2.1%, or 8.4% on an annualized basis.

Deposits at March 31, 2008 were $4.949 billion, an increase of $20.5 million or 0.4%, compared with $4.928 billion at March 31, 2007. Linked quarter deposits decreased 0.4% from $4.966 billion at December 31, 2007. As reflected in the table above, linked quarter deposits for the first quarter of 2008 were impacted by the deposits assumed as a part of the acquisitions of Texas United, Navsasota and the Banco Popular Houston branches. Excluding deposits assumed as a part of those acquisitions, linked quarter deposit decreased 3.1%.

Average loans increased 9.3% or $267.145 million to $3.143 billion for the quarter ended March 31, 2008 compared with $2.876 billion for the same period of 2007. Linked quarter average loans increased $6.659 million from $3.137 billion. Average deposits increased 8.9% to $4.938 billion for the quarter ended March 31, 2008 compared with $4.536 billion for the same period of 2007. Linked quarter average deposits increased $152.815 million from $4.785 billion.