Prosperity Bancshares, Inc.® Reports First Quarter 2021 Earnings

Rhea-AI Summary

Prosperity Bancshares reported a net income of $133.3 million for Q1 2021, up from $130.8 million YoY, translating to $1.44 per diluted share.

Deposits rose 20.7% YoY to $28.763 billion. Loan balances increased 2.7% to $19.639 billion, despite a 3.0% linked quarter decline.

Nonperforming assets remained low at 0.15%. A cash dividend of $0.49 per share was declared for Q2 2021.

Positive

• Net income increased by $2.5 million or 1.9% YoY.
• Deposits surged by $4.937 billion or 20.7% YoY.
• Nonperforming assets decreased to 0.15% of average interest-earning assets.
• Declared a Q2 2021 cash dividend of $0.49 per share.

Negative

• Net income per diluted share declined 2.7% from the previous quarter.
• Net interest income fell by $1.4 million or 0.6% YoY and $3.1 million or 1.2% linked quarter.
• Net interest margin decreased to 3.41%, down from 3.81% YoY.

HOUSTON, April 28, 2021 /PRNewswire/ -- Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, "Prosperity"), reported net income for the quarter ended March 31, 2021 of  $133.3 million compared with $130.8 million for the same period in 2020. Net income per diluted common share was $1.44 compared with $1.39 for the same period in 2020 and the annualized return on first quarter average assets was 1.54%.  Additionally, deposits increased $1.403 billion or 5.1% (20.5% annualized) during the first quarter 2021 and nonperforming assets remain low at 0.15% of first quarter average interest-earning assets.

"With the hard work of our entire team, the combination of Prosperity and LegacyTexas has continued to bear fruit, as reflected in our positive results for the first quarter of 2021," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"Prosperity Bank was ranked as the number 2 Best Bank in America for 2021 and in the Top 10 of Forbes' America's Best Banks since 2010.  I want to congratulate and thank all of our customers, associates, directors and shareholders for helping us achieve this great honor," continued Zalman.

"Texas and Oklahoma both have bright futures. According to the Dallas Federal Reserve, Texas now has the fastest growing population in the nation. Further, the Dallas Federal Reserve is projecting over 6% job growth, meaning over 700,000 new jobs, in Texas for 2021 and Texas is expected to outperform most of the other states for the next three years. Companies continue to move to Texas, with HP and Oracle announcing headquarter moves and other companies, such as Tesla, announcing a major expansion into Texas. Oklahoma is also projected to have population growth for 2021 and has seen expansion of many of the large businesses operating in the state, including Boeing, American Airlines, Costco and Amazon. Consumer spending in Oklahoma is above early 2020 levels and retail job additions and new housing permits are higher than the average U.S. rate," added Zalman.

"We are carefully monitoring office building, hospitality and oil and gas loans, but continue to participate in these areas with experienced borrowers that can withstand the volatility of their industries," stated Zalman.

"I want to thank all our associates for helping create the success we have had. We have a strong team and a deep bench at Prosperity, and we will continue to work hard to improve everyone's quality of life and shareholder value," concluded Zalman.

Results of Operations for the Three Months Ended March 31, 2021

Net income was $133.3 million⁽²⁾ for the three months ended March 31, 2021 compared with $130.8 million⁽³⁾ for the same period in 2020, an increase of $2.5 million or 1.9%. Net income per diluted common share was $1.44 for the three months ended March 31, 2021 compared with $1.39 for the same period in 2020, an increase of 3.6%. On a linked quarter basis, net income decreased $3.8 million or 2.8% to $133.3 million⁽²⁾ compared with $137.1 million⁽⁴⁾ for the three months ended December 31, 2020. Net income per diluted common share was $1.44 for the three months ended March 31, 2021 compared with $1.48 for the three months ended December 31, 2020, a decrease of 2.7%. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2021 were 1.54%, 8.60% and 18.43%⁽¹⁾, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 41.25%⁽¹⁾ for the three months ended March 31, 2021.

Net interest income before provision for credit losses for the three months ended March 31, 2021 was $254.6 million compared with $256.0 million for the same period in 2020, a decrease of $1.4 million or 0.6%. The decrease was primarily due to a decrease in the average rate on interest-earning assets and a decrease in loan discount accretion of $12.1 million, partially offset by a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, net interest income before provision for credit losses was $254.6 million compared with $257.6 million for the three months ended December 31, 2020, a decrease of $3.1 million or 1.2%. The decrease was primarily due to a decrease in the average loan balance, partially offset by a decrease in the average rate on interest-bearing liabilities and an increase in average investment securities balance.

The net interest margin on a tax equivalent basis was 3.41% for the three months ended March 31, 2021 compared with 3.81% for the same period in 2020. The change was primarily due to an increase in lower yielding Warehouse Purchase Program and Paycheck Protection Program ("PPP") loans, a $12.1 million decrease in loan discount accretion, higher net premium amortization on securities and higher cash balances due to excess liquidity, partially offset by a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, the net interest margin on a tax equivalent basis was 3.41% for the three months ended March 31, 2021 compared with 3.49% for the three months ended December 31, 2020. This change was primarily due to a higher net premium amortization on securities and higher cash balances due to excess liquidity.

Noninterest income was $34.0 million for the three months ended March 31, 2021 compared with $34.4 million for the same period in 2020. On a linked quarter basis, noninterest income decreased $2.5 million or 6.9% to $34.0 million compared with $36.5 million for the three months ended December 31, 2020. This decrease was primarily due to decreases in nonsufficient funds ("NSF") fees and other noninterest income.

Noninterest expense was $119.1 million for the three months ended March 31, 2021 compared with $124.7 million for the same period in 2020, a decrease of $5.7 million or 4.5%, primarily due to decreases in data processing, other noninterest expenses and net occupancy and equipment, partially offset by an increase in salaries and benefits. On a linked quarter basis, noninterest expense decreased $1.1 million or 0.9% to $119.1 million compared with $120.2 million for the three months ended December 31, 2020. This decrease was primarily due to a decrease in other noninterest expense and a net gain on sale of other real estate, partially offset by an increase in salaries and benefits.

Balance Sheet Information

At March 31, 2021, Prosperity had $35.558 billion in total assets, an increase of $3.815 billion or 12.0% compared with $31.743 billion at March 31, 2020.

Loans at March 31, 2021 were $19.639 billion, an increase of $511.7 million or 2.7%, compared with $19.127 billion at March 31, 2020, primarily due to an increase in Warehouse Purchase Program loans. Linked quarter loans decreased $608.1 million or 3.0% from $20.247 billion at December 31, 2020, primarily due to a decrease in Warehouse Purchase Program loans. At March 31, 2021, Prosperity had $1.139 billion of PPP loans.

As part of its lending activities, Prosperity extends credit to oil and gas production and servicing companies. Oil and gas production loans are loans to companies directly involved in the exploration and/or production of oil and gas. Oil and gas servicing loans are loans to companies that provide services for oil and gas production and exploration. At March 31, 2021, oil and gas loans totaled $503.9 million (net of discount and excluding PPP loans totaling $142.6 million) or 2.6% of total loans, of which $289.4 million were production loans and $214.5 million were servicing loans, compared with total oil and gas loans of $718.7 million (net of discount) or 3.8% of total loans at March 31, 2020, of which $435.1 million were production loans and $283.6 million were servicing loans. In addition, as of March 31, 2021, Prosperity had total unfunded commitments to oil and gas companies of $248.1 million compared with total unfunded commitments to oil and gas companies of $389.5 million as of March 31, 2020. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Additionally, Prosperity extends credit to hotels and restaurants. At March 31, 2021, loans to hotels totaled $401.2 million (excluding PPP loans totaling $13.1 million) or 2.0% of total loans, and loans to restaurants totaled $208.7 million (excluding PPP loans totaling $125.2 million) or 1.1% of total loans.

Deposits at March 31, 2021 were $28.763 billion, an increase of $4.937 billion or 20.7%, compared with $23.826 billion at March 31, 2020. Linked quarter deposits increased $1.403 billion or 5.1% (20.5% annualized) from $27.360 billion at December 31, 2020.

Asset Quality

Nonperforming assets totaled $44.2 million or 0.15% of quarterly average interest-earning assets at March 31, 2021, compared with $67.2 million or 0.25% of quarterly average interest-earning assets at March 31, 2020, and $59.6 million or 0.20% of quarterly average interest-earning assets at December 31, 2020.

The allowance for credit losses on loans was $307.2 million or 1.56% of total loans at March 31, 2021 compared to $316.1 million or 1.56% of total loans at December 31, 2020 and $327.2 million or 1.71% of total loans at March 31, 2020. The allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and PPP loans, was 1.89%⁽¹⁾ at March 31, 2021 compared with 1.92%⁽¹⁾ at December 31, 2020 and 1.88%⁽¹⁾ at March 31, 2020.

There was no provision for credit losses for the three months ended March 31, 2021, December 31, 2020 and March 31, 2020. 

Net charge-offs were $8.9 million for the three months ended March 31, 2021 compared with net charge-offs of $801 thousand for the three months ended March 31, 2020 and net charge-offs of $7.6 million for the three months ended December 31, 2020. Net charge-offs for the first quarter of 2021 included $7.1 million related to resolved PCD loans, which had specific reserves that were allocated to the charge-offs. Further, an additional $4.2 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Dividend

Prosperity Bancshares declared a second quarter cash dividend of $0.49 per share to be paid on July 1, 2021 to all shareholders of record as of June 15, 2021.

COVID-19 Pandemic

In December 2019, a novel strain of coronavirus disease ("COVID-19") was first reported in Wuhan, Hubei Province, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. On March 13, 2020, the U.S. President announced a national emergency relating to the pandemic, which has since been extended. On April 5, 2021, the Governor of Texas further extended the proclamation certifying that COVID-19 poses an imminent threat of disaster in the state and declaring a state of disaster for all counties in Texas while lifting restrictions on all businesses and activities in the state. On April 11, 2021, the Governor of Oklahoma further extended the executive order that declared an emergency caused by the impending threat of COVID-19 to the people of Oklahoma while lifting restrictions on all businesses and activities in the state. Prosperity Bank (the "Bank") continues to monitor the latest developments regarding COVID-19. The COVID-19 pandemic has resulted in significant economic uncertainties that have had, and could continue to have, an adverse impact on Prosperity's operating income, financial condition and cash flows. The extent to which the COVID-19 pandemic will impact Prosperity's operations and financial results during 2021 cannot be reasonably or reliably estimated at this time.

The health and safety of the Bank's associates, customers, and communities are of utmost importance; and Prosperity has taken additional measures in an effort to ensure this safety, including restricting nonessential employee travel, expanding remote access availability, distancing work stations, professional cleaning of its facilities, and signs and distancing reminders for customers in the banking centers. Further, Prosperity remains committed to providing uninterrupted and reliable banking service and has business continuity plans and protocols in place to ensure critical operations are able to continue without disruption.

In response to the COVID-19 pandemic, on March 27, 2020 the President of the United States signed the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") into law. The CARES Act provides assistance for American workers, families and small businesses. The Paycheck Protection Program, established by the CARES Act and implemented by the Small Business Administration ("SBA") with support from the Department of the Treasury, provides small businesses with funds to pay payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities and are 100% guaranteed by the SBA. On June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act of 2020 ("PPP Flexibility Act"), which modified the covered expense period from eight weeks to 24 weeks, extended the maturity date of the loans out to five years and gave greater flexibility to employers having difficulty hiring workers. PPP loans originated prior to June 5, 2020, have a two-year term and earn interest at 1%. PPP loans originated on and after June 5, 2020, have a minimum five-year term, which can be extended for up to five additional years if the lender and borrower both agree. On December 27, 2020, the Consolidated Appropriations Act of 2021 ("CAA") was signed into law, which extended certain provisions of the CARES Act, provided additional funding and contained new relief provisions. The CAA extended the PPP application period to March 31, 2021 and permits eligible companies to obtain a second PPP loan ("second draw") under terms specified in the CAA, with a maximum amount of $2.0 million and limit of one second draw loan.  Second draw PPP borrowers are eligible for loan forgiveness on the same terms as the first draw PPP borrowers. Lenders that were permitted to approve first draw PPP loans are permitted to approve second draw loans. Additionally, the Bank is entitled to a per loan processing fee based on a tiered schedule ranging from 5% to 1% of the loan balance for the first draw PPP loans and the CAA established pre-determined fees for processing and servicing the second draw PPP loans. On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which added an additional $7.25 billion in PPP funding. On March 30, 2021, the PPP Extension Act of 2021 was signed into law, which extended the PPP application filing deadline from March 31, 2021 to May 31, 2021 and extended the authorization of loans to June 30, 2021.  Since the implementation of the PPP in 2020, Prosperity has obtained SBA approvals on approximately 18,500 loans totaling $1.980 billion and, as of March 31, 2021, had an outstanding balance of 9,621 loans totaling $1.139 billion after remittance.

Also, in response to the COVID-19 pandemic, Prosperity has provided relief to its loan customers through loan extensions and deferrals. Under the CARES Act and the CAA, banks may elect to deem that loan modifications do not result in troubled debt restructurings if they are (1) related to COVID-19; (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the COVID-19 national emergency declaration by the President of the United States or (B) January 1, 2022. Additionally, other short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not troubled debt restructurings under Accounting Standards Codification ("ASC") Subtopic 310-40 and federal banking agencies' interagency guidance. These modifications include modifications such as principal and interest payment deferrals, temporary interest only payment terms, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. Prosperity's troubled debt restructurings do not include loan modifications related to COVID-19. Beginning in mid-March of 2020, Prosperity began offering deferral and modification of principal and/or interest payments to selected borrowers on a case-by-case basis. As of March 31, 2021, Prosperity had approximately $316.7 million in outstanding loans subject to deferral and modification agreements.

Conference Call

Prosperity's management team will host a conference call on Wednesday, April 28, 2021 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's first quarter 2021 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The participant elite entry number is 1669484.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at www.prosperitybankusa.com. The webcast may be accessed from Prosperity's home page by selecting "Presentations, Webcast & Calls" from the menu on the Investor Relations link and following the instructions.

Non-GAAP Financial Measures

Prosperity's management uses certain non-GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews diluted earnings per share excluding merger related expenses, net of tax, and net operating loss ("NOL") tax benefit; return on average assets excluding merger related expenses, net of tax, and NOL tax benefit; return on average common equity excluding merger related expenses, net of tax, and NOL tax benefit; return on average tangible common equity; return on average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program and PPP loans; the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities and merger related expenses, for internal planning and forecasting purposes. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and their presentation, together with the accompanying reconciliations, provides a more complete understanding of factors and trends affecting Prosperity's business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP financial measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP financial measures should not be considered a substitute for, nor of greater importance than, GAAP basis financial measures and results; Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. Please refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures to the nearest respective GAAP financial measures.

Prosperity Bancshares, Inc. ®

As of March 31, 2021, Prosperity Bancshares, Inc.^® is a $35.558 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma.  Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

As of March 31, 2021, Prosperity operated 275 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 65 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area; 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area.

Cautionary Notes on Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may," or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity's possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity's future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity's loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity's operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement, as well as expectations regarding the effects of the COVID-19 pandemic on Prosperity's operating income, financial condition and cash flows.  These forward–looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements.  These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks, including LegacyTexas Financial Group and LegacyTexas Bank (collectively "LegacyTexas"); continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives.  Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); the possibility that the anticipated benefits of an acquisition transaction, including the LegacyTexas transaction, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of two companies or as a result of the strength of the economy and competitive factors generally; a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; 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, interest rate and commodity price fluctuations; the effect, impact potential duration or other implications of the COVID-19 pandemic; and weather.  These and various other factors are discussed in Prosperity Bancshares' Annual Report on Form 10-K for the year ended December 31, 2020 and other reports and statements Prosperity Bancshares has filed with the Securities and Exchange Commission ("SEC"). Copies of the SEC filings for Prosperity Bancshares may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

 

Bryan/College Station Area		Frisco-West		Kerens		Hempstead		98th Street
Bryan		Garland		Longview		Hitchcock		Avenue Q
Bryan-29th Street		Grapevine		Mount Vernon		Liberty		North University
Bryan-East		Grapevine Main		Palestine		Magnolia		Texas Tech Student Union
Bryan-North		Kiest		Rusk		Magnolia Parkway
Caldwell		Lake Highlands		Seven Points		Mont Belvieu		Midland
College Station		McKinney		Teague		Nederland		Wadley
Crescent Point		McKinney Eldorado		Tyler-Beckham		Needville		Wall Street
Hearne		McKinney Redbud		Tyler-South Broadway		Rosenberg
Huntsville		North Carrolton		Tyler-University		Shadow Creek		Odessa
Madisonville		Oak Cliff		Winnsboro		Spring		Grandview
Navasota		Park Cities				Tomball		Grant
New Waverly		Plano		Houston Area		Waller		Kermit Highway
Rock Prairie		Plano-West		Houston		West Columbia		Parkway
Southwest Parkway		Preston Forest		Aldine		Wharton
Tower Point		Preston Parker		Alief		Winnie		Other West Texas Area
Wellborn Road		Preston Royal		Bellaire		Wirt		Locations
		Red Oak		Beltway				Big Spring
Central Texas Area		Richardson		Clear Lake		South Texas Area -		Brownfield
Austin		Richardson-West		Copperfield		Corpus Christi		Brownwood
Allandale		Rosewood Court		Cypress		Calallen		Cisco
Cedar Park		The Colony		Downtown		Carmel		Comanche
Congress		Tollroad		Eastex		Northwest		Early
Lakeway		Trinity Mills		Fairfield		Saratoga		Floydada
Liberty Hill		Turtle Creek		First Colony		Timbergate		Gorman
Northland		West 15th Plano		Fry Road		Water Street		Levelland
Oak Hill		West Allen		Gessner				Littlefield
Research Blvd		Westmoreland		Gladebrook		Victoria		Merkel
Westlake		Wylie		Grand Parkway		Victoria Main		Plainview
				Heights		Victoria-Navarro		San Angelo
Other Central Texas Area		Fort Worth		Highway 6 West		Victoria-North		Slaton
Locations		Haltom City		Little York		Victoria Salem		Snyder
Bastrop		Hulen		Medical Center
Canyon Lake		Keller		Memorial Drive		Other South Texas Area		Oklahoma
Dime Box		Museum Place		Northside		Locations		Central Oklahoma Area
Dripping Springs		Renaissance Square		Pasadena		Alice		Oklahoma City
Elgin		Roanoke		Pecan Grove		Aransas Pass		23rd Street
Flatonia		Stockyards		Pin Oak		Beeville		Expressway
Georgetown				River Oaks		Colony Creek		I-240
Gruene		Other Dallas/Fort Worth Area		Sugar Land		Cuero		Memorial
Kingsland		Locations		SW Medical Center		Edna
La Grange		Arlington		Tanglewood		Goliad		Other Central Oklahoma Area
Lexington		Azle		The Plaza		Gonzales		Locations
New Braunfels		Ennis		Uptown		Hallettsville		Edmond
Pleasanton		Flower Mound		Waugh Drive		Kingsville		Norman
Round Rock		Gainesville		Westheimer		Mathis
San Antonio		Glen Rose		West University		Padre Island		Tulsa Area
Schulenburg		Granbury		Woodcreek		Palacios		Tulsa
Seguin		Grand Prairie				Port Lavaca		Garnett
Smithville		Jacksboro		Katy		Portland		Harvard
Thorndale		Mesquite		Cinco Ranch		Rockport		Memorial
Weimar		Muenster		Katy-Spring Green		Sinton		Sheridan
		Runaway Bay				Taft		S. Harvard
Dallas/Fort Worth Area		Sanger		The Woodlands		Yoakum		Utica Tower
Dallas		Waxahachie		The Woodlands-College Park		Yorktown		Yale
14th Street Plano		Weatherford		The Woodlands-I-45
Abrams Centre				The Woodlands-Research Forest		West Texas Area		Other Tulsa Area Locations
Addison		East Texas Area				Abilene		Owasso
Allen		Athens		Other Houston Area		Antilley Road
Balch Springs		Blooming Grove		Locations		Barrow Street
Camp Wisdom		Canton		Angleton		Cypress Street
Carrollton		Carthage		Bay City		Judge Ely
Cedar Hill		Corsicana		Beaumont		Mockingbird
Coppell		Crockett		Cleveland
East Plano		Eustace		East Bernard		Lubbock
Euless		Gilmer		El Campo		4th Street
Frisco		Grapeland		Dayton		66th Street
Frisco Gaylord		Gun Barrel City		Galveston		82nd Street
Frisco Warren		Jacksonville		Groves		86th Street

 

(1)	Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
(2)	Includes purchase accounting adjustments of $13.2 million, net of tax, primarily comprised of loan discount accretion of $16.3 million for the three months ended March 31, 2021.
(3)	Includes purchase accounting adjustments of $24.1 million, net of tax, primarily comprised of loan discount accretion of $28.5 million, and merger related expenses of $544 thousand for the three months ended March 31, 2020.
(4)	Includes purchase accounting adjustments of $13.3 million, net of tax, primarily comprised of loan discount accretion of $16.1 million for the three months ended December 31, 2020.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (In thousands)
		Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
Balance Sheet Data (at period end)
Loans held for sale		$	20,991			$	46,777			$	51,694			$	39,516			$	65,035
Loans held for investment			17,345,506				17,357,788				18,013,333				18,428,474				17,348,398
Loans held for investment - Warehouse Purchase Program			2,272,389				2,842,379				2,730,614				2,557,183				1,713,762
Total loans			19,638,886				20,246,944				20,795,641				21,025,173				19,127,195
Investment securities(A)			10,088,002				8,542,820				7,431,495				7,717,586				8,295,495
Federal funds sold			8,986				553				56,469				568				676
Allowance for credit losses			(307,210)				(316,068)				(323,635)				(324,205)				(327,206)
Cash and due from banks			1,947,235				1,342,996				1,031,193				332,873				381,458
Goodwill			3,231,636				3,231,636				3,231,692				3,231,964				3,223,144
Core deposit intangibles, net			70,304				73,235				76,478				79,748				83,041
Other real estate owned			462				10,593				11,548				6,160				5,452
Fixed assets, net			326,970				323,572				325,994				324,975				327,293
Other assets			553,147				602,994				560,724				571,807				626,951
Total assets		$	35,558,418			$	34,059,275			$	33,197,599			$	32,966,649			$	31,743,499
Noninterest-bearing deposits		$	9,820,445			$	9,151,233			$	8,998,328			$	9,040,257			$	7,461,323
Interest-bearing deposits			18,942,660				18,209,259				17,460,878				17,112,431				16,365,034
Total deposits			28,763,105				27,360,492				26,459,206				26,152,688				23,826,357
Other borrowings			—				—				2,570				103,131				1,338,429
Securities sold under repurchase agreements			377,106				389,583				380,274				365,335				344,695
Subordinated notes			—				—				125,146				125,365				125,585
Allowance for credit losses on off-balance sheet credit exposures			29,947				29,947				29,947				29,947				29,947
Other liabilities			166,414				148,584				165,579				242,061				222,912
Total liabilities			29,336,572				27,928,606				27,162,722				27,018,527				25,887,925
Shareholders' equity(B)			6,221,846				6,130,669				6,034,877				5,948,122				5,855,574
Total liabilities and equity		$	35,558,418			$	34,059,275			$	33,197,599			$	32,966,649			$	31,743,499

(A)	Includes $970, $974, $(442), $(1,767) and $(3,421) in unrealized gains (losses) on available for sale securities for the quarterly periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.
(B)	Includes $766, $770, $(349), $(1,396) and $(2,703) in after-tax unrealized gains (losses) on available for sale securities for the quarterly periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (In thousands)
		Three Months Ended
		Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
Income Statement Data
Interest income:
Loans		$	233,075			$	241,625			$	244,255			$	242,772			$	247,243
Securities(C)			38,677				36,721				38,033				43,776				48,282
Federal funds sold and other earning assets			351				301				144				45				713
Total interest income			272,103				278,647				282,432				286,593				296,238
Interest expense:
Deposits			17,362				19,757				22,458				25,269				35,018
Other borrowings			—				33				52				533				2,932
Securities sold under repurchase agreements			159				224				309				337				757
Subordinated notes and trust preferred			—				999				1,500				1,499				1,500
Total interest expense			17,521				21,013				24,319				27,638				40,207
Net interest income			254,582				257,634				258,113				258,955				256,031
Provision for credit losses			—				—				10,000				10,000				—
Net interest income after provision for credit losses			254,582				257,634				248,113				248,955				256,031
Noninterest income:
Nonsufficient funds (NSF) fees			6,687				8,051				7,156				5,645				9,443
Credit card, debit card and ATM card income			8,031				8,193				8,315				7,263				7,474
Service charges on deposit accounts			5,978				6,046				5,920				5,790				6,104
Trust income			2,837				2,192				2,502				2,242				2,662
Mortgage income			3,307				3,989				2,958				1,820				2,010
Brokerage income			711				642				628				584				650
Bank owned life insurance income			1,292				1,252				1,449				1,508				1,545
Net (loss) on sale or write-down of assets			(79)				(675)				(528)				(3,945)				(385)
Other noninterest income			5,244				6,857				6,524				4,768				4,885
Total noninterest income			34,008				36,547				34,924				25,675				34,388
Noninterest expense:
Salaries and benefits			80,037				77,809				75,068				79,109				77,282
Net occupancy and equipment			7,833				8,223				8,644				9,190				8,980
Credit and debit card, data processing and software amortization			8,233				8,442				8,776				11,690				11,421
Regulatory assessments and FDIC insurance			2,670				2,670				2,512				2,601				2,078
Core deposit intangibles amortization			2,931				3,243				3,270				3,293				3,363
Depreciation			4,540				4,261				4,605				4,598				4,768
Communications			2,899				2,931				3,027				3,324				3,195
Other real estate expense			244				279				258				40				46
Net (gain) loss on sale or write-down of other real estate			(887)				(195)				(137)				4				(130)
Merger related expenses			—				—				—				7,474				544
Other noninterest expense			10,576				12,542				11,896				13,045				13,194
Total noninterest expense			119,076				120,205				117,919				134,368				124,741
Income before income taxes			169,514				173,976				165,118				140,262				165,678
Provision for income taxes			36,205				36,885				35,054				9,361				34,830
Net income available to common shareholders		$	133,309			$	137,091			$	130,064			$	130,901			$	130,848

(C)	Interest income on securities was reduced by net premium amortization of $12,844, $11,509, $10,089, $9,224 and $8,005 for the three-month periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.

 

Prosperity Bancshares, Inc. ® Financial Highlights (Unaudited) (Dollars and share amounts in thousands, except per share data and market prices)
		Three Months Ended
		Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
Profitability
Net income (D) (E)		$	133,309			$	137,091			$	130,064			$	130,901			$	130,848
Basic earnings per share		$	1.44			$	1.48			$	1.40			$	1.41			$	1.39
Diluted earnings per share		$	1.44			$	1.48			$	1.40			$	1.41			$	1.39
Return on average assets (F)			1.54	%			1.63	%			1.58	%			1.61	%	(J)		1.67	%	(J)
Return on average common equity (F)			8.60	%			8.98	%			8.64	%			8.84	%	(J)		8.86	%	(J)
Return on average tangible common equity (F) (G)			18.43	%			19.57	%			19.19	%			19.98	%	(J)		20.16	%	(J)
Tax equivalent net interest margin (D) (E) (H)			3.41	%			3.49	%			3.57	%			3.69	%			3.81	%
Efficiency ratio (G) (I)			41.25	%			40.77	%			40.17	%			46.56	%	(K)		42.90	%	(K)
Liquidity and Capital Ratios
Equity to assets			17.50	%			18.00	%			18.18	%			18.04	%			18.45	%
Common equity tier 1 capital			14.60	%			13.74	%			13.17	%			12.29	%			12.27	%
Tier 1 risk-based capital			14.60	%			13.74	%			13.17	%			12.29	%			12.27	%
Total risk-based capital			15.07	%			14.23	%			14.28	%			13.36	%			12.81	%
Tier 1 leverage capital			9.68	%			9.67	%			9.57	%			9.41	%			9.49	%
Period end tangible equity to period end tangible assets (G)			9.05	%			9.19	%			9.12	%			8.89	%			8.96	%
Other Data
Weighted-average shares used in computing earnings per common share
Basic			92,854				92,559				92,656				92,658				94,371
Diluted			92,854				92,559				92,656				92,658				94,371
Period end shares outstanding			92,929				92,571				92,562				92,660				92,652
Cash dividends paid per common share		$	0.49			$	0.49			$	0.46			$	0.46			$	0.46
Book value per common share		$	66.95			$	66.23			$	65.20			$	64.19			$	63.20
Tangible book value per common share (G)		$	31.42			$	30.53			$	29.46			$	28.45			$	27.52
Common Stock Market Price
High		$	83.02			$	70.38			$	60.63			$	72.95			$	75.22
Low		$	66.45			$	50.43			$	48.80			$	43.68			$	42.02
Period end closing price		$	76.16			$	69.36			$	51.83			$	59.38			$	48.25
Employees – FTE (excluding overtime)			3,724				3,756				3,716				3,793				3,801
Number of banking centers			275				275				275				275				285

(D) Includes purchase accounting adjustments for the periods presented as follows:
	Three Months Ended
	Mar 31, 2021		Dec 31, 2020		Sep 30, 2020		Jun 30, 2020		Mar 31, 2020
Loan discount accretion
ASC 310-20	$13,314		$13,514		$16,729		$17,999		$22,463
ASC 310-30	$3,027		$2,545		$5,805		$6,267		$6,019
Securities net amortization	$111		$66		$116		$203		$194
Time deposits amortization	$507		$790		$1,240		$1,793		$2,270

(E)	Using effective tax rate of 21.4%, 21.2%, 21.2%, 6.7% and 21.0% for the three-month periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.  Net income for the second quarter of 2020 includes a tax benefit for NOL due to the CARES Act.
(F)	Interim periods annualized.
(G)	Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
(H)	Net interest margin for all periods presented is based on average balances on an actual 365 day or 366 day basis.
(I)	Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale or write down of assets and securities. Additionally, taxes are not part of this calculation.
(J)	For calculations of the annualized returns on average assets, average common equity and average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit, refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
(K)	For calculations of the efficiency ratio excluding merger related expenses, net of tax, refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
YIELD ANALYSIS		Three Months Ended
		Mar 31, 2021												Dec 31, 2020												Mar 31, 2020
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(L)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(L)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(L)
Interest-earning assets:
Loans held for sale		$	33,327			$	238			2.90%				$	42,856			$	348			3.23%				$	66,917			$	623			3.80%
Loans held for investment			17,279,066				213,978			5.02%					17,700,756				220,357			4.95%					17,263,098				236,517			5.51%
Loans held for investment - Warehouse Purchase Program			2,369,601				18,859			3.23%					2,603,455				20,920			3.20%					1,120,324				10,094			3.62%
Total Loans			19,681,994				233,075			4.80%					20,347,067				241,625			4.72%					18,450,339				247,243			5.39%
Investment securities			9,148,841				38,677			1.71%			(M)		8,001,679				36,721			1.83%			(M)		8,434,196				48,282			2.30%			(M)
Federal funds sold and other earning assets			1,506,645				351			0.09%					1,094,487				301			0.11%					223,631				713			1.28%
Total interest-earning assets			30,337,480				272,103			3.64%					29,443,233				278,647			3.76%					27,108,166				296,238			4.40%
Allowance for credit losses			(315,590)												(322,138)												(328,005)
Noninterest-earning assets			4,522,470												4,569,811												4,577,251
Total assets		$	34,544,360											$	33,690,906											$	31,357,412
Interest-bearing liabilities:
Interest-bearing demand deposits		$	6,112,469			$	5,943			0.39%				$	5,545,298			$	5,301			0.38%				$	4,990,386			$	7,096			0.57%
Savings and money market deposits			9,420,064				5,753			0.25%					9,170,179				6,985			0.30%					7,965,440				14,122			0.71%
Certificates and other time deposits			3,031,621				5,666			0.76%					3,047,475				7,471			0.98%					3,404,748				13,800			1.63%
Other borrowings			—				—				—				2,435				33			5.39%					832,961				2,932			1.42%
Securities sold under repurchase agreements			376,662				159			0.17%					376,779				224			0.24%					366,615				757			0.83%
Subordinated notes and trust preferred			—				—				—				81,570				999			4.87%					125,694				1,500			4.80%
Total interest-bearing liabilities			18,940,816				17,521			0.38%			(N)		18,223,736				21,013			0.46%			(N)		17,685,834				40,207			0.91%			(N)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			9,206,791												9,103,742												7,491,798
Allowance for credit losses on off-balance sheet credit exposures			29,947												29,947												13,009
Other liabilities			169,138												224,907												262,523
Total liabilities			28,346,692												27,582,332												25,453,164
Shareholders' equity			6,197,668												6,108,574												5,904,248
Total liabilities and shareholders' equity		$	34,544,360											$	33,690,906											$	31,357,412
Net interest income and margin						$	254,582			3.40%								$	257,634			3.48%								$	256,031			3.80%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							635												664												723
Net interest income and margin (tax equivalent basis)						$	255,217			3.41%								$	258,298			3.49%								$	256,754			3.81%

(L)	Annualized and based on an actual 365 day or 366 day basis.
(M)	Yield on securities was impacted by net premium amortization of $12,844, $11,509 and $8,005 for the three-month periods ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively.
(N)	Total cost of funds, including noninterest bearing deposits, was 0.25%, 0.31% and 0.64% for the three-month periods ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

  

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
	Three Months Ended
	Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
YIELD TREND (O)
Interest-Earning Assets:
Loans held for sale		2.90	%			3.23	%			3.30	%			3.32	%			3.80	%
Loans held for investment		5.02	%			4.95	%			4.91	%			5.06	%			5.51	%
Loans held for investment - Warehouse Purchase Program		3.23	%			3.20	%			3.18	%			3.10	%			3.62	%
Total loans		4.80	%			4.72	%			4.72	%			4.87	%			5.39	%
Investment securities (P)		1.71	%			1.83	%			1.99	%			2.19	%			2.30	%
Federal funds sold and other earning assets		0.09	%			0.11	%			0.09	%			0.10	%			1.28	%
Total interest-earning assets		3.64	%			3.76	%			3.90	%			4.08	%			4.40	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits		0.39	%			0.38	%			0.38	%			0.38	%			0.57	%
Savings and money market deposits		0.25	%			0.30	%			0.35	%			0.41	%			0.71	%
Certificates and other time deposits		0.76	%			0.98	%			1.23	%			1.48	%			1.63	%
Other borrowings		—				5.39	%			1.49	%			0.45	%			1.42	%
Securities sold under repurchase agreements		0.17	%			0.24	%			0.32	%			0.37	%			0.83	%
Subordinated notes and trust preferred		—				4.87	%			4.76	%			4.80	%			4.80	%
Total interest-bearing liabilities		0.38	%			0.46	%			0.54	%			0.63	%			0.91	%
Net Interest Margin		3.40	%			3.48	%			3.56	%			3.68	%			3.80	%
Net Interest Margin (tax equivalent)		3.41	%			3.49	%			3.57	%			3.69	%			3.81	%

(O)	Annualized and based on average balances on an actual 365 day or 366 day basis.
(P)	Yield on securities was impacted by net premium amortization of $12,844, $11,509, $10,089, $9,224 and $8,005 for the three-month periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
		Three Months Ended
		Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
Balance Sheet Averages
Loans held for sale		$	33,327			$	42,856			$	50,606			$	63,338			$	66,917
Loans held for investment			17,279,066				17,700,756				18,267,559				18,135,226				17,263,098
Loans held for investment - Warehouse Purchase Program			2,369,601				2,603,455				2,279,461				1,843,097				1,120,324
Total Loans			19,681,994				20,347,067				20,597,626				20,041,661				18,450,339
Investment securities			9,148,841				8,001,679				7,603,762				8,054,008				8,434,196
Federal funds sold and other earning assets			1,506,645				1,094,487				618,228				172,761				223,631
Total interest-earning assets			30,337,480				29,443,233				28,819,616				28,268,430				27,108,166
Allowance for credit losses			(315,590)				(322,138)				(321,424)				(325,720)				(328,005)
Cash and due from banks			308,787				289,579				267,887				247,426				321,832
Goodwill			3,233,231				3,231,850				3,231,976				3,223,469				3,223,633
Core deposit intangibles, net			71,763				74,919				78,269				81,539				84,865
Other real estate			6,385				14,573				8,061				5,666				5,837
Fixed assets, net			326,004				325,485				325,958				327,811				325,337
Other assets			576,300				633,405				570,495				676,105				615,747
Total assets		$	34,544,360			$	33,690,906			$	32,980,838			$	32,504,726			$	31,357,412
Noninterest-bearing deposits		$	9,206,791			$	9,103,742			$	8,980,814			$	8,583,734			$	7,491,798
Interest-bearing demand deposits			6,112,469				5,545,298				5,221,722				4,949,023				4,990,376
Savings and money market deposits			9,420,064				9,170,179				8,937,751				8,537,352				7,965,440
Certificates and other time deposits			3,031,621				3,047,475				3,103,290				3,224,196				3,404,748
Total deposits			27,770,945				26,866,694				26,243,577				25,294,305				23,852,362
Other borrowings			—				2,435				13,898				474,867				832,961
Securities sold under repurchase agreements			376,662				376,779				378,888				365,077				366,615
Subordinated notes and trust preferred			—				81,570				125,256				125,475				125,694
Allowance for credit losses on off-balance sheet credit exposures			29,947				29,947				29,947				29,947				13,009
Other liabilities			169,138				224,907				167,532				289,899				262,523
Shareholders' equity			6,197,668				6,108,574				6,021,740				5,925,156				5,904,248
Total liabilities and equity		$	34,544,360			$	33,690,906			$	32,980,838			$	32,504,726			$	31,357,412

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
		Mar 31, 2021							Dec 31, 2020							Sep 30, 2020							Jun 30, 2020							Mar 31, 2020
Period End Balances
Loan Portfolio
Commercial and industrial		$	2,104,116			10.7	%		$	2,210,003			10.9	%		$	2,171,302			10.5	%		$	2,214,742			10.5	%		$	2,500,110			13.1	%
Warehouse purchase program			2,272,389			11.6	%			2,842,379			14.0	%			2,730,614			13.1	%			2,557,183			12.2	%			1,713,762			9.0	%
Construction, land development and other land loans			2,031,355			10.4	%			1,956,960			9.7	%			2,081,762			10.0	%			2,033,037			9.7	%			2,051,021			10.7	%
1-4 family residential			4,310,437			21.9	%			4,253,331			21.0	%			4,189,852			20.1	%			4,184,972			19.9	%			3,993,138			20.9	%
Home equity			554,278			2.8	%			504,207			2.5	%			477,552			2.3	%			437,098			2.1	%			516,003			2.6	%
Commercial real estate (includes multi-family residential)			5,858,475			29.8	%			6,078,764			30.0	%			6,179,901			29.7	%			6,550,086			31.2	%			6,576,213			34.4	%
Agriculture (includes farmland)			571,783			2.9	%			581,352			2.9	%			598,972			2.9	%			612,694			2.9	%			635,295			3.3	%
Consumer and other			293,023			1.5	%			344,028			1.7	%			367,231			1.8	%			403,462			1.9	%			423,000			2.2	%
Energy			503,947			2.6	%			512,735			2.5	%			604,698			2.9	%			639,402			3.0	%			718,653			3.8	%
Paycheck Protection Program			1,139,083			5.8	%			963,185			4.8	%			1,393,757			6.7	%			1,392,497			6.6	%			—			—
Total loans		$	19,638,886						$	20,246,944						$	20,795,641						$	21,025,173						$	19,127,195
Deposit Types
Noninterest-bearing DDA		$	9,820,445			34.1	%		$	9,151,233			33.4	%		$	8,998,328			34.0	%		$	9,040,257			34.6	%		$	7,461,323			31.3	%
Interest-bearing DDA			6,158,641			21.4	%			5,899,051			21.6	%			5,297,802			20.0	%			5,130,495			19.6	%			4,980,090			20.9	%
Money market			6,714,889			23.4	%			6,381,014			23.3	%			6,324,127			23.9	%			6,148,206			23.5	%			5,341,525			22.4	%
Savings			3,083,447			10.7	%			2,863,086			10.5	%			2,772,492			10.5	%			2,722,718			10.4	%			2,716,247			11.4	%
Certificates and other time deposits			2,985,683			10.4	%			3,066,108			11.2	%			3,066,457			11.6	%			3,111,012			11.9	%			3,327,172			14.0	%
Total deposits		$	28,763,105						$	27,360,492						$	26,459,206						$	26,152,688						$	23,826,357
Loan to Deposit Ratio			68.3	%						74.0	%						78.6	%						80.4	%						80.3	%

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
Construction Loans
		Mar 31, 2021							Dec 31, 2020							Sep 30, 2020							Jun 30, 2020							Mar 31, 2020
Single family residential construction		$	590,223			29.1	%		$	579,761			29.6	%		$	654,933			31.5	%		$	710,401			34.9	%		$	655,191			31.9	%
Land development			97,267			4.8	%			103,307			5.3	%			114,937			5.5	%			114,748			5.6	%			110,853			5.4	%
Raw land			243,394			12.0	%			247,628			12.7	%			240,154			11.5	%			274,159			13.5	%			265,943			12.9	%
Residential lots			176,884			8.6	%			158,441			8.1	%			137,615			6.6	%			144,765			7.1	%			136,861			6.7	%
Commercial lots			137,512			6.8	%			114,427			5.8	%			109,569			5.3	%			103,267			5.1	%			106,036			5.2	%
Commercial construction and other			786,192			38.7	%			753,587			38.5	%			825,053			39.6	%			687,618			33.8	%			778,731			37.9	%
Net unaccreted discount			(117)							(191)							(499)							(1,921)							(2,594)
Total construction loans		$	2,031,355						$	1,956,960						$	2,081,762						$	2,033,037						$	2,051,021

 

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of March 31, 2021
	Houston				Dallas				Austin				OK City				Tulsa				Other (Q)				Total
Collateral Type
Shopping center/retail	$	379,908			$	300,615			$	52,933			$	20,114			$	31,387			$	292,494			$	1,077,451
Commercial and industrial buildings		163,816				91,356				19,499				20,448				18,256				174,502				487,877
Office buildings		166,801				496,162				35,465				74,682				5,000				77,391				855,501
Medical buildings		36,347				29,333				2,660				24,011				24,004				58,362				174,717
Apartment buildings		330,576				357,804				24,347				14,388				8,835				169,704				905,654
Hotel		69,280				72,206				43,581				28,996				—				132,810				346,873
Other		80,641				58,865				27,713				8,154				3,865				62,117				241,355
Total	$	1,227,369			$	1,406,341			$	206,198			$	190,793			$	91,347			$	967,380			$	4,089,428		(R)

 

Acquired Loans
		Non-PCD Loans												PCD Loans												Total Acquired Loans
		Balance at Acquisition Date				Balance at Dec 31, 2020				Balance at Mar 31, 2021				Balance at Acquisition Date				Balance at Dec 31, 2020				Balance at Mar 31, 2021				Balance at Acquisition Date				Balance at Dec 31, 2020				Balance at Mar 31, 2021
Loan marks:
Acquired banks (S)		$	229,080			$	5,973			$	5,225			$	142,128			$	—			$	—			$	371,208			$	5,973			$	5,225
LegacyTexas merger(T)			116,519				33,614				21,060				177,924				14,216				11,157				294,443				47,830				32,217
Total			345,599				39,587				26,285				320,052				14,216		(V)		11,157				665,651				53,803				37,442
Acquired portfolio loan balances:
Acquired banks (S)			5,690,998				266,036				229,040				275,221				3,523				3,306				5,966,219				269,559				232,346
LegacyTexas merger(T)			6,595,161				3,603,169				3,110,630				414,352				192,108				159,885				7,009,513				3,795,277				3,270,515
Total			12,286,159				3,869,205				3,339,670				689,573				195,631				163,191				12,975,732		(U)		4,064,836				3,502,861
Acquired portfolio loan balances less loan marks		$	11,940,560			$	3,829,618			$	3,313,385			$	369,521			$	181,415			$	152,034			$	12,310,081			$	4,011,033			$	3,465,419

(Q)	Includes other MSA and non-MSA regions.
(R)	Represents a portion of total commercial real estate loans of $5.858 billion as of March 31, 2021.
(S)	Includes Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank, The F&M Bank & Trust Company and Tradition Bank.
(T)	The merger of LegacyTexas Financial Group, Inc. ("LegacyTexas") into Prosperity Bancshares, Inc. and LegacyTexas Bank into Prosperity Bank was completed on November 1, 2019.  During the fourth quarter of 2019, LegacyTexas added $7.010 billion in loans with related purchase accounting adjustments of $294.4 million at acquisition date.
(U)	Actual principal balances acquired.
(V)	ASU 2016-13 became effective for Prosperity on January 1, 2020.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
	Three Months Ended
	Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
Asset Quality
Nonaccrual loans	$	43,025			$	47,185			$	57,412			$	62,904			$	58,194
Accruing loans 90 or more days past due		313				1,699				462				8,691				3,255
Total nonperforming loans		43,338				48,884				57,874				71,595				61,449
Repossessed assets		362				93				120				187				278
Other real estate		462				10,593				11,548				6,160				5,452
Total nonperforming assets	$	44,162			$	59,570			$	69,542			$	77,942			$	67,179
Nonperforming assets:
Commercial and industrial (includes energy)	$	11,290			$	16,176			$	17,273			$	15,238			$	15,987
Construction, land development and other land loans		1,692				1,566				2,633				10,530				1,125
1-4 family residential (includes home equity)		11,920				25,830				29,953				29,812				28,996
Commercial real estate (includes multi-family residential)		16,896				12,315				16,069				20,748				20,155
Agriculture (includes farmland)		803				2,075				1,931				1,501				896
Consumer and other		1,561				1,608				1,683				113				20
Total	$	44,162			$	59,570			$	69,542			$	77,942			$	67,179
Number of loans/properties		167				208				198				213				198
Allowance for credit losses at end of period	$	307,210			$	316,068			$	323,635			$	324,205			$	327,206
Net charge-offs (recoveries):
Commercial and industrial (includes energy)	$	1,584			$	4,085			$	8,344			$	12,206			$	(28)
Construction, land development and other land loans		(5)				(110)				478				(6)				(12)
1-4 family residential (includes home equity)		47				1,982				252				51				5
Commercial real estate (includes multi-family residential)		6,589				626				676				—				(81)
Agriculture (includes farmland)		33				(4)				(17)				(3)				(1)
Consumer and other		610				988				837				753				918
Total	$	8,858			$	7,567			$	10,570			$	13,001			$	801
Asset Quality Ratios
Nonperforming assets to average interest-earning assets		0.15	%			0.20	%			0.24	%			0.28	%			0.25	%
Nonperforming assets to loans and other real estate		0.22	%			0.29	%			0.33	%			0.37	%			0.35	%
Net charge-offs to average loans (annualized)		0.18	%			0.15	%			0.21	%			0.26	%			0.02	%
Allowance for credit losses to total loans		1.56	%			1.56	%			1.56	%			1.54	%			1.71	%
Allowance for credit losses to total loans, excluding Warehouse      Purchase Program loans and Paycheck Protection Program loans (G)		1.89	%			1.92	%			1.94	%			1.90	%			1.88	%

 

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

(Dollars and share amounts in thousands, except per share data)

NOTES TO SELECTED FINANCIAL DATA

Prosperity's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews diluted earnings per share excluding merger related expenses, net of tax, and NOL tax benefit; return on average assets excluding merger related expenses, net of tax, and NOL tax benefit; return on average common equity excluding merger related expenses, net of tax, and NOL tax benefit; return on average tangible common equity; return on average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program and PPP loans; the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities and merger related expenses, for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP financial measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding Warehouse Purchase Program loans and PPP loans). Prosperity has included information below relating to these non-GAAP financial measures for the applicable periods presented.

		Three Months Ended
		Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
Reconciliation of diluted earnings per      share to diluted earnings per share, excluding merger related expenses, net of tax, and NOL      tax benefit:
Net income		$	133,309			$	137,091			$	130,064			$	130,901			$	130,848
Add: merger related expenses, net of tax(W)			—				—				—				5,904				430
Less: NOL tax benefit (X)			—				—				—				(20,145)				—
Net income, excluding merger related expenses, net of tax, and NOL tax benefit (W) (X)		$	133,309			$	137,091			$	130,064			$	116,660			$	131,278
Weighted average diluted shares outstanding			92,854				92,559				92,656				92,658				94,371
Merger related expenses per diluted share, net of tax(W)		$	—			$	—			$	—			$	0.06			$	—
NOL tax benefit per diluted share (W)		$	—			$	—			$	—			$	(0.22)			$	—
Diluted earnings per share, excluding merger related expenses, net of tax,      and NOL tax benefit (W) (X)		$	1.44			$	1.48			$	1.40			$	1.25			$	1.39
Reconciliation of return on average assets to return on average assets      excluding merger related expenses, net of tax, and NOL      tax benefit:
Net income, excluding merger related expenses, net of tax,      and NOL tax benefit (W) (X)		$	133,309			$	137,091			$	130,064			$	116,660			$	131,278
Average total assets		$	34,544,360			$	33,690,906			$	32,980,838			$	32,504,726			$	31,357,412
Return on average assets excluding merger related expenses, net of tax,      and NOL tax benefit (F) (W) (X)			1.54	%			1.63	%			1.58	%			1.44	%			1.67	%
Reconciliation of return on average common equity to return on      average common equity excluding merger related expenses, net      of tax, and NOL tax benefit:
Net income, excluding merger related expenses, net of tax, and NOL tax benefit (W) (X)		$	133,309			$	137,091			$	130,064			$	116,660			$	131,278
Average shareholders' equity		$	6,197,668			$	6,108,574			$	6,021,740			$	5,925,156			$	5,904,248
Return on average common equity excluding merger related expenses,      net of tax, and NOL tax benefit (F) (W) (X)			8.60	%			8.98	%			8.64	%			7.88	%			8.89	%
Reconciliation of return on average common equity to return on      average tangible common equity:
Net income		$	133,309			$	137,091			$	130,064			$	130,901			$	130,848
Average shareholders' equity		$	6,197,668			$	6,108,574			$	6,021,740			$	5,925,156			$	5,904,248
Less: Average goodwill and other intangible assets			(3,304,994)				(3,306,769)				(3,310,245)				(3,305,008)				(3,308,498)
Average tangible shareholders' equity		$	2,892,674			$	2,801,805			$	2,711,495			$	2,620,148			$	2,595,750
Return on average tangible common equity (F)			18.43	%			19.57	%			19.19	%			19.98	%			20.16	%

(W)	Calculated assuming a federal tax rate of 21.0%.
(X)	Net income for the second quarter of 2020 includes a tax benefit for NOL related to the CARES Act.

 

		Three Months Ended
		Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
Reconciliation of return on average common equity to return on      average tangible common equity excluding merger related      expenses, net of tax, and NOL tax benefit:
Net income, excluding merger related expenses, net of tax, and NOL tax benefit (W) (X)		$	133,309			$	137,091			$	130,064			$	116,660			$	131,278
Average shareholders' equity		$	6,197,668			$	6,108,574			$	6,021,740			$	5,925,156			$	5,904,248
Less: Average goodwill and other intangible assets			(3,304,994)				(3,306,769)				(3,310,245)				(3,305,008)				(3,308,498)
Average tangible shareholders' equity		$	2,892,674			$	2,801,805			$	2,711,495			$	2,620,148			$	2,595,750
Return on average tangible common equity excluding merger related      expenses, net of tax, and NOL tax benefit (F) (W) (X)			18.43	%			19.57	%			19.19	%			17.81	%			20.23	%
Reconciliation of book value per share to tangible book value per share:
Shareholders' equity		$	6,221,846			$	6,130,669			$	6,034,877			$	5,948,122			$	5,855,574
Less: Goodwill and other intangible assets			(3,301,940)				(3,304,871)				(3,308,170)				(3,311,712)				(3,306,185)
Tangible shareholders' equity		$	2,919,906			$	2,825,798			$	2,726,707			$	2,636,410			$	2,549,389
Period end shares outstanding			92,929				92,571				92,562				92,660				92,652
Tangible book value per share		$	31.42			$	30.53			$	29.46			$	28.45			$	27.52
Reconciliation of equity to assets ratio to period end tangible equity      to period end tangible assets ratio:
Tangible shareholders' equity		$	2,919,906			$	2,825,798			$	2,726,707			$	2,636,410			$	2,549,389
Total assets		$	35,558,418			$	34,059,275			$	33,197,599			$	32,966,649			$	31,743,499
Less: Goodwill and other intangible assets			(3,301,940)				(3,304,871)				(3,308,170)				(3,311,712)				(3,306,185)
Tangible assets		$	32,256,478			$	30,754,404			$	29,889,429			$	29,654,937			$	28,437,314
Period end tangible equity to period end tangible assets ratio			9.05	%			9.19	%			9.12	%			8.89	%			8.96	%
Reconciliation of allowance for credit losses to      total loans to allowance for credit losses to total loans, excluding Warehouse  Purchase Program and Paycheck Protection Program loans:
Allowance for credit losses		$	307,210			$	316,068			$	323,635			$	324,205			$	327,206
Total loans		$	19,638,886			$	20,246,944			$	20,795,641			$	21,025,173			$	19,127,195
Less: Warehouse Purchase Program loans			(2,272,389)				(2,842,379)				(2,730,614)				(2,557,183)				(1,713,762)
Less: Paycheck Protection Program loans			(1,139,083)				(963,185)				(1,393,757)				(1,392,497)				—
Total loans less Warehouse Purchase Program and Paycheck      Protection Program loans		$	16,227,414			$	16,441,380			$	16,671,270			$	17,075,493			$	17,413,433
Allowance for credit losses to total loans, excluding Warehouse Purchase      Program and Paycheck Protection Program loans			1.89	%			1.92	%			1.94	%			1.90	%			1.88	%
Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets and taxes:
Noninterest expense		$	119,076			$	120,205			$	117,919			$	134,368			$	124,741
Net interest income		$	254,582			$	257,634			$	258,113			$	258,955			$	256,031
Noninterest income			34,008				36,547				34,924				25,675				34,388
Less: net loss on sale or write down of assets			(79)				(675)				(528)				(3,945)				(385)
Noninterest income excluding net gains and losses on the sale or write down of assets and securities			34,087				37,222				35,452				29,620				34,773
Total income excluding net gains and losses on the sale or write      down of assets and taxes		$	288,669			$	294,856			$	293,565			$	288,575			$	290,804
Efficiency ratio, excluding net gains and losses on the sale or write      down of assets and taxes			41.25	%			40.77	%			40.17	%			46.56	%			42.90	%

 

		Three Months Ended
		Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
Reconciliation of efficiency ratio to efficiency ratio, excluding net      gains and losses on the sale of assets, taxes and merger related expenses:
Noninterest expense		$	119,076			$	120,205			$	117,919			$	134,368			$	124,741
Less: merger related expenses			—				—				—				7,474				544
Noninterest expense excluding merger related expenses		$	119,076			$	120,205			$	117,919			$	126,894			$	124,197
Net interest income		$	254,582			$	257,634			$	258,113			$	258,955			$	256,031
Noninterest income			34,008				36,547				34,924				25,675				34,388
Less: net loss on sale or write down of assets			(79)				(675)				(528)				(3,945)				(385)
Noninterest income excluding net gains and losses on the sale or write down of assets and taxes			34,087				37,222				35,452				29,620				34,773
Total income excluding net gains and losses on the sale or write down of assets and taxes		$	288,669			$	294,856			$	293,565			$	288,575			$	290,804
Efficiency ratio, excluding net gains and losses on the sale or write      down of assets, taxes and merger related expenses			41.25	%			40.77	%			40.17	%			43.97	%			42.71	%

 

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SOURCE Prosperity Bancshares, Inc.

FAQ

What was Prosperity Bancshares' net income for Q1 2021?

Prosperity Bancshares reported a net income of $133.3 million for Q1 2021.

How much did deposits increase in Q1 2021 for PB?

Deposits increased by $4.937 billion or 20.7% year over year.

What is the earnings per share for Prosperity Bancshares for Q1 2021?

The earnings per share for Q1 2021 was $1.44.

What dividend did Prosperity Bancshares declare for Q2 2021?

A cash dividend of $0.49 per share was declared for Q2 2021.

How did net interest income perform in Q1 2021 for PB?

Net interest income decreased by $1.4 million or 0.6% compared to Q1 2020.