PROSPERITY BANCSHARES, INC.® REPORTS FIRST QUARTER 2023 EARNINGS

Rhea-AI Summary

Prosperity Bancshares reported a net income of $124.7 million for Q1 2023, up from $122.3 million in Q1 2022, with earnings per share of $1.37. Loans, excluding Warehouse Purchase Program loans, increased by $436 million or 2.4% (9.6% annualized). The allowance for credit losses stands at 1.52% of total loans. Nonperforming assets remain low at 0.07% of average interest-earning assets. Annualized returns on assets reached 1.31%, while the efficiency ratio is 43.68%. The company repurchased 611,263 shares during the quarter and received regulatory approvals for its acquisitions of First Bancshares of Texas and Lone Star State Bancshares. Prosperity Bancshares is ranked 6th in Forbes' 2023 Best Banks list.

Positive

• Net income increased to $124.7 million, a 1.9% year-over-year growth.
• Loan growth (excluding Warehouse Purchase Program) of 9.6% annualized.
• Nonperforming assets remained low at 0.07% of average interest-earning assets.
• Annualized return on average assets of 1.31% indicates strong profitability.
• Stock repurchase program successfully executed with 611,263 shares repurchased.

Negative

• Decrease in net interest income compared to the previous quarter ($243.5 million vs. $256.1 million).
• Deposits decreased by $1.529 billion (5.4%) compared to the previous quarter.

• First quarter net income of $124.7 million and earnings per share (diluted) of $1.37
• Loans, excluding Warehouse Purchase Program loans, increased $436.0 million or 2.4% (9.6% annualized) during first quarter 2023
• Allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program loans, of 1.52%⁽¹⁾
• Nonperforming assets remain low at 0.07% of first quarter average interest-earning assets
• Return (annualized) on first quarter average assets of 1.31%, average common equity of 7.38%, average tangible common equity of 14.34%⁽¹⁾, and efficiency ratio of 43.68%
• Repurchased 611,263 shares of common stock during the first quarter of 2023
• Prosperity Bancshares was ranked Number 6 in Forbes' 2023 America's Best Banks
• Received all necessary regulatory approvals for the acquisition of First Bancshares of Texas, Inc., Midland, Texas
• Pending acquisition of Lone Star State Bancshares, Inc., Lubbock, Texas

HOUSTON, April 26, 2023 /PRNewswire/ -- Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, "Prosperity"), reported net income of $124.7 million for the quarter ended March 31, 2023 compared with $122.3 million for the same period in 2022. Net income per diluted common share was $1.37 for the quarter ended March 31, 2023 compared with $1.33 for the same period in 2022, an increase of 3.0%, and the annualized return on first quarter average assets was 1.31%. Additionally, loans, excluding Warehouse Purchase Program loans, increased $436.0 million or 2.4% (9.6% annualized) during the first quarter of 2023. Nonperforming assets remain low at 0.07% of first quarter average interest-earning assets.

"Prosperity continued to show strong earnings despite the failures of Silicon Valley Bank and Signature Bank and the overall pressures on the banking system. Net income was $124.7 million for the three months ended March 31, 2023, compared with $122.3 million for the same period in 2022, an increase of $2.4 million or 1.9%. Loans, excluding Warehouse Purchase Program loans, increased 9.6% annualized for the quarter, while nonperforming assets remained low at 0.07% of first quarter average interest-earning assets. Prosperity repurchased 611,263 of its shares in the first quarter. We are also pleased to announce that we received all necessary regulatory and shareholder approvals for the acquisition of First Bancshares of Texas, Inc.," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"As we all are aware, the market was flooded with excess funds the last few years during the COVID-19 pandemic and now the Federal Reserve is reducing the money supply in its efforts to lower inflation. In turn, most banks saw a loss of deposits during the quarter, including from some customers who were concerned with liquidity after the failure of SVB and Signature Bank. Prosperity has established lines of credit at the Federal Home Loan Bank and the Federal Reserve in the amount of $14.7 billion, of which $11.3 billion is currently available. This is approximately $4 billion in excess of our uninsured and pledged deposits," added Zalman.

"Texas and Oklahoma continue to do well. Texas' population increased by approximately 470,000 in 2022, continuing a steady uptick.  From 2002 to 2022, Texas gained over 9 million residents, more than any other state and almost 3 million more than Florida, the next largest gaining state. Texas and Oklahoma continue to benefit from strong economies and are home to 56 Fortune 500 headquartered companies. Texas now has more Fortune 500 companies than any other state including New York and California," continued Zalman.

"Each year, Forbes judges the 100 largest banks in the United States on growth, credit quality, earnings, as well as other factors, for its America's Best Banks list. Prosperity Bank has been ranked in the Top 10 since the list's inception in 2010. We have twice been ranked number 1, were ranked number 2 in 2021 and are ranked number 6 for 2023. It is a testament to Prosperity's performance, culture, vision and consistency and distinguishes us among most banks. I congratulate and thank all our customers, associates and directors for helping us achieve this honor," stated Zalman.

"Prosperity has a talented team, deep bench, strong earnings, a solid capital position and a fortress balance sheet. We will continue working to help our customers and associates succeed and to build shareholder value," concluded Zalman.

Results of Operations for the Three Months Ended March 31, 2023

Net income was $124.7 million⁽²⁾ for the three months ended March 31, 2023 compared with $122.3 million⁽³⁾ for the same period in 2022, an increase of $2.4 million or 1.9%. The change was primarily due to an increase in interest income from loans, securities and federal funds sold and other earning assets, partially offset by a decrease in SBA Paycheck Protection Program ("PPP") loans fees and interest income of $3.6 million, a decrease in loan discount accretion of $4.3 million and an increase in interest expense. Net income per diluted common share was $1.37 for the three months ended March 31, 2023 compared with $1.33 for the same period in 2022, an increase of 3.0%. On a linked quarter basis, net income was $124.7 million⁽²⁾ for the three months ended March 31, 2023 compared with $137.9 million⁽⁴⁾ for the three months ended December 31, 2022. The change was primarily due to a decrease in net interest income. Net income per diluted common share was $1.37 for the three months ended March 31, 2023 compared with $1.51 for the three months ended December 31, 2022. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2023 were 1.31%, 7.38% and 14.34%⁽¹⁾, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and securities) was 43.68%⁽¹⁾ for the three months ended March 31, 2023.

Net interest income before provision for credit losses for the three months ended March 31, 2023 was $243.5 million compared with $239.9 million for the same period in 2022, an increase of $3.5 million or 1.5%. The change was primarily due to an increase in the average balances and average rates on loans held for investment and investment securities, partially offset by a decrease in PPP fees and interest income of $3.6 million, a decrease in loan discount accretion of $4.3 million, an increase in average borrowings and an increase in the average rates on interest-bearing deposits. On a linked quarter basis, net interest income before provision for credit losses was $243.5 million compared with $256.1 million for the three months ended December 31, 2022, a decrease of $12.7 million or 4.9%.  The change was primarily due to an increase in the average balances and average rates on borrowings and an increase in average rates on interest-bearing deposits, partially offset by an increase in the average balances and average rates on loans held for investment and federal funds sold and other earning assets.

The net interest margin on a tax equivalent basis was 2.93% for the three months ended March 31, 2023 compared with 2.88% for the same period in 2022. The change was primarily due to an increase in the average balances and average rates on loans held for investment and investment securities and an increase in average rates on federal funds sold and other earnings assets, partially offset by a decrease in PPP fees and interest income of $3.6 million, a decrease in loan discount accretion of $4.3 million, an increase in average borrowings and an increase in the average rates on interest-bearing deposits. On a linked quarter basis, the net interest margin on a tax equivalent basis was 2.93% for the three months ended March 31, 2023 compared with 3.05% for the three months ended December 31, 2022. The change was primarily due to an increase in the average balances and average rates on borrowings and increase in average rates on interest-bearing deposits, partially offset by an increase in the average balances and average rates on loans held for investment and federal funds sold and other earning assets.

Noninterest income was $38.3 million for the three months ended March 31, 2023 compared with $35.1 million for the same period in 2022, an increase of $3.1 million or 9.0%.  This change was primarily due to an increase in trust income and in other noninterest income.  On a linked quarter basis, noninterest income was $38.3 million compared with $37.7 million for the three months ended December 31, 2022, an increase of $542 thousand or 1.4%.

Noninterest expense was $123.0 million for the three months ended March 31, 2023 compared with $119.9 million for the same period in 2022, an increase of $3.2 million or 2.6%.  The change was primarily due to increases in regulatory assessments and FDIC insurance and merger related expenses, partially offset by a decrease in salaries and benefits.  On a linked quarter basis, noninterest expense increased $3.8 million  or 3.1% to $123.0 million compared with $119.2 million for the three months ended December 31, 2022. This change was primarily due to increases in salaries and benefits and regulatory assessments and FDIC insurance, partially offset by a decrease in other noninterest expense.

Balance Sheet Information

At March 31, 2023, Prosperity had $37.829 billion in total assets, a decrease of $442.0 million or 1.2%, compared with $38.271 billion at March 31, 2022. 

Loans at March 31, 2023 were $19.334 billion,  an increase of $494.5 million or 2.6% (10.5% annualized) from $18.840 billion at December 31, 2022, primarily due to increases in 1-4 family residential and commercial real estate loans. Loans increased $1.267 billion or 7.0%, compared with $18.068 billion at March 31, 2022, primarily due to increases in 1-4 family residential loans, and construction, land development and other land loans, partially offset by decreases in Warehouse Purchase Program loans and PPP loans. Loans, excluding Warehouse Purchase Program loans, at March 31, 2023 were $18.535 billion compared to $18.099 billion at December 31, 2022, an increase of $436.0 million or 2.4% (9.6% annualized), and compared to $16.723 billion at March 31, 2022, an increase of $1.812 billion or 10.8%. 

Deposits at March 31, 2023 were $27.004 billion, a decrease of $1.529 billion or 5.4% compared with $28.534 billion at December 31, 2022 primarily due to a decrease in business demand deposits and public fund deposits. Deposits decreased $4.064 billion or 13.1%, compared with $31.068 billion at March 31, 2022, primarily due to a decrease in public fund deposits.

Asset Quality
Nonperforming assets totaled $24.5 million or 0.07% of quarterly average interest-earning assets at March 31, 2023 compared with  $27.5 million or 0.08% of quarterly average interest-earning assets at December 31, 2022 and $27.2 million or 0.08% of quarterly average interest-earning assets at March 31, 2022.

The allowance for credit losses on loans and off-balance sheet credit exposures was $312.1 million at March 31, 2023 compared with $311.5 million at December 31, 2022 and $315.1 million at March 31, 2022. There was no provision for credit losses for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022.

The allowance for credit losses on loans was $282.2 million or 1.46% of total loans at March 31, 2023 compared with $281.6 million or 1.49% of total loans at December 31, 2022 and $285.2 million or 1.58% of total loans at March 31, 2022. Excluding Warehouse Purchase Program loans, the allowance for credit losses on loans to total loans was 1.52%(1) at March 31, 2023 compared with  1.56%(1) at December 31, 2022 and  1.71%(1) at March 31, 2022.

Net recoveries were $615 thousand for the three months ended March 31, 2023 compared with net charge-offs of $603 thousand for three months ended December 31, 2022 and net charge-offs of $1.2 million for the three months ended March 31, 2022. During the first quarter of 2023, net recoveries did not include any purchased credit deteriorated ("PCD") loans and $241 thousand of specific reserves on resolved PCD loans was released to the general reserve. 

Dividend

Prosperity Bancshares declared a second quarter 2023 cash dividend of $0.55 per share to be paid on July 3, 2023, to all shareholders of record as of June 15, 2023.

Stock Repurchase Program

On January 17, 2023, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 4.6 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 17, 2024, at the discretion of management. Under its 2023 stock repurchase program, Prosperity Bancshares repurchased 611,263 shares of its common stock at an average weighted price of $62.20 per share during the three months ended March 31, 2023.

Pending Acquisition of First Bancshares of Texas, Inc.

On October 11, 2022, Prosperity Bancshares and First Bancshares of Texas, Inc. ("First Bancshares") jointly announced the signing of a definitive merger agreement whereby First Bancshares, the parent company of FirstCapital Bank of Texas, N.A. ("FirstCapital Bank") will merge with and into Prosperity. FirstCapital Bank operates 16 full-service banking offices in 6 different markets in West, North and Central Texas areas, including its main office in Midland, and banking offices in Midland, Lubbock, Amarillo, Wichita Falls, Burkburnett, Byers, Henrietta, Dallas, Horseshoe Bay, Marble Falls and Fredericksburg, Texas. As of March 31, 2023, First Bancshares, on a consolidated basis, reported total assets of $2.141 billion, total loans of $1.653 billion and total deposits of $1.712 billion.

Under the terms of the merger agreement, Prosperity will issue 3,583,370 shares of Prosperity common stock plus $93.4 million in cash for all outstanding shares of First Bancshares capital stock, subject to certain conditions and potential adjustments. Based on Prosperity's closing price of $69.27 on October 7, 2022, the total consideration was valued at approximately $341.6 million. Prosperity has received all necessary regulatory approvals for the acquisition of First Bancshares, and the shareholders of First Bancshares approved the transaction on March 3, 2023. The transaction is expected to become effective on May 1, 2023, subject to customary closing conditions.

Pending Acquisition of Lone Star State Bancshares, Inc.

On October 11, 2022, Prosperity Bancshares and Lone Star State Bancshares, Inc. ("Lone Star") jointly announced the signing of a definitive merger agreement whereby Lone Star, the parent company of Lone Star State Bank of West Texas ("Lone Star Bank") will merge with and into Prosperity. Lone Star Bank operates 5 banking offices in the West Texas area, including its main office in Lubbock, and 1 banking center in each of Brownfield, Midland, Odessa and Big Spring, Texas. As of March 31, 2023, Lone Star, on a consolidated basis, reported total assets of $1.383 billion, total loans of $1.032 billion and total deposits of $1.231 billion.

Under the terms of the merger agreement, Prosperity will issue 2,376,182 shares of Prosperity common stock plus $64.1 million in cash for all outstanding shares of Lone Star capital stock, subject to certain conditions and potential adjustments. Based on Prosperity's closing price of $69.27 on October 7, 2022, the total consideration was valued at approximately $228.7 million. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals. The shareholders of Lone Star approved the transaction on March 28, 2023.  The transaction is expected to close during the second quarter of 2023, although delays could occur.

Conference Call

Prosperity's management team will host a conference call on Wednesday, April 26, 2023, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's first quarter 2023 earnings. Individuals and investment professionals may participate in the call by dialing 877-885-0477 for domestic participants, or 412-902-6506 for international participants. The participant elite entry number is 7001408.

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, Webcasts & 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 return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses on loans to total loans excluding Warehouse Purchase Program loans; and the efficiency ratio excluding net gains and losses on the sale or write down of assets and securities, 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, 2023, Prosperity Bancshares, Inc.^® is a $37.829 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.

Prosperity currently operates 272 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 62 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; and 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. From time to time, oral or written forward-looking statements may also be included in other information released to the public.  Such forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "believe," "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, changes in deposits, borrowings and the investment securities portfolio, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's future operations, future or proposed acquisitions, including the pending transactions with First Bancshares and Lone Star, 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 each of the proposed transactions, 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 based on expectations and assumptions Prosperity currently believes to be valid.  Because forward-looking statements relate to future results and occurrences, many of which are outside of Prosperity's control, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. 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 First Bancshares and Lone Star; 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 pending transactions with First Bancshares and Lone Star, 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. Prosperity disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. These and various other factors are discussed in Prosperity's Annual Report on Form 10-K for the year ended December 31, 2022, and other reports and statements Prosperity has filed with the Securities and Exchange Commission ("SEC"). Copies of the SEC filings for Prosperity may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

(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 $728 thousand, net of tax, primarily comprised of loan discount accretion of $871 thousand, and merger related expenses of $860 thousand for the three months ended March 31, 2023.
(3)	Includes purchase accounting adjustments of $4.1 million, net of tax, primarily comprised of loan discount accretion of $5.2 million for the three months ended March 31, 2022.
(4)	Includes purchase accounting adjustments of $758 thousand, net of tax, primarily comprised of loan discount accretion of $913 thousand, and merger related expenses of $272 thousand for the three months ended December 31, 2022.

 

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

 - - -

Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(In thousands)
		Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022				Mar 31, 2022
Balance Sheet Data (at period end)
Loans held for sale		$	1,603			$	554			$	2,871			$	3,350			$	2,810
Loans held for investment			18,533,641				18,098,653				17,580,653				17,067,871				16,720,173
Loans held for investment - Warehouse Purchase Program			799,115				740,620				922,764				1,137,623				1,344,541
Total loans			19,334,359				18,839,827				18,506,288				18,208,844				18,067,524
Investment securities(A)			14,071,545				14,476,005				14,806,487				14,912,313				14,798,127
Federal funds sold			222				301				244				201				274
Allowance for credit losses on loans			(282,191)				(281,576)				(282,179)				(283,959)				(285,163)
Cash and due from banks			405,331				423,832				602,152				393,716				1,560,321
Goodwill			3,231,636				3,231,636				3,231,636				3,231,636				3,231,636
Core deposit intangibles, net			48,974				51,348				53,906				56,483				59,064
Other real estate owned			1,989				1,963				1,758				1,555				1,705
Fixed assets, net			345,149				339,453				337,099				335,939				336,075
Other assets			672,218				607,040				586,111				530,528				501,623
Total assets		$	37,829,232			$	37,689,829			$	37,843,502			$	37,387,256			$	38,271,186
Noninterest-bearing deposits		$	10,108,348			$	10,915,448			$	11,154,143			$	11,032,184			$	10,776,652
Interest-bearing deposits			16,895,888				17,618,083				18,145,952				18,833,434				20,291,658
Total deposits			27,004,236				28,533,531				29,300,095				29,865,618				31,068,310
Other borrowings			3,365,000				1,850,000				1,165,000				300,000				—
Securities sold under repurchase agreements			434,261				428,134				454,304				481,785				440,891
Allowance for credit losses on off-balance sheet credit exposures			29,947				29,947				29,947				29,947				29,947
Other liabilities			256,671				148,843				282,514				188,079				227,614
Total liabilities			31,090,115				30,990,455				31,231,860				30,865,429				31,766,762
Shareholders' equity(B)			6,739,117				6,699,374				6,611,642				6,521,827				6,504,424
Total liabilities and equity		$	37,829,232			$	37,689,829			$	37,843,502			$	37,387,256			$	38,271,186

(A)	Includes $(4,399), $(4,396), $(296), $1,517 and $2,115 in unrealized (losses) gains on available for sale securities for the quarterly periods ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively.
(B)	Includes $(3,476), $(3,473), $(234), $1,198 and $1,671 in after-tax unrealized (losses) gains on available for sale securities for the quarterly periods ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively.

 

Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(In thousands)
		Three Months Ended
		Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022				Mar 31, 2022
Income Statement Data
Interest income:
Loans		$	247,118			$	235,126			$	210,268			$	192,770			$	193,025
Securities(C)			73,185				72,533				68,761				64,111				55,011
Federal funds sold and other earning assets			7,006				933				525				925				847
Total interest income			327,309				308,592				279,554				257,806				248,883
Interest expense:
Deposits			47,343				36,048				14,669				8,641				8,754
Other borrowings			34,396				14,682				3,719				450				—
Securities sold under repurchase agreements			2,103				1,725				487				244				185
Total interest expense			83,842				52,455				18,875				9,335				8,939
Net interest income			243,467				256,137				260,679				248,471				239,944
Provision for credit losses			—				—				—				—				—
Net interest income after provision for credit losses			243,467				256,137				260,679				248,471				239,944
Noninterest income:
Nonsufficient funds (NSF) fees			8,095				8,519				8,887				8,484				8,124
Credit card, debit card and ATM card income			8,666				8,816				8,889				8,880				8,179
Service charges on deposit accounts			5,926				5,932				6,222				6,365				6,211
Trust income			3,225				3,498				3,174				2,875				2,703
Mortgage income			238				102				340				502				455
Brokerage income			1,149				905				940				917				892
Bank owned life insurance income			1,354				1,329				1,214				1,293				1,283
Net gain on sale or write-down of assets			121				2,087				50				1,108				689
Other noninterest income			9,492				6,536				4,972				7,170				6,586
Total noninterest income			38,266				37,724				34,688				37,594				35,122
Noninterest expense:
Salaries and benefits			77,798				75,353				79,578				80,371				79,411
Net occupancy and equipment			8,025				8,147				8,412				8,039				7,848
Credit and debit card, data processing and software amortization			9,566				9,716				9,516				9,246				8,849
Regulatory assessments and FDIC insurance			4,973				2,873				2,807				2,851				2,850
Core deposit intangibles amortization			2,374				2,558				2,577				2,581				2,620
Depreciation			4,433				4,438				4,436				4,539				4,547
Communications			3,462				3,506				3,374				3,206				2,919
Other real estate expense			58				154				198				195				214
Net (gain) loss on sale or write-down of other real estate			(13)				(63)				(213)				14				(621)
Merger related expenses			860				272				—				—				—
Other noninterest expense			11,464				12,290				11,529				11,836				11,213
Total noninterest expense			123,000				119,244				122,214				122,878				119,850
Income before income taxes			158,733				174,617				173,153				163,187				155,216
Provision for income taxes			34,039				36,737				37,333				34,697				32,890
Net income available to common shareholders		$	124,694			$	137,880			$	135,820			$	128,490			$	122,326

(C)	Interest income on securities was reduced by net premium amortization of $7,384, $8,703, $9,947, $11,450 and $12,857 for the three months ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, 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, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022				Mar 31, 2022
Profitability
Net income (D) (E)		$	124,694			$	137,880			$	135,820			$	128,490			$	122,326
Basic earnings per share		$	1.37			$	1.51			$	1.49			$	1.40			$	1.33
Diluted earnings per share		$	1.37			$	1.51			$	1.49			$	1.40			$	1.33
Return on average assets (F)			1.31	%			1.47	%			1.45	%			1.36	%			1.29	%
Return on average common equity (F)			7.38	%			8.26	%			8.24	%			7.84	%			7.54	%
Return on average tangible common equity (F) (G)			14.34	%			16.26	%			16.44	%			15.73	%			15.30	%
Tax equivalent net interest margin (D) (E) (H)			2.93	%			3.05	%			3.11	%			2.97	%			2.88	%
Efficiency ratio (G) (I)			43.68	%			40.87	%			41.38	%			43.12	%			43.68	%
Liquidity and Capital Ratios
Equity to assets			17.81	%			17.78	%			17.47	%			17.44	%			17.00	%
Common equity tier 1 capital			15.59	%			15.88	%			15.44	%			15.26	%			15.32	%
Tier 1 risk-based capital			15.59	%			15.88	%			15.44	%			15.26	%			15.32	%
Total risk-based capital			16.41	%			16.51	%			16.09	%			15.91	%			15.99	%
Tier 1 leverage capital			10.06	%			10.16	%			9.94	%			9.58	%			9.44	%
Period end tangible equity to period end tangible assets (G)			10.01	%			9.93	%			9.62	%			9.48	%			9.19	%
Other Data
Weighted-average shares used in computing earnings per common share
Basic			91,207				91,287				91,209				91,772				92,161
Diluted			91,207				91,287				91,209				91,772				92,161
Period end shares outstanding			90,693				91,314				91,210				91,196				92,160
Cash dividends paid per common share		$	0.55			$	0.55			$	0.52			$	0.52			$	0.52
Book value per common share		$	74.31			$	73.37			$	72.49			$	71.51			$	70.58
Tangible book value per common share (G)		$	38.13			$	37.41			$	36.47			$	35.46			$	34.87
Common Stock Market Price
High		$	78.76			$	76.32			$	77.93			$	73.50			$	80.46
Low		$	58.25			$	66.71			$	65.37			$	64.69			$	69.08
Period end closing price		$	61.52			$	72.68			$	66.68			$	68.27			$	69.38
Employees – FTE (excluding overtime)			3,651				3,633				3,592				3,576				3,595
Number of banking centers			272				272				272				272				272

(D) Includes purchase accounting adjustments for the periods presented as follows:

	Three Months Ended
	Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022
Loan discount accretion
ASC 310-20	$532		$603		$912		$(265)		$4,674
ASC 310-30	$339		$310		$322		$324		$521
Securities net amortization	$2		$12		$40		$12		$52
Time deposits amortization	$53		$59		$68		$84		$100

(E)	Using effective tax rate of 21.4%, 21.0%, 21.6%, 21.3% and 21.2% for the three months ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively.
(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 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.

 

Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
YIELD ANALYSIS		Three Months Ended
		Mar 31, 2023										Dec 31, 2022										Mar 31, 2022
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate	(J)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate	(J)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(J)
Interest-earning assets:
Loans held for sale		$	2,343			$	38			6.58 %		$	1,758			$	27			6.09 %		$	4,611			$	40			3.52 %
Loans held for investment			18,317,712				236,606			5.24 %			17,818,769				223,768			4.98 %			16,712,690				183,033			4.44 %
Loans held for investment - Warehouse Purchase Program			617,822				10,474			6.88 %			747,007				11,331			6.02 %			1,268,715				9,952			3.18 %
Total Loans			18,937,877				247,118			5.29 %			18,567,534				235,126			5.02 %			17,986,016				193,025			4.35 %
Investment securities			14,332,509				73,185			2.07 %	(K)		14,715,516				72,533			1.96 %	(K)		13,772,974				55,011			1.62 %			(K)
Federal funds sold and other earning assets			600,048				7,006			4.74 %			101,986				933			3.63 %			2,135,503				847			0.16 %
Total interest-earning assets			33,870,434				327,309			3.92 %			33,385,036				308,592			3.67 %			33,894,493				248,883			2.98 %
Allowance for credit losses on loans			(282,316)										(282,546)										(285,692)
Noninterest-earning assets			4,589,735										4,515,412										4,458,669
Total assets		$	38,177,853									$	37,617,902									$	38,067,470
Interest-bearing liabilities:
Interest-bearing demand deposits		$	5,877,641			$	3,792			0.26 %		$	5,843,672			$	3,224			0.22 %		$	6,775,114			$	2,452			0.15 %
Savings and money market deposits			9,579,679				35,521			1.50 %			9,805,024				27,929			1.13 %			10,870,461				4,026			0.15 %
Certificates and other time deposits			2,045,580				8,030			1.59 %			2,066,085				4,895			0.94 %			2,637,529				2,276			0.35 %
Other borrowings			2,887,011				34,396			4.83 %			1,465,533				14,682			3.97 %			—				—				—
Securities sold under repurchase agreements			427,887				2,103			1.99 %			441,405				1,725			1.55 %			452,054				185			0.17 %
Total interest-bearing liabilities			20,817,798				83,842			1.63 %	(L)		19,621,719				52,455			1.06 %	(L)		20,735,158				8,939			0.17 %			(L)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			10,389,980										11,064,714										10,636,624
Allowance for credit losses on off-balance sheet credit exposures			29,947										29,947										29,947
Other liabilities			180,685										224,512										176,360
Total liabilities			31,418,410										30,940,892										31,578,089
Shareholders' equity			6,759,443										6,677,010										6,489,381
Total liabilities and shareholders' equity		$	38,177,853									$	37,617,902									$	38,067,470
Net interest income and margin						$	243,467			2.92 %						$	256,137			3.04 %						$	239,944			2.87 %
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							833										440										472
Net interest income and margin      (tax equivalent basis)						$	244,300			2.93 %						$	256,577			3.05 %						$	240,416			2.88 %

(J)	Annualized and based on an actual 365-day basis.
(K)	Yield on securities was impacted by net premium amortization of $7,384, $8,703 and $12,857 for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
(L)	Total cost of funds, including noninterest bearing deposits, was 1.09%, 0.68% and 0.12% for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively.

 

Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
	Three Months Ended
	Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022				Mar 31, 2022
YIELD TREND (M)
Interest-Earning Assets:
Loans held for sale		6.58	%			6.09	%			5.47	%			5.02	%			3.52	%
Loans held for investment		5.24	%			4.98	%			4.58	%			4.35	%			4.44	%
Loans held for investment - Warehouse Purchase Program		6.88	%			6.02	%			4.56	%			3.33	%			3.18	%
Total loans		5.29	%			5.02	%			4.58	%			4.28	%			4.35	%
Investment securities (N)		2.07	%			1.96	%			1.82	%			1.72	%			1.62	%
Federal funds sold and other earning assets		4.74	%			3.63	%			2.37	%			0.69	%			0.16	%
Total interest-earning assets		3.92	%			3.67	%			3.33	%			3.08	%			2.98	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits		0.26	%			0.22	%			0.15	%			0.13	%			0.15	%
Savings and money market deposits		1.50	%			1.13	%			0.37	%			0.17	%			0.15	%
Certificates and other time deposits		1.59	%			0.94	%			0.52	%			0.34	%			0.35	%
Other borrowings		4.83	%			3.97	%			2.55	%			1.60	%			—
Securities sold under repurchase agreements		1.99	%			1.55	%			0.41	%			0.21	%			0.17	%
Total interest-bearing liabilities		1.63	%			1.06	%			0.38	%			0.19	%			0.17	%
Net Interest Margin		2.92	%			3.04	%			3.11	%			2.97	%			2.87	%
Net Interest Margin (tax equivalent)		2.93	%			3.05	%			3.11	%			2.97	%			2.88	%

(M)	Annualized and based on average balances on an actual 365-day basis.
(N)	Yield on securities was impacted by net premium amortization of $7,384, $8,703, $9,947, $11,450 and $12,857 for the three months ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively.

 

Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
		Three Months Ended
		Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022				Mar 31, 2022
Balance Sheet Averages
Loans held for sale		$	2,343			$	1,758			$	4,136			$	3,199			$	4,611
Loans held for investment			18,317,712				17,818,769				17,275,866				16,799,609				16,712,690
Loans held for investment - Warehouse Purchase Program			617,822				747,007				938,589				1,257,521				1,268,715
Total Loans			18,937,877				18,567,534				18,218,591				18,060,329				17,986,016
Investment securities			14,332,509				14,715,516				14,962,847				14,989,666				13,772,974
Federal funds sold and other earning assets			600,048				101,986				87,859				540,907				2,135,503
Total interest-earning assets			33,870,434				33,385,036				33,269,297				33,590,902				33,894,493
Allowance for credit losses on loans			(282,316)				(282,546)				(283,244)				(284,550)				(285,692)
Cash and due from banks			319,960				306,235				302,479				309,223				326,552
Goodwill			3,231,637				3,231,637				3,231,637				3,231,637				3,231,637
Core deposit intangibles, net			50,208				52,591				55,158				57,728				60,346
Other real estate			2,083				2,075				1,652				1,639				1,893
Fixed assets, net			342,380				338,572				336,657				336,242				327,297
Other assets			643,467				584,302				552,929				511,591				510,944
Total assets		$	38,177,853			$	37,617,902			$	37,466,565			$	37,754,412			$	38,067,470
Noninterest-bearing deposits		$	10,389,980			$	11,064,714			$	11,048,856			$	10,855,802			$	10,636,624
Interest-bearing demand deposits			5,877,641				5,843,672				6,155,511				6,437,614				6,775,114
Savings and money market deposits			9,579,679				9,805,024				10,172,986				10,702,273				10,870,461
Certificates and other time deposits			2,045,580				2,066,085				2,185,529				2,409,663				2,637,529
Total deposits			27,892,880				28,779,495				29,562,882				30,405,352				30,919,728
Other borrowings			2,887,011				1,465,533				577,828				112,582				—
Securities sold under repurchase agreements			427,887				441,405				473,584				463,108				452,054
Allowance for credit losses on off-balance sheet credit exposures			29,947				29,947				29,947				29,947				29,947
Other liabilities			180,685				224,512				231,812				186,344				176,360
Shareholders' equity			6,759,443				6,677,010				6,590,512				6,557,079				6,489,381
Total liabilities and equity		$	38,177,853			$	37,617,902			$	37,466,565			$	37,754,412			$	38,067,470

 

Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
		Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022			Mar 31, 2022
Period End Balances
Loan Portfolio
Commercial and industrial		$2,074,078	10.7 %		$2,165,263	11.6 %		$2,197,033	11.9 %		$2,183,277	12.0 %		$2,094,041	11.6 %
Warehouse purchase program		799,115	4.1 %		740,620	3.9 %		922,764	5.0 %		1,137,623	6.2 %		1,344,541	7.4 %
Construction, land development and other land loans		2,899,980	15.0 %		2,805,438	14.9 %		2,659,552	14.4 %		2,460,526	13.5 %		2,327,837	12.9 %
1-4 family residential		6,055,532	31.3 %		5,774,814	30.6 %		5,447,993	29.4 %		5,156,200	28.3 %		4,970,620	27.5 %
Home equity		959,124	5.0 %		966,410	5.1 %		943,197	5.1 %		932,725	5.1 %		870,130	4.8 %
Commercial real estate (includes multi-family residential)		5,133,693	26.6 %		4,986,211	26.5 %		4,966,243	26.8 %		4,967,662	27.3 %		5,150,555	28.5 %
Agriculture (includes farmland)		721,395	3.7 %		688,033	3.6 %		670,603	3.6 %		665,960	3.7 %		617,418	3.4 %
Consumer and other		288,300	1.5 %		283,559	1.5 %		288,834	1.6 %		274,532	1.5 %		246,433	1.4 %
Energy		403,142	2.1 %		429,479	2.3 %		410,069	2.2 %		430,339	2.4 %		445,949	2.5 %
Total loans		$19,334,359			$18,839,827			$18,506,288			$18,208,844			$18,067,524
Deposit Types
Noninterest-bearing DDA		$10,108,348	37.4 %		$10,915,448	38.2 %		$11,154,143	38.1 %		$11,032,184	36.9 %		$10,776,652	34.7 %
Interest-bearing DDA		5,332,086	19.8 %		5,986,203	21.0 %		6,027,157	20.6 %		6,331,314	21.2 %		6,603,934	21.2 %
Money market		6,021,449	22.3 %		6,164,025	21.6 %		6,438,787	22.0 %		6,646,726	22.3 %		7,603,329	24.5 %
Savings		3,304,482	12.2 %		3,471,970	12.2 %		3,563,776	12.1 %		3,597,820	12.0 %		3,543,300	11.4 %
Certificates and other time deposits		2,237,871	8.3 %		1,995,885	7.0 %		2,116,232	7.2 %		2,257,574	7.6 %		2,541,095	8.2 %
Total deposits		$27,004,236			$28,533,531			$29,300,095			$29,865,618			$31,068,310
Loan to Deposit Ratio		71.6 %			66.0 %			63.2 %			61.0 %			58.2 %

 

Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
Construction Loans
		Mar 31, 2023							Dec 31, 2022							Sep 30, 2022							Jun 30, 2022							Mar 31, 2022
Single family residential construction		$	1,179,883			40.7	%		$	1,097,176			39.1	%		$	1,004,000			37.8	%		$	911,443			37.0	%		$	816,072			35.0	%
Land development			222,511			7.7	%			181,747			6.5	%			145,303			5.5	%			133,398			5.4	%			103,853			4.5	%
Raw land			326,168			11.2	%			332,603			11.9	%			343,066			12.9	%			316,750			12.9	%			310,987			13.4	%
Residential lots			226,600			7.8	%			243,942			8.7	%			237,714			8.9	%			223,703			9.1	%			212,029			9.1	%
Commercial lots			167,151			5.8	%			177,378			6.3	%			181,679			6.8	%			184,794			7.5	%			183,760			7.9	%
Commercial construction and other			777,678			26.8	%			772,606			27.5	%			747,803			28.1	%			690,453			28.1	%			701,148			30.1	%
Net unaccreted discount			(11)							(14)							(13)							(15)							(12)
Total construction loans		$	2,899,980						$	2,805,438						$	2,659,552						$	2,460,526						$	2,327,837

 

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of March 31, 2023
	Houston				Dallas				Austin				OK City				Tulsa				Other (O)				Total
Collateral Type
Shopping center/retail	$	404,791			$	239,409			$	49,198			$	19,854			$	19,813			$	278,763			$	1,011,828
Commercial and industrial buildings		160,086				89,698				29,162				32,045				14,556				208,361				533,908
Office buildings		82,333				247,912				48,187				67,434				4,200				62,372				512,438
Medical buildings		76,085				18,766				3,775				26,024				36,722				45,407				206,779
Apartment buildings		156,145				91,286				13,748				14,526				8,677				153,412				437,794
Hotel		107,113				67,348				33,635				27,745				—				130,840				366,681
Other		75,516				79,143				43,290				8,414				1,787				68,588				276,738
Total	$	1,062,069			$	833,562			$	220,995			$	196,042			$	85,755			$	947,743			$	3,346,166		(P)

 

Acquired Loans
	Non-PCD Loans												PCD Loans												Total Acquired Loans
	Balance at Acquisition Date				Balance at Dec 31, 2022				Balance at Mar 31, 2023				Balance at Acquisition Date				Balance at Dec 31, 2022				Balance at Mar 31, 2023				Balance at Acquisition Date				Balance at Dec 31, 2022				Balance at Mar 31, 2023
Loan marks:
Acquired banks (Q)	$	345,599			$	2,233			$	1,701			$	320,052			$	3,361			$	3,022			$	665,651			$	5,594			$	4,723
Acquired portfolio loan balances:
Acquired banks (Q)		12,286,159				1,319,507				1,249,921				689,573				63,383				58,549				12,975,732		(R)		1,382,890				1,308,470
Acquired portfolio loan balances less loan marks	$	11,940,560			$	1,317,274			$	1,248,220			$	369,521			$	60,022			$	55,527			$	12,310,081			$	1,377,296			$	1,303,747

(O)	Includes other MSA and non-MSA regions.
(P)	Represents a portion of total commercial real estate loans of $5.134 billion as of March 31, 2023.
(Q)	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, Tradition Bank and LegacyTexas Bank.
(R)	Actual principal balances acquired.

  

Prosperity Bancshares, Inc.®
Financial Highlights (Unaudited)
(Dollars in thousands)
	Three Months Ended
	Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022				Mar 31, 2022
Asset Quality
Nonaccrual loans	$	22,496			$	19,614			$	17,729			$	20,619			$	21,765
Accruing loans 90 or more days past due		—				5,917				378				13				3,695
Total nonperforming loans		22,496				25,531				18,107				20,632				25,460
Repossessed assets		—				—				13				—				19
Other real estate		1,989				1,963				1,758				1,555				1,705
Total nonperforming assets	$	24,485			$	27,494			$	19,878			$	22,187			$	27,184
Nonperforming assets:
Commercial and industrial (includes energy)	$	2,832			$	3,921			$	2,376			$	2,964			$	4,403
Construction, land development and other land loans		3,210				6,166				1,712				1,866				1,761
1-4 family residential (includes home equity)		16,951				15,326				13,986				14,335				11,899
Commercial real estate (includes multi-family residential)		1,051				1,649				1,364				2,448				7,685
Agriculture (includes farmland)		432				421				434				567				1,402
Consumer and other		9				11				6				7				34
Total	$	24,485			$	27,494			$	19,878			$	22,187			$	27,184
Number of loans/properties		190				170				150				160				147
Allowance for credit losses on loans	$	282,191			$	281,576			$	282,179			$	283,959			$	285,163
Net charge-offs (recoveries):
Commercial and industrial (includes energy)	$	(1,472)			$	(643)			$	(15)			$	(197)			$	14
Construction, land development and other land loans		(13)				(5)				(4)				(5)				430
1-4 family residential (includes home equity)		(140)				(55)				(202)				(32)				87
Commercial real estate (includes multi-family residential)		(1)				74				757				395				(366)
Agriculture (includes farmland)		(6)				(14)				119				(9)				(103)
Consumer and other		1,017				1,246				1,125				1,052				1,155
Total	$	(615)			$	603			$	1,780			$	1,204			$	1,217
Asset Quality Ratios
Nonperforming assets to average interest-earning assets		0.07	%			0.08	%			0.06	%			0.07	%			0.08	%
Nonperforming assets to loans and other real estate		0.13	%			0.15	%			0.11	%			0.12	%			0.15	%
Net charge-offs to average loans (annualized)		-0.01	%			0.01	%			0.04	%			0.03	%			0.03	%
Allowance for credit losses on loans to total loans		1.46	%			1.49	%			1.52	%			1.56	%			1.58	%
Allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program loans (G)		1.52	%			1.56	%			1.60	%			1.66	%			1.71	%

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 return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses on loans to total loans excluding Warehouse Purchase Program loans; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities, 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 on loans to total loans (excluding Warehouse Purchase Program loans). Prosperity has included information below relating to these non-GAAP financial measures for the applicable periods presented.

		Three Months Ended
		Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022				Mar 31, 2022
Reconciliation of return on average common equity to return on average tangible common equity:
Net income		$	124,694			$	137,880			$	135,820			$	128,490			$	122,326
Average shareholders' equity		$	6,759,443			$	6,677,010			$	6,590,512			$	6,557,079			$	6,489,381
Less: Average goodwill and other intangible assets			(3,281,845)				(3,284,228)				(3,286,795)				(3,289,365)				(3,291,983)
Average tangible shareholders' equity		$	3,477,598			$	3,392,782			$	3,303,717			$	3,267,714			$	3,197,398
Return on average tangible common equity (F)			14.34	%			16.26	%			16.44	%			15.73	%			15.30	%
Reconciliation of book value per share to tangible book value per share:
Shareholders' equity		$	6,739,117			$	6,699,374			$	6,611,642			$	6,521,827			$	6,504,424
Less: Goodwill and other intangible assets			(3,280,610)				(3,282,984)				(3,285,542)				(3,288,119)				(3,290,700)
Tangible shareholders' equity		$	3,458,507			$	3,416,390			$	3,326,100			$	3,233,708			$	3,213,724
Period end shares outstanding			90,693				91,314				91,210				91,196				92,160
Tangible book value per share		$	38.13			$	37.41			$	36.47			$	35.46			$	34.87
Reconciliation of equity to assets ratio to period end tangible equity to period end tangible assets ratio:
Tangible shareholders' equity		$	3,458,507			$	3,416,390			$	3,326,100			$	3,233,708			$	3,213,724
Total assets		$	37,829,232			$	37,689,829			$	37,843,502			$	37,387,256			$	38,271,186
Less: Goodwill and other intangible assets			(3,280,610)				(3,282,984)				(3,285,542)				(3,288,119)				(3,290,700)
Tangible assets		$	34,548,622			$	34,406,845			$	34,557,960			$	34,099,137			$	34,980,486
Period end tangible equity to period end tangible assets ratio			10.01	%			9.93	%			9.62	%			9.48	%			9.19	%
Reconciliation of allowance for credit losses to total loans to allowance for credit losses on loans to total loans excluding Warehouse Purchase Program loans:
Allowance for credit losses on loans		$	282,191			$	281,576			$	282,179			$	283,959			$	285,163
Total loans		$	19,334,359			$	18,839,827			$	18,506,288			$	18,208,844			$	18,067,524
Less: Warehouse Purchase Program loans			(799,115)				(740,620)				(922,764)				(1,137,623)				(1,344,541)
Total loans less Warehouse Purchase Program loans		$	18,535,244			$	18,099,207			$	17,583,524			$	17,071,221			$	16,722,983
Allowance for credit losses on loans to total loans excluding Warehouse Purchase Program loans			1.52	%			1.56	%			1.60	%			1.66	%			1.71	%
Reconciliation of efficiency ratio to efficiency ratio excluding net gains and losses on the sale of assets and securities:
Noninterest expense		$	123,000			$	119,244			$	122,214			$	122,878			$	119,850
Net interest income		$	243,467			$	256,137			$	260,679			$	248,471			$	239,944
Noninterest income			38,266				37,724				34,688				37,594				35,122
Less: net gain on sale or write down of assets			121				2,087				50				1,108				689
Noninterest income excluding net gains and losses on the sale or write down of assets and securities			38,145				35,637				34,638				36,486				34,433
Total income excluding net gains and losses on the sale or write down of assets and securities		$	281,612			$	291,774			$	295,317			$	284,957			$	274,377
Efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities			43.68	%			40.87	%			41.38	%			43.12	%			43.68	%

 

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SOURCE Prosperity Bancshares, Inc.

FAQ

What is Prosperity Bancshares' Q1 2023 net income?

Prosperity Bancshares reported a net income of $124.7 million for Q1 2023.

What was the earnings per share for Prosperity Bancshares in Q1 2023?

The earnings per share for Q1 2023 was $1.37.

How much did loans increase for Prosperity Bancshares in Q1 2023?

Loans, excluding Warehouse Purchase Program loans, increased by $436 million or 2.4% (9.6% annualized) in Q1 2023.

What is the current allowance for credit losses on loans for Prosperity Bancshares?

The allowance for credit losses on loans is 1.52% of total loans.

When does Prosperity Bancshares expect to complete its acquisition of First Bancshares?

The acquisition of First Bancshares is expected to be effective on May 1, 2023.