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PROSPERITY BANCSHARES, INC.® REPORTS FIRST QUARTER 2024 EARNINGS

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Prosperity Bancshares, Inc. reported a net income of $110.4 million and diluted earnings per share of $1.18 for the first quarter of 2024. Loans and deposits increased, nonperforming assets remain low, and the merger with Lone Star State Bancshares, Inc. was completed.
Prosperity Bancshares, Inc. ha riportato un reddito netto di 110,4 milioni di dollari e utili diluiti per azione di 1,18 dollari per il primo trimestre del 2024. I prestiti e i depositi sono aumentati, gli attivi non performanti sono rimasti bassi e la fusione con Lone Star State Bancshares, Inc. è stata completata.
Prosperity Bancshares, Inc. reportó un ingreso neto de $110.4 millones y ganancias diluidas por acción de $1.18 para el primer trimestre de 2024. Los préstamos y depósitos aumentaron, los activos no productivos se mantuvieron bajos, y se completó la fusión con Lone Star State Bancshares, Inc.
Prosperity Bancshares, Inc.는 2024년 첫 분기에 순이익 1억 1,040만 달러와 주당 희석이익 1.18달러를 보고했습니다. 대출과 예금은 증가했으며, 부실 자산은 낮은 상태를 유지하였고, Lone Star State Bancshares, Inc.와의 합병이 완료되었습니다.
Prosperity Bancshares, Inc. a déclaré un revenu net de 110,4 millions de dollars et des bénéfices dilués par action de 1,18 dollar pour le premier trimestre de 2024. Les prêts et les dépôts ont augmenté, les actifs non performants sont restés faibles, et la fusion avec Lone Star State Bancshares, Inc. a été réalisée.
Prosperity Bancshares, Inc. berichtete über ein Nettoeinkommen von 110,4 Millionen Dollar und verdünntem Gewinn pro Aktie von 1,18 Dollar für das erste Quartal 2024. Kredite und Einlagen stiegen, notleidende Vermögenswerte blieben gering und die Fusion mit Lone Star State Bancshares, Inc. wurde abgeschlossen.
Positive
  • Net income decreased compared to the same period in 2023.
  • Noninterest income and expenses showed mixed trends.
  • Balance sheet data reflected growth in loans and deposits.
  • Nonperforming assets were slightly higher compared to the previous quarter.
  • The merger with Lone Star State Bancshares, Inc. was successfully completed.
  • Prosperity Bancshares declared a cash dividend for the second quarter of 2024.
  • A stock repurchase program was initiated during the period.
  • Prosperity's management will host a conference call to discuss first quarter 2024 earnings.
Negative
  • Net income decreased from the same period in 2023.
  • Noninterest expense increased due to salaries, benefits, and merger expenses.
  • Net charge-offs were reported for the three months ended March 31, 2024.
  • Efficiency ratio increased compared to the same period in 2023.
  • Nonperforming assets saw a slight increase.
  • Decrease in deposits compared to the previous quarter.

Insights

When examining Prosperity Bancshares' latest financials, the first aspect that stands out is the decline in net income from $124.7 million in Q1 2023 to $110.4 million in Q1 2024. Investors should note that this figure surpassed the $95.5 million reported in Q4 2023. The diluted EPS for Q1 2024 stood at $1.18, down from $1.37 in Q1 2023 but above the $1.02 in Q4 2023. The bank's net interest margin saw a slight uptick to 2.79%, which is positive, but is down from 2.93% year-over-year. The reported loan growth at a modest 0.6% (2.4% annualized) and deposit increase by $109.8 million suggest a controlled expansion strategy likely focused on maintaining asset quality. The completion of the merger with Lone Star Bancshares could influence future growth, but the operational integration's success, scheduled for late October, will be key to realizing potential synergies. Investors should weigh the short-term costs associated with the merger against the potential for enhanced market presence and long-term earnings growth.

Prosperity's strategic moves, such as the merger with Lone Star State Bancshares and the completion of the First Bancshares merger last year, position Prosperity to capitalize on the robust Texas economy, which is cited as the eighth largest in the world. The regional focus on Texas and Oklahoma, which are outperforming in terms of job growth and business climate, suggests a favorable operating environment for Prosperity. However, investors should remain cognizant of the increased noninterest expenses resulting from higher salaries, benefits and expenses related to the FB Merger. This has resulted in a 10.4% increase in noninterest expenses year-over-year. While Prosperity's decision to repurchase over 567,000 shares indicates management's confidence in the intrinsic value of the company, retail investors should consider whether these buybacks support share price performance and assess their impact on the bank's equity and future dividend payout potential.

The report suggests stable asset quality with nonperforming assets at 0.24% of average interest-earning assets, which is a slight increase from the previous quarter's 0.21%. The allowance for credit losses on loans and off-balance sheet credit exposures remains substantial at $366.7 million, though slightly down from $368.9 million at the end of the previous quarter. Notably, there was no provision for credit losses in Q1 2024, signaling management's confidence in the current loan portfolio's risk profile. As investors, it's important to keep an eye on the loan portfolio's performance, particularly as the bank integrates its recent acquisitions, which could potentially affect asset quality metrics going forward.
  • Net income of $110.4 million and diluted earnings per share of $1.18 for first quarter 2024
  • Loans, excluding Warehouse Purchase Program loans and loans acquired in the merger of First Bancshares of Texas, Inc, increased $115.8 million or 0.6% (2.4% annualized) during first quarter 2024
  • Deposits, excluding public funds deposits, increased $109.8 million during first quarter 2024, with no brokered deposits purchased
  • Noninterest-bearing deposits of $9.5 billion, representing 35.1% of total deposits
  • Net interest margin increased 4 basis points to 2.79% during first quarter 2024
  • Allowance for credit losses on loans and on off-balance sheet credit exposure of $366.7 million and allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program, of 1.62%(1)
  • Nonperforming assets remain low at 0.24% of first quarter average interest-earning assets
  • Completed the merger of Lone Star State Bancshares, Inc. on April 1, 2024
  • Repurchased 567,692 shares of common stock during first quarter 2024

HOUSTON, April 24, 2024 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income of $110.4 million for the quarter ended March 31, 2024 compared with $124.7 million for the same period in 2023. Net income per diluted common share was $1.18 for the quarter ended March 31, 2024 compared with $1.37 for the same period in 2023. On April 1, 2024, Lone Star State Bancshares, Inc. ("Lone Star") merged with Prosperity Bancshares and Lone Star State Bank of West Texas ("Lone Star Bank") merged with Prosperity Bank. The annualized return on first quarter average assets was 1.13%. Nonperforming assets remain low at 0.24% of first quarter average interest-earning assets.

"We are excited to announce that on April 1, 2024, we completed the merger with Lone Star and its wholly owned subsidiary Lone Star Bank, headquartered in Lubbock, Texas. The operational integration is scheduled for late October 2024, when Lone Star customers will have full access to our 288 full-service locations. We welcome the Lone Star customers and associates to Prosperity and will work hard to win your trust," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"The $2.4 trillion Texas economy is now the eight-largest economy in the world - larger than Russia, Canada, Italy and others. Texas is the top state for Fortune 500 headquartered companies, currently at 55, and was named the 2023 state of year for best in nation business climate and job growth," added Zalman.

"Texas added 369,600 non-farm jobs in 2023, the most in the nation. We believe the Texas and Oklahoma economies should outperform most other states," continued Zalman.

"Prosperity continues to focus on long term relationships and our customers' success while maintaining strong asset quality and earnings, and a fair return to shareholders. Prosperity maintained a high tangible equity to tangible assets ratio of 10.33% for the first quarter 2024 while sharing earnings with our shareholders. Prosperity repurchased 567,692 shares of common stock during the first quarter of 2024 in addition to the quarterly dividend. In 2023, Prosperity's total capital return to shareholders from dividends and share repurchases was $278 million," concluded Zalman.

Results of Operations for the Three Months Ended March 31, 2024

For the three months ended March 31, 2024, net income was $110.4 million(2) or $1.18 per diluted common share compared with $95.5 million(3) or $1.02 per diluted common share for the three months ended December 31, 2023. The change was primarily due to higher interest income and lower FDIC assessments, partially offset by an increase in salaries and benefits and interest expense. For the three months ended March 31, 2024, net income was $110.4 million(2) or $1.18 per diluted common share compared with $124.7 million(4) or $1.37 per diluted common share for the same period in 2023. The change was primarily due to a decrease in net interest income and an increase in noninterest expense primarily due to an increase in salaries and benefits and expenses due to the merger of First Bancshares of Texas, Inc. (the "FB Merger"). Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2024 were 1.13%, 6.20% and 12.06%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and securities) was 49.07%(1) for the three months ended March 31, 2024.

Net interest income before provision for credit losses was $238.2 million for the three months ended March 31, 2024 compared with $237.0 million for the three months ended December 31, 2023, an increase of $1.3 million or 0.5%. Net interest income before provision for credit losses decreased $5.2 million or 2.1% to $238.2 million for the three months ended March 31, 2024 compared with $243.5 million for the same period in 2023. The change was primarily due to an increase in the average balances on other borrowings, an increase in the average rates on interest-bearing deposits and a decrease in the average balance on investment securities, partially offset by an increase in the average balances and average rates on loans.

The net interest margin on a tax equivalent basis was 2.79% for the three months ended March 31, 2024 compared with 2.75% for the three months ended December 31, 2023. The net interest margin on a tax equivalent basis was 2.79% for the three months ended March 31, 2024 compared with 2.93% for the same period in 2023. The change was primarily due to an increase in the average balances on other borrowings, an increase in the average rates on interest-bearing deposits and a decrease in the average balance on investment securities, partially offset by an increase in the average balances and average rates on loans.

Noninterest income was $38.9 million for the three months ended March 31, 2024 compared with $36.6 million for the three months ended December 31, 2023, an increase of $2.3 million or 6.3%. The change was primarily due to increases in trust income and other noninterest income. Noninterest income was $38.9 million for the three months ended March 31, 2024 compared with $38.3 million for the same period in 2023, an increase of $604 thousand or 1.6%.

Noninterest expense was $135.8 million for the three months ended March 31, 2024 compared with $152.2 million for the three months ended December 31, 2023, a decrease of $16.3 million or 10.7%. The change was primarily due to lower FDIC assessments, partially offset by an increase in salaries and benefits. Noninterest expense was $135.8 million for the three months ended March 31, 2024 compared with $123.0 million for the same period in 2023, an increase of $12.8 million or 10.4%. The change was primarily due to increases in salaries and benefits, other noninterest expense and in credit and debit card, data processing and software amortization expense primarily due to three months of operations related to the FB Merger in the first quarter 2024 compared to none in the first quarter 2023.

Balance Sheet Information

At March 31, 2024, Prosperity had $38.757 billion in total assets, an increase of $927.3 million or 2.5%, compared with $37.829 billion at March 31, 2023.

Loans were $21.265 billion at March 31, 2024, an increase of $84.7 million or 0.4% (1.6% annualized) from $21.181 billion at December 31, 2023. Loans increased $1.931 billion or 10.0%, compared with $19.334 billion at March 31, 2023. Loans, excluding Warehouse Purchase Program loans, were $20.400 billion at March 31, 2024 compared with $20.358 billion at December 31, 2023, an increase of $42.0 million or 0.2% (0.8% annualized), and $18.535 billion at March 31, 2023, an increase of $1.865 billion or 10.1%.

Deposits were $27.176 billion at March 31, 2024, a decrease of $4.3 million from $27.180 billion at December 31, 2023. Deposits increased $171.3 million or 0.6%, compared with $27.004 billion at March 31, 2023. Deposits, excluding public funds deposits, were $24.558 billion at March 31, 2024 compared with $24.448 billion at December 31, 2023, an increase of $109.8 million or 0.4%. Deposits, excluding public funds deposits, increased $660.8 million or 2.8% compared with $23.897 billion at March 31, 2023.

The table below provides detail on the impact of loans acquired and deposits assumed in the FB Merger.

Balance Sheet Data (at period end)
















(In thousands)


















Mar 31, 2024



Dec 31, 2023



Sep 30, 2023



Jun 30, 2023



Mar 31, 2023




(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)


Loans acquired (including new production since acquisition date):
















FirstCapital Bank


$

1,302,582



$

1,376,356



$

1,494,378



$

1,590,137



$

—


Prosperity - Warehouse Purchase Program loans



864,924




822,245




912,327




1,148,883




799,115


Prosperity - All other loans



19,097,741




18,981,937




19,026,008




18,914,926




18,535,244


Total loans


$

21,265,247



$

21,180,538



$

21,432,713



$

21,653,946



$

19,334,359


















Deposits assumed (including new deposits since acquisition date):
















FirstCapital Bank


$

1,449,166



$

1,517,217



$

1,625,691



$

1,481,831



$

—


All other deposits



25,726,352




25,662,592




25,687,109




25,899,055




27,004,236


Total deposits


$

27,175,518



$

27,179,809



$

27,312,800



$

27,380,886



$

27,004,236


Excluding loans acquired in the FB Merger and new production since May 1, 2023 by the acquired lending operations, loans at March 31, 2024 grew $158.5 million or 0.8% (3.2% annualized) compared with December 31, 2023 and grew $628.3 million or 3.2% compared with March 31, 2023. Excluding loans acquired in the FB Merger, new production since May 1, 2023 by the acquired lending operations and Warehouse Purchase Program loans, loans at March 31, 2024 grew $115.8 million or 0.6% (2.4% annualized) compared with December 31, 2023 and grew $562.5 million or 3.0% compared with March 31, 2023.

Excluding deposits assumed in the FB Merger and new deposits generated at the acquired banking centers since May 1, 2023, deposits at March 31, 2024 grew by $63.8 million or 0.2% (1.0% annualized) compared with December 31, 2023 and decreased by $1.278 billion or 4.7% compared with March 31, 2023.

Asset Quality

Nonperforming assets totaled $83.8 million or 0.24% of quarterly average interest-earning assets at March 31, 2024 compared with $72.7 million or 0.21% of quarterly average interest-earning assets at December 31, 2023, with the majority of the balance for each period attributable to acquired loans. Nonperforming assets were $24.5 million or 0.07% of quarterly average interest-earning assets at March 31, 2023.

The allowance for credit losses on loans and off-balance sheet credit exposures was $366.7 million at March 31, 2024 compared with $368.9 million at December 31, 2023 and $312.1 million at March 31, 2023. There was no provision for credit losses for the three months ended  March 31, 2024, December 31, 2023 and March 31, 2023.

The allowance for credit losses on loans was $330.2 million or 1.55% of total loans at March 31, 2024 compared with $332.4 million or 1.57% of total loans at December 31, 2023 and $282.2 million or 1.46% of total loans at March 31, 2023. Excluding Warehouse Purchase Program loans, the allowance for credit losses on loans to total loans was 1.62%(1) at March 31, 2024 compared with 1.63%(1) at December 31, 2023 and 1.52%(1) at March 31, 2023.

Net charge-offs were $2.1 million for the three months ended March 31, 2024 compared with net charge-offs of $19.1 million for the three months ended December 31, 2023 and net recoveries of $615 thousand for the three months ended March 31, 2023. Net charge-offs for the first quarter of 2024 included $991 thousand related to resolved purchased credit deteriorated ("PCD") loans, which had specific reserves that were allocated to the charge-offs. Further, an additional $4.1 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 2024 cash dividend of $0.56 per share to be paid on July 1, 2024, to all shareholders of record as of June 14, 2024.

Stock Repurchase Program

On January 16, 2024, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 4.7 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 16, 2025, at the discretion of management. Under its 2024 stock repurchase program, Prosperity Bancshares repurchased 567,692 shares of its common stock at an average weighted price of $62.12 per share during the three months ended March 31, 2024.

Merger of Lone Star State Bancshares, Inc.

On April 1, 2024, Prosperity completed the merger of Lone Star and its wholly owned subsidiary Lone Star Bank, headquartered in Lubbock, Texas. Lone Star Bank operated 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, 2024, Lone Star, on a consolidated basis, reported total assets of $1.384 billion, total loans of $1.075 billion and total deposits of $1.241 billion.

Pursuant to the terms of the definitive agreement, Prosperity issued 2,376,182 shares of Prosperity common stock plus approximately $64.1 million in cash for all outstanding shares of Lone Star in the second quarter of 2024.

Merger of First Bancshares of Texas, Inc.

On May 1, 2023, Prosperity completed the merger of First Bancshares and its wholly owned subsidiary FirstCapital Bank of Texas, N.A. ("FirstCapital Bank"), headquartered in Midland, Texas. FirstCapital Bank operated 16 full-service banking offices in six 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.

Pursuant to the terms of the definitive agreement, Prosperity issued 3,583,370 shares of Prosperity common stock plus approximately $91.5 million in cash for all outstanding shares of First Bancshares. This resulted in goodwill of $164.8 million as of March 31, 2024, which was subject to subsequent fair value adjustments. During the second quarter of 2023, Prosperity completed the operational conversion of FirstCapital Bank.

Conference Call

Prosperity's management team will host a conference call on Wednesday, April 24, 2024, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's first quarter 2024 earnings. Individuals and investment professionals may participate in the call by dialing 1-877-883-0383 for domestic participants, or 1-412-902-6506 for international participants. The participant elite entry number is 5323694.

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 Investor Relations page by selecting "Presentations, Webcasts & Calls" from the menu and following the instructions.

Non-GAAP Financial Measures

Prosperity's management uses certain non-GAAP financial measures to evaluate its performance. Specifically, for internal planning and forecasting purposes, Prosperity reviews each of diluted earnings per share, return on average assets, return on average common equity, and return on average tangible common equity, in each case excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and the FDIC special assessment, net of tax; return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program 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, merger related expenses and the FDIC special assessment. 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, 2024, Prosperity Bancshares, Inc.® is a $38.757 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 288 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; 31 in the Central Texas area including Austin and San Antonio; 44 in the West Texas area including Lubbock, Midland-Odessa, Abilene; Amarillo and Wichita Falls; 15 in the Bryan/College Station area, 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area and 5 in the West Texas area currently doing business as Lone Star Bank.

PROSPERITY BANCSHARES, INC. (PRNewsfoto/Prosperity Bancshares, Inc.)

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, 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 a proposed transaction, and statements about the assumptions underlying any such statement. 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; 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 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; and the effect, impact, potential duration or other implications of weather and climate-related events. 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, 2023, 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 $2.0 million, net of tax, primarily comprised of loan discount accretion of $1.9 million for the three months ended March 31, 2024.

(3)

Includes purchase accounting adjustments of $2.6 million, net of tax, primarily comprised of loan discount accretion of $2.5 million, merger related expenses of $278 thousand, and the FDIC special assessment of $19.9 million for the three months ended December 31, 2023.

(4)

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.

 

Bryan/College Station Area


Grapevine Main


Tyler-South Broadway


Tomball


West

Bryan


Kiest


Tyler-University


Waller



Bryan-29th Street


Lake Highlands


Winnsboro


West Columbia


Odessa

Bryan-East


McKinney




Wharton


Grandview

Bryan-North


McKinney Eldorado


Houston Area


Winnie


Grant

Caldwell


McKinney Redbud


Houston


Wirt


Kermit Highway

College Station


North Carrolton


Aldine




Parkway

Hearne


Park Cities


Alief


South Texas Area -



Huntsville


Plano


Bellaire


Corpus Christi


Wichita Falls

Madisonville


Plano-West


Beltway


Calallen


Cattlemans

Navasota


Preston Forest


Clear Lake


Carmel


Kell

New Waverly


Preston Parker


Copperfield


Northwest



Rock Prairie


Preston Royal


Cypress


Saratoga


Other West Texas Area

Southwest Parkway


Red Oak


Downtown


Timbergate


Locations

Tower Point


Richardson


Eastex


Water Street


Big Spring

Wellborn Road


Richardson-West


Fairfield




Brownfield



Rosewood Court


First Colony


Victoria


Brownwood

Central Texas Area


The Colony


Fry Road


Victoria Main


Burkburnett

Austin


Tollroad


Gessner


Victoria-Navarro


Byers

Cedar Park


Trinity Mills


Gladebrook


Victoria-North


Cisco

Congress


Turtle Creek


Grand Parkway


Victoria Salem


Comanche

Lakeway


West 15th Plano


Heights




Early

Liberty Hill


West Allen


Highway 6 West


Other South Texas Area


Floydada

Northland


Westmoreland


Little York


 Locations


Gorman

Oak Hill


Wylie


Medical Center


Alice


Henrietta

Research Blvd




Memorial Drive


Aransas Pass


Levelland

Westlake


Fort Worth


Northside


Beeville


Littlefield



Haltom City


Pasadena


Colony Creek


Merkel

Other Central Texas Area


Hulen


Pecan Grove


Cuero


Plainview

Locations


Keller


Pin Oak


Edna


San Angelo

Bastrop


Museum Place


River Oaks


Goliad


Slaton

Canyon Lake


Renaissance Square


Sugar Land


Gonzales


Snyder

Dime Box


Roanoke


SW Medical Center


Hallettsville



Dripping Springs


Stockyards


Tanglewood


Kingsville


Lone Star West Texas Area

Elgin




The Plaza


Mathis


Big Spring

Flatonia


Other Dallas/Fort Worth Area


Uptown


Padre Island


Brownfield

Fredericksburg


Locations


Waugh Drive


Palacios


Lubbock

Georgetown


Arlington


Westheimer


Port Lavaca


Midland

Gruene


Azle


West University


Portland


Odessa

Horseshoe Bay


Ennis


Woodcreek


Rockport



Kingsland


Gainesville




Sinton


Oklahoma

La Grange


Glen Rose


Katy


Taft


Central Oklahoma Area

Lexington


Granbury


Cinco Ranch


Yoakum


Oklahoma City

Marble Falls


Grand Prairie


Katy-Spring Green


Yorktown


23rd Street

New Braunfels


Jacksboro






Expressway

Pleasanton


Mesquite


The Woodlands


West Texas Area


I-240

Round Rock


Muenster


The Woodlands-College Park


Abilene


Memorial

San Antonio


Runaway Bay


The Woodlands-I-45


Antilley Road



Schulenburg


Sanger


The Woodlands-Research Forest


Barrow Street


Other Central Oklahoma Area

Seguin


Waxahachie




Cypress Street


 Locations

Smithville


Weatherford


Other Houston Area


Judge Ely


Edmond

Thorndale




Locations


Mockingbird


Norman

Weimar


East Texas Area


Angleton







Athens


Bay City


Amarillo


Tulsa Area

Dallas/Fort Worth Area


Blooming Grove


Beaumont


Hillside


Tulsa

Dallas


Canton


Cleveland


Soncy


Garnett

14th Street Plano


Carthage


East Bernard




Harvard

Abrams Centre


Corsicana


El Campo


Lubbock


Memorial

Addison


Crockett


Dayton


4th Street


Sheridan

Allen


Eustace


Galveston


66th Street


S. Harvard

Balch Springs


Gilmer


Groves


82nd Street


Utica Tower

Camp Wisdom


Grapeland


Hempstead


86th Street


Yale

Carrollton


Gun Barrel City


Hitchcock


98th Street



Cedar Hill


Jacksonville


Liberty


Avenue Q


Other Tulsa Area Locations

Coppell


Kerens


Magnolia


Milwaukee


Owasso

East Plano


Longview


Magnolia Parkway


North University



Euless


Mount Vernon


Mont Belvieu


Texas Tech Student Union



Frisco


Palestine


Nederland





Frisco Warren


Rusk


Needville


Midland



Frisco-West


Seven Points


Rosenberg


North



Garland


Teague


Shadow Creek


Wadley



Grapevine


Tyler-Beckham


Spring


Wall Street



 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)






Mar 31, 2024



Dec 31, 2023



Sep 30, 2023



Jun 30, 2023



Mar 31, 2023


Balance Sheet Data (at period end)
















Loans held for sale


$

6,380



$

5,734



$

10,187



$

10,656



$

1,603


Loans held for investment



20,393,943




20,352,559




20,510,199




20,494,407




18,533,641


Loans held for investment - Warehouse Purchase Program



864,924




822,245




912,327




1,148,883




799,115


Total loans



21,265,247




21,180,538




21,432,713




21,653,946




19,334,359


















Investment securities(A)



12,301,138




12,803,896




13,192,742




13,667,319




14,071,545


Federal funds sold



250




260




234




181




222


Allowance for credit losses on loans



(330,219)




(332,362)




(351,495)




(345,209)




(282,191)


Cash and due from banks



1,086,444




458,153




512,239




396,848




405,331


Goodwill



3,396,402




3,396,086




3,396,459




3,383,698




3,231,636


Core deposit intangibles, net



60,757




63,994




67,553




71,128




48,974


Other real estate owned



2,204




1,708




9,320




3,107




1,989


Fixed assets, net



372,333




369,992




370,237




365,299




345,149


Other assets



601,964




605,612




665,682




708,814




672,218


Total assets


$

38,756,520



$

38,547,877



$

39,295,684



$

39,905,131



$

37,829,232


















Noninterest-bearing deposits


$

9,526,535



$

9,776,572



$

10,281,893



$

10,364,921



$

10,108,348


Interest-bearing deposits



17,648,983




17,403,237




17,030,907




17,015,965




16,895,888


Total deposits



27,175,518




27,179,809




27,312,800




27,380,886




27,004,236


Other borrowings



3,900,000




3,725,000




4,250,000




4,800,000




3,365,000


Securities sold under repurchase agreements



261,671




309,277




300,714




434,160




434,261


Subordinated debentures



—




—




—




3,093




—


Allowance for credit losses on off-balance sheet credit exposures



36,503




36,503




36,503




36,503




29,947


Other liabilities



278,284




217,958




362,990




282,373




256,671


Total liabilities



31,651,976




31,468,547




32,263,007




32,937,015




31,090,115


Shareholders' equity(B)



7,104,544




7,079,330




7,032,677




6,968,116




6,739,117


Total liabilities and equity


$

38,756,520



$

38,547,877



$

39,295,684



$

39,905,131



$

37,829,232




(A)

Includes $(2,954), $(1,770), $(2,442), $(3,393) and $(4,399) in unrealized losses on available for sale securities for the quarterly periods ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, respectively.

(B)

Includes $(2,333), $(1,398), $(1,930), $(2,681) and $(3,476) in after-tax unrealized losses on available for sale securities for the quarterly periods ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)






Three Months Ended




Mar 31,
2024



Dec 31,
2023



Sep 30,
2023



Jun 30,
2023



Mar 31,
2023


Income Statement Data
















Interest income:
















Loans


$

306,228



$

306,562



$

308,678



$

286,638



$

247,118


Securities(C)



66,421




68,077




69,987




72,053




73,185


Federal funds sold and other earning assets



9,265




1,793




1,689




1,757




7,006


Total interest income



381,914




376,432




380,354




360,448




327,309


















Interest expense:
















Deposits



92,692




84,969




76,069




63,964




47,343


Other borrowings



48,946




52,386




62,190




57,351




34,396


Securities sold under repurchase agreements



2,032




2,094




2,533




2,674




2,103


Subordinated debentures



—




—




38




—




—


Total interest expense



143,670




139,449




140,830




123,989




83,842


Net interest income



238,244




236,983




239,524




236,459




243,467


Provision for credit losses



—




—




—




18,540




—


Net interest income after provision for credit losses



238,244




236,983




239,524




217,919




243,467


















Noninterest income:
















Nonsufficient funds (NSF) fees



8,288




8,365




8,719




8,512




8,095


Credit card, debit card and ATM card income



8,861




9,314




9,285




9,206




8,666


Service charges on deposit accounts



6,406




6,316




6,262




6,078




5,926


Trust income



4,156




3,360




3,326




3,358




3,225


Mortgage income



610




542




857




661




238


Brokerage income



1,235




1,059




1,067




1,000




1,149


Bank owned life insurance income



2,047




1,882




1,864




1,553




1,354


Net (loss) gain on sale or write-down of assets



(35)




(84)




(45)




1,994




121


Net gain on sale of securities



298




—




—




—




—


Other noninterest income



7,004




5,814




7,408




7,326




9,492


Total noninterest income



38,870




36,568




38,743




39,688




38,266


















Noninterest expense:
















Salaries and benefits



85,771




80,486




85,423




84,723




77,798


Net occupancy and equipment



8,623




9,093




9,464




8,935




8,025


Credit and debit card, data processing and software amortization



10,975




10,741




10,919




10,344




9,566


Regulatory assessments and FDIC insurance



5,538




24,940




5,155




5,097




4,973


Core deposit intangibles amortization



3,237




3,559




3,576




3,167




2,374


Depreciation



4,686




4,607




4,585




4,658




4,433


Communications



3,402




3,572




3,686




3,693




3,462


Other real estate expense



187




165




153




(464)




58


Net (gain) loss on sale or write-down of other real estate



(138)




34




(734)




(33)




(13)


Merger related expenses



—




278




1,104




12,891




860


Other noninterest expense



13,567




14,696




12,326




12,859




11,464


Total noninterest expense



135,848




152,171




135,657




145,870




123,000


Income before income taxes



141,266




121,380




142,610




111,737




158,733


Provision for income taxes



30,840




25,904




30,402




24,799




34,039


Net income available to common shareholders


$

110,426



$

95,476



$

112,208



$

86,938



$

124,694




(C)

Interest income on securities was reduced by net premium amortization of $5,822, $6,428, $6,897, $7,131 and $7,384 for the three months ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, 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, 2024



Dec 31, 2023



Sep 30, 2023



Jun 30, 2023



Mar 31, 2023


















Profitability
















Net income (D) (E)


$

110,426



$

95,476



$

112,208



$

86,938



$

124,694


















Basic earnings per share


$

1.18



$

1.02



$

1.20



$

0.94



$

1.37


Diluted earnings per share


$

1.18



$

1.02



$

1.20



$

0.94



$

1.37


















Return on average assets (F) (J)



1.13

%



0.98

%



1.13

%



0.89

%



1.31

%

Return on average common equity (F) (J)



6.20

%



5.39

%



6.39

%



5.01

%



7.38

%

Return on average tangible common equity (F) (G) (J)



12.06

%



10.54

%



12.58

%



9.67

%



14.34

%

Tax equivalent net interest margin (D) (E) (H)



2.79

%



2.75

%



2.72

%



2.73

%



2.93

%

Efficiency ratio (G) (I) (K)



49.07

%



55.61

%



48.74

%



53.21

%



43.68

%

















Liquidity and Capital Ratios
















Equity to assets



18.33

%



18.37

%



17.90

%



17.46

%



17.81

%

Common equity tier 1 capital



15.78

%



15.54

%



14.98

%



14.49

%



15.59

%

Tier 1 risk-based capital



15.78

%



15.54

%



14.98

%



14.49

%



15.59

%

Total risk-based capital



17.08

%



16.56

%



16.05

%



15.52

%



16.41

%

Tier 1 leverage capital



10.37

%



10.39

%



10.03

%



9.96

%



10.06

%

Period end tangible equity to period end tangible assets (G)



10.33

%



10.31

%



9.96

%



9.64

%



10.01

%

















Other Data
















Weighted-average shares used in computing earnings per common share
















Basic



93,706




93,715




93,720




92,930




91,207


Diluted



93,706




93,715




93,720




92,930




91,207


Period end shares outstanding



93,525




93,722




93,717




93,721




90,693


Cash dividends paid per common share


$

0.56



$

0.56



$

0.55



$

0.55



$

0.55


Book value per common share


$

75.96



$

75.54



$

75.04



$

74.35



$

74.31


Tangible book value per common share (G)


$

39.00



$

38.62



$

38.08



$

37.49



$

38.13


















Common Stock Market Price
















High


$

68.88



$

68.79



$

63.65



$

63.13



$

78.76


Low


$

60.08



$

49.60



$

52.62



$

55.12



$

58.25


Period end closing price


$

65.78



$

67.73



$

54.58



$

56.48



$

61.52


Employees – FTE (excluding overtime)



3,901




3,850




3,853




3,710




3,651


Number of banking centers



283




285




285




286




272


 

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



Three Months Ended


Mar 31,

2024


Dec 31,

2023


Sep 30,

2023


Jun 30,

2023


Mar 31,

2023

Loan discount accretion










Non-PCD

$1,312


$1,543


$1,508


$1,242


$532

PCD

$548


$937


$767


$1,178


$339

Securities net accretion (amortization)

$561


$598


$626


$426


$(2)

Time deposits amortization

$(97)


$(150)


$(210)


$(187)


$(53)

 

(E)

Using effective tax rate of 21.8%, 21.3%, 21.3%, 22.2% and 21.4% for the three months ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, 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 366-day or 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.

(J)

For calculations of the annualized returns on average assets, average common equity and average tangible common equity excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, 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.

(K)

For calculations of the efficiency ratio excluding merger related expenses and FDIC special assessment 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.®

Financial Highlights (Unaudited)

(Dollars in thousands)




YIELD ANALYSIS


Three Months Ended




Mar 31, 2024


Dec 31, 2023


Mar 31, 2023




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


$

5,467



$

92



6.77 %


$

9,828



$

185



7.47 %


$

2,343



$

38



6.58 %


Loans held for investment



20,415,316




292,673



5.77 %



20,370,915




291,882



5.68 %



18,317,712




236,606



5.24 %


Loans held for investment - Warehouse Purchase
Program



720,650




13,463



7.51 %



770,481




14,495



7.46 %



617,822




10,474



6.88 %


Total loans



21,141,433




306,228



5.83 %



21,151,224




306,562



5.75 %



18,937,877




247,118



5.29 %


Investment securities



12,693,268




66,421



2.10 %

(M)


13,074,243




68,077



2.07 %

(M)


14,332,509




73,185



2.07 %

(M)

Federal funds sold and other earning assets



672,840




9,265



5.54 %



125,295




1,793



5.68 %



600,048




7,006



4.74 %


Total interest-earning assets



34,507,541




381,914



4.45 %



34,350,762




376,432



4.35 %



33,870,434




327,309



3.92 %


Allowance for credit losses on loans



(331,708)









(346,493)









(282,316)








Noninterest-earning assets



4,759,697









4,810,942









4,589,735








Total assets


$

38,935,530








$

38,815,211








$

38,177,853


































Interest-bearing liabilities:


























Interest-bearing demand deposits


$

5,143,585



$

8,423



0.66 %


$

4,822,698



$

6,789



0.56 %


$

5,877,641



$

3,792



0.26 %


Savings and money market deposits



8,889,077




47,152



2.13 %



8,815,892




45,192



2.03 %



9,579,679




35,521



1.50 %


Certificates and other time deposits



3,683,815




37,117



4.05 %



3,442,115




32,988



3.80 %



2,045,580




8,030



1.59 %


Other borrowings



4,083,132




48,946



4.82 %



4,028,263




52,386



5.16 %



2,887,011




34,396



4.83 %


Securities sold under repurchase agreements



296,437




2,032



2.76 %



300,317




2,094



2.77 %



427,887




2,103



1.99 %


Total interest-bearing liabilities



22,096,046




143,670



2.62 %

(N)


21,409,285




139,449



2.58 %

(N)


20,817,798




83,842



1.63 %

(N)



























Noninterest-bearing liabilities:


























Noninterest-bearing demand deposits



9,443,249









9,960,240









10,389,980








Allowance for credit losses on off-balance sheet credit
exposures



36,503









36,503









29,947








Other liabilities



238,480









323,344









180,685








Total liabilities



31,814,278









31,729,372









31,418,410








Shareholders' equity



7,121,252









7,085,839









6,759,443








Total liabilities and shareholders' equity


$

38,935,530








$

38,815,211








$

38,177,853


































Net interest income and margin





$

238,244



2.78 %





$

236,983



2.74 %





$

243,467



2.92 %


Non-GAAP to GAAP reconciliation:


























Tax equivalent adjustment






808









952









833





Net interest income and margin
     (tax equivalent basis)





$

239,052



2.79 %





$

237,935



2.75 %





$

244,300



2.93 %




(L)

Annualized and based on an actual 366-day or 365-day basis.

(M)

Yield on securities was impacted by net premium amortization of $5,822, $6,428 and $7,384 for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

(N)

Total cost of funds, including noninterest bearing deposits, was 1.83%, 1.76% and 1.09% for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)





Three Months Ended



Mar 31, 2024



Dec 31, 2023



Sep 30, 2023



Jun 30, 2023



Mar 31, 2023


YIELD TREND (O)






























Interest-Earning Assets:















Loans held for sale


6.77

%



7.47

%



6.54

%



6.87

%



6.58

%

Loans held for investment


5.77

%



5.68

%



5.62

%



5.48

%



5.24

%

Loans held for investment - Warehouse Purchase Program


7.51

%



7.46

%



7.32

%



7.09

%



6.88

%

Total loans


5.83

%



5.75

%



5.70

%



5.55

%



5.29

%

Investment securities (P)


2.10

%



2.07

%



2.05

%



2.07

%



2.07

%

Federal funds sold and other earning assets


5.54

%



5.68

%



5.33

%



4.69

%



4.74

%

Total interest-earning assets


4.45

%



4.35

%



4.30

%



4.15

%



3.92

%
















Interest-Bearing Liabilities:















Interest-bearing demand deposits


0.66

%



0.56

%



0.43

%



0.30

%



0.26

%

Savings and money market deposits


2.13

%



2.03

%



1.96

%



1.88

%



1.50

%

Certificates and other time deposits


4.05

%



3.80

%



3.31

%



2.59

%



1.59

%

Other borrowings


4.82

%



5.16

%



5.28

%



5.20

%



4.83

%

Securities sold under repurchase agreements


2.76

%



2.77

%



2.58

%



2.43

%



1.99

%

Subordinated debentures


—




—




5.85

%



—




—


Total interest-bearing liabilities


2.62

%



2.58

%



2.54

%



2.28

%



1.63

%
















Net Interest Margin


2.78

%



2.74

%



2.71

%



2.72

%



2.92

%

Net Interest Margin (tax equivalent)


2.79

%



2.75

%



2.72

%



2.73

%



2.93

%



(O)

Annualized and based on average balances on an actual 366-day or 365-day basis.

(P)

Yield on securities was impacted by net premium amortization of $5,822, $6,428, $6,897, $7,131 and $7,384 for the three months ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)






Three Months Ended




Mar 31, 2024



Dec 31, 2023



Sep 30, 2023



Jun 30, 2023



Mar 31, 2023


Balance Sheet Averages
















Loans held for sale


$

5,467



$

9,828



$

9,832



$

3,910



$

2,343


Loans held for investment



20,415,316




20,370,915




20,496,075




19,802,751




18,317,712


Loans held for investment - Warehouse Purchase Program



720,650




770,481




972,936




898,768




617,822


Total loans



21,141,433




21,151,224




21,478,843




20,705,429




18,937,877


















Investment securities



12,693,268




13,074,243




13,512,137




13,976,818




14,332,509


Federal funds sold and other earning assets



672,840




125,295




125,690




150,300




600,048


Total interest-earning assets



34,507,541




34,350,762




35,116,670




34,832,547




33,870,434


Allowance for credit losses on loans



(331,708)




(346,493)




(343,967)




(283,594)




(282,316)


Cash and due from banks



315,612




302,864




301,201




281,593




319,960


Goodwill



3,396,177




3,396,224




3,387,293




3,291,659




3,231,637


Core deposit intangibles, net



62,482




65,986




69,551




48,616




50,208


Other real estate



2,319




4,781




6,301




2,712




2,083


Fixed assets, net



372,458




370,900




367,814




357,593




342,380


Other assets



610,649




670,187




697,176




756,500




643,467


Total assets


$

38,935,530



$

38,815,211



$

39,602,039



$

39,287,626



$

38,177,853


















Noninterest-bearing deposits


$

9,443,249



$

9,960,240



$

10,269,162



$

10,274,819



$

10,389,980


Interest-bearing demand deposits



5,143,585




4,822,698




4,768,485




5,147,453




5,877,641


Savings and money market deposits



8,889,077




8,815,892




8,977,824




9,156,047




9,579,679


Certificates and other time deposits



3,683,815




3,442,115




3,172,178




2,652,064




2,045,580


Total deposits



27,159,726




27,040,945




27,187,649




27,230,383




27,892,880


Other borrowings



4,083,132




4,028,263




4,671,449




4,427,914




2,887,011


Securities sold under repurchase agreements



296,437




300,317




389,149




441,303




427,887


Subordinated debentures



—




—




2,578




1,547




—


Allowance for credit losses on off-balance sheet credit exposures



36,503




36,503




36,504




30,022




29,947


Other liabilities



238,480




323,344




290,217




220,775




180,685


Shareholders' equity



7,121,252




7,085,839




7,024,493




6,935,682




6,759,443


Total liabilities and equity


$

38,935,530



$

38,815,211



$

39,602,039



$

39,287,626



$

38,177,853


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Mar 31, 2024


Dec 31, 2023


Sep 30, 2023


Jun 30, 2023


Mar 31, 2023

Period End Balances
































Loan Portfolio
















Commercial and industrial


$1,932,534

9.1 %


$1,936,717

9.2 %


$2,153,391

10.1 %


$2,245,620

10.5 %


$2,074,078

10.7 %

Warehouse purchase program


864,924

4.1 %


822,245

3.9 %


912,327

4.3 %


1,148,883

5.3 %


799,115

4.1 %

Construction, land development and other land loans


2,876,588

13.5 %


3,076,591

14.5 %


3,200,479

14.9 %


3,215,016

14.8 %


2,899,980

15.0 %

1-4 family residential


7,331,251

34.5 %


7,207,226

34.0 %


7,032,593

32.8 %


6,780,813

31.3 %


6,055,532

31.3 %

Home equity


950,169

4.5 %


960,852

4.5 %


969,498

4.5 %


977,070

4.5 %


959,124

5.0 %

Commercial real estate (includes multi-family residential)


5,631,460

26.5 %


5,662,948

26.7 %


5,606,837

26.2 %


5,676,526

26.2 %


5,133,693

26.6 %

Agriculture (includes farmland)


813,092

3.8 %


816,043

3.9 %


801,933

3.7 %


804,376

3.7 %


721,395

3.7 %

Consumer and other


326,915

1.5 %


329,593

1.6 %


306,018

1.4 %


305,207

1.4 %


288,300

1.5 %

Energy


538,314

2.5 %


368,323

1.7 %


449,637

2.1 %


500,435

2.3 %


403,142

2.1 %

Total loans


$21,265,247



$21,180,538



$21,432,713



$21,653,946



$19,334,359


















Deposit Types
















Noninterest-bearing DDA


$9,526,535

35.1 %


$9,776,572

36.0 %


$10,281,893

37.6 %


$10,364,921

37.9 %


$10,108,348

37.4 %

Interest-bearing DDA


4,867,247

17.9 %


5,115,945

18.8 %


4,797,259

17.6 %


4,953,090

18.1 %


5,332,086

19.8 %

Money market


6,134,221

22.6 %


5,859,701

21.6 %


5,892,505

21.6 %


5,904,160

21.5 %


6,021,449

22.3 %

Savings


2,830,117

10.4 %


2,881,397

10.6 %


3,005,936

11.0 %


3,179,351

11.6 %


3,304,482

12.2 %

Certificates and other time deposits


3,817,398

14.0 %


3,546,194

13.0 %


3,335,207

12.2 %


2,979,364

10.9 %


2,237,871

8.3 %

Total deposits


$27,175,518



$27,179,809



$27,312,800



$27,380,886



$27,004,236


















Loan to Deposit Ratio


78.3 %



77.9 %



78.5 %



79.1 %



71.6 %


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 


Construction Loans






Mar 31, 2024



Dec 31, 2023



Sep 30, 2023



Jun 30, 2023



Mar 31, 2023




























Single family residential construction


$

1,031,163



35.8

%


$

1,088,636



35.4

%


$

1,157,016



36.1

%


$

1,244,631



38.7

%


$

1,179,883



40.7

%

Land development



290,243



10.1

%



367,849



12.0

%



359,518



11.2

%



310,199



9.7

%



222,511



7.7

%

Raw land



311,265



10.8

%



328,365



10.7

%



340,659



10.7

%



359,228



11.2

%



326,168



11.2

%

Residential lots



224,901



7.8

%



222,591



7.2

%



216,659



6.8

%



216,706



6.7

%



226,600



7.8

%

Commercial lots



59,691



2.1

%



155,415



5.0

%



154,425



4.8

%



158,278



4.9

%



167,151



5.8

%

Commercial construction and other



959,687



33.4

%



914,436



29.7

%



973,022



30.4

%



927,025



28.8

%



777,678



26.8

%

Net unaccreted discount



(362)






(701)






(820)






(1,051)






(11)




Total construction loans


$

2,876,588





$

3,076,591





$

3,200,479





$

3,215,016





$

2,899,980




 

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of March 31, 2024



Houston



Dallas



Austin



OK City



Tulsa



Other (Q)



Total



Collateral Type






















Shopping center/retail

$

347,702



$

278,496



$

58,938



$

14,763



$

14,413



$

287,241



$

1,001,553



Commercial and industrial buildings


161,906




100,565




25,744




35,528




17,881




258,388




600,012



Office buildings


95,697




220,797




60,013




48,260




3,842




91,314




519,923



Medical buildings


75,558




18,489




1,727




43,390




31,984




57,686




228,834



Apartment buildings


136,913




126,568




17,998




14,395




13,437




199,616




508,927



Hotel


110,759




100,561




33,322




18,031




—




167,511




430,184



Other


175,653




59,582




35,154




8,252




1,636




85,070




365,347



Total

$

1,104,188



$

905,058



$

232,896



$

182,619



$

83,193



$

1,146,826



$

3,654,780


(R)

 

Acquired Loans





Non-PCD Loans



PCD Loans



Total Acquired Loans



Balance at
Acquisition
Date



Balance at
Dec 31,
2023



Balance at
Mar 31,
2024



Balance at
Acquisition
Date



Balance at
Dec 31,
2023



Balance at
Mar 31,
2024



Balance at
Acquisition
Date



Balance at
Dec 31,
2023



Balance at
Mar 31,
2024


Loan marks:



























Acquired banks (S)

$

345,599



$

506



$

245



$

320,052



$

2,594



$

2,503



$

665,651



$

3,100



$

2,748


FirstCapital Bank (T)


22,648




19,486




18,436




7,790




5,320




4,858




30,438




24,806




23,294


Total


368,247




19,992




18,681




327,842




7,914




7,361




696,089




27,906




26,042





























Acquired portfolio loan balances:



























Acquired banks (S)


12,286,159




1,043,525




977,286




689,573




58,310




56,982




12,975,732




1,101,835




1,034,268


FirstCapital Bank (T)


1,021,694




780,284




699,277




627,991




475,343




438,092




1,649,685




1,255,627




1,137,369


Total


13,307,853




1,823,809




1,676,563




1,317,564




533,653




495,074




14,625,417


 (U)


2,357,462




2,171,637





























Acquired portfolio loan balances less loan marks

$

12,939,606



$

1,803,817



$

1,657,882



$

989,722



$

525,739



$

487,713



$

13,929,328



$

2,329,556



$

2,145,595




(Q)

Includes other MSA and non-MSA regions.

(R)

Represents a portion of total commercial real estate loans of $5.631 billion as of March 31, 2024.

(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, Tradition Bank and LegacyTexas Bank.

(T)

FirstCapital Bank merger was completed on May 1, 2023 and resulted in the addition of $1.650 billion in loans with related purchase accounting adjustments of $30.4 million at acquisition date, which were subject to subsequent fair value adjustments.

(U)

Actual principal balances acquired.

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)





Three Months Ended



Mar 31, 2024



Dec 31, 2023



Sep 30, 2023



Jun 30, 2023



Mar 31, 2023


Asset Quality















Nonaccrual loans

$

78,475



$

68,688



$

59,729



$

57,723



$

22,496


Accruing loans 90 or more days past due


3,035




2,195




397




1,744




—


Total nonperforming loans


81,510




70,883




60,126




59,467




22,496


Repossessed assets


97




76




35




153




—


Other real estate


2,204




1,708




9,320




3,107




1,989


Total nonperforming assets

$

83,811



$

72,667



$

69,481



$

62,727



$

24,485

















Nonperforming assets:















Commercial and industrial (includes energy)

$

10,199



$

8,957



$

22,219



$

24,027



$

2,832


Construction, land development and other land loans


15,826




17,343




8,684




4,245




3,210


1-4 family residential (includes home equity)


30,206




26,096




23,708




19,609




16,951


Commercial real estate (includes multi-family residential)


23,720




18,775




13,341




13,504




1,051


Agriculture (includes farmland)


3,714




1,460




1,511




1,284




432


Consumer and other


146




36




18




58




9


Total

$

83,811



$

72,667



$

69,481



$

62,727



$

24,485


Number of loans/properties


319




292




260




241




190


Allowance for credit losses on loans

$

330,219



$

332,362



$

351,495



$

345,209



$

282,191

















Net charge-offs (recoveries):















Commercial and industrial (includes energy)

$

283



$

16,123



$

1,594



$

160



$

(1,472)


Construction, land development and other land loans


(2)




(5)




(5)




50




(13)


1-4 family residential (includes home equity)


457




20




(78)




(70)




(140)


Commercial real estate (includes multi-family residential)


(17)




1,590




570




14,957




(1)


Agriculture (includes farmland)


23




—




—




(78)




(6)


Consumer and other


1,399




1,405




1,327




1,046




1,017


Total

$

2,143



$

19,133



$

3,408



$

16,065



$

(615)

















Asset Quality Ratios















Nonperforming assets to average interest-earning assets


0.24

%



0.21

%



0.20

%



0.18

%



0.07

%

Nonperforming assets to loans and other real estate


0.39

%



0.34

%



0.32

%



0.29

%



0.13

%

Net charge-offs to average loans (annualized)


0.04

%



0.36

%



0.06

%



0.31

%


(0.01 %)


Allowance for credit losses on loans to total loans


1.55

%



1.57

%



1.64

%



1.59

%



1.46

%

Allowance for credit losses on loans to total loans, excluding
Warehouse Purchase Program loans (G)


1.62

%



1.63

%



1.71

%



1.68

%



1.52

%

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, for internal planning and forecasting purposes, Prosperity reviews each of diluted earnings per share, return on average assets, return on average common equity, and return on average tangible common equity, in each case excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and the FDIC special assessment, net of tax; return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program 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, merger related expenses and the FDIC special assessment. 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). Prosperity has included information below relating to these non-GAAP financial measures for the applicable periods presented.

 



Three Months Ended




Mar 31,
2024



Dec 31,
2023



Sep 30,
2023



Jun 30,
2023



Mar 31,
2023


Reconciliation of diluted earnings per share to diluted earnings per share excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax:
















Diluted earnings per share (unadjusted)


$

1.18



$

1.02



$

1.20



$

0.94



$

1.37


















Net income


$

110,426



$

95,476



$

112,208



$

86,938



$

124,694


Merger related provision for credit losses, net of tax(V)



—




—




—




14,647




—


Merger related expenses, net of tax(V)



—




220




872




10,184




679


FDIC special assessment, net of tax(V)



—




15,736




—




—




—


Net income excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax(V):


$

110,426



$

111,432



$

113,080



$

111,769



$

125,373


















Weighted average diluted shares outstanding



93,706




93,715




93,720




92,930




91,207


Merger related provision for credit losses, net of tax, per diluted common share(V)


$

—



$

—



$

—



$

0.16



$

—


Merger related expenses, net of tax, per diluted common share(V')


$

—



$

—



$

0.01



$

0.11



$

0.01


FDIC special assessment, net of tax, per diluted common share(V)


$

—



$

0.17



$

—



$

—



$

—


Diluted earnings per share excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax:(V)


$

1.18



$

1.19



$

1.21



$

1.21



$

1.38


















Reconciliation of return on average assets to return on average assets excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax:
















Return on average assets (unadjusted)



1.13

%



0.98

%



1.13

%



0.89

%



1.31

%

















Net income excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax(V):


$

110,426



$

111,432



$

113,080



$

111,769



$

125,373


Average total assets


$

38,935,530



$

38,815,211



$

39,602,039



$

39,287,626



$

38,177,853


Return on average assets excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax (F) (V)



1.13

%



1.15

%



1.14

%



1.14

%



1.31

%






















(V) Calculated assuming a federal tax rate of 21.0%.

























Three Months Ended




Mar 31,
2024



Dec 31,
2023



Sep 30,
2023



Jun 30,
2023



Mar 31,
2023


Reconciliation of return on average common equity to return on average common equity excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax:
















Return on average common equity (unadjusted)



6.20

%



5.39

%



6.39

%



5.01

%



7.38

%

















Net income, excluding merger related provision for credit losses, net of tax, and merger related expenses, net of tax, and FDIC special assessment, net of tax(V)


$

110,426



$

111,432



$

113,080



$

111,769



$

125,373


Average shareholders' equity


$

7,121,252



$

7,085,839



$

7,024,493



$

6,935,682



$

6,759,443


Return on average common equity excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax (F) (V)



6.20

%



6.29

%



6.44

%



6.45

%



7.42

%

















Reconciliation of return on average common equity to return on average tangible common equity:
















Net income


$

110,426



$

95,476



$

112,208



$

86,938



$

124,694


Average shareholders' equity


$

7,121,252



$

7,085,839



$

7,024,493



$

6,935,682



$

6,759,443


Less: Average goodwill and other intangible assets



(3,458,659)




(3,462,210)




(3,456,844)




(3,340,275)




(3,281,845)


Average tangible shareholders' equity


$

3,662,593



$

3,623,629



$

3,567,649



$

3,595,407



$

3,477,598


Return on average tangible common equity (F)



12.06

%



10.54

%



12.58

%



9.67

%



14.34

%

















Reconciliation of return on average common equity to return on average tangible common equity excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax:
















Net income, excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax(V)


$

110,426



$

111,432



$

113,080



$

111,769



$

125,373


Average shareholders' equity


$

7,121,252



$

7,085,839



$

7,024,493



$

6,935,682



$

6,759,443


Less: Average goodwill and other intangible assets



(3,458,659)




(3,462,210)




(3,456,844)




(3,340,275)




(3,281,845)


Average tangible shareholders' equity


$

3,662,593



$

3,623,629



$

3,567,649



$

3,595,407



$

3,477,598


Return on average tangible common equity excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax (F) (V)



12.06

%



12.30

%



12.68

%



12.43

%



14.42

%

















Reconciliation of book value per share to tangible book value per share:
















Shareholders' equity


$

7,104,544



$

7,079,330



$

7,032,677



$

6,968,116



$

6,739,117


Less: Goodwill and other intangible assets



(3,457,159)




(3,460,080)




(3,464,012)




(3,454,826)




(3,280,610)


Tangible shareholders' equity


$

3,647,385



$

3,619,250



$

3,568,665



$

3,513,290



$

3,458,507


















Period end shares outstanding



93,525




93,722




93,717




93,721




90,693


Tangible book value per share


$

39.00



$

38.62



$

38.08



$

37.49



$

38.13


















Reconciliation of equity to assets ratio to period end tangible equity to period end tangible assets ratio:
















Tangible shareholders' equity


$

3,647,385



$

3,619,250



$

3,568,665



$

3,513,290



$

3,458,507


Total assets


$

38,756,520



$

38,547,877



$

39,295,684



$

39,905,131



$

37,829,232


Less: Goodwill and other intangible assets



(3,457,159)




(3,460,080)




(3,464,012)




(3,454,826)




(3,280,610)


Tangible assets


$

35,299,361



$

35,087,797



$

35,831,672



$

36,450,305



$

34,548,622


Period end tangible equity to period end tangible assets ratio



10.33

%



10.31

%



9.96

%



9.64

%



10.01

%





Three Months Ended




Mar 31,
2024



Dec 31,
2023



Sep 30,
2023



Jun 30,
2023



Mar 31,
2023


Reconciliation of allowance for credit losses to total loans to allowance for credit losses on loans to total loans excluding Warehouse Purchase Program:
















Allowance for credit losses on loans


$

330,219



$

332,362



$

351,495



$

345,209



$

282,191


Total loans


$

21,265,247



$

21,180,538



$

21,432,713



$

21,653,946



$

19,334,359


Less: Warehouse Purchase Program loans



(864,924)




(822,245)




(912,327)




(1,148,883)




(799,115)


Total loans less Warehouse Purchase Program


$

20,400,323



$

20,358,293



$

20,520,386



$

20,505,063



$

18,535,244


Allowance for credit losses on loans to total loans excluding Warehouse Purchase Program



1.62

%



1.63

%



1.71

%



1.68

%



1.52

%

















Reconciliation of efficiency ratio to efficiency ratio excluding net gains and losses on the sale or write down of assets and securities:
















Noninterest expense


$

135,848



$

152,171



$

135,657



$

145,870



$

123,000


















Net interest income


$

238,244



$

236,983



$

239,524



$

236,459



$

243,467


Noninterest income



38,870




36,568




38,743




39,688




38,266


Less: net (loss) gain on sale or write down of assets



(35)




(84)




(45)




1,994




121


Less: net gain on sale of securities



298




—




—




—




—


Noninterest income excluding net gains and losses on the sale or write down of assets and securities



38,607




36,652




38,788




37,694




38,145


Total income excluding net gains and losses on the sale or write down of assets and securities


$

276,851



$

273,635



$

278,312



$

274,153



$

281,612


Efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities



49.07

%



55.61

%



48.74

%



53.21

%



43.68

%

















Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities, merger related expenses and FDIC special assessment:
















Noninterest expense


$

135,848



$

152,171



$

135,657



$

145,870



$

123,000


Less: merger related expenses



—




278




1,104




12,891




860


Less: FDIC special assessment



—




19,919




—




—




—


Noninterest expense excluding merger related expenses and FDIC special assessment


$

135,848



$

131,974



$

134,553



$

132,979



$

122,140


















Net interest income


$

238,244



$

236,983



$

239,524



$

236,459



$

243,467


Noninterest income



38,870




36,568




38,743




39,688




38,266


Less: net (loss) gain on sale or write down of assets



(35)




(84)




(45)




1,994




121


Less: net gain on sale of securities



298




—




—




—




—


Noninterest income excluding net gains and losses on the sale or write down of assets and securities



38,607




36,652




38,788




37,694




38,145


Total income excluding net gains and losses on the sale or write down of assets and securities


$

276,851



$

273,635



$

278,312



$

274,153



$

281,612


Efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities, merger related expenses and FDIC special assessment



49.07

%



48.23

%



48.35

%



48.51

%



43.37

%

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/prosperity-bancshares-inc-reports-first-quarter-2024-earnings-302125340.html

SOURCE Prosperity Bancshares, Inc.

FAQ

How did Prosperity Bancshares perform in the first quarter of 2024?

Prosperity Bancshares reported a net income of $110.4 million and diluted earnings per share of $1.18 for the first quarter of 2024.

What was the impact of the merger with Lone Star State Bancshares, Inc.?

The merger with Lone Star State Bancshares, Inc. was successfully completed, adding to Prosperity's assets and operations.

Did Prosperity Bancshares declare a dividend for the second quarter of 2024?

Yes, Prosperity Bancshares declared a cash dividend of $0.56 per share to be paid on July 1, 2024.

Was there a stock repurchase program initiated during the first quarter of 2024?

Yes, Prosperity Bancshares initiated a stock repurchase program during the first quarter of 2024.

Will there be a conference call to discuss first quarter 2024 earnings?

Yes, Prosperity's management will host a conference call on April 24, 2024, to discuss first quarter 2024 earnings.

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Oct 23, 2024
PROSPERITY BANCSHARES, INC.® REPORTS THIRD QUARTER 2024 EARNINGS
Oct 16, 2024
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Sep 25, 2024
PROSPERITY BANCSHARES, INC.® INVITES YOU TO JOIN ITS THIRD QUARTER 2024 EARNINGS CONFERENCE CALL
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PROSPERITY BANCSHARES, INC.® REPORTS SECOND QUARTER 2024 EARNINGS
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