Prosperity Bancshares, Inc.® Reports Second Quarter 2021 Earnings

Rhea-AI Summary

Prosperity Bancshares, Inc. (NYSE: PB) reported a net income of $130.6 million for Q2 2021, a slight decline from $130.9 million in Q2 2020. The net income per diluted share remained stable at $1.41. While loans decreased by 8.4% year-over-year, deposits rose by 11.3%. Noninterest income grew by 38.5% to $35.6 million. The efficiency ratio improved to 40.96%, showing effective cost management. The company continues to navigate economic uncertainties stemming from COVID-19, maintaining strong asset quality with nonperforming assets at just 0.11%.

Positive

• Noninterest income increased by 38.5% to $35.6 million.
• Deposits rose by 11.3% year-over-year to $29.110 billion.
• Efficiency ratio improved to 40.96%, highlighting effective cost management.
• Net income per diluted share stable at $1.41.

Negative

• Net income decreased by 0.2% year-over-year.
• Loans decreased by 8.4% compared to the previous year.
• Net interest income fell by 5.2% year-over-year to $245.4 million.

HOUSTON, July 28, 2021 /PRNewswire/ -- Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, "Prosperity"), reported net income of  $130.6 million for the quarter ended June 30, 2021 compared with $130.9 million for the same period in 2020. Net income per diluted common share was $1.41 for the quarter ended June 30, 2021, unchanged from the same period in 2020, and the annualized return on second quarter average assets was 1.45%. The second quarter of 2020 includes a tax benefit for net operating losses ("NOL") of $20.1 million, or $0.22⁽¹⁾ per diluted common share, as a result of the enactment of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Additionally, loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program ("PPP") loans, increased $148.8 million or 0.9% (3.7% annualized) and deposits increased $347.1 million or 1.2% (4.8% annualized) during the second quarter of 2021. Nonperforming assets remain low at 0.11% of second quarter average interest-earning assets. 

"For the second quarter of 2021, Prosperity had strong earnings, core loan growth, deposit growth, continued sound asset quality, impressive cost controls, a return on average tangible common equity of 17.49% and remains well reserved," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer. 

"Unemployment rates continue to decrease and GDP growth continues at a high level, as forecasted last year with the re-opening of the economy. We are seeing increased oil and gas prices as well as increased farm commodity prices, both of which are positive for the Texas and Oklahoma economies. Further, businesses and individuals continue to move to Texas for lower tax rates and a better quality of life," continued Zalman.

"We believe that Prosperity is well positioned to grow along with the Texas and Oklahoma economies. For 2021, Prosperity Bank was ranked the 2nd Best Bank in America by Forbes and has been ranked in the Top 10 of Forbes America's Best Banks since 2010. We have a deep bench of associates with a passion to help Prosperity and our customers succeed," concluded Zalman.

Results of Operations for the Three Months Ended June 30, 2021

Net income was $130.6 million⁽²⁾ for the three months ended June 30, 2021 compared with $130.9 million⁽³⁾ for the same period in 2020, a decrease of $290 thousand or 0.2%. Net income per diluted common share was $1.41 for the three months ended June 30, 2021 and 2020. Net income for the second quarter of 2020 includes a tax benefit for NOL of $20.1 million and merger related expenses of $7.5 million. Net income was $130.6 million⁽²⁾ for the three months ended June 30, 2021 compared with $133.3 million⁽⁴⁾ for the three months ended March 31, 2021, a decrease of $2.7 million or 2.0%. The change was primarily due to a decrease in PPP fee income and a decrease in loan discount accretion of $4.1 million, partially offset by an increase in securities income. Net income per diluted common share was $1.41 for the three months ended June 30, 2021 compared with $1.44 for the three months ended March 31, 2021, a decrease of 2.1%. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2021 were 1.45%, 8.31% and 17.49%⁽¹⁾, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 40.96%⁽¹⁾ for the three months ended June 30, 2021.

Net interest income before provision for credit losses for the three months ended June 30, 2021 was $245.4 million compared with $259.0 million for the same period in 2020, a decrease of $13.6 million or 5.2%. The decrease was primarily due to a decrease in the average loan balance and average rate on loans and a decrease in loan discount accretion of $12.1 million, partially offset by a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, net interest income before provision for credit losses was $245.4 million compared with $254.6 million for the three months ended March 31, 2021, a decrease of $9.2 million or 3.6%. The decrease was primarily due to a decrease in the average rate on loans and a decrease in loan discount accretion of $4.1 million, partially offset by a decrease in the average rate on interest-bearing liabilities and an increase in average investment securities balance.

The net interest margin on a tax equivalent basis was 3.11% for the three months ended June 30, 2021 compared with 3.69% for the same period in 2020. The change was primarily due to a decrease in the average loan balance and average rate on loans, an increase in lower yielding securities, a decrease in loan discount accretion of $12.1 million and higher cash balances due to excess liquidity, partially offset by a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, the net interest margin on a tax equivalent basis was 3.11% for the three months ended June 30, 2021 compared with 3.41% for the three months ended March 31, 2021. The change was primarily due to a lower average yield on loans, a $4.1 million decrease in loan discount accretion and higher net premium amortization on securities, partially offset by a decrease in the average rate on interest-bearing liabilities.

Noninterest income was $35.6 million for the three months ended June 30, 2021 compared with $25.7 million for the same period in 2020, an increase of $9.9 million or 38.5%. This increase was primarily due to an increase in credit card, debit card and ATM card income, an increase in mortgage income, lower loss on write-down of assets and an increase in other noninterest income. On a linked quarter basis, noninterest income increased $1.5 million or 4.6% to $35.6 million compared with $34.0 million for the three months ended March 31, 2021. This increase was primarily due to an increase in other noninterest income.

Noninterest expense was $115.2 million for the three months ended June 30, 2021 compared with $134.4 million for the same period in 2020, a decrease of $19.2 million or 14.3%, primarily due to decreases in merger related expenses, salaries and benefits and data processing as a result of efficiencies gained following the LegacyTexas Bank system conversion during the second quarter of 2020, partially offset by gains on sale of other real estate. On a linked quarter basis, noninterest expense decreased $3.9 million or 3.3% to $115.2 million compared with $119.1 million for the three months ended March 31, 2021. This decrease was primarily due to a decrease in salaries and benefits.

Results of Operations for the Six Months Ended June 30, 2021

Net income was $263.9 million⁽⁵⁾ for the six months ended June 30, 2021 compared with $261.7 million⁽⁶⁾ for the same period in 2020, an increase of $2.2 million or 0.8%. Net income per diluted common share was $2.84 for the six months ended June 30, 2021 compared with $2.80 for the same period in 2020, an increase of 1.4%. Annualized returns on average assets, average common equity and average tangible common equity for the six months ended June 30, 2021 were 1.49%, 8.46% and 17.95%⁽¹⁾, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 41.11%⁽¹⁾ for the six months ended June 30, 2021.

Net interest income before provision for credit losses for the six months ended June 30, 2021 was $500.0 million compared with $515.0 million for the prior year, a decrease of $15.0 million or 2.9%. The decrease was primarily due to a decrease in the average rate on interest-earning assets and a decrease in loan discount accretion of $24.2 million, partially offset by a decrease in the average rate on interest-bearing liabilities.

The net interest margin on a tax equivalent basis for the six months ended June 30, 2021 was 3.26% compared with 3.75% for the same period in 2020. The change was primarily due to an increase in lower yielding loans, a decrease in loan discount accretion of $24.2 million, higher net premium amortization on securities and higher cash balances due to excess liquidity, partially offset by a decrease in the average rate on interest-bearing liabilities.

Noninterest income was $69.6 million for the six months ended June 30, 2021 compared with $60.1 million for the same period in 2020, an increase of $9.5 million or 15.8%. This increase was primarily due to an increase in credit card, debit card and ATM card income, an increase in mortgage income, lower net loss on write-downs of assets and an increase in other noninterest income, partially offset by a decrease in nonsufficient funds ("NSF") fees.

Noninterest expense was $234.3 million for the six months ended June 30, 2021 compared with $259.1 million for the same period in 2020, a decrease of $24.8 million or 9.6%. The change was primarily due to decreases in merger related expenses, data processing, net occupancy and equipment and other noninterest expense as a result of efficiencies gained following the LegacyTexas Bank system conversion during the second quarter of 2020, partially offset by a gain on sale of other real estate.

Balance Sheet Information

At June 30, 2021, Prosperity had $36.100 billion in total assets, an increase of $3.133 billion or 9.5% compared with $32.967 billion at June 30, 2020.

Loans at June 30, 2021 were $19.252 billion, a decrease of $1.773 billion or 8.4%, compared with $21.025 billion at June 30, 2020, primarily due to a decrease in commercial real estate, PPP and Warehouse Purchase Program loans. Linked quarter loans decreased $387.1 million or 2.0% from $19.639 billion at March 31, 2021, primarily due to a $359.1 million decrease in PPP loans. At June 30, 2021, the Company had $780.0 million of PPP loans compared to $1.392 billion of PPP loans at June 30, 2020 and $1.139 billion of PPP loans at March 31, 2021.  Linked quarter loans, excluding Warehouse Purchase Program and PPP loans, increased $148.8 million or 0.9% (3.7% annualized) from $16.227 billion at March 31, 2021.

As part of its lending activities, Prosperity extends credit to oil and gas production and servicing companies. Oil and gas production loans are loans to companies directly involved in the exploration and/or production of oil and gas. Oil and gas servicing loans are loans to companies that provide services for oil and gas production and exploration. At June 30, 2021, oil and gas loans totaled $501.8 million (net of discount and excluding PPP loans totaling $92.3 million) or 2.6% of total loans, of which $283.1 million were production loans and $218.7 million were servicing loans, compared with total oil and gas loans of $639.4 million (net of discount and excluding PPP loans totaling $118.6 million) or 3.0% of total loans at June 30, 2020, of which $394.4 million were production loans and $245.0 million were servicing loans. In addition, as of June 30, 2021, Prosperity had total unfunded commitments to oil and gas companies of $298.4 million compared with total unfunded commitments to oil and gas companies of $276.9 million as of June 30, 2020. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Additionally, Prosperity extends credit to hotels and restaurants. At June 30, 2021, loans to hotels totaled $394.2 million (excluding PPP loans totaling $10.6 million) or 2.0% of total loans, an increase of $9.4 million or 2.4%, compared with $384.8 million (excluding PPP loans totaling $8.8 million) or 1.8% of total loans at June 30, 2020.  At June 30, 2021, loans to restaurants totaled $201.9 million (excluding PPP loans totaling $92.1 million) or 1.0% of total loans, a decrease of $10.4 million or 4.9%, compared with $212.3 million (excluding PPP loans totaling $110.7 million) or 1.0% of total loans at June 30, 2020.

Deposits at June 30, 2021 were $29.110 billion, an increase of $2.958 billion or 11.3%, compared with $26.153 billion at June 30, 2020. Linked quarter deposits increased $347.1 million or 1.2% (4.8% annualized) from $28.763 billion at March 31, 2021.

Asset Quality

Nonperforming assets totaled $33.7 million or 0.11% of quarterly average interest-earning assets at June 30, 2021, compared with $77.9 million or 0.28% of quarterly average interest-earning assets at June 30, 2020, and $44.2 million or 0.15% of quarterly average interest-earning assets at March 31, 2021.

The allowance for credit losses on loans was $302.9 million or 1.57% of total loans at June 30, 2021 compared to $307.2 million or 1.56% of total loans at March 31, 2021 and $324.2 million or 1.54% of total loans at June 30, 2020. The allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and PPP loans, was 1.85%⁽¹⁾ at June 30, 2021 compared with 1.89%⁽¹⁾ at March 31, 2021 and 1.90%⁽¹⁾ at June 30, 2020.

There was no provision for credit losses for the three months ended June 30, 2021 compared with $10.0 million for the three months ended June 30, 2020 and no provision for credit losses for the three months ended March 31, 2021.  There was no provision for credit losses for the six months ended June 30, 2021 compared with $10.0 million for the six months ended June 30, 2020.

Net charge-offs were $4.3 million for the three months ended June 30, 2021 compared with net charge-offs of $13.0 million for the three months ended June 30, 2020 and net charge-offs of $8.9 million for the three months ended March 31, 2021. Net charge-offs for the second quarter of 2021 included $1.0 million related to resolved PCD loans. These PCD loans had specific reserves of $3.1 million, of which $1.0 million was allocated to the charge-offs and $2.1 million was moved to the general reserve. Further, an additional $1.4 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Net charge-offs were $13.2 million for the six months ended June 30, 2021 compared with $13.8 million for the six months ended June 30, 2020. Net charge-offs for the six months ended June 30, 2021 included $8.2 million related to resolved PCD loans. These PCD loans had specific reserves of $9.8 million, of which $7.7 million was allocated to the charge-offs and $2.1 million was moved to the general reserve. Further, an additional $5.6 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Dividend

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

COVID-19 Pandemic

Prosperity continues to monitor the latest developments regarding COVID-19. As of June 30, 2021, the states of Texas and Oklahoma have lifted their respective restrictions on all business and activities. The COVID-19 pandemic has resulted in significant economic uncertainties that have had, and could continue to have, an adverse impact on Prosperity's operating income, financial condition and cash flows. The extent to which the COVID-19 pandemic will impact Prosperity's operations and financial results during 2021 cannot be reasonably or reliably estimated at this time.

Since the implementation of the Paycheck Protection Program in 2020, Prosperity has obtained SBA approvals on approximately 18,700 loans totaling $2.036 billion and, as of June 30, 2021, had an outstanding balance of 7,770 loans totaling $780.0 million after remittance.

Also, in response to the COVID-19 pandemic, Prosperity has provided relief to its loan customers through loan extensions and deferrals. Prosperity's troubled debt restructurings do not include loan modifications related to COVID-19. Beginning in mid-March of 2020, Prosperity began offering deferral and modification of principal and/or interest payments to selected borrowers on a case-by-case basis. As of June 30, 2021, Prosperity had approximately $210.4 million in outstanding loans subject to deferral and modification agreements.

Conference Call

Prosperity's management team will host a conference call on Wednesday, July 28, 2021 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's second quarter 2021 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The participant elite entry number is 4866823.

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

Non-GAAP Financial Measures

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

Prosperity Bancshares, Inc. ®

As of June 30, 2021, Prosperity Bancshares, Inc.^® is a $36.100 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma.  Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

As of June 30, 2021, Prosperity operated 274 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 64 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. Forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may," or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity's possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity's future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity's loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity's operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement, as well as expectations regarding the effects of the COVID-19 pandemic on Prosperity's operating income, financial condition and cash flows.  These forward–looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements.  These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; 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; the effect, impact, potential duration or other implications of the COVID-19 pandemic; and weather.  These and various other factors are discussed in Prosperity Bancshares' Annual Report on Form 10-K for the year ended December 31, 2020 and other reports and statements Prosperity Bancshares has filed with the Securities and Exchange Commission ("SEC"). Copies of the SEC filings for Prosperity Bancshares may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

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

 

(1)	Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
(2)	Includes purchase accounting adjustments of $9.8 million, net of tax, primarily comprised of loan discount accretion of $12.2 million for the three months ended June 30, 2021.
(3)	Includes purchase accounting adjustments of $20.4 million, net of tax, primarily comprised of loan discount accretion of $24.3 million, and merger related expenses of $7.5 million for the three months ended June 30, 2020.
(4)	Includes purchase accounting adjustments of $13.2 million, net of tax, primarily comprised of loan discount accretion of $16.3 million for the three months ended March 31, 2021.
(5)	Includes purchase accounting adjustments of $23.0 million, net of tax, primarily comprised of loan discount accretion of $28.5 million for the six months ended June 30, 2021.
(6)	Includes purchase accounting adjustments of $44.6 million, net of tax, primarily comprised of loan discount accretion of $52.7 million, and merger related expenses of $8.0 million for the six months ended June 30, 2020.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (In thousands)
		Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020
Balance Sheet Data (at period end)
Loans held for sale		$	9,080			$	20,991			$	46,777			$	51,694			$	39,516
Loans held for investment			17,147,146				17,345,506				17,357,788				18,013,333				18,428,474
Loans held for investment - Warehouse Purchase Program			2,095,559				2,272,389				2,842,379				2,730,614				2,557,183
Total loans			19,251,785				19,638,886				20,246,944				20,795,641				21,025,173
Investment securities(A)			11,918,691				10,088,002				8,542,820				7,431,495				7,717,586
Federal funds sold			281				8,986				553				56,469				568
Allowance for credit losses			(302,884)				(307,210)				(316,068)				(323,635)				(324,205)
Cash and due from banks			1,059,879				1,947,235				1,342,996				1,031,193				332,873
Goodwill			3,231,636				3,231,636				3,231,636				3,231,692				3,231,964
Core deposit intangibles, net			67,417				70,304				73,235				76,478				79,748
Other real estate owned			144				462				10,593				11,548				6,160
Fixed assets, net			324,502				326,970				323,572				325,994				324,975
Other assets			548,473				553,147				602,994				560,724				571,807
Total assets		$	36,099,924			$	35,558,418			$	34,059,275			$	33,197,599			$	32,966,649
Noninterest-bearing deposits		$	10,099,149			$	9,820,445			$	9,151,233			$	8,998,328			$	9,040,257
Interest-bearing deposits			19,011,092				18,942,660				18,209,259				17,460,878				17,112,431
Total deposits			29,110,241				28,763,105				27,360,492				26,459,206				26,152,688
Other borrowings			—				—				—				2,570				103,131
Securities sold under repurchase agreements			433,069				377,106				389,583				380,274				365,335
Subordinated notes			—				—				—				125,146				125,365
Allowance for credit losses on off-balance sheet credit exposures			29,947				29,947				29,947				29,947				29,947
Other liabilities			216,330				166,414				148,584				165,579				242,061
Total liabilities			29,789,587				29,336,572				27,928,606				27,162,722				27,018,527
Shareholders' equity(B)			6,310,337				6,221,846				6,130,669				6,034,877				5,948,122
Total liabilities and equity		$	36,099,924			$	35,558,418			$	34,059,275			$	33,197,599			$	32,966,649

(A)	Includes $1,394, $970, $974, $(442) and $(1,767) in unrealized gains (losses) on available for sale securities for the quarterly periods ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.
(B)	Includes $1,101, $766, $770, $(349) and $(1,396) in after-tax unrealized gains (losses) on available for sale securities for the quarterly periods ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (In thousands)
		Three Months Ended																				Year-to-Date
		Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Jun 30, 2021				Jun 30, 2020
Income Statement Data
Interest income:
Loans		$	216,803			$	233,075			$	241,625			$	244,255			$	242,772			$	449,878			$	490,015
Securities(C)			43,708				38,677				36,721				38,033				43,776				82,385				92,058
Federal funds sold and other earning assets			340				351				301				144				45				691				758
Total interest income			260,851				272,103				278,647				282,432				286,593				532,954				582,831
Interest expense:
Deposits			15,288				17,362				19,757				22,458				25,269				32,650				60,287
Other borrowings			—				—				33				52				533				—				3,465
Securities sold under repurchase agreements			164				159				224				309				337				323				1,094
Subordinated notes and trust preferred			—				—				999				1,500				1,499				—				2,999
Total interest expense			15,452				17,521				21,013				24,319				27,638				32,973				67,845
Net interest income			245,399				254,582				257,634				258,113				258,955				499,981				514,986
Provision for credit losses			—				—				—				10,000				10,000				—				10,000
Net interest income after provision for credit losses			245,399				254,582				257,634				248,113				248,955				499,981				504,986
Noninterest income:
Nonsufficient funds (NSF) fees			6,560				6,687				8,051				7,156				5,645				13,247				15,088
Credit card, debit card and ATM card income			8,918				8,031				8,193				8,315				7,263				16,949				14,737
Service charges on deposit accounts			6,062				5,978				6,046				5,920				5,790				12,040				11,894
Trust income			2,276				2,837				2,192				2,502				2,242				5,113				4,904
Mortgage income			2,914				3,307				3,989				2,958				1,820				6,221				3,830
Brokerage income			795				711				642				628				584				1,506				1,234
Bank owned life insurance income			1,294				1,292				1,252				1,449				1,508				2,586				3,053
Net (loss) on sale or write-down of assets			(244)				(79)				(675)				(528)				(3,945)				(323)				(4,330)
Other noninterest income			6,981				5,244				6,857				6,524				4,768				12,225				9,653
Total noninterest income			35,556				34,008				36,547				34,924				25,675				69,564				60,063
Noninterest expense:
Salaries and benefits			75,611				80,037				77,809				75,068				79,109				155,648				156,391
Net occupancy and equipment			8,046				7,833				8,223				8,644				9,190				15,879				18,170
Credit and debit card, data processing and software amortization			8,718				8,233				8,442				8,776				11,690				16,951				23,111
Regulatory assessments and FDIC insurance			2,670				2,670				2,670				2,512				2,601				5,340				4,679
Core deposit intangibles amortization			2,887				2,931				3,243				3,270				3,293				5,818				6,656
Depreciation			4,513				4,540				4,261				4,605				4,598				9,053				9,366
Communications			2,982				2,899				2,931				3,027				3,324				5,881				6,519
Other real estate expense			198				244				279				258				40				442				86
Net (gain) loss on sale or write-down of other real estate			(1,839)				(887)				(195)				(137)				4				(2,726)				(126)
Merger related expenses			—				—				—				—				7,474				—				8,018
Other noninterest expense			11,405				10,576				12,542				11,896				13,045				21,981				26,239
Total noninterest expense			115,191				119,076				120,205				117,919				134,368				234,267				259,109
Income before income taxes			165,764				169,514				173,976				165,118				140,262				335,278				305,940
Provision for income taxes			35,153				36,205				36,885				35,054				9,361				71,358				44,191
Net income available to common shareholders		$	130,611			$	133,309			$	137,091			$	130,064			$	130,901			$	263,920			$	261,749

(C)	Interest income on securities was reduced by net premium amortization of $14,436, $12,844, $11,509, $10,089 and $9,224 for the three months ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively, and $27,280 and $17,229 for the six months ended June 30, 2021 and June 30, 2020, respectively.

 

Prosperity Bancshares, Inc. ® Financial Highlights (Unaudited) (Dollars and share amounts in thousands, except per share data and market prices)
		Three Months Ended																				Year-to-Date
		Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Jun 30, 2021				Jun 30, 2020
Profitability
Net income (D) (E)		$	130,611			$	133,309			$	137,091			$	130,064			$	130,901			$	263,920			$	261,749
Basic earnings per share		$	1.41			$	1.44			$	1.48			$	1.40			$	1.41			$	2.84			$	2.80
Diluted earnings per share		$	1.41			$	1.44			$	1.48			$	1.40			$	1.41			$	2.84			$	2.80
Return on average assets (F)			1.45	%			1.54	%			1.63	%			1.58	%			1.61	%	(J)		1.49	%			1.64	%	(J)
Return on average common equity (F)			8.31	%			8.60	%			8.98	%			8.64	%			8.84	%	(J)		8.46	%			8.85	%	(J)
Return on average tangible common equity (F) (G)			17.49	%			18.43	%			19.57	%			19.19	%			19.98	%	(J)		17.95	%			20.07	%	(J)
Tax equivalent net interest margin (D) (E) (H)			3.11	%			3.41	%			3.49	%			3.57	%			3.69	%			3.26	%			3.75	%
Efficiency ratio (G) (I)			40.96	%			41.25	%			40.77	%			40.17	%			46.56	%	(K)		41.11	%			44.72	%	(K)
Liquidity and Capital Ratios
Equity to assets			17.48	%			17.50	%			18.00	%			18.18	%			18.04	%			17.48	%			18.04	%
Common equity tier 1 capital			15.26	%			14.60	%			13.74	%			13.17	%			12.29	%			15.26	%			12.29	%
Tier 1 risk-based capital			15.26	%			14.60	%			13.74	%			13.17	%			12.29	%			15.26	%			12.29	%
Total risk-based capital			15.71	%			15.07	%			14.23	%			14.28	%			13.36	%			15.71	%			13.36	%
Tier 1 leverage capital			9.50	%			9.68	%			9.67	%			9.57	%			9.41	%			9.50	%			9.41	%
Period end tangible equity to period end tangible assets (G)			9.18	%			9.05	%			9.19	%			9.12	%			8.89	%			9.18	%			8.89	%
Other Data
Weighted-average shares used in computing earnings per common share
Basic			92,935				92,854				92,559				92,656				92,658				92,895				93,514
Diluted			92,935				92,854				92,559				92,656				92,658				92,895				93,514
Period end shares outstanding			92,935				92,929				92,571				92,562				92,660				92,935				92,660
Cash dividends paid per common share		$	0.49			$	0.49			$	0.49			$	0.46			$	0.46			$	0.98			$	0.92
Book value per common share		$	67.90			$	66.95			$	66.23			$	65.20			$	64.19			$	67.90			$	64.19
Tangible book value per common share (G)		$	32.40			$	31.42			$	30.53			$	29.46			$	28.45			$	32.40			$	28.45
Common Stock Market Price
High		$	78.06			$	83.02			$	70.38			$	60.63			$	72.95			$	83.02			$	75.22
Low		$	69.83			$	66.45			$	50.43			$	48.80			$	43.68			$	66.45			$	42.02
Period end closing price		$	71.80			$	76.16			$	69.36			$	51.83			$	59.38			$	71.80			$	59.38
Employees – FTE (excluding overtime)			3,724				3,724				3,756				3,716				3,793				3,724				3,793
Number of banking centers			274				275				275				275				275				274				275

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

	Three Months Ended										Year-to-Date
	Jun 30, 2021		Mar 31, 2021		Dec 31, 2020		Sep 30, 2020		Jun 30, 2020		Jun 30, 2021		Jun 30, 2020
Loan discount accretion
ASC 310-20	$9,731		$13,313		$13,514		$16,729		$17,999		$23,044		$40,462
ASC 310-30	$2,462		$3,027		$2,545		$5,805		$6,267		$5,489		$12,286
Securities net amortization	$171		$111		$66		$116		$203		$282		$397
Time deposits amortization	$327		$507		$790		$1,240		$1,793		$834		$4,063

(E)	Using effective tax rate of 21.2%, 21.4%, 21.2%, 21.2% and 6.7% for the three months ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively, and 21.3% and 14.4% for the six months ended June 30, 2021 and June 30, 2020, respectively. Net income for the second quarter of 2020 includes a tax benefit for NOL due to the CARES Act.
(F)	Interim periods annualized.
(G)	Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
(H)	Net interest margin for all periods presented is based on average balances on an actual 365-day or 366-day basis.
(I)	Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale or write down of assets and securities. Additionally, taxes are not part of this calculation.
(J)	For calculations of the annualized returns on average assets, average common equity and average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit, refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
(K)	For calculations of the efficiency ratio excluding merger related expenses, net of tax, refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
YIELD ANALYSIS		Three Months Ended
		Jun 30, 2021												Mar 31, 2021												Jun 30, 2020
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(L)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(L)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(L)
Interest-earning assets:
Loans held for sale		$	13,716			$	109			3.19%				$	33,327			$	238			2.90%				$	63,338			$	523			3.32%
Loans held for investment			17,305,259				200,817			4.65%					17,279,066				213,978			5.02%					18,135,226				228,062			5.06%
Loans held for investment - Warehouse Purchase Program			1,984,305				15,877			3.21%					2,369,601				18,859			3.23%					1,843,097				14,187			3.10%
Total Loans			19,303,280				216,803			4.50%					19,681,994				233,075			4.80%					20,041,661				242,772			4.87%
Investment securities			11,180,948				43,708			1.57%			(M)		9,148,841				38,677			1.71%			(M)		8,054,008				43,776			2.19%			(M)
Federal funds sold and other earning assets			1,221,993				340			0.11%					1,506,645				351			0.09%					172,761				45			0.10%
Total interest-earning assets			31,706,221				260,851			3.30%					30,337,480				272,103			3.64%					28,268,430				286,593			4.08%
Allowance for credit losses			(306,059)												(315,590)												(325,720)
Noninterest-earning assets			4,695,860												4,522,470												4,562,016
Total assets		$	36,096,022											$	34,544,360											$	32,504,726
Interest-bearing liabilities:
Interest-bearing demand deposits		$	6,281,068			$	5,471			0.35%				$	6,112,469			$	5,943			0.39%				$	4,949,023			$	4,621			0.38%
Savings and money market deposits			9,872,624				5,490			0.22%					9,420,064				5,753			0.25%					8,537,352				8,745			0.41%
Certificates and other time deposits			2,980,186				4,327			0.58%					3,031,621				5,666			0.76%					3,224,196				11,903			1.48%
Other borrowings			—				—				—				—				—				—				474,867				533			0.45%
Securities sold under repurchase agreements			383,975				164			0.17%					376,662				159			0.17%					365,077				337			0.37%
Subordinated notes			—				—				—				—				—				—				125,475				1,499			4.80%
Total interest-bearing liabilities			19,517,853				15,452			0.32%			(N)		18,940,816				17,521			0.38%			(N)		17,675,990				27,638			0.63%			(N)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			10,062,085												9,206,791												8,583,734
Allowance for credit losses on off-balance sheet credit exposures			29,947												29,947												29,947
Other liabilities			198,748												169,138												289,899
Total liabilities			29,808,633												28,346,692												26,579,570
Shareholders' equity			6,287,389												6,197,668												5,925,156
Total liabilities and shareholders' equity		$	36,096,022											$	34,544,360											$	32,504,726
Net interest income and margin						$	245,399			3.10%								$	254,582			3.40%								$	258,955			3.68%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							586												635												690
Net interest income and margin (tax equivalent basis)						$	245,985			3.11%								$	255,217			3.41%								$	259,645			3.69%

(L)	Annualized and based on an actual 365-day or 366-day basis.
(M)	Yield on securities was impacted by net premium amortization of $14,436, $12,844 and $9,224 for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.
(N)	Total cost of funds, including noninterest bearing deposits, was 0.21%, 0.25% and 0.42% for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
YIELD ANALYSIS		Year-to-Date
		Jun 30, 2021												Jun 30, 2020
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(O)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(O)
Interest-earning assets:
Loans held for sale		$	23,468			$	347			2.98%				$	65,128			$	1,155			3.57%
Loans held for investment			17,292,235				414,795			4.84%					17,699,162				464,579			5.28%
Loans held for investment - Warehouse Purchase Program			2,175,888				34,736			3.22%					1,481,710				24,281			3.30%
Total loans			19,491,591				449,878			4.65%					19,246,000				490,015			5.12%
Investment securities			10,170,508				82,385			1.63%			(P)		8,244,102				92,058			2.25%			(P)
Federal funds sold and other earning assets			1,363,533				691			0.10%					198,196				758			0.77%
Total interest-earning assets			31,025,632				532,954			3.46%					27,688,298				582,831			4.23%
Allowance for credit losses(B)			(310,798)												(326,862)
Noninterest-earning assets			4,609,640												4,569,631
Total assets		$	35,324,474											$	31,931,067
Interest-bearing liabilities:
Interest-bearing demand deposits		$	6,197,235			$	11,414			0.37%				$	4,969,700			$	11,717			0.47%
Savings and money market deposits			9,647,594				11,243			0.24%					8,251,396				22,867			0.56%
Certificates and other time deposits			3,005,761				9,993			0.67%					3,314,472				25,703			1.56%
Other borrowings			—				—				—				653,914				3,465			1.07%
Securities sold under repurchase agreements			380,339				323			0.17%					365,846				1,094			0.60%
Subordinated notes			—				—				—				125,585				2,999			4.80%
Total interest-bearing liabilities			19,230,929				32,973			0.35%			(Q)		17,680,913				67,845			0.77%			(Q)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			9,636,800												8,037,767
Allowance for credit losses on off-balance sheet credit exposures			29,947												21,478
Other liabilities			184,023												276,211
Total liabilities			29,081,699												26,016,369
Shareholders' equity			6,242,775												5,914,698
Total liabilities and shareholders' equity			35,324,474											$	31,931,067
Net interest income and margin						$	499,981			3.25%								$	514,986			3.74%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							1,222												1,413
Net interest income and margin (tax equivalent basis)						$	501,203			3.26%								$	516,399			3.75%

(O)	Annualized and based on an actual 365-day or 366-day basis.
(P)	Yield on securities was impacted by net premium amortization of $27,280 and $17,229 for the six months ended June 30, 2021 and 2020, respectively.
(Q)	Total cost of funds, including noninterest bearing deposits, was 0.23% and 0.53% for the six months ended June 30, 2021 and 2020, respectively.

  

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
	Three Months Ended
	Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020
YIELD TREND (R)
Interest-Earning Assets:
Loans held for sale		3.19	%			2.90	%			3.23	%			3.30	%			3.32	%
Loans held for investment		4.65	%			5.02	%			4.95	%			4.91	%			5.06	%
Loans held for investment - Warehouse Purchase Program		3.21	%			3.23	%			3.20	%			3.18	%			3.10	%
Total loans		4.50	%			4.80	%			4.72	%			4.72	%			4.87	%
Investment securities (S)		1.57	%			1.71	%			1.83	%			1.99	%			2.19	%
Federal funds sold and other earning assets		0.11	%			0.09	%			0.11	%			0.09	%			0.10	%
Total interest-earning assets		3.30	%			3.64	%			3.76	%			3.90	%			4.08	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits		0.35	%			0.39	%			0.38	%			0.38	%			0.38	%
Savings and money market deposits		0.22	%			0.25	%			0.30	%			0.35	%			0.41	%
Certificates and other time deposits		0.58	%			0.76	%			0.98	%			1.23	%			1.48	%
Other borrowings		—				—				5.39	%			1.49	%			0.45	%
Securities sold under repurchase agreements		0.17	%			0.17	%			0.24	%			0.32	%			0.37	%
Subordinated notes		—				—				4.87	%			4.76	%			4.80	%
Total interest-bearing liabilities		0.32	%			0.38	%			0.46	%			0.54	%			0.63	%
Net Interest Margin		3.10	%			3.40	%			3.48	%			3.56	%			3.68	%
Net Interest Margin (tax equivalent)		3.11	%			3.41	%			3.49	%			3.57	%			3.69	%

(R)	Annualized and based on average balances on an actual 365-day or 366-day basis.
(S)	Yield on securities was impacted by net premium amortization of $14,436, $12,844, $11,509, $10,089 and $9,224 for the three months ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
		Three Months Ended
		Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020
Balance Sheet Averages
Loans held for sale		$	13,716			$	33,327			$	42,856			$	50,606			$	63,338
Loans held for investment			17,305,259				17,279,066				17,700,756				18,267,559				18,135,226
Loans held for investment - Warehouse Purchase Program			1,984,305				2,369,601				2,603,455				2,279,461				1,843,097
Total Loans			19,303,280				19,681,994				20,347,067				20,597,626				20,041,661
Investment securities			11,180,948				9,148,841				8,001,679				7,603,762				8,054,008
Federal funds sold and other earning assets			1,221,993				1,506,645				1,094,487				618,228				172,761
Total interest-earning assets			31,706,221				30,337,480				29,443,233				28,819,616				28,268,430
Allowance for credit losses			(306,059)				(315,590)				(322,138)				(321,424)				(325,720)
Cash and due from banks			521,737				308,787				289,579				267,887				247,426
Goodwill			3,231,637				3,233,231				3,231,850				3,231,976				3,223,469
Core deposit intangibles, net			68,830				71,763				74,919				78,269				81,539
Other real estate			3,001				6,385				14,573				8,061				5,666
Fixed assets, net			326,570				326,004				325,485				325,958				327,811
Other assets			544,085				576,300				633,405				570,495				676,105
Total assets		$	36,096,022			$	34,544,360			$	33,690,906			$	32,980,838			$	32,504,726
Noninterest-bearing deposits		$	10,062,085			$	9,206,791			$	9,103,742			$	8,980,814			$	8,583,734
Interest-bearing demand deposits			6,281,068				6,112,469				5,545,298				5,221,722				4,949,023
Savings and money market deposits			9,872,624				9,420,064				9,170,179				8,937,751				8,537,352
Certificates and other time deposits			2,980,186				3,031,621				3,047,475				3,103,290				3,224,196
Total deposits			29,195,963				27,770,945				26,866,694				26,243,577				25,294,305
Other borrowings			—				—				2,435				13,898				474,867
Securities sold under repurchase agreements			383,975				376,662				376,779				378,888				365,077
Subordinated notes			—				—				81,570				125,256				125,475
Allowance for credit losses on off-balance sheet credit exposures			29,947				29,947				29,947				29,947				29,947
Other liabilities			198,748				169,138				224,907				167,532				289,899
Shareholders' equity			6,287,389				6,197,668				6,108,574				6,021,740				5,925,156
Total liabilities and equity		$	36,096,022			$	34,544,360			$	33,690,906			$	32,980,838			$	32,504,726

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
		Jun 30, 2021							Mar 31, 2021							Dec 31, 2020							Sep 30, 2020							Jun 30, 2020
Period End Balances
Loan Portfolio
Commercial and industrial		$	2,021,951			10.5	%		$	2,104,116			10.7	%		$	2,210,003			10.9	%		$	2,171,302			10.5	%		$	2,214,742			10.5	%
Warehouse purchase program			2,095,559			10.9	%			2,272,389			11.6	%			2,842,379			14.0	%			2,730,614			13.1	%			2,557,183			12.2	%
Construction, land development and other land loans			2,147,474			11.2	%			2,031,355			10.4	%			1,956,960			9.7	%			2,081,762			10.0	%			2,033,037			9.7	%
1-4 family residential			4,531,589			23.5	%			4,310,437			21.9	%			4,253,331			21.0	%			4,189,852			20.1	%			4,184,972			19.9	%
Home equity			637,431			3.3	%			554,278			2.8	%			504,207			2.5	%			477,552			2.3	%			437,098			2.1	%
Commercial real estate (includes multi-family residential)			5,681,184			29.5	%			5,858,475			29.8	%			6,078,764			30.0	%			6,179,901			29.7	%			6,550,086			31.2	%
Agriculture (includes farmland)			590,135			3.1	%			571,783			2.9	%			581,352			2.9	%			598,972			2.9	%			612,694			2.9	%
Consumer and other			264,652			1.4	%			293,023			1.5	%			344,028			1.7	%			367,231			1.8	%			403,462			1.9	%
Energy			501,821			2.6	%			503,947			2.6	%			512,735			2.5	%			604,698			2.9	%			639,402			3.0	%
Paycheck Protection Program			779,989			4.0	%			1,139,083			5.8	%			963,185			4.8	%			1,393,757			6.7	%			1,392,497			6.6	%
Total loans		$	19,251,785						$	19,638,886						$	20,246,944						$	20,795,641						$	21,025,173
Deposit Types
Noninterest-bearing DDA		$	10,099,149			34.7	%		$	9,820,445			34.1	%		$	9,151,233			33.4	%		$	8,998,328			34.0	%		$	9,040,257			34.6	%
Interest-bearing DDA			6,185,115			21.2	%			6,158,641			21.4	%			5,899,051			21.6	%			5,297,802			20.0	%			5,130,495			19.6	%
Money market			6,706,252			23.0	%			6,714,889			23.4	%			6,381,014			23.3	%			6,324,127			23.9	%			6,148,206			23.5	%
Savings			3,160,606			10.9	%			3,083,447			10.7	%			2,863,086			10.5	%			2,772,492			10.5	%			2,722,718			10.4	%
Certificates and other time deposits			2,959,119			10.2	%			2,985,683			10.4	%			3,066,108			11.2	%			3,066,457			11.6	%			3,111,012			11.9	%
Total deposits		$	29,110,241						$	28,763,105						$	27,360,492						$	26,459,206						$	26,152,688
Loan to Deposit Ratio			66.1	%						68.3	%						74.0	%						78.6	%						80.4	%

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
Construction Loans
		Jun 30, 2021							Mar 31, 2021							Dec 31, 2020							Sep 30, 2020							Jun 30, 2020
Single family residential construction		$	624,954			29.1	%		$	590,223			29.1	%		$	579,761			29.6	%		$	654,933			31.5	%		$	710,401			34.9	%
Land development			97,709			4.6	%			97,267			4.8	%			103,307			5.3	%			114,937			5.5	%			114,748			5.6	%
Raw land			245,484			11.4	%			243,394			12.0	%			247,628			12.7	%			240,154			11.5	%			274,159			13.5	%
Residential lots			165,645			7.7	%			176,884			8.6	%			158,441			8.1	%			137,615			6.6	%			144,765			7.1	%
Commercial lots			153,714			7.2	%			137,512			6.8	%			114,427			5.8	%			109,569			5.3	%			103,267			5.1	%
Commercial construction and other			860,069			40.0	%			786,192			38.7	%			753,587			38.5	%			825,053			39.6	%			687,618			33.8	%
Net unaccreted discount			(101)							(117)							(191)							(499)							(1,921)
Total construction loans		$	2,147,474						$	2,031,355						$	1,956,960						$	2,081,762						$	2,033,037

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of June 30, 2021
	Houston				Dallas				Austin				OK City				Tulsa				Other (T)				Total
Collateral Type
Shopping center/retail	$	380,117			$	270,891			$	52,981			$	19,350			$	29,253			$	297,645			$	1,050,237
Commercial and industrial buildings		157,719				89,284				20,485				20,970				17,691				172,869				479,018
Office buildings		158,722				494,963				30,440				73,335				4,912				72,207				834,579
Medical buildings		105,852				25,139				2,639				23,839				39,217				78,944				275,630
Apartment buildings		246,330				257,044				24,080				14,993				35,917				162,749				741,113
Hotel		79,503				70,388				43,372				28,996				—				131,253				353,512
Other		76,469				62,065				24,118				8,211				3,560				65,570				239,993
Total	$	1,204,712			$	1,269,774			$	198,115			$	189,694			$	130,550			$	981,237			$	3,974,082		(U)

Acquired Loans
		Non-PCD Loans												PCD Loans												Total Acquired Loans
		Balance at Acquisition Date				Balance at Mar 31, 2021				Balance at Jun 30, 2021				Balance at Acquisition Date				Balance at Mar 31, 2021				Balance at Jun 30, 2021				Balance at Acquisition Date				Balance at Mar 31, 2021				Balance at Jun 30, 2021
Loan marks:
Acquired banks (V)		$	345,599			$	26,285			$	16,535			$	320,052			$	11,157			$	8,695			$	665,651			$	37,442			$	25,230
Acquired portfolio loan balances:
Acquired banks (V)			12,286,159				3,339,670				2,913,494				689,573				163,191				144,694				12,975,732		(W)		3,502,861				3,058,188
Acquired portfolio loan balances less loan marks		$	11,940,560			$	3,313,385			$	2,896,959			$	369,521			$	152,034			$	135,999			$	12,310,081			$	3,465,419			$	3,032,958

(T)	Includes other MSA and non-MSA regions.
(U)	Represents a portion of total commercial real estate loans of $5.681 billion as of June 30, 2021.
(V)	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.
(W)	Actual principal balances acquired.

  

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
	Three Months Ended																				Year-to-Date
	Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Jun 30, 2021				Jun 30, 2020
Asset Quality
Nonaccrual loans	$	32,880			$	43,025			$	47,185			$	57,412			$	62,904			$	32,880			$	62,904
Accruing loans 90 or more days past due		330				313				1,699				462				8,691				330				8,691
Total nonperforming loans		33,210				43,338				48,884				57,874				71,595				33,210				71,595
Repossessed assets		310				362				93				120				187				310				187
Other real estate		144				462				10,593				11,548				6,160				144				6,160
Total nonperforming assets	$	33,664			$	44,162			$	59,570			$	69,542			$	77,942			$	33,664			$	77,942
Nonperforming assets:
Commercial and industrial (includes energy)	$	8,613			$	11,290			$	16,176			$	17,273			$	15,238			$	8,613			$	15,238
Construction, land development and other land loans		1,423				1,692				1,566				2,633				10,530				1,423				10,530
1-4 family residential (includes home equity)		11,681				11,920				25,830				29,953				29,812				11,681				29,812
Commercial real estate (includes multi-family residential)		11,266				16,896				12,315				16,069				20,748				11,266				20,748
Agriculture (includes farmland)		661				803				2,075				1,931				1,501				661				1,501
Consumer and other		20				1,561				1,608				1,683				113				20				113
Total	$	33,664			$	44,162			$	59,570			$	69,542			$	77,942			$	33,664			$	77,942
Number of loans/properties		152				167				208				198				213				152				213
Allowance for credit losses at end of period	$	302,884			$	307,210			$	316,068			$	323,635			$	324,205			$	302,884			$	324,205
Net charge-offs (recoveries):
Commercial and industrial (includes energy)	$	3,529			$	1,584			$	4,085			$	8,344			$	12,206			$	5,113			$	12,178
Construction, land development and other land loans		(105)				(5)				(110)				478				(6)				(110)				(18)
1-4 family residential (includes home equity)		(6)				47				1,982				252				51				41				56
Commercial real estate (includes multi-family residential)		517				6,589				626				676				—				7,106				(81)
Agriculture (includes farmland)		(9)				33				(4)				(17)				(3)				24				(4)
Consumer and other		400				610				988				837				753				1,010				1,671
Total	$	4,326			$	8,858			$	7,567			$	10,570			$	13,001			$	13,184			$	13,802
Asset Quality Ratios
Nonperforming assets to average interest-earning assets		0.11	%			0.15	%			0.20	%			0.24	%			0.28	%			0.11	%			0.28	%
Nonperforming assets to loans and other real estate		0.17	%			0.22	%			0.29	%			0.33	%			0.37	%			0.17	%			0.37	%
Net charge-offs to average loans (annualized)		0.09	%			0.18	%			0.15	%			0.21	%			0.26	%			0.14	%			0.14	%
Allowance for credit losses to total loans		1.57	%			1.56	%			1.56	%			1.56	%			1.54	%			1.57	%			1.54	%
Allowance for credit losses to total loans, excluding  Warehouse Purchase Program loans and Paycheck Protection Program loans (G)		1.85	%			1.89	%			1.92	%			1.94	%			1.90	%			1.85	%			1.90	%

 

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

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

NOTES TO SELECTED FINANCIAL DATA

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

		Three Months Ended																				Year-to-Date
		Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Jun 30, 2021				Jun 30, 2020
Reconciliation of diluted earnings per share to diluted    earnings per share, excluding merger related    expenses, net of tax, and NOL tax benefit:
Net income		$	130,611			$	133,309			$	137,091			$	130,064			$	130,901			$	263,920			$	261,749
Add: merger related expenses, net of tax(X)			—				—				—				—				5,904				—				6,334
Less: NOL tax benefit (Y)			—				—				—				—				(20,145)				—				(20,145)
Net income, excluding merger related expenses, net of tax,    and NOL tax benefit (X) (Y)		$	130,611			$	133,309			$	137,091			$	130,064			$	116,660			$	263,920			$	247,938
Weighted average diluted shares outstanding			92,935				92,854				92,559				92,656				92,658				92,895				93,514
Merger related expenses per diluted share, net of tax(X)		$	—			$	—			$	—			$	—			$	0.06			$	—			$	0.07
NOL tax benefit per diluted share (X)		$	—			$	—			$	—			$	—			$	(0.22)			$	—			$	(0.22)
Diluted earnings per share, excluding merger related    expenses, net of tax, and NOL tax benefit (X) (Y)		$	1.41			$	1.44			$	1.48			$	1.40			$	1.25			$	2.84			$	2.65
Reconciliation of return on average assets to return on     average assets excluding merger related expenses,    net of tax, and NOL tax benefit:
Net income, excluding merger related expenses, net of tax,     and NOL tax benefit (X) (Y)		$	130,611			$	133,309			$	137,091			$	130,064			$	116,660			$	263,920			$	247,938
Average total assets		$	36,096,022			$	34,544,360			$	33,690,906			$	32,980,838			$	32,504,726			$	35,324,474			$	31,931,067
Return on average assets excluding merger related    expenses, net of tax, and NOL tax benefit (F) (X) (Y)			1.45	%			1.54	%			1.63	%			1.58	%			1.44	%			1.49	%			1.55	%
Reconciliation of return on average common equity to    return on average common equity excluding     merger related expenses, net of tax, and NOL tax benefit:
Net income, excluding merger related expenses, net of tax,    and NOL tax benefit (X) (Y)		$	130,611			$	133,309			$	137,091			$	130,064			$	116,660			$	263,920			$	247,938
Average shareholders' equity		$	6,287,389			$	6,197,668			$	6,108,574			$	6,021,740			$	5,925,156			$	6,242,775			$	5,914,698
Return on average common equity excluding merger    related expenses, net of tax, and NOL tax benefit (F) (X) (Y)			8.31	%			8.60	%			8.98	%			8.64	%			7.88	%			8.46	%			8.38	%
Reconciliation of return on average common equity to    return on average tangible common equity:
Net income		$	130,611			$	133,309			$	137,091			$	130,064			$	130,901			$	263,920			$	261,749
Average shareholders' equity		$	6,287,389			$	6,197,668			$	6,108,574			$	6,021,740			$	5,925,156			$	6,242,775			$	5,914,698
Less: Average goodwill and other intangible assets			(3,300,467)				(3,304,994)				(3,306,769)				(3,310,245)				(3,305,008)				(3,302,718)				(3,306,753)
Average tangible shareholders' equity		$	2,986,922			$	2,892,674			$	2,801,805			$	2,711,495			$	2,620,148			$	2,940,057			$	2,607,945
Return on average tangible common equity (F)			17.49	%			18.43	%			19.57	%			19.19	%			19.98	%			17.95	%			20.07	%

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

		Three Months Ended																				Year-to-Date
		Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Jun 30, 2021				Jun 30, 2020
Reconciliation of return on average common equity to    return on average tangible common equity    excluding merger related expenses, net of tax, and    NOL tax benefit:
Net income, excluding merger related expenses, net of tax,    and NOL tax benefit (X) (Y)		$	130,611			$	133,309			$	137,091			$	130,064			$	116,660			$	263,920			$	247,938
Average shareholders' equity		$	6,287,389			$	6,197,668			$	6,108,574			$	6,021,740			$	5,925,156			$	6,242,775			$	5,914,698
Less: Average goodwill and other intangible assets			(3,300,467)				(3,304,994)				(3,306,769)				(3,310,245)				(3,305,008)				(3,302,718)				(3,306,753)
Average tangible shareholders' equity		$	2,986,922			$	2,892,674			$	2,801,805			$	2,711,495			$	2,620,148			$	2,940,057			$	2,607,945
Return on average tangible common equity excluding     merger related expenses, net of tax, and NOL tax    benefit (F) (X) (Y)			17.49	%			18.43	%			19.57	%			19.19	%			17.81	%			17.95	%			19.01	%
Reconciliation of book value per share to tangible book     value per share:
Shareholders' equity		$	6,310,337			$	6,221,846			$	6,130,669			$	6,034,877			$	5,948,122			$	6,310,337			$	5,948,122
Less: Goodwill and other intangible assets			(3,299,053)				(3,301,940)				(3,304,871)				(3,308,170)				(3,311,712)				(3,299,053)				(3,311,712)
Tangible shareholders' equity		$	3,011,284			$	2,919,906			$	2,825,798			$	2,726,707			$	2,636,410			$	3,011,284			$	2,636,410
Period end shares outstanding			92,935				92,929				92,571				92,562				92,660				92,935				92,660
Tangible book value per share		$	32.40			$	31.42			$	30.53			$	29.46			$	28.45			$	32.40				28.45
Reconciliation of equity to assets ratio to period end    tangible equity to period end tangible assets ratio:
Tangible shareholders' equity		$	3,011,284			$	2,919,906			$	2,825,798			$	2,726,707			$	2,636,410			$	3,011,284			$	2,636,410
Total assets		$	36,099,924			$	35,558,418			$	34,059,275			$	33,197,599			$	32,966,649			$	36,099,924			$	32,966,649
Less: Goodwill and other intangible assets			(3,299,053)				(3,301,940)				(3,304,871)				(3,308,170)				(3,311,712)				(3,299,053)				(3,311,712)
Tangible assets		$	32,800,871			$	32,256,478			$	30,754,404			$	29,889,429			$	29,654,937			$	32,800,871			$	29,654,937
Period end tangible equity to period end tangible assets ratio			9.18	%			9.05	%			9.19	%			9.12	%			8.89	%			9.18	%			8.89	%
Reconciliation of allowance for credit losses to total    loans to allowance for credit losses to total loans,    excluding Warehouse Purchase Program and    Paycheck Protection Program loans:
Allowance for credit losses		$	302,884			$	307,210			$	316,068			$	323,635			$	324,205			$	302,884			$	324,205
Total loans		$	19,251,785			$	19,638,886			$	20,246,944			$	20,795,641			$	21,025,173			$	19,251,785			$	21,025,173
Less: Warehouse Purchase Program loans			(2,095,559)				(2,272,389)				(2,842,379)				(2,730,614)				(2,557,183)				(2,095,559)				2,557,183
Less: Paycheck Protection Program loans			(779,989)				(1,139,083)				(963,185)				(1,393,757)				(1,392,497)				(779,989)				1,392,497
Total loans less Warehouse Purchase Program and    Paycheck Protection Program loans		$	16,376,237			$	16,227,414			$	16,441,380			$	16,671,270			$	17,075,493			$	16,376,237			$	17,075,493
Allowance for credit losses to total loans, excluding    Warehouse Purchase Program and    Paycheck Protection Program loans			1.85	%			1.89	%			1.92	%			1.94	%			1.90	%			1.85	%			1.90	%
Reconciliation of efficiency ratio to efficiency ratio,    excluding net gains and losses on the sale of assets and taxes:
Noninterest expense		$	115,191			$	119,076			$	120,205			$	117,919			$	134,368			$	234,267			$	259,109
Net interest income		$	245,399			$	254,582			$	257,634			$	258,113			$	258,955			$	499,981			$	514,986
Noninterest income			35,556				34,008				36,547				34,924				25,675				69,564				60,063
Less: net loss on sale or write down of assets			(244)				(79)				(675)				(528)				(3,945)				(323)				(4,330)
Noninterest income excluding net gains and losses on the     sale or write down of assets and securities			35,800				34,087				37,222				35,452				29,620				69,887				64,393
Total income excluding net gains and losses on the    sale or write down of assets and taxes		$	281,199			$	288,669			$	294,856			$	293,565			$	288,575			$	569,868			$	579,379
Efficiency ratio, excluding net gains and losses on the       sale or write down of assets and taxes			40.96	%			41.25	%			40.77	%			40.17	%			46.56	%			41.11	%			44.72	%
		Three Months Ended																				Year-to-Date
		Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Jun 30, 2021				Jun 30, 2020
Reconciliation of efficiency ratio to efficiency ratio,    excluding net gains and losses on the sale of assets,    taxes and merger related expenses:
Noninterest expense		$	115,191			$	119,076			$	120,205			$	117,919			$	134,368			$	234,267			$	259,109
Less: merger related expenses			—				—				—				—				7,474				—				8,018
Noninterest expense excluding merger related expenses		$	115,191			$	119,076			$	120,205			$	117,919			$	126,894			$	234,267			$	251,091
Net interest income		$	245,399			$	254,582			$	257,634			$	258,113			$	258,955			$	499,981			$	514,986
Noninterest income			35,556				34,008				36,547				34,924				25,675				69,564				60,063
Less: net loss on sale or write down of assets			(244)				(79)				(675)				(528)				(3,945)				(323)				(4,330)
Noninterest income excluding net gains and losses on the    sale or write down of assets and taxes			35,800				34,087				37,222				35,452				29,620				69,887				64,393
Total income excluding net gains and losses on the    sale or write down of assets and taxes		$	281,199			$	288,669			$	294,856			$	293,565			$	288,575			$	569,868			$	579,379
Efficiency ratio, excluding net gains and losses on the    sale or write down of assets, taxes and merger related expenses			40.96	%			41.25	%			40.77	%			40.17	%			43.97	%			41.11	%			43.34	%

 

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SOURCE Prosperity Bancshares, Inc.

FAQ

What was Prosperity Bancshares' net income for Q2 2021?

Prosperity Bancshares reported a net income of $130.6 million for Q2 2021.

How did Prosperity Bancshares' deposits change in Q2 2021?

Deposits increased by 11.3% year-over-year to $29.110 billion.

What is the net income per diluted share for Prosperity Bancshares in Q2 2021?

The net income per diluted common share was $1.41 for Q2 2021, unchanged from Q2 2020.

How much did Prosperity Bancshares' noninterest income grow in Q2 2021?

Noninterest income grew by 38.5% to $35.6 million in Q2 2021.

What was the efficiency ratio for Prosperity Bancshares in Q2 2021?

The efficiency ratio improved to 40.96% for Q2 2021.