PROSPERITY BANCSHARES, INC.® REPORTS SECOND QUARTER 2022 EARNINGS

Rhea-AI Summary

Prosperity Bancshares reported a net income of $128.5 million and earnings per share of $1.40 for Q2 2022, a slight decline from $130.6 million and $1.41 in Q2 2021. Total loans rose by $406.9 million or 2.4% compared to the previous quarter. The allowance for credit losses stood at $313.9 million, maintaining a low rate of 0.07% for nonperforming assets. Prosperity repurchased 981,884 shares during the quarter. Total assets increased to $37.387 billion, reflecting a 3.6% year-over-year growth.

Positive

• Q2 net income increased by 5.0% from Q1 2022.
• Loans grew by 2.4% (annualized 9.8%) in Q2 2022.
• Net interest income before provision for credit losses rose to $248.5 million.
• Continuing low nonperforming assets at 0.07%.

Negative

• Net income decreased year-over-year from $130.6 million to $128.5 million.
• Net interest margin dropped to 2.97% from 3.11% in Q2 2021.
• Loan interest income decreased due to lower PPP fees.
• Noninterest expenses increased by 6.7% year-over-year.

• Second quarter net income of $128.5 million and earnings per share (diluted) of $1.40
• Second quarter net income increased $6.2 million or 5.0% compared to the first quarter 2022
• Loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program loans, increased $406.9 million or 2.4% (9.8% annualized) during the second quarter 2022
• Allowance for credit losses on loans and on off-balance sheet credit exposure of $313.9 million
• Allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program loans, of 1.67%⁽¹⁾
• Nonperforming assets remain low at 0.07% of second quarter average interest-earning assets
• Return (annualized) on second quarter average assets of 1.36%
• Returns (annualized) on second quarter average common equity of 7.84% and average tangible common equity of 15.73%⁽¹⁾
• Repurchased 981,884 shares during the second quarter 2022

HOUSTON, July 27, 2022 /PRNewswire/ -- Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, "Prosperity"), reported net income of  $128.5 million for the quarter ended June 30, 2022 compared with $130.6 million for the same period in 2021. Net income per diluted common share was $1.40 for the quarter ended June 30, 2022 compared with $1.41 for the same period in 2021, and the annualized return on second quarter average assets was 1.36%. Additionally, loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program ("PPP") loans, increased $406.9 million or 2.4% (9.8% annualized) during the second quarter of 2022. Nonperforming assets remain low at 0.07% of second quarter average interest-earning assets.

"We experienced a strong second quarter of 2022. Earnings increased 5.0% compared with the first quarter of 2022 and we expect continued earnings growth as interest rates increase. Further, our core loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program loans, grew $406.9 million or 2.4% (9.8% annualized) during the quarter, while our non-performing loans remained very low," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"Texas and Oklahoma continue to shine as more people and companies move to these states. For example, according to CNBC, Texas added more jobs over the last year than the 25 lowest job growth states combined. Further, during the last year, the Dallas-Fort Worth area added 295,000 jobs, three times its average annual growth, and the Houston area added 185,000 jobs. Unemployment remains unusually low," continued Zalman.

"We are optimistic about our company, with increased earnings, strong asset quality and over 250 locations in one of the best economies in the nation.  This is evidenced by our repurchase of 981,884 shares of our stock during the second quarter of 2022," added Zalman. 

"Thank you to all the customers, associates and directors for helping build a successful company," concluded Zalman.

Results of Operations for the Three Months Ended June 30, 2022

Net income was $128.5 million⁽²⁾ for the three months ended June 30, 2022 compared with $130.6 million⁽³⁾ for the same period in 2021. The change was primarily due to a decrease in loan interest income (including a decrease in PPP fees and interest income of $10.4 million) and loan discount accretion of $12.1 million, partially offset by an increase in securities interest income and a decrease in interest expense. Net income per diluted common share was $1.40 for the three months ended June 30, 2022 compared with $1.41 for the same period in 2021. On a linked quarter basis, net income was $128.5 million⁽²⁾ for the three months ended June 30, 2022 compared with $122.3 million⁽⁴⁾ for the three months ended March 31, 2022, an increase of $6.2 million or 5.0%. The change was primarily due to an increase in securities interest income, partially offset by a decrease in loan discount accretion of $5.1 million. Net income per diluted common share was $1.40 for the three months ended June 30, 2022 compared with $1.33 for the three months ended March 31, 2022. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2022 were 1.36%, 7.84% and 15.73%⁽¹⁾, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and securities) was 43.12%⁽¹⁾ for the three months ended June 30, 2022.

Net interest income before provision for credit losses for the three months ended June 30, 2022 was $248.5 million compared with $245.4 million for the same period in 2021, an increase of $3.1 million or 1.3%. On a linked quarter basis, net interest income before provision for credit losses was $248.5 million compared with $239.9 million for the three months ended March 31, 2022, an increase of $8.5 million or 3.6%. The change was primarily due to an increase in the average balances and average rates on investment securities.

The net interest margin on a tax equivalent basis was 2.97% for the three months ended June 30, 2022 compared with 3.11% for the same period in 2021. The change was primarily due to a decrease in loan discount accretion of $12.1 million and a decrease in PPP fees and interest income of $10.4 million, partially offset by an increase in the average balances and average rates on investment securities and 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 2.97% for the three months ended June 30, 2022 compared with 2.88% for the three months ended March 31, 2022. The change was primarily due to higher average balances and average rates on investment securities and lower cash balances due to a reduction in liquidity, partially offset by a decrease in loan discount accretion of $5.1 million.

Noninterest income was $37.6 million for the three months ended June 30, 2022 compared with $35.6 million for the same period in 2021, an increase of $2.0 million or 5.7%. This change was primarily due to an increase in nonsufficient funds fees ("NSF") income, a net gain on the sale or write-down of assets and an increase in trust income, partially offset by a decrease in mortgage income. On a linked quarter basis, noninterest income was $37.6 million compared with $35.1 million for the three months ended March 31, 2022, an increase of $2.5 million or 7.0%. This change was primarily due to increases in credit card, debit card and ATM card income, a net gain on the sale or write-down of assets and other noninterest income.

Noninterest expense was $122.9 million for the three months ended June 30, 2022 compared with $115.2 million for the same period in 2021, an increase of $7.7 million or 6.7%, primarily due to an increase in salaries and benefits and the change in net loss (gain) on sale or write-down of other real estate.  On a linked quarter basis, noninterest expense increased $3.0 million or 2.5% to $122.9 million compared with $119.9 million for the three months ended March 31, 2022. The increase was primarily due to an increase in salaries and benefits, the change in net loss (gain) on sale or write-down of other real estate and an increase in other noninterest expense.

Results of Operations for the Six Months Ended June 30, 2022

Net income was $250.8 million⁽⁵⁾ for the six months ended June 30, 2022 compared with $263.9 million⁽⁶⁾ for the same period in 2021. Net income per diluted common share was $2.73 for the six months ended June 30, 2022 compared with $2.84 for the same period in 2021. Annualized returns on average assets, average common equity and average tangible common equity for the six months ended June 30, 2022 were 1.32%, 7.69% and 15.52%⁽¹⁾, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 43.40%⁽¹⁾ for the six months ended June 30, 2022.

Net interest income before provision for credit losses for the six months ended June 30, 2022 was $488.4 million compared with $500.0 million for the prior year. The change was primarily due to a decrease in the average balances and average rates on loans, a decrease in loan discount accretion of $23.3 million and a decrease in PPP fees and interest income of $22.2 million, partially offset by an increase in the average balance on investment securities and 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, 2022 was 2.92% compared with 3.26% for the same period in 2021. The change was primarily due to a decrease in loan discount accretion of $23.3 million, a decrease in PPP fees and interest income of $22.2 million and an increase in the average balance on investment securities, partially offset by a decrease in the average rate on interest-bearing liabilities.

Noninterest income was $72.7 million for the six months ended June 30, 2022 compared with $69.6 million for the same period in 2021, an increase of $3.2 million or 4.5%. This change was primarily due to an increase in NSF income, a net gain on the sale or write-down of assets and an increase in other noninterest income, partially offset by a decrease in mortgage income.

Noninterest expense was $242.7 million for the six months ended June 30, 2022 compared with $234.3 million for the same period in 2021, an increase of $8.5 million or 3.6%. The increase was primarily due to an increase in salaries and benefits, the change in net loss (gain) on sale or write-down of other real estate, an increase in credit and debit card and data processing expense and an increase in other noninterest expense.

Balance Sheet Information

At June 30, 2022, Prosperity had $37.387 billion in total assets, an increase of $1.287 billion or 3.6%, compared with $36.100 billion at June 30, 2021.

Loans at June 30, 2022 were $18.209 billion, a decrease of $1.043 billion or 5.4%, compared with $19.252 billion at June 30, 2021, primarily due to decreases in Warehouse Purchase Program, PPP and commercial real estate loans, partially offset by increases in 1-4 family residential and construction, land development and other land loans. Linked quarter loans increased $141.3 million or 0.8% (3.1% annualized) from $18.068 billion at March 31, 2022. Excluding Warehouse Purchase Program and PPP loans, loans at June 30, 2022 were $17.044 billion compared to $16.376 billion at June 30, 2021, an increase of $667.4 million or 4.1%. Linked quarter loans, excluding Warehouse Purchase Program and PPP loans, increased $406.9 million or 2.4% (9.8% annualized) from $16.637 billion at March 31, 2022.

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, 2022, oil and gas loans totaled $430.3 million (net of discount and excluding PPP loans totaling $8.2 million) or 2.4% of total loans, of which $214.0 million were production loans and $216.3 million were servicing loans, compared with total oil and gas loans of $501.8 million (net of discount and excluding PPP loans totaling $92.3 million) or 2.6% of total loans at June 30, 2021, of which $283.1 million were production loans and $218.7 million were servicing loans. In addition, as of June 30, 2022, Prosperity had total unfunded commitments to oil and gas companies of $466.7 million compared with total unfunded commitments to oil and gas companies of $298.4 million as of June 30, 2021. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Deposits at June 30, 2022 were $29.866 billion, an increase of $755.4 million or 2.6%, compared with $29.110 billion at June 30, 2021. Linked quarter deposits decreased $1.203 billion or 3.9% from $31.068 billion at March 31, 2022, primarily due to a decrease in public fund deposits. Prosperity generally experiences seasonality with its public fund deposits, as public fund customers use the tax dollars they receive in December and January throughout the year, resulting in lower deposit balances in the second and third quarters of the year. On a linked quarter basis, noninterest-bearing deposits increased by $255.5 million.

Asset Quality

Nonperforming assets totaled $22.2 million or 0.07% of quarterly average interest-earning assets at June 30, 2022 compared with $33.7 million or 0.11% of quarterly average interest-earning assets at June 30, 2021 and $27.2 million or 0.08% of quarterly average interest-earning assets at March 31, 2022.

The allowance for credit losses on loans and off-balance sheet credit exposures was $313.9 million at June 30, 2022 compared with $332.8 million at June 30, 2021 and $315.1 million at March 31, 2022.

The allowance for credit losses on loans was $284.0 million or 1.56% of total loans at June 30, 2022 compared with $302.9 million or 1.57% of total loans at June 30, 2021 and $285.2 million or 1.58% of total loans at March 31, 2022. Excluding Warehouse Purchase Program and PPP loans, the allowance for credit losses on loans to total loans was 1.67%⁽¹⁾ at June 30, 2022 compared with 1.85%⁽¹⁾ at June 30, 2021 and 1.71%⁽¹⁾ at March 31, 2022.

There was no provision for credit losses for the three months ended June 30, 2022 and 2021 or the six months ended June 30, 2022 and 2021.

Net charge-offs were $1.2 million for the three months ended June 30, 2022 compared with net charge-offs of $4.3 million for the three months ended June 30, 2021 and net charge-offs of $1.2 million for the three months ended March 31, 2022. During the second quarter of 2022, net charge-offs did not include any purchased credit deteriorated ("PCD") loans and $1.4 million of specific reserves on resolved PCD loans was released to the general reserve.

Net charge-offs were $2.4 million for the six months ended June 30, 2022 compared with $13.2 million for the six months ended June 30, 2021. Net charge-offs for the six months ended June 30, 2022 did not include any PCD loans and $2.0 million of specific reserves on resolved PCD loans was released to the general reserve during the period.

Dividend

Prosperity Bancshares declared a third quarter cash dividend of $0.52 per share to be paid on October 3, 2022, to all shareholders of record as of September 15, 2022.

Stock Repurchase Program

On January 18, 2022, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately

4.61 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 18, 2023, at the discretion of management. Prosperity Bancshares repurchased 981,884 shares of its common stock at an average weighted price of $66.90 per share during the three and six months ended June 30, 2022.

COVID-19 Pandemic

The Company continues to monitor the latest developments regarding a novel strain of coronavirus disease ("COVID-19"). Although the restrictions previously imposed on businesses and activities by the states of Texas and Oklahoma remained lifted as of June 30, 2022, it is possible that some restrictions could be re-introduced if the number of cases were to increase due to the emergence of a new variant of COVID-19 or otherwise. The COVID-19 pandemic has resulted in significant economic uncertainties that have had, and could continue to have, an adverse impact on the Company's operating income, financial condition and cash flows. The extent to which the COVID-19 pandemic will impact the Company's operations and financial results during 2022 cannot be reasonably or reliably estimated at this time.

Since the implementation of the Paycheck Protection Program ("PPP") in 2020, the Company has obtained Small Business Administration approvals on approximately 18,700 loans totaling $2.036 billion and, as of June 30, 2022, had an outstanding balance of 237 loans totaling $27.6 million.

In response to the COVID-19 pandemic, the Company provided relief to its loan customers through loan extensions and deferrals beginning in March 2020 to selected borrowers on a case-by-case basis. The Company's troubled debt restructurings do not include loan modifications related to COVID-19. As of June 30, 2022, the Company had no outstanding loans subject to deferral and modification agreements.

Conference Call

Prosperity's management team will host a conference call on Wednesday, July 27, 2022, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's second quarter 2022 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 0594487.

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

Non-GAAP Financial Measures

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

Prosperity Bancshares, Inc. ®

As of June 30, 2022, Prosperity Bancshares, Inc.^® is a $37.387 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma.  Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

Prosperity currently operates 272 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 62 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area; 6 in the Central Oklahoma area; and 8 in the Tulsa, Oklahoma area.

Cautionary Notes on Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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, 2021, 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.

 

(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 $103 thousand, net of tax, primarily comprised of loan discount accretion of $59 thousand for the three months ended June 30, 2022.
(3)	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.
(4)	Includes purchase accounting adjustments of $4.1 million, net of tax, primarily comprised of loan discount accretion of $5.2 million for the three months ended March 31, 2022.
(5)	Includes purchase accounting adjustments of $4.2 million, net of tax, primarily comprised of loan discount accretion of $5.3 million for the six months ended June 30, 2022.
(6)	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.

 

 

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

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (In thousands)
		Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021
Balance Sheet Data (at period end)
Loans held for sale		$	3,350			$	2,810			$	7,274			$	10,197			$	9,080
Loans held for investment			17,067,871				16,720,173				16,833,171				16,949,486				17,147,146
Loans held for investment - Warehouse Purchase       Program			1,137,623				1,344,541				1,775,699				1,998,049				2,095,559
Total loans			18,208,844				18,067,524				18,616,144				18,957,732				19,251,785
Investment securities(A)			14,912,313				14,798,127				12,818,901				12,629,368				11,918,691
Federal funds sold			201				274				241				237				281
Allowance for credit losses on loans			(283,959)				(285,163)				(286,380)				(287,187)				(302,884)
Cash and due from banks			393,716				1,560,321				2,547,739				1,055,386				1,059,879
Goodwill			3,231,636				3,231,636				3,231,636				3,231,636				3,231,636
Core deposit intangibles, net			56,483				59,064				61,684				64,539				67,417
Other real estate owned			1,555				1,705				622				150				144
Fixed assets, net			335,939				336,075				319,799				322,799				324,502
Other assets			530,528				501,623				523,584				537,459				548,473
Total assets		$	37,387,256			$	38,271,186			$	37,833,970			$	36,512,119			$	36,099,924
Noninterest-bearing deposits		$	11,032,184			$	10,776,652			$	10,750,034			$	10,326,489			$	10,099,149
Interest-bearing deposits			18,833,434				20,291,658				20,021,728				19,125,163				19,011,092
Total deposits			29,865,618				31,068,310				30,771,762				29,451,652				29,110,241
Other borrowings			300,000				—				—				—				—
Securities sold under repurchase agreements			481,785				440,891				448,099				440,969				433,069
Allowance for credit losses on off-balance sheet       credit exposures			29,947				29,947				29,947				29,947				29,947
Other liabilities			188,079				227,614				156,926				244,110				216,330
Total liabilities			30,865,429				31,766,762				31,406,734				30,166,678				29,789,587
Shareholders' equity(B)			6,521,827				6,504,424				6,427,236				6,345,441				6,310,337
Total liabilities and equity		$	37,387,256			$	38,271,186			$	37,833,970			$	36,512,119			$	36,099,924

(A)	Includes $1,517, $2,115, $2,290, $2,483 and $1,394 in unrealized gains on available for sale securities for the quarterly periods ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively.
(B)	Includes $1,198 $1,671, $1,809, $1,961 and $1,101 in after-tax unrealized gains on available for sale securities for the quarterly periods ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (In thousands)
		Three Months Ended																				Year-to-Date
		Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021				Jun 30, 2022				Jun 30, 2021
Income Statement Data
Interest income:
Loans		$	192,770			$	193,025			$	206,209			$	213,821			$	216,803			$	385,795			$	449,878
Securities(C)			64,111				55,011				46,857				46,217				43,708				119,122				82,385
Federal funds sold and other earning assets			925				847				563				302				340				1,772				691
Total interest income			257,806				248,883				253,629				260,340				260,851				506,689				532,954
Interest expense:
Deposits			8,641				8,754				8,685				11,578				15,288				17,395				32,650
Other borrowings			450				—				—				—				—				450				—
Securities sold under repurchase agreements			244				185				184				195				164				429				323
Total interest expense			9,335				8,939				8,869				11,773				15,452				18,274				32,973
Net interest income			248,471				239,944				244,760				248,567				245,399				488,415				499,981
Provision for credit losses			—				—				—				—				—				—				—
Net interest income after provision for credit losses			248,471				239,944				244,760				248,567				245,399				488,415				499,981
Noninterest income:
Nonsufficient funds (NSF) fees			8,484				8,124				8,401				7,962				6,560				16,608				13,247
Credit card, debit card and ATM card income			8,880				8,179				8,894				8,837				8,918				17,059				16,949
Service charges on deposit accounts			6,365				6,211				6,237				6,115				6,062				12,576				12,040
Trust income			2,875				2,703				2,698				2,467				2,276				5,578				5,113
Mortgage income			502				455				685				1,396				2,914				957				6,221
Brokerage income			917				892				953				861				795				1,809				1,506
Bank owned life insurance income			1,293				1,283				1,317				1,325				1,294				2,576				2,586
Net gain (loss) on sale or write-down of assets			1,108				689				1,165				255				(244)				1,797				(323)
Other noninterest income			7,170				6,586				5,407				5,427				6,981				13,756				12,225
Total noninterest income			37,594				35,122				35,757				34,645				35,556				72,716				69,564
Noninterest expense:
Salaries and benefits			80,371				79,411				76,496				78,412				75,611				159,782				155,648
Net occupancy and equipment			8,039				7,848				8,140				8,165				8,046				15,887				15,879
Credit and debit card, data processing and       software amortization			9,246				8,849				9,050				9,103				8,718				18,095				16,951
Regulatory assessments and FDIC insurance			2,851				2,850				2,801				2,497				2,670				5,701				5,340
Core deposit intangibles amortization			2,581				2,620				2,855				2,878				2,887				5,201				5,818
Depreciation			4,539				4,547				4,518				4,524				4,513				9,086				9,053
Communications			3,206				2,919				3,134				3,013				2,982				6,125				5,881
Other real estate expense			195				214				24				30				198				409				442
Net loss (gain) on sale or write-down of other real estate			14				(621)				2				4				(1,839)				(607)				(2,726)
Other noninterest expense			11,836				11,213				12,518				11,189				11,405				23,049				21,981
Total noninterest expense			122,878				119,850				119,538				119,815				115,191				242,728				234,267
Income before income taxes			163,187				155,216				160,979				163,397				165,764				318,403				335,278
Provision for income taxes			34,697				32,890				34,192				34,807				35,153				67,587				71,358
Net income available to common shareholders		$	128,490			$	122,326			$	126,787			$	128,590			$	130,611			$	250,816			$	263,920

(C)	Interest income on securities was reduced by net premium amortization of $11,450, $12,857, $16,006, $15,141 and $14,436 for the three months ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively, and $24,307 and $27,280 for the six months ended June 30, 2022 and June 30, 2021, 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, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021				Jun 30, 2022				Jun 30, 2021
Profitability
Net income (D) (E)		$	128,490			$	122,326			$	126,787			$	128,590			$	130,611			$	250,816			$	263,920
Basic earnings per share		$	1.40			$	1.33			$	1.38			$	1.39			$	1.41			$	2.73			$	2.84
Diluted earnings per share		$	1.40			$	1.33			$	1.38			$	1.39			$	1.41			$	2.73			$	2.84
Return on average assets (F)			1.36	%			1.29	%			1.37	%			1.42	%			1.45	%			1.32	%			1.49	%
Return on average common equity (F)			7.84	%			7.54	%			7.91	%			8.07	%			8.31	%			7.69	%			8.46	%
Return on average tangible common equity   (F) (G)			15.73	%			15.30	%			16.26	%			16.72	%			17.49	%			15.52	%			17.95	%
Tax equivalent net interest margin (D) (E) (H)			2.97	%			2.88	%			2.97	%			3.10	%			3.11	%			2.92	%			3.26	%
Efficiency ratio (G) (I)			43.12	%			43.68	%			42.79	%			42.34	%			40.96	%			43.40	%			41.11	%
Liquidity and Capital Ratios
Equity to assets			17.44	%			17.00	%			16.99	%			17.38	%			17.48	%			17.44	%			17.48	%
Common equity tier 1 capital			15.26	%	(J)		15.32	%	(J)		15.10	%			14.84	%			15.26	%			15.26	%	(J)		15.26	%
Tier 1 risk-based capital			15.26	%	(J)		15.32	%	(J)		15.10	%			14.84	%			15.26	%			15.26	%	(J)		15.26	%
Total risk-based capital			15.91	%	(J)		15.99	%	(J)		15.45	%			15.20	%			15.71	%			15.91	%	(J)		15.71	%
Tier 1 leverage capital			9.58	%	(J)		9.44	%	(J)		9.62	%			9.55	%			9.50	%			9.58	%	(J)		9.50	%
Period end tangible equity to period end tangible      assets (G)			9.48	%			9.19	%			9.07	%			9.18	%			9.18	%			9.48	%			9.18	%
Other Data
Weighted-average shares used in computing      earnings per common share
Basic			91,772				92,161				92,162				92,683				92,935				91,965				92,895
Diluted			91,772				92,161				92,162				92,683				92,935				91,965				92,895
Period end shares outstanding			91,196				92,160				92,170				92,160				92,935				91,196				92,935
Cash dividends paid per common share		$	0.52			$	0.52			$	0.52			$	0.49			$	0.49			$	1.04			$	0.98
Book value per common share		$	71.51			$	70.58			$	69.73			$	68.85			$	67.90			$	71.51			$	67.90
Tangible book value per common share (G)		$	35.46			$	34.87			$	34.00			$	33.09			$	32.40			$	35.46			$	32.40
Common Stock Market Price
High		$	73.50			$	80.46			$	78.67			$	72.97			$	78.06			$	80.46			$	83.02
Low		$	64.69			$	69.08			$	68.53			$	64.40			$	69.83			$	64.69			$	66.45
Period end closing price		$	68.27			$	69.38			$	72.35			$	71.13			$	71.80			$	68.27			$	71.80
Employees – FTE (excluding overtime)			3,576				3,595				3,704				3,625				3,724				3,576				3,724
Number of banking centers			272				272				273				273				274				272				274

 

(D) Includes purchase accounting adjustments for the periods presented as follows:
	Three Months Ended										Year-to-Date
	Jun 30, 2022		Mar 31, 2022		Dec 31, 2021		Sep 30, 2021		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Loan discount accretion
ASC 310-20	$(265)		$4,674		$4,635		$3,761		$9,731		$4,409		$23,044
ASC 310-30	$324		$521		$731		$1,618		$2,462		$845		$5,489
Securities net amortization	$12		$52		$139		$136		$171		$64		$282
Time deposits amortization	$84		$100		$127		$201		$327		$184		$834

(E)	Using effective tax rate of 21.3, 21.2%, 21.2%, 21.3% and 21.2% for the three months ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively, and 21.2% and 21.3% for the six months ended June 30, 2022 and June 30, 2021, respectively.
(F)	Interim periods annualized.
(G)	Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
(H)	Net interest margin for all periods presented is based on average balances on an actual 365-day basis.
(I)	Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale or write down of assets and securities. Additionally, taxes are not part of this calculation.
(J)	Beginning on January 1, 2022, the cumulative amount of the current expected credit loss ("CECL") transition adjustments is being phased in over a three-year transition period.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
YIELD ANALYSIS		Three Months Ended
		Jun 30, 2022												Mar 31, 2022												Jun 30, 2021
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(K)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(K)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(K)
Interest-earning assets:
Loans held for sale		$	3,199			$	40			5.02 %				$	4,611			$	40			3.52 %				$	13,716			$	109			3.19 %
Loans held for investment			16,799,609				182,286			4.35 %					16,712,690				183,033			4.44 %					17,305,259				200,817			4.65 %
Loans held for investment - Warehouse Purchase Program			1,257,521				10,444			3.33 %					1,268,715				9,952			3.18 %					1,984,305				15,877			3.21 %
Total Loans			18,060,329				192,770			4.28 %					17,986,016				193,025			4.35 %					19,303,280				216,803			4.50 %
Investment securities			14,989,666				64,111			1.72 %			(L)		13,772,974				55,011			1.62 %			(L)		11,180,948				43,708			1.57 %			(L)
Federal funds sold and other earning assets			540,907				925			0.69 %					2,135,503				847			0.16 %					1,221,993				340			0.11 %
Total interest-earning assets			33,590,902				257,806			3.08 %					33,894,493				248,883			2.98 %					31,706,221				260,851			3.30 %
Allowance for credit losses on loans			(284,550)												(285,692)												(306,059)
Noninterest-earning assets			4,448,060												4,458,669												4,695,860
Total assets		$	37,754,412											$	38,067,470											$	36,096,022
Interest-bearing liabilities:
Interest-bearing demand deposits		$	6,437,614			$	2,154			0.13 %				$	6,775,114			$	2,452			0.15 %				$	6,281,068			$	5,471			0.35 %
Savings and money market deposits			10,702,273				4,473			0.17 %					10,870,461				4,026			0.15 %					9,872,624				5,490			0.22 %
Certificates and other time deposits			2,409,663				2,014			0.34 %					2,637,529				2,276			0.35 %					2,980,186				4,327			0.58 %
Other borrowings			112,582				450			1.60 %					—				—				—				—				—				—
Securities sold under repurchase agreements			463,108				244			0.21 %					452,054				185			0.17 %					383,975				164			0.17 %
Total interest-bearing liabilities			20,125,240				9,335			0.19 %			(M)		20,735,158				8,939			0.17 %			(M)		19,517,853				15,452			0.32 %			(M)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			10,855,802												10,636,624												10,062,085
Allowance for credit losses on off-balance       sheet credit exposures			29,947												29,947												29,947
Other liabilities			186,344												176,360												198,748
Total liabilities			31,197,333												31,578,089												29,808,633
Shareholders' equity			6,557,079												6,489,381												6,287,389
Total liabilities and shareholders' equity		$	37,754,412											$	38,067,470											$	36,096,022
Net interest income and margin						$	248,471			2.97 %								$	239,944			2.87 %								$	245,399			3.10 %
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							445												472												586
Net interest income and margin (tax      equivalent basis)						$	248,916			2.97 %								$	240,416			2.88 %								$	245,985			3.11 %

(K)	Annualized and based on an actual 365-day basis.
(L)	Yield on securities was impacted by net premium amortization of $11,450, $12,857 and $14,436 for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
(M)	Total cost of funds, including noninterest bearing deposits, was 0.12%, 0.12% and 0.21% for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
YIELD ANALYSIS		Year-to-Date
		Jun 30, 2022												Jun 30, 2021
		Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(N)	Average Balance				Interest Earned/ Interest Paid				Average Yield/ Rate			(N)
Interest-earning assets:
Loans held for sale		$	3,901			$	80			4.14 %				$	23,468			$	347			2.98 %
Loans held for investment			16,756,345				365,319			4.40 %					17,292,235				414,795			4.84 %
Loans held for investment - Warehouse Purchase      Program			1,263,132				20,396			3.26 %					2,175,888				34,736			3.22 %
Total loans			18,023,378				385,795			4.32 %					19,491,591				449,878			4.65 %
Investment securities			14,384,681				119,122			1.67 %			(O)		10,170,508				82,385			1.63 %			(O)
Federal funds sold and other earning assets			1,333,800				1,772			0.27 %					1,363,533				691			0.10 %
Total interest-earning assets			33,741,859				506,689			3.03 %					31,025,632				532,954			3.46 %
Allowance for credit losses on loans			(285,118)												(310,798)
Noninterest-earning assets			4,453,117												4,609,640
Total assets		$	37,909,858											$	35,324,474
Interest-bearing liabilities:
Interest-bearing demand deposits		$	6,605,431			$	4,606			0.14 %				$	6,197,235			$	11,414			0.37 %
Savings and money market deposits			10,785,902				8,499			0.16 %					9,647,594				11,243			0.24 %
Certificates and other time deposits			2,522,966				4,290			0.34 %					3,005,761				9,993			0.67 %
Other borrowings			56,602				450			1.60 %					—				—				—
Securities sold under repurchase agreements			457,612				429			0.19 %					380,339				323			0.17 %
Total interest-bearing liabilities			20,428,513				18,274			0.18 %			(P)		19,230,929				32,973			0.35 %			(P)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits			10,746,819												9,636,800
Allowance for credit losses on off-balance sheet credit      exposures			29,947												29,947
Other liabilities			181,157												184,023
Total liabilities			31,386,436												29,081,699
Shareholders' equity			6,523,422												6,242,775
Total liabilities and shareholders' equity			37,909,858											$	35,324,474
Net interest income and margin						$	488,415			2.92 %								$	499,981			3.25 %
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment							917												1,222
Net interest income and margin (tax equivalent basis)						$	489,332			2.92 %								$	501,203			3.26 %

(N)	Annualized and based on an actual 365-day basis.
(O)	Yield on securities was impacted by net premium amortization of $24,307 and $27,280 for the six months ended June 30, 2022 and 2021, respectively.
(P)	Total cost of funds, including noninterest bearing deposits, was 0.12% and 0.23% for the six months ended June 30, 2022 and 2021, respectively.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
	Three Months Ended
	Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021
YIELD TREND (Q)
Interest-Earning Assets:
Loans held for sale		5.02	%			3.52	%			3.20	%			3.08	%			3.19	%
Loans held for investment		4.35	%			4.44	%			4.53	%			4.62	%			4.65	%
Loans held for investment - Warehouse Purchase      Program		3.33	%			3.18	%			3.12	%			3.18	%			3.21	%
Total loans		4.28	%			4.35	%			4.40	%			4.48	%			4.50	%
Investment securities (R)		1.72	%			1.62	%			1.46	%			1.50	%			1.57	%
Federal funds sold and other earning assets		0.69	%			0.16	%			0.16	%			0.16	%			0.11	%
Total interest-earning assets		3.08	%			2.98	%			3.07	%			3.24	%			3.30	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits		0.13	%			0.15	%			0.14	%			0.24	%			0.35	%
Savings and money market deposits		0.17	%			0.15	%			0.15	%			0.18	%			0.22	%
Certificates and other time deposits		0.34	%			0.35	%			0.38	%			0.47	%			0.58	%
Other borrowings		1.60	%			—				—				—				—
Securities sold under repurchase agreements		0.21	%			0.17	%			0.17	%			0.17	%			0.17	%
Total interest-bearing liabilities		0.19	%			0.17	%			0.18	%			0.24	%			0.32	%
Net Interest Margin		2.97	%			2.87	%			2.96	%			3.09	%			3.10	%
Net Interest Margin (tax equivalent)		2.97	%			2.88	%			2.97	%			3.10	%			3.11	%

(Q)	Annualized and based on average balances on an actual 365-day basis.
(R)	Yield on securities was impacted by net premium amortization of $11,450, $12,857, $16,006, $15,141 and $14,436 for the three months ended June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, respectively.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
		Three Months Ended
		Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021
Balance Sheet Averages
Loans held for sale		$	3,199			$	4,611			$	8,794			$	11,714			$	13,716
Loans held for investment			16,799,609				16,712,690				16,830,163				17,102,998				17,305,259
Loans held for investment - Warehouse Purchase      Program			1,257,521				1,268,715				1,772,971				1,836,252				1,984,305
Total Loans			18,060,329				17,986,016				18,611,928				18,950,964				19,303,280
Investment securities			14,989,666				13,772,974				12,751,857				12,184,964				11,180,948
Federal funds sold and other earning assets			540,907				2,135,503				1,393,859				734,787				1,221,993
Total interest-earning assets			33,590,902				33,894,493				32,757,644				31,870,715				31,706,221
Allowance for credit losses on loans			(284,550)				(285,692)				(287,191)				(301,011)				(306,059)
Cash and due from banks			309,223				326,552				329,406				570,765				521,737
Goodwill			3,231,637				3,231,637				3,231,637				3,231,637				3,231,637
Core deposit intangibles, net			57,728				60,346				63,091				65,955				68,830
Other real estate			1,639				1,893				321				279				3,001
Fixed assets, net			336,242				327,297				321,524				323,584				326,570
Other assets			511,591				510,944				530,603				536,745				544,085
Total assets		$	37,754,412			$	38,067,470			$	36,947,035			$	36,298,669			$	36,096,022
Noninterest-bearing deposits		$	10,855,802			$	10,636,624			$	10,587,441			$	10,286,062			$	10,062,085
Interest-bearing demand deposits			6,437,614				6,775,114				6,196,283				6,089,678				6,281,068
Savings and money market deposits			10,702,273				10,870,461				10,286,650				9,944,664				9,872,624
Certificates and other time deposits			2,409,663				2,637,529				2,766,123				2,897,123				2,980,186
Total deposits			30,405,352				30,919,728				29,836,497				29,217,527				29,195,963
Other borrowings			112,582				—				—				—				—
Securities sold under repurchase agreements			463,108				452,054				432,981				448,338				383,975
Allowance for credit losses on off-balance sheet      credit exposures			29,947				29,947				29,947				29,947				29,947
Other liabilities			186,344				176,360				234,746				229,502				198,748
Shareholders' equity			6,557,079				6,489,381				6,412,864				6,373,355				6,287,389
Total liabilities and equity		$	37,754,412			$	38,067,470			$	36,947,035			$	36,298,669			$	36,096,022

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
		Jun 30, 2022							Mar 31, 2022							Dec 31, 2021							Sep 30, 2021							Jun 30, 2021
Period End Balances
Loan Portfolio
Commercial and industrial		$	2,155,727			11.8	%		$	2,007,783			11.1	%		$	2,050,631			11.0	%		$	1,841,899			9.7	%		$	2,021,951			10.5	%
Warehouse purchase program			1,137,623			6.2	%			1,344,541			7.4	%			1,775,699			9.5	%			1,998,049			10.6	%			2,095,559			10.9	%
Construction, land development and      other land loans			2,460,526			13.5	%			2,327,837			12.9	%			2,299,715			12.4	%			2,269,417			12.0	%			2,147,474			11.2	%
1-4 family residential			5,156,200			28.3	%			4,970,620			27.5	%			4,860,419			26.1	%			4,709,468			24.8	%			4,531,589			23.5	%
Home equity			932,725			5.1	%			870,130			4.8	%			808,289			4.4	%			746,426			3.9	%			637,431			3.3	%
Commercial real estate (includes      multi-family residential)			4,967,662			27.3	%			5,150,555			28.5	%			5,251,368			28.2	%			5,550,841			29.3	%			5,681,184			29.5	%
Agriculture (includes farmland)			665,960			3.7	%			617,418			3.4	%			620,338			3.3	%			631,497			3.3	%			590,135			3.1	%
Consumer and other			274,532			1.5	%			246,433			1.4	%			288,496			1.6	%			274,980			1.5	%			264,652			1.4	%
Energy			430,339			2.4	%			445,949			2.5	%			491,305			2.6	%			569,314			3.0	%			501,821			2.6	%
Paycheck Protection Program			27,550			0.2	%			86,258			0.5	%			169,884			0.9	%			365,841			1.9	%			779,989			4.0	%
Total loans		$	18,208,844						$	18,067,524						$	18,616,144						$	18,957,732						$	19,251,785
Deposit Types
Noninterest-bearing DDA		$	11,032,184			36.9	%		$	10,776,652			34.7	%		$	10,750,034			34.9	%		$	10,326,489			35.0	%		$	10,099,149			34.7	%
Interest-bearing DDA			6,331,314			21.2	%			6,603,934			21.2	%			6,741,092			21.9	%			6,088,923			20.7	%			6,185,115			21.2	%
Money market			6,646,726			22.3	%			7,603,329			24.5	%			7,178,904			23.3	%			6,864,664			23.3	%			6,706,252			23.0	%
Savings			3,597,820			12.0	%			3,543,300			11.4	%			3,401,727			11.1	%			3,293,850			11.2	%			3,160,606			10.9	%
Certificates and other time deposits			2,257,574			7.6	%			2,541,095			8.2	%			2,700,005			8.8	%			2,877,726			9.8	%			2,959,119			10.2	%
Total deposits		$	29,865,618						$	31,068,310						$	30,771,762						$	29,451,652						$	29,110,241
Loan to Deposit Ratio			61.0	%						58.2	%						60.5	%						64.4	%						66.1	%

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
Construction Loans
		Jun 30, 2022							Mar 31, 2022							Dec 31, 2021							Sep 30, 2021							Jun 30, 2021
Single family residential construction		$	911,443			37.0	%		$	816,072			35.0	%		$	728,393			31.7	%		$	659,248			29.0	%		$	624,954			29.1	%
Land development			133,398			5.4	%			103,853			4.5	%			99,099			4.3	%			92,623			4.1	%			97,709			4.6	%
Raw land			316,750			12.9	%			310,987			13.4	%			322,673			14.0	%			315,803			13.9	%			245,484			11.4	%
Residential lots			223,703			9.1	%			212,029			9.1	%			206,978			9.0	%			195,201			8.6	%			165,645			7.7	%
Commercial lots			184,794			7.5	%			183,760			7.9	%			184,901			8.0	%			169,189			7.5	%			153,714			7.2	%
Commercial construction and other			690,453			28.1	%			701,148			30.1	%			757,687			33.0	%			837,436			36.9	%			860,069			40.0	%
Net unaccreted discount			(15)							(12)							(16)							(83)							(101)
Total construction loans		$	2,460,526						$	2,327,837						$	2,299,715						$	2,269,417						$	2,147,474

 

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of June 30, 2022
	Houston				Dallas				Austin				OK City				Tulsa				Other (S)				Total
Collateral Type
Shopping center/retail	$	332,853			$	262,721			$	52,529			$	18,757			$	27,588			$	278,111			$	972,559
Commercial and industrial buildings		145,805				76,015				14,960				32,554				16,584				163,430				449,348
Office buildings		94,768				378,379				27,539				69,217				4,532				69,667				644,102
Medical buildings		97,855				19,913				2,547				21,126				40,062				75,306				256,809
Apartment buildings		104,393				64,513				11,774				14,060				8,153				171,424				374,317
Hotel		93,324				69,380				44,658				28,148				—				132,699				368,209
Other		74,843				75,197				28,423				7,480				2,724				70,620				259,287
Total	$	943,841			$	946,118			$	182,430			$	191,342			$	99,643			$	961,257			$	3,324,631		(T)

 

Acquired Loans
		Non-PCD Loans												PCD Loans												Total Acquired Loans
		Balance at Acquisition Date				Balance at Mar 31, 2022				Balance at Jun 30, 2022				Balance at Acquisition Date				Balance at Mar 31, 2022				Balance at Jun 30, 2022				Balance at Acquisition Date				Balance at Mar 31, 2022				Balance at Jun 30, 2022
Loan marks:
Acquired banks (U)		$	345,599			$	3,469			$	3,734			$	320,052			$	4,317			$	3,993			$	665,651			$	7,786			$	7,727
Acquired portfolio loan balances:
Acquired banks (U)			12,286,159				1,868,511				1,559,270				689,573				72,992				68,125				12,975,732		(V)		1,941,503				1,627,395
Acquired portfolio loan balances less loan       marks		$	11,940,560			$	1,865,042			$	1,555,536			$	369,521			$	68,675			$	64,132			$	12,310,081			$	1,933,717			$	1,619,668

(S)	Includes other MSA and non-MSA regions.
(T)	Represents a portion of total commercial real estate loans of $4.968 billion as of June 30, 2022.
(U)	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.
(V)	Actual principal balances acquired.

 

Prosperity Bancshares, Inc.® Financial Highlights (Unaudited) (Dollars in thousands)
	Three Months Ended																				Year-to-Date
	Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021				Jun 30, 2022				Jun 30, 2021
Asset Quality
Nonaccrual loans	$	20,619			$	21,765			$	26,269			$	35,035			$	32,880			$	20,619			$	32,880
Accruing loans 90 or more days past due		13				3,695				887				1,038				330				13				330
Total nonperforming loans		20,632				25,460				27,156				36,073				33,210				20,632				33,210
Repossessed assets		—				19				310				326				310				—				310
Other real estate		1,555				1,705				622				150				144				1,555				144
Total nonperforming assets	$	22,187			$	27,184			$	28,088			$	36,549			$	33,664			$	22,187			$	33,664
Nonperforming assets:
Commercial and industrial (includes energy)	$	2,964			$	4,403			$	6,150			$	8,199			$	8,613			$	2,964			$	8,613
Construction, land development and other land      loans		1,866				1,761				1,841				803				1,423				1,866				1,423
1-4 family residential (includes home equity)		14,335				11,899				11,990				11,117				11,681				14,335				11,681
Commercial real estate (includes multi-family      residential)		2,448				7,685				7,276				15,691				11,266				2,448				11,266
Agriculture (includes farmland)		567				1,402				816				643				661				567				661
Consumer and other		7				34				15				96				20				7				20
Total	$	22,187			$	27,184			$	28,088			$	36,549			$	33,664			$	22,187			$	33,664
Number of loans/properties		160				147				157				155				152				160				152
Allowance for credit losses on loans	$	283,959			$	285,163			$	286,380			$	287,187			$	302,884			$	283,959			$	302,884
Net charge-offs (recoveries):
Commercial and industrial (includes energy)	$	(197)			$	14			$	177			$	3,763			$	3,529			$	(183)			$	5,113
Construction, land development and other land      loans		(5)				430				(162)				(4)				(105)				425				(110)
1-4 family residential (includes home equity)		(32)				87				(72)				66				(6)				55				41
Commercial real estate (includes multi-family      residential)		395				(366)				(10)				11,180				517				29				7,106
Agriculture (includes farmland)		(9)				(103)				(102)				(63)				(9)				(112)				24
Consumer and other		1,052				1,155				976				755				400				2,207				1,010
Total	$	1,204			$	1,217			$	807			$	15,697			$	4,326			$	2,421			$	13,184
Asset Quality Ratios
Nonperforming assets to average interest-earning assets		0.07	%			0.08	%			0.09	%			0.11	%			0.11	%			0.07	%			0.11	%
Nonperforming assets to loans and other real estate		0.12	%			0.15	%			0.15	%			0.19	%			0.17	%			0.12	%			0.17	%
Net charge-offs to average loans (annualized)		0.03	%			0.03	%			0.02	%			0.33	%			0.09	%			0.03	%			0.14	%
Allowance for credit losses on loans to total loans		1.56	%			1.58	%			1.54	%			1.51	%			1.57	%			1.56	%			1.57	%
Allowance for credit losses on loans to total loans,      excluding Warehouse Purchase Program loans      and Paycheck Protection Program loans (G)		1.67	%			1.71	%			1.72	%			1.73	%			1.85	%			1.67	%			1.85	%

 

Prosperity Bancshares, Inc.® Notes to Selected Financial Data (Unaudited) (Dollars and share amounts in thousands, except per share data)
NOTES TO SELECTED FINANCIAL DATA
Prosperity's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses on loans to total loans excluding Warehouse Purchase Program and PPP loans; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities, for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP financial measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses on loans to total loans (excluding Warehouse Purchase Program loans 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, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021				Jun 30, 2022				Jun 30, 2021
Reconciliation of return on average common equity to      return on average tangible common equity:
Net income		$	128,490			$	122,326			$	126,787			$	128,590			$	130,611			$	250,816			$	263,920
Average shareholders' equity		$	6,557,079			$	6,489,381			$	6,412,864			$	6,373,355			$	6,287,389			$	6,523,422			$	6,242,775
Less: Average goodwill and other intangible assets			(3,289,365)				(3,291,983)				(3,294,728)				(3,297,592)				(3,300,467)				(3,290,667)				(3,302,718)
Average tangible shareholders' equity		$	3,267,714			$	3,197,398			$	3,118,136			$	3,075,763			$	2,986,922			$	3,232,755			$	2,940,057
Return on average tangible common equity   (F)			15.73	%			15.30	%			16.26	%			16.72	%			17.49	%			15.52	%			17.95	%
Reconciliation of book value per share to tangible book      value per share:
Shareholders' equity		$	6,521,827			$	6,504,424			$	6,427,236			$	6,345,441			$	6,310,337			$	6,521,827			$	6,310,337
Less: Goodwill and other intangible assets			(3,288,119)				(3,290,700)				(3,293,320)				(3,296,175)				(3,299,053)				(3,288,119)				(3,299,053)
Tangible shareholders' equity		$	3,233,708			$	3,213,724			$	3,133,916			$	3,049,266			$	3,011,284			$	3,233,708			$	3,011,284
Period end shares outstanding			91,196				92,160				92,170				92,160				92,935				91,196				92,935
Tangible book value per share		$	35.46			$	34.87			$	34.00			$	33.09			$	32.40			$	35.46			$	32.40
Reconciliation of equity to assets ratio to period end      tangible equity to period end tangible assets ratio:
Tangible shareholders' equity		$	3,233,708			$	3,213,724			$	3,133,916			$	3,049,266			$	3,011,284			$	3,233,708			$	3,011,284
Total assets		$	37,387,256			$	38,271,186			$	37,833,970			$	36,512,119			$	36,099,924			$	37,387,256			$	36,099,924
Less: Goodwill and other intangible assets			(3,288,119)				(3,290,700)				(3,293,320)				(3,296,175)				(3,299,053)				(3,288,119)				(3,299,053)
Tangible assets		$	34,099,137			$	34,980,486			$	34,540,650			$	33,215,944			$	32,800,871			$	34,099,137			$	32,800,871
Period end tangible equity to period end tangible assets      ratio			9.48	%			9.19	%			9.07	%			9.18	%			9.18	%			9.48	%			9.18	%
Reconciliation of allowance for credit losses to total      loans to allowance for credit losses on loans to total      loans excluding Warehouse Purchase Program and      Paycheck Protection Program loans:
Allowance for credit losses on loans		$	283,959			$	285,163			$	286,380			$	287,187			$	302,884			$	283,959			$	302,884
Total loans		$	18,208,844			$	18,067,524			$	18,616,144			$	18,957,732			$	19,251,785			$	18,208,844			$	19,251,785
Less: Warehouse Purchase Program loans			(1,137,623)				(1,344,541)				(1,775,699)				(1,998,049)				(2,095,559)				(1,137,623)				(2,095,559)
Less: Paycheck Protection Program loans			(27,550)				(86,258)				(169,884)				(365,841)				(779,989)				(27,550)				(779,989)
Total loans less Warehouse Purchase Program and      Paycheck Protection Program loans		$	17,043,671			$	16,636,725			$	16,670,561			$	16,593,842			$	16,376,237			$	17,043,671			$	16,376,237
Allowance for credit losses on loans to total loans      excluding Warehouse Purchase Program and Paycheck      Protection Program loans			1.67	%			1.71	%			1.72	%			1.73	%			1.85	%			1.67	%			1.85	%
Reconciliation of efficiency ratio to efficiency ratio      excluding net gains and losses on the sale of assets       and securities:
Noninterest expense		$	122,878			$	119,850			$	119,538			$	119,815			$	115,191			$	242,728			$	234,267
Net interest income		$	248,471			$	239,944			$	244,760			$	248,567			$	245,399			$	488,415			$	499,981
Noninterest income			37,594				35,122				35,757				34,645				35,556				72,716				69,564
Less: net gain (loss) on sale or write down of assets			1,108				689				1,165				255				(244)				1,797				(323)
Noninterest income excluding net gains and losses      on the sale or write down of assets and securities			36,486				34,433				34,592				34,390				35,800				70,919				69,887
Total income excluding net gains and losses on the       sale or write down of assets and securities		$	284,957			$	274,377			$	279,352			$	282,957			$	281,199			$	559,334			$	569,868
Efficiency ratio, excluding net gains and losses on the sale      or write down of assets and securities			43.12	%			43.68	%			42.79	%			42.34	%			40.96	%			43.40	%			41.11	%

 

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SOURCE Prosperity Bancshares, Inc.

FAQ

What were Prosperity Bancshares' earnings for Q2 2022?

Prosperity Bancshares reported a net income of $128.5 million and earnings per share of $1.40 for Q2 2022.

How much did Prosperity Bancshares' loans increase in Q2 2022?

Loans increased by $406.9 million or 2.4% (annualized 9.8%) in Q2 2022.

What is the outlook for Prosperity Bancshares following their Q2 results?

The company expects continued earnings growth as interest rates increase.

What are the nonperforming assets for Prosperity Bancshares in Q2 2022?

Nonperforming assets remained low at 0.07% of second quarter average interest-earning assets.

How many shares did Prosperity Bancshares repurchase in Q2 2022?

Prosperity repurchased 981,884 shares during the second quarter of 2022.