EX-99.1 2 pb-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

img98618419_0.jpg 

 

PRESS RELEASE

For more information contact:

 

 

Prosperity Bancshares, Inc.®

Cullen Zalman

Prosperity Bank Plaza

Executive Vice President – Banking and Corporate Activities

4295 San Felipe

281.269.7199

Houston, Texas 77027

cullen.zalman@prosperitybankusa.com

FOR IMMEDIATE RELEASE

PROSPERITY BANCSHARES, INC.®

REPORTS FIRST QUARTER

2024 EARNINGS

•
Net income of $110.4 million and diluted earnings per share of $1.18 for first quarter 2024
•
Loans, excluding Warehouse Purchase Program loans and loans acquired in the merger of First Bancshares of Texas, Inc, increased $115.8 million or 0.6% (2.4% annualized) during first quarter 2024
•
Deposits, excluding public funds deposits, increased $109.8 million during first quarter 2024, with no brokered deposits purchased
•
Noninterest-bearing deposits of $9.5 billion, representing 35.1% of total deposits
•
Net interest margin increased 4 basis points to 2.79% during first quarter 2024
•
Allowance for credit losses on loans and on off-balance sheet credit exposure of $366.7 million and allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program, of 1.62%(1)
•
Nonperforming assets remain low at 0.24% of first quarter average interest-earning assets
•
Completed the merger of Lone Star State Bancshares, Inc. on April 1, 2024
•
Repurchased 567,692 shares of common stock during first quarter 2024

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

 

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

 

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

______________

(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.

Page 1

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

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

 

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

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

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

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

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

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

Balance Sheet Information

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

______________

(2)
Includes purchase accounting adjustments of $2.0 million, net of tax, primarily comprised of loan discount accretion of $1.9 million for the three months ended March 31, 2024.
(3)
Includes purchase accounting adjustments of $2.6 million, net of tax, primarily comprised of loan discount accretion of $2.5 million, merger related expenses of $278 thousand, and the FDIC special assessment of $19.9 million for the three months ended December 31, 2023.
(4)
Includes purchase accounting adjustments of $728 thousand, net of tax, primarily comprised of loan discount accretion of $871 thousand, and merger related expenses of $860 thousand for the three months ended March 31, 2023.

Page 2

 

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

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

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

 

Balance Sheet Data (at period end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mar 31, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2023

 

 

Jun 30, 2023

 

 

Mar 31, 2023

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Loans acquired (including new production since acquisition date):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FirstCapital Bank

 

$

1,302,582

 

 

$

1,376,356

 

 

$

1,494,378

 

 

$

1,590,137

 

 

$

—

 

Prosperity - Warehouse Purchase Program loans

 

 

864,924

 

 

 

822,245

 

 

 

912,327

 

 

 

1,148,883

 

 

 

799,115

 

Prosperity - All other loans

 

 

19,097,741

 

 

 

18,981,937

 

 

 

19,026,008

 

 

 

18,914,926

 

 

 

18,535,244

 

Total loans

 

$

21,265,247

 

 

$

21,180,538

 

 

$

21,432,713

 

 

$

21,653,946

 

 

$

19,334,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits assumed (including new deposits since acquisition date):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FirstCapital Bank

 

$

1,449,166

 

 

$

1,517,217

 

 

$

1,625,691

 

 

$

1,481,831

 

 

$

—

 

All other deposits

 

 

25,726,352

 

 

 

25,662,592

 

 

 

25,687,109

 

 

 

25,899,055

 

 

 

27,004,236

 

Total deposits

 

$

27,175,518

 

 

$

27,179,809

 

 

$

27,312,800

 

 

$

27,380,886

 

 

$

27,004,236

 

 

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

 

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

Asset Quality

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

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

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

 

Net charge-offs were $2.1 million for the three months ended March 31, 2024 compared with net charge-offs of $19.1 million for the three months ended December 31, 2023 and net recoveries of $615 thousand for the three months ended March 31, 2023. Net charge-offs for the first quarter of 2024 included $991 thousand related to resolved purchased credit deteriorated (“PCD”) loans, which had specific reserves that were allocated to the charge-offs. Further, an additional $4.1 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Page 3

 

Dividend

Prosperity Bancshares declared a second quarter 2024 cash dividend of $0.56 per share to be paid on July 1, 2024, to all shareholders of record as of June 14, 2024.

Stock Repurchase Program

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

Merger of Lone Star State Bancshares, Inc.

On April 1, 2024, Prosperity completed the merger of Lone Star and its wholly owned subsidiary Lone Star Bank, headquartered in Lubbock, Texas. Lone Star Bank operated 5 banking offices in the West Texas area, including its main office in Lubbock, and 1 banking center in each of Brownfield, Midland, Odessa and Big Spring, Texas. As of March 31, 2024, Lone Star, on a consolidated basis, reported total assets of $1.384 billion, total loans of $1.075 billion and total deposits of $1.241 billion.

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

Merger of First Bancshares of Texas, Inc.

On May 1, 2023, Prosperity completed the merger of First Bancshares and its wholly owned subsidiary FirstCapital Bank of Texas, N.A. (“FirstCapital Bank”), headquartered in Midland, Texas. FirstCapital Bank operated 16 full-service banking offices in six different markets in West, North and Central Texas areas, including its main office in Midland, and banking offices in Midland, Lubbock, Amarillo, Wichita Falls, Burkburnett, Byers, Henrietta, Dallas, Horseshoe Bay, Marble Falls and Fredericksburg, Texas.

 

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

Conference Call

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

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

Non-GAAP Financial Measures

Prosperity’s management uses certain non-GAAP financial measures to evaluate its performance. Specifically, for internal planning and forecasting purposes, Prosperity reviews each of diluted earnings per share, return on average assets, return on average common equity, and return on average tangible common equity, in each case excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and the FDIC special assessment, net of tax; return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program loans; the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities, merger related expenses and the FDIC special assessment. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity’s financial results and their presentation, together with the accompanying reconciliations, provides a more complete understanding of factors and trends affecting Prosperity’s business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP financial measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP financial measures should not be considered a substitute for, nor of greater

Page 4

 

importance than, GAAP basis financial measures and results; Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. Please refer to the “Notes to Selected Financial Data” at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures to the nearest respective GAAP financial measures.

Prosperity Bancshares, Inc. ®

As of March 31, 2024, Prosperity Bancshares, Inc.® is a $38.757 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma. Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

Prosperity currently operates 288 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 62 in the Dallas/Fort Worth area; 22 in the East Texas area; 31 in the Central Texas area including Austin and San Antonio; 44 in the West Texas area including Lubbock, Midland-Odessa, Abilene; Amarillo and Wichita Falls; 15 in the Bryan/College Station area, 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area and 5 in the West Texas area currently doing business as Lone Star Bank.

Cautionary Notes on Forward-Looking Statements

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity’s management on the conference call may contain, forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, oral or written forward-looking statements may also be included in other information released to the public. Such forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,” “is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,” “will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will result,” “would be,” variations of such words or phrases (including where the word “could,” “may,” or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity’s possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity’s future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity’s loan portfolio and allowance for loan losses, changes in deposits, borrowings and the investment securities portfolio, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity’s future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity’s operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits a proposed transaction, and statements about the assumptions underlying any such statement. These forward‑looking statements are not guarantees of future performance and are based on expectations and assumptions Prosperity currently believes to be valid. Because forward-looking statements relate to future results and occurrences, many of which are outside of Prosperity’s control, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. These risks and uncertainties include, but are not limited to, whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); the possibility that the anticipated benefits of an acquisition transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of two companies or as a result of the strength of the economy and competitive factors generally; a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity’s securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate, interest rate and commodity price fluctuations; and the effect, impact, potential duration or other implications of weather and climate-related events. Prosperity disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. These and various other factors are discussed in Prosperity’s Annual Report on Form 10-K for the year

Page 5

 

ended December 31, 2023, and other reports and statements Prosperity has filed with the Securities and Exchange Commission (“SEC”). Copies of the SEC filings for Prosperity may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

 

Page 6

 

 

Bryan/College Station Area

 

Grapevine Main

 

Tyler-South Broadway

 

Tomball

 

West

Bryan

 

Kiest

 

Tyler-University

 

Waller

 

 

Bryan-29th Street

 

Lake Highlands

 

Winnsboro

 

West Columbia

 

Odessa

Bryan-East

 

McKinney

 

 

 

Wharton

 

Grandview

Bryan-North

 

McKinney Eldorado

 

Houston Area

 

Winnie

 

Grant

Caldwell

 

McKinney Redbud

 

Houston

 

Wirt

 

Kermit Highway

College Station

 

North Carrolton

 

Aldine

 

 

 

Parkway

Hearne

 

Park Cities

 

Alief

 

South Texas Area -

 

 

Huntsville

 

Plano

 

Bellaire

 

Corpus Christi

 

Wichita Falls

Madisonville

 

Plano-West

 

Beltway

 

Calallen

 

Cattlemans

Navasota

 

Preston Forest

 

Clear Lake

 

Carmel

 

Kell

New Waverly

 

Preston Parker

 

Copperfield

 

Northwest

 

 

Rock Prairie

 

Preston Royal

 

Cypress

 

Saratoga

 

Other West Texas Area

Southwest Parkway

 

Red Oak

 

Downtown

 

Timbergate

 

Locations

Tower Point

 

Richardson

 

Eastex

 

Water Street

 

Big Spring

Wellborn Road

 

Richardson-West

 

Fairfield

 

 

Brownfield

 

 

Rosewood Court

 

First Colony

 

Victoria

 

Brownwood

Central Texas Area

 

The Colony

 

Fry Road

 

Victoria Main

 

Burkburnett

Austin

 

Tollroad

 

Gessner

 

Victoria-Navarro

 

Byers

Cedar Park

 

Trinity Mills

 

Gladebrook

 

Victoria-North

 

Cisco

Congress

 

Turtle Creek

 

Grand Parkway

 

Victoria Salem

 

Comanche

Lakeway

 

West 15th Plano

 

Heights

 

 

 

Early

Liberty Hill

 

West Allen

 

Highway 6 West

 

Other South Texas Area

 

Floydada

Northland

 

Westmoreland

 

Little York

 

 Locations

 

Gorman

Oak Hill

 

Wylie

 

Medical Center

 

Alice

 

Henrietta

Research Blvd

 

 

 

Memorial Drive

 

Aransas Pass

 

Levelland

Westlake

 

Fort Worth

 

Northside

 

Beeville

 

Littlefield

 

 

Haltom City

 

Pasadena

 

Colony Creek

 

Merkel

Other Central Texas Area

 

Hulen

 

Pecan Grove

 

Cuero

 

Plainview

Locations

 

Keller

 

Pin Oak

 

Edna

 

San Angelo

Bastrop

 

Museum Place

 

River Oaks

 

Goliad

 

Slaton

Canyon Lake

 

Renaissance Square

 

Sugar Land

 

Gonzales

 

Snyder

Dime Box

 

Roanoke

 

SW Medical Center

 

Hallettsville

 

 

Dripping Springs

 

Stockyards

 

Tanglewood

 

Kingsville

 

Lone Star West Texas Area

Elgin

 

 

 

The Plaza

 

Mathis

 

Big Spring

Flatonia

 

Other Dallas/Fort Worth Area

 

Uptown

 

Padre Island

 

Brownfield

Fredericksburg

 

Locations

 

Waugh Drive

 

Palacios

 

Lubbock

Georgetown

 

Arlington

 

Westheimer

 

Port Lavaca

 

Midland

Gruene

 

Azle

 

West University

 

Portland

 

Odessa

Horseshoe Bay

 

Ennis

 

Woodcreek

 

Rockport

 

 

Kingsland

 

Gainesville

 

 

 

Sinton

 

Oklahoma

La Grange

 

Glen Rose

 

Katy

 

Taft

 

Central Oklahoma Area

Lexington

 

Granbury

 

Cinco Ranch

 

Yoakum

 

Oklahoma City

Marble Falls

 

Grand Prairie

 

Katy-Spring Green

 

Yorktown

 

23rd Street

New Braunfels

 

Jacksboro

 

 

 

 

 

Expressway

Pleasanton

 

Mesquite

 

The Woodlands

 

West Texas Area

 

I-240

Round Rock

 

Muenster

 

The Woodlands-College Park

 

Abilene

 

Memorial

San Antonio

 

Runaway Bay

 

The Woodlands-I-45

 

Antilley Road

 

 

Schulenburg

 

Sanger

 

The Woodlands-Research Forest

 

Barrow Street

 

Other Central Oklahoma Area

Seguin

 

Waxahachie

 

 

 

Cypress Street

 

 Locations

Smithville

 

Weatherford

 

Other Houston Area

 

Judge Ely

 

Edmond

Thorndale

 

 

 

Locations

 

Mockingbird

 

Norman

Weimar

 

East Texas Area

 

Angleton

 

 

 

 

 

 

Athens

 

Bay City

 

Amarillo

 

Tulsa Area

Dallas/Fort Worth Area

 

Blooming Grove

 

Beaumont

 

Hillside

 

Tulsa

Dallas

 

Canton

 

Cleveland

 

Soncy

 

Garnett

14th Street Plano

 

Carthage

 

East Bernard

 

 

 

Harvard

Abrams Centre

 

Corsicana

 

El Campo

 

Lubbock

 

Memorial

Addison

 

Crockett

 

Dayton

 

4th Street

 

Sheridan

Allen

 

Eustace

 

Galveston

 

66th Street

 

S. Harvard

Balch Springs

 

Gilmer

 

Groves

 

82nd Street

 

Utica Tower

Camp Wisdom

 

Grapeland

 

Hempstead

 

86th Street

 

Yale

Carrollton

 

Gun Barrel City

 

Hitchcock

 

98th Street

 

 

Cedar Hill

 

Jacksonville

 

Liberty

 

Avenue Q

 

Other Tulsa Area Locations

Coppell

 

Kerens

 

Magnolia

 

Milwaukee

 

Owasso

East Plano

 

Longview

 

Magnolia Parkway

 

North University

 

 

Euless

 

Mount Vernon

 

Mont Belvieu

 

Texas Tech Student Union

 

 

Frisco

 

Palestine

 

Nederland

 

 

 

 

Frisco Warren

 

Rusk

 

Needville

 

Midland

 

 

Frisco-West

 

Seven Points

 

Rosenberg

 

North

 

 

Garland

 

Teague

 

Shadow Creek

 

Wadley

 

 

Grapevine

 

Tyler-Beckham

 

Spring

 

Wall Street

 

 

 

 

- - -

Page 7

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

 

 

Mar 31, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2023

 

 

Jun 30, 2023

 

 

Mar 31, 2023

 

Balance Sheet Data (at period end)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

6,380

 

 

$

5,734

 

 

$

10,187

 

 

$

10,656

 

 

$

1,603

 

Loans held for investment

 

 

20,393,943

 

 

 

20,352,559

 

 

 

20,510,199

 

 

 

20,494,407

 

 

 

18,533,641

 

Loans held for investment - Warehouse Purchase Program

 

 

864,924

 

 

 

822,245

 

 

 

912,327

 

 

 

1,148,883

 

 

 

799,115

 

Total loans

 

 

21,265,247

 

 

 

21,180,538

 

 

 

21,432,713

 

 

 

21,653,946

 

 

 

19,334,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities(A)

 

 

12,301,138

 

 

 

12,803,896

 

 

 

13,192,742

 

 

 

13,667,319

 

 

 

14,071,545

 

Federal funds sold

 

 

250

 

 

 

260

 

 

 

234

 

 

 

181

 

 

 

222

 

Allowance for credit losses on loans

 

 

(330,219

)

 

 

(332,362

)

 

 

(351,495

)

 

 

(345,209

)

 

 

(282,191

)

Cash and due from banks

 

 

1,086,444

 

 

 

458,153

 

 

 

512,239

 

 

 

396,848

 

 

 

405,331

 

Goodwill

 

 

3,396,402

 

 

 

3,396,086

 

 

 

3,396,459

 

 

 

3,383,698

 

 

 

3,231,636

 

Core deposit intangibles, net

 

 

60,757

 

 

 

63,994

 

 

 

67,553

 

 

 

71,128

 

 

 

48,974

 

Other real estate owned

 

 

2,204

 

 

 

1,708

 

 

 

9,320

 

 

 

3,107

 

 

 

1,989

 

Fixed assets, net

 

 

372,333

 

 

 

369,992

 

 

 

370,237

 

 

 

365,299

 

 

 

345,149

 

Other assets

 

 

601,964

 

 

 

605,612

 

 

 

665,682

 

 

 

708,814

 

 

 

672,218

 

Total assets

 

$

38,756,520

 

 

$

38,547,877

 

 

$

39,295,684

 

 

$

39,905,131

 

 

$

37,829,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

9,526,535

 

 

$

9,776,572

 

 

$

10,281,893

 

 

$

10,364,921

 

 

$

10,108,348

 

Interest-bearing deposits

 

 

17,648,983

 

 

 

17,403,237

 

 

 

17,030,907

 

 

 

17,015,965

 

 

 

16,895,888

 

Total deposits

 

 

27,175,518

 

 

 

27,179,809

 

 

 

27,312,800

 

 

 

27,380,886

 

 

 

27,004,236

 

Other borrowings

 

 

3,900,000

 

 

 

3,725,000

 

 

 

4,250,000

 

 

 

4,800,000

 

 

 

3,365,000

 

Securities sold under repurchase agreements

 

 

261,671

 

 

 

309,277

 

 

 

300,714

 

 

 

434,160

 

 

 

434,261

 

Subordinated debentures

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,093

 

 

 

—

 

Allowance for credit losses on off-balance sheet credit exposures

 

 

36,503

 

 

 

36,503

 

 

 

36,503

 

 

 

36,503

 

 

 

29,947

 

Other liabilities

 

 

278,284

 

 

 

217,958

 

 

 

362,990

 

 

 

282,373

 

 

 

256,671

 

Total liabilities

 

 

31,651,976

 

 

 

31,468,547

 

 

 

32,263,007

 

 

 

32,937,015

 

 

 

31,090,115

 

Shareholders' equity(B)

 

 

7,104,544

 

 

 

7,079,330

 

 

 

7,032,677

 

 

 

6,968,116

 

 

 

6,739,117

 

Total liabilities and equity

 

$

38,756,520

 

 

$

38,547,877

 

 

$

39,295,684

 

 

$

39,905,131

 

 

$

37,829,232

 

 

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

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

 

Page 8

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

 

 

Three Months Ended

 

 

 

Mar 31,
2024

 

 

Dec 31,
2023

 

 

Sep 30,
2023

 

 

Jun 30,
2023

 

 

Mar 31,
2023

 

Income Statement Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

306,228

 

 

$

306,562

 

 

$

308,678

 

 

$

286,638

 

 

$

247,118

 

Securities(C)

 

 

66,421

 

 

 

68,077

 

 

 

69,987

 

 

 

72,053

 

 

 

73,185

 

Federal funds sold and other earning assets

 

 

9,265

 

 

 

1,793

 

 

 

1,689

 

 

 

1,757

 

 

 

7,006

 

Total interest income

 

 

381,914

 

 

 

376,432

 

 

 

380,354

 

 

 

360,448

 

 

 

327,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

92,692

 

 

 

84,969

 

 

 

76,069

 

 

 

63,964

 

 

 

47,343

 

Other borrowings

 

 

48,946

 

 

 

52,386

 

 

 

62,190

 

 

 

57,351

 

 

 

34,396

 

Securities sold under repurchase agreements

 

 

2,032

 

 

 

2,094

 

 

 

2,533

 

 

 

2,674

 

 

 

2,103

 

Subordinated debentures

 

 

—

 

 

 

—

 

 

 

38

 

 

 

—

 

 

 

—

 

Total interest expense

 

 

143,670

 

 

 

139,449

 

 

 

140,830

 

 

 

123,989

 

 

 

83,842

 

Net interest income

 

 

238,244

 

 

 

236,983

 

 

 

239,524

 

 

 

236,459

 

 

 

243,467

 

Provision for credit losses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18,540

 

 

 

—

 

Net interest income after provision for credit losses

 

 

238,244

 

 

 

236,983

 

 

 

239,524

 

 

 

217,919

 

 

 

243,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonsufficient funds (NSF) fees

 

 

8,288

 

 

 

8,365

 

 

 

8,719

 

 

 

8,512

 

 

 

8,095

 

Credit card, debit card and ATM card income

 

 

8,861

 

 

 

9,314

 

 

 

9,285

 

 

 

9,206

 

 

 

8,666

 

Service charges on deposit accounts

 

 

6,406

 

 

 

6,316

 

 

 

6,262

 

 

 

6,078

 

 

 

5,926

 

Trust income

 

 

4,156

 

 

 

3,360

 

 

 

3,326

 

 

 

3,358

 

 

 

3,225

 

Mortgage income

 

 

610

 

 

 

542

 

 

 

857

 

 

 

661

 

 

 

238

 

Brokerage income

 

 

1,235

 

 

 

1,059

 

 

 

1,067

 

 

 

1,000

 

 

 

1,149

 

Bank owned life insurance income

 

 

2,047

 

 

 

1,882

 

 

 

1,864

 

 

 

1,553

 

 

 

1,354

 

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

 

 

(35

)

 

 

(84

)

 

 

(45

)

 

 

1,994

 

 

 

121

 

Net gain on sale of securities

 

 

298

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other noninterest income

 

 

7,004

 

 

 

5,814

 

 

 

7,408

 

 

 

7,326

 

 

 

9,492

 

Total noninterest income

 

 

38,870

 

 

 

36,568

 

 

 

38,743

 

 

 

39,688

 

 

 

38,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

85,771

 

 

 

80,486

 

 

 

85,423

 

 

 

84,723

 

 

 

77,798

 

Net occupancy and equipment

 

 

8,623

 

 

 

9,093

 

 

 

9,464

 

 

 

8,935

 

 

 

8,025

 

Credit and debit card, data processing and software amortization

 

 

10,975

 

 

 

10,741

 

 

 

10,919

 

 

 

10,344

 

 

 

9,566

 

Regulatory assessments and FDIC insurance

 

 

5,538

 

 

 

24,940

 

 

 

5,155

 

 

 

5,097

 

 

 

4,973

 

Core deposit intangibles amortization

 

 

3,237

 

 

 

3,559

 

 

 

3,576

 

 

 

3,167

 

 

 

2,374

 

Depreciation

 

 

4,686

 

 

 

4,607

 

 

 

4,585

 

 

 

4,658

 

 

 

4,433

 

Communications

 

 

3,402

 

 

 

3,572

 

 

 

3,686

 

 

 

3,693

 

 

 

3,462

 

Other real estate expense

 

 

187

 

 

 

165

 

 

 

153

 

 

 

(464

)

 

 

58

 

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

 

 

(138

)

 

 

34

 

 

 

(734

)

 

 

(33

)

 

 

(13

)

Merger related expenses

 

 

—

 

 

 

278

 

 

 

1,104

 

 

 

12,891

 

 

 

860

 

Other noninterest expense

 

 

13,567

 

 

 

14,696

 

 

 

12,326

 

 

 

12,859

 

 

 

11,464

 

Total noninterest expense

 

 

135,848

 

 

 

152,171

 

 

 

135,657

 

 

 

145,870

 

 

 

123,000

 

Income before income taxes

 

 

141,266

 

 

 

121,380

 

 

 

142,610

 

 

 

111,737

 

 

 

158,733

 

Provision for income taxes

 

 

30,840

 

 

 

25,904

 

 

 

30,402

 

 

 

24,799

 

 

 

34,039

 

Net income available to common shareholders

 

$

110,426

 

 

$

95,476

 

 

$

112,208

 

 

$

86,938

 

 

$

124,694

 

 

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

Page 9

 

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

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

 

 

 

Three Months Ended

 

 

 

Mar 31, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2023

 

 

Jun 30, 2023

 

 

Mar 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profitability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (D) (E)

 

$

110,426

 

 

$

95,476

 

 

$

112,208

 

 

$

86,938

 

 

$

124,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

1.18

 

 

$

1.02

 

 

$

1.20

 

 

$

0.94

 

 

$

1.37

 

Diluted earnings per share

 

$

1.18

 

 

$

1.02

 

 

$

1.20

 

 

$

0.94

 

 

$

1.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (F) (J)

 

 

1.13

%

 

 

0.98

%

 

 

1.13

%

 

 

0.89

%

 

 

1.31

%

Return on average common equity (F) (J)

 

 

6.20

%

 

 

5.39

%

 

 

6.39

%

 

 

5.01

%

 

 

7.38

%

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

 

 

12.06

%

 

 

10.54

%

 

 

12.58

%

 

 

9.67

%

 

 

14.34

%

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

 

 

2.79

%

 

 

2.75

%

 

 

2.72

%

 

 

2.73

%

 

 

2.93

%

Efficiency ratio (G) (I) (K)

 

 

49.07

%

 

 

55.61

%

 

 

48.74

%

 

 

53.21

%

 

 

43.68

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liquidity and Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity to assets

 

 

18.33

%

 

 

18.37

%

 

 

17.90

%

 

 

17.46

%

 

 

17.81

%

Common equity tier 1 capital

 

 

15.78

%

 

 

15.54

%

 

 

14.98

%

 

 

14.49

%

 

 

15.59

%

Tier 1 risk-based capital

 

 

15.78

%

 

 

15.54

%

 

 

14.98

%

 

 

14.49

%

 

 

15.59

%

Total risk-based capital

 

 

17.08

%

 

 

16.56

%

 

 

16.05

%

 

 

15.52

%

 

 

16.41

%

Tier 1 leverage capital

 

 

10.37

%

 

 

10.39

%

 

 

10.03

%

 

 

9.96

%

 

 

10.06

%

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

 

 

10.33

%

 

 

10.31

%

 

 

9.96

%

 

 

9.64

%

 

 

10.01

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used in computing earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

93,706

 

 

 

93,715

 

 

 

93,720

 

 

 

92,930

 

 

 

91,207

 

Diluted

 

 

93,706

 

 

 

93,715

 

 

 

93,720

 

 

 

92,930

 

 

 

91,207

 

Period end shares outstanding

 

 

93,525

 

 

 

93,722

 

 

 

93,717

 

 

 

93,721

 

 

 

90,693

 

Cash dividends paid per common share

 

$

0.56

 

 

$

0.56

 

 

$

0.55

 

 

$

0.55

 

 

$

0.55

 

Book value per common share

 

$

75.96

 

 

$

75.54

 

 

$

75.04

 

 

$

74.35

 

 

$

74.31

 

Tangible book value per common share (G)

 

$

39.00

 

 

$

38.62

 

 

$

38.08

 

 

$

37.49

 

 

$

38.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Market Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

High

 

$

68.88

 

 

$

68.79

 

 

$

63.65

 

 

$

63.13

 

 

$

78.76

 

Low

 

$

60.08

 

 

$

49.60

 

 

$

52.62

 

 

$

55.12

 

 

$

58.25

 

Period end closing price

 

$

65.78

 

 

$

67.73

 

 

$

54.58

 

 

$

56.48

 

 

$

61.52

 

Employees – FTE (excluding overtime)

 

 

3,901

 

 

 

3,850

 

 

 

3,853

 

 

 

3,710

 

 

 

3,651

 

Number of banking centers

 

 

283

 

 

 

285

 

 

 

285

 

 

 

286

 

 

 

272

 

 

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

 

Three Months Ended

 

Mar 31,

2024

 

Dec 31,

2023

 

Sep 30,

2023

 

Jun 30,

2023

 

Mar 31,

2023

Loan discount accretion

 

 

 

 

 

 

 

 

 

Non-PCD

$1,312

 

$1,543

 

$1,508

 

$1,242

 

$532

PCD

$548

 

$937

 

$767

 

$1,178

 

$339

Securities net accretion (amortization)

$561

 

$598

 

$626

 

$426

 

$(2)

Time deposits amortization

$(97)

 

$(150)

 

$(210)

 

$(187)

 

$(53)

 

(E) Using effective tax rate of 21.8%, 21.3%, 21.3%, 22.2% and 21.4% for the three months ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, respectively.

(F) Interim periods annualized.

(G) Refer to the “Notes to Selected Financial Data” at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

(H) Net interest margin for all periods presented is based on average balances on an actual 366-day or 365-day basis.

(I) Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale or write down of assets and securities. Additionally, taxes are not part of this calculation.

(J) For calculations of the annualized returns on average assets, average common equity and average tangible common equity excluding merger related provision for credit losses, net of tax, merger related expenses, net of tax, and FDIC special assessment, net of tax, refer to the “Notes to Selected Financial Data” at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

(K) For calculations of the efficiency ratio excluding merger related expenses and FDIC special assessment refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures to the nearest respective GAAP financial measures.

Page 10

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS

 

Three Months Ended

 

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

 

 

 

Average
Balance

 

 

Interest
Earned/
Interest
Paid

 

 

Average
Yield/
Rate

(L)

Average
Balance

 

 

Interest
Earned/
Interest
Paid

 

 

Average
Yield/
Rate

(L)

Average
Balance

 

 

Interest
Earned/
Interest
Paid

 

 

Average
Yield/
Rate

(L)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

5,467

 

 

$

92

 

 

6.77%

 

$

9,828

 

 

$

185

 

 

7.47%

 

$

2,343

 

 

$

38

 

 

6.58%

 

Loans held for investment

 

 

20,415,316

 

 

 

292,673

 

 

5.77%

 

 

20,370,915

 

 

 

291,882

 

 

5.68%

 

 

18,317,712

 

 

 

236,606

 

 

5.24%

 

Loans held for investment - Warehouse Purchase Program

 

 

720,650

 

 

 

13,463

 

 

7.51%

 

 

770,481

 

 

 

14,495

 

 

7.46%

 

 

617,822

 

 

 

10,474

 

 

6.88%

 

Total loans

 

 

21,141,433

 

 

 

306,228

 

 

5.83%

 

 

21,151,224

 

 

 

306,562

 

 

5.75%

 

 

18,937,877

 

 

 

247,118

 

 

5.29%

 

Investment securities

 

 

12,693,268

 

 

 

66,421

 

 

2.10%

(M)

 

13,074,243

 

 

 

68,077

 

 

2.07%

(M)

 

14,332,509

 

 

 

73,185

 

 

2.07%

(M)

Federal funds sold and other earning assets

 

 

672,840

 

 

 

9,265

 

 

5.54%

 

 

125,295

 

 

 

1,793

 

 

5.68%

 

 

600,048

 

 

 

7,006

 

 

4.74%

 

Total interest-earning assets

 

 

34,507,541

 

 

 

381,914

 

 

4.45%

 

 

34,350,762

 

 

 

376,432

 

 

4.35%

 

 

33,870,434

 

 

 

327,309

 

 

3.92%

 

Allowance for credit losses on loans

 

 

(331,708

)

 

 

 

 

 

 

 

(346,493

)

 

 

 

 

 

 

 

(282,316

)

 

 

 

 

 

 

Noninterest-earning assets

 

 

4,759,697

 

 

 

 

 

 

 

 

4,810,942

 

 

 

 

 

 

 

 

4,589,735

 

 

 

 

 

 

 

Total assets

 

$

38,935,530

 

 

 

 

 

 

 

$

38,815,211

 

 

 

 

 

 

 

$

38,177,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

 

$

5,143,585

 

 

$

8,423

 

 

0.66%

 

$

4,822,698

 

 

$

6,789

 

 

0.56%

 

$

5,877,641

 

 

$

3,792

 

 

0.26%

 

Savings and money market deposits

 

 

8,889,077

 

 

 

47,152

 

 

2.13%

 

 

8,815,892

 

 

 

45,192

 

 

2.03%

 

 

9,579,679

 

 

 

35,521

 

 

1.50%

 

Certificates and other time deposits

 

 

3,683,815

 

 

 

37,117

 

 

4.05%

 

 

3,442,115

 

 

 

32,988

 

 

3.80%

 

 

2,045,580

 

 

 

8,030

 

 

1.59%

 

Other borrowings

 

 

4,083,132

 

 

 

48,946

 

 

4.82%

 

 

4,028,263

 

 

 

52,386

 

 

5.16%

 

 

2,887,011

 

 

 

34,396

 

 

4.83%

 

Securities sold under repurchase agreements

 

 

296,437

 

 

 

2,032

 

 

2.76%

 

 

300,317

 

 

 

2,094

 

 

2.77%

 

 

427,887

 

 

 

2,103

 

 

1.99%

 

Total interest-bearing liabilities

 

 

22,096,046

 

 

 

143,670

 

 

2.62%

(N)

 

21,409,285

 

 

 

139,449

 

 

2.58%

(N)

 

20,817,798

 

 

 

83,842

 

 

1.63%

(N)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

 

9,443,249

 

 

 

 

 

 

 

 

9,960,240

 

 

 

 

 

 

 

 

10,389,980

 

 

 

 

 

 

 

Allowance for credit losses on off-balance sheet credit exposures

 

 

36,503

 

 

 

 

 

 

 

 

36,503

 

 

 

 

 

 

 

 

29,947

 

 

 

 

 

 

 

Other liabilities

 

 

238,480

 

 

 

 

 

 

 

 

323,344

 

 

 

 

 

 

 

 

180,685

 

 

 

 

 

 

 

Total liabilities

 

 

31,814,278

 

 

 

 

 

 

 

 

31,729,372

 

 

 

 

 

 

 

 

31,418,410

 

 

 

 

 

 

 

Shareholders' equity

 

 

7,121,252

 

 

 

 

 

 

 

 

7,085,839

 

 

 

 

 

 

 

 

6,759,443

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

38,935,530

 

 

 

 

 

 

 

$

38,815,211

 

 

 

 

 

 

 

$

38,177,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income and margin

 

 

 

 

$

238,244

 

 

2.78%

 

 

 

 

$

236,983

 

 

2.74%

 

 

 

 

$

243,467

 

 

2.92%

 

Non-GAAP to GAAP reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax equivalent adjustment

 

 

 

 

 

808

 

 

 

 

 

 

 

 

952

 

 

 

 

 

 

 

 

833

 

 

 

 

Net interest income and margin
     (tax equivalent basis)

 

 

 

 

$

239,052

 

 

2.79%

 

 

 

 

$

237,935

 

 

2.75%

 

 

 

 

$

244,300

 

 

2.93%

 

 

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

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

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

Page 11

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

Three Months Ended

 

 

Mar 31, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2023

 

 

Jun 30, 2023

 

 

Mar 31, 2023

 

YIELD TREND (O)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

6.77

%

 

 

7.47

%

 

 

6.54

%

 

 

6.87

%

 

 

6.58

%

Loans held for investment

 

5.77

%

 

 

5.68

%

 

 

5.62

%

 

 

5.48

%

 

 

5.24

%

Loans held for investment - Warehouse Purchase Program

 

7.51

%

 

 

7.46

%

 

 

7.32

%

 

 

7.09

%

 

 

6.88

%

Total loans

 

5.83

%

 

 

5.75

%

 

 

5.70

%

 

 

5.55

%

 

 

5.29

%

Investment securities (P)

 

2.10

%

 

 

2.07

%

 

 

2.05

%

 

 

2.07

%

 

 

2.07

%

Federal funds sold and other earning assets

 

5.54

%

 

 

5.68

%

 

 

5.33

%

 

 

4.69

%

 

 

4.74

%

Total interest-earning assets

 

4.45

%

 

 

4.35

%

 

 

4.30

%

 

 

4.15

%

 

 

3.92

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

 

0.66

%

 

 

0.56

%

 

 

0.43

%

 

 

0.30

%

 

 

0.26

%

Savings and money market deposits

 

2.13

%

 

 

2.03

%

 

 

1.96

%

 

 

1.88

%

 

 

1.50

%

Certificates and other time deposits

 

4.05

%

 

 

3.80

%

 

 

3.31

%

 

 

2.59

%

 

 

1.59

%

Other borrowings

 

4.82

%

 

 

5.16

%

 

 

5.28

%

 

 

5.20

%

 

 

4.83

%

Securities sold under repurchase agreements

 

2.76

%

 

 

2.77

%

 

 

2.58

%

 

 

2.43

%

 

 

1.99

%

Subordinated debentures

 

—

 

 

 

—

 

 

 

5.85

%

 

 

—

 

 

 

—

 

Total interest-bearing liabilities

 

2.62

%

 

 

2.58

%

 

 

2.54

%

 

 

2.28

%

 

 

1.63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Margin

 

2.78

%

 

 

2.74

%

 

 

2.71

%

 

 

2.72

%

 

 

2.92

%

Net Interest Margin (tax equivalent)

 

2.79

%

 

 

2.75

%

 

 

2.72

%

 

 

2.73

%

 

 

2.93

%

 

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

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

Page 12

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

 

 

 

Mar 31, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2023

 

 

Jun 30, 2023

 

 

Mar 31, 2023

 

Balance Sheet Averages

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

5,467

 

 

$

9,828

 

 

$

9,832

 

 

$

3,910

 

 

$

2,343

 

Loans held for investment

 

 

20,415,316

 

 

 

20,370,915

 

 

 

20,496,075

 

 

 

19,802,751

 

 

 

18,317,712

 

Loans held for investment - Warehouse Purchase Program

 

 

720,650

 

 

 

770,481

 

 

 

972,936

 

 

 

898,768

 

 

 

617,822

 

Total loans

 

 

21,141,433

 

 

 

21,151,224

 

 

 

21,478,843

 

 

 

20,705,429

 

 

 

18,937,877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

 

12,693,268

 

 

 

13,074,243

 

 

 

13,512,137

 

 

 

13,976,818

 

 

 

14,332,509

 

Federal funds sold and other earning assets

 

 

672,840

 

 

 

125,295

 

 

 

125,690

 

 

 

150,300

 

 

 

600,048

 

Total interest-earning assets

 

 

34,507,541

 

 

 

34,350,762

 

 

 

35,116,670

 

 

 

34,832,547

 

 

 

33,870,434

 

Allowance for credit losses on loans

 

 

(331,708

)

 

 

(346,493

)

 

 

(343,967

)

 

 

(283,594

)

 

 

(282,316

)

Cash and due from banks

 

 

315,612

 

 

 

302,864

 

 

 

301,201

 

 

 

281,593

 

 

 

319,960

 

Goodwill

 

 

3,396,177

 

 

 

3,396,224

 

 

 

3,387,293

 

 

 

3,291,659

 

 

 

3,231,637

 

Core deposit intangibles, net

 

 

62,482

 

 

 

65,986

 

 

 

69,551

 

 

 

48,616

 

 

 

50,208

 

Other real estate

 

 

2,319

 

 

 

4,781

 

 

 

6,301

 

 

 

2,712

 

 

 

2,083

 

Fixed assets, net

 

 

372,458

 

 

 

370,900

 

 

 

367,814

 

 

 

357,593

 

 

 

342,380

 

Other assets

 

 

610,649

 

 

 

670,187

 

 

 

697,176

 

 

 

756,500

 

 

 

643,467

 

Total assets

 

$

38,935,530

 

 

$

38,815,211

 

 

$

39,602,039

 

 

$

39,287,626

 

 

$

38,177,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

9,443,249

 

 

$

9,960,240

 

 

$

10,269,162

 

 

$

10,274,819

 

 

$

10,389,980

 

Interest-bearing demand deposits

 

 

5,143,585

 

 

 

4,822,698

 

 

 

4,768,485

 

 

 

5,147,453

 

 

 

5,877,641

 

Savings and money market deposits

 

 

8,889,077

 

 

 

8,815,892

 

 

 

8,977,824

 

 

 

9,156,047

 

 

 

9,579,679

 

Certificates and other time deposits

 

 

3,683,815

 

 

 

3,442,115

 

 

 

3,172,178

 

 

 

2,652,064

 

 

 

2,045,580

 

Total deposits

 

 

27,159,726

 

 

 

27,040,945

 

 

 

27,187,649

 

 

 

27,230,383

 

 

 

27,892,880

 

Other borrowings

 

 

4,083,132

 

 

 

4,028,263

 

 

 

4,671,449

 

 

 

4,427,914

 

 

 

2,887,011

 

Securities sold under repurchase agreements

 

 

296,437

 

 

 

300,317

 

 

 

389,149

 

 

 

441,303

 

 

 

427,887

 

Subordinated debentures

 

 

—

 

 

 

—

 

 

 

2,578

 

 

 

1,547

 

 

 

—

 

Allowance for credit losses on off-balance sheet credit exposures

 

 

36,503

 

 

 

36,503

 

 

 

36,504

 

 

 

30,022

 

 

 

29,947

 

Other liabilities

 

 

238,480

 

 

 

323,344

 

 

 

290,217

 

 

 

220,775

 

 

 

180,685

 

Shareholders' equity

 

 

7,121,252

 

 

 

7,085,839

 

 

 

7,024,493

 

 

 

6,935,682

 

 

 

6,759,443

 

Total liabilities and equity

 

$

38,935,530

 

 

$

38,815,211

 

 

$

39,602,039

 

 

$

39,287,626

 

 

$

38,177,853

 

 

Page 13

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Jun 30, 2023

 

Mar 31, 2023

Period End Balances

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan Portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$1,932,534

9.1%

 

$1,936,717

9.2%

 

$2,153,391

10.1%

 

$2,245,620

10.5%

 

$2,074,078

10.7%

Warehouse purchase program

 

864,924

4.1%

 

822,245

3.9%

 

912,327

4.3%

 

1,148,883

5.3%

 

799,115

4.1%

Construction, land development and other land loans

 

2,876,588

13.5%

 

3,076,591

14.5%

 

3,200,479

14.9%

 

3,215,016

14.8%

 

2,899,980

15.0%

1-4 family residential

 

7,331,251

34.5%

 

7,207,226

34.0%

 

7,032,593

32.8%

 

6,780,813

31.3%

 

6,055,532

31.3%

Home equity

 

950,169

4.5%

 

960,852

4.5%

 

969,498

4.5%

 

977,070

4.5%

 

959,124

5.0%

Commercial real estate (includes multi-family residential)

 

5,631,460

26.5%

 

5,662,948

26.7%

 

5,606,837

26.2%

 

5,676,526

26.2%

 

5,133,693

26.6%

Agriculture (includes farmland)

 

813,092

3.8%

 

816,043

3.9%

 

801,933

3.7%

 

804,376

3.7%

 

721,395

3.7%

Consumer and other

 

326,915

1.5%

 

329,593

1.6%

 

306,018

1.4%

 

305,207

1.4%

 

288,300

1.5%

Energy

 

538,314

2.5%

 

368,323

1.7%

 

449,637

2.1%

 

500,435

2.3%

 

403,142

2.1%

Total loans

 

$21,265,247

 

 

$21,180,538

 

 

$21,432,713

 

 

$21,653,946

 

 

$19,334,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposit Types

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing DDA

 

$9,526,535

35.1%

 

$9,776,572

36.0%

 

$10,281,893

37.6%

 

$10,364,921

37.9%

 

$10,108,348

37.4%

Interest-bearing DDA

 

4,867,247

17.9%

 

5,115,945

18.8%

 

4,797,259

17.6%

 

4,953,090

18.1%

 

5,332,086

19.8%

Money market

 

6,134,221

22.6%

 

5,859,701

21.6%

 

5,892,505

21.6%

 

5,904,160

21.5%

 

6,021,449

22.3%

Savings

 

2,830,117

10.4%

 

2,881,397

10.6%

 

3,005,936

11.0%

 

3,179,351

11.6%

 

3,304,482

12.2%

Certificates and other time deposits

 

3,817,398

14.0%

 

3,546,194

13.0%

 

3,335,207

12.2%

 

2,979,364

10.9%

 

2,237,871

8.3%

Total deposits

 

$27,175,518

 

 

$27,179,809

 

 

$27,312,800

 

 

$27,380,886

 

 

$27,004,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan to Deposit Ratio

 

78.3%

 

 

77.9%

 

 

78.5%

 

 

79.1%

 

 

71.6%

 

 

Page 14

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

Construction Loans

 

 

Mar 31, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2023

 

 

Jun 30, 2023

 

 

Mar 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family residential construction

 

$

1,031,163

 

 

35.8

%

 

$

1,088,636

 

 

35.4

%

 

$

1,157,016

 

 

36.1

%

 

$

1,244,631

 

 

38.7

%

 

$

1,179,883

 

 

40.7

%

Land development

 

 

290,243

 

 

10.1

%

 

 

367,849

 

 

12.0

%

 

 

359,518

 

 

11.2

%

 

 

310,199

 

 

9.7

%

 

 

222,511

 

 

7.7

%

Raw land

 

 

311,265

 

 

10.8

%

 

 

328,365

 

 

10.7

%

 

 

340,659

 

 

10.7

%

 

 

359,228

 

 

11.2

%

 

 

326,168

 

 

11.2

%

Residential lots

 

 

224,901

 

 

7.8

%

 

 

222,591

 

 

7.2

%

 

 

216,659

 

 

6.8

%

 

 

216,706

 

 

6.7

%

 

 

226,600

 

 

7.8

%

Commercial lots

 

 

59,691

 

 

2.1

%

 

 

155,415

 

 

5.0

%

 

 

154,425

 

 

4.8

%

 

 

158,278

 

 

4.9

%

 

 

167,151

 

 

5.8

%

Commercial construction and other

 

 

959,687

 

 

33.4

%

 

 

914,436

 

 

29.7

%

 

 

973,022

 

 

30.4

%

 

 

927,025

 

 

28.8

%

 

 

777,678

 

 

26.8

%

Net unaccreted discount

 

 

(362

)

 

 

 

 

(701

)

 

 

 

 

(820

)

 

 

 

 

(1,051

)

 

 

 

 

(11

)

 

 

Total construction loans

 

$

2,876,588

 

 

 

 

$

3,076,591

 

 

 

 

$

3,200,479

 

 

 

 

$

3,215,016

 

 

 

 

$

2,899,980

 

 

 

 

 

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

 

Houston

 

 

Dallas

 

 

Austin

 

 

OK City

 

 

Tulsa

 

 

Other (Q)

 

 

Total

 

 

Collateral Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shopping center/retail

$

347,702

 

 

$

278,496

 

 

$

58,938

 

 

$

14,763

 

 

$

14,413

 

 

$

287,241

 

 

$

1,001,553

 

 

Commercial and industrial buildings

 

161,906

 

 

 

100,565

 

 

 

25,744

 

 

 

35,528

 

 

 

17,881

 

 

 

258,388

 

 

 

600,012

 

 

Office buildings

 

95,697

 

 

 

220,797

 

 

 

60,013

 

 

 

48,260

 

 

 

3,842

 

 

 

91,314

 

 

 

519,923

 

 

Medical buildings

 

75,558

 

 

 

18,489

 

 

 

1,727

 

 

 

43,390

 

 

 

31,984

 

 

 

57,686

 

 

 

228,834

 

 

Apartment buildings

 

136,913

 

 

 

126,568

 

 

 

17,998

 

 

 

14,395

 

 

 

13,437

 

 

 

199,616

 

 

 

508,927

 

 

Hotel

 

110,759

 

 

 

100,561

 

 

 

33,322

 

 

 

18,031

 

 

 

—

 

 

 

167,511

 

 

 

430,184

 

 

Other

 

175,653

 

 

 

59,582

 

 

 

35,154

 

 

 

8,252

 

 

 

1,636

 

 

 

85,070

 

 

 

365,347

 

 

Total

$

1,104,188

 

 

$

905,058

 

 

$

232,896

 

 

$

182,619

 

 

$

83,193

 

 

$

1,146,826

 

 

$

3,654,780

 

(R)

 

 

Acquired Loans

 

Non-PCD Loans

 

 

PCD Loans

 

 

Total Acquired Loans

 

 

Balance at
Acquisition
Date

 

 

Balance at
Dec 31,
2023

 

 

Balance at
Mar 31,
2024

 

 

Balance at
Acquisition
Date

 

 

Balance at
Dec 31,
2023

 

 

Balance at
Mar 31,
2024

 

 

Balance at
Acquisition
Date

 

 

Balance at
Dec 31,
2023

 

 

Balance at
Mar 31,
2024

 

Loan marks:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired banks (S)

$

345,599

 

 

$

506

 

 

$

245

 

 

$

320,052

 

 

$

2,594

 

 

$

2,503

 

 

$

665,651

 

 

$

3,100

 

 

$

2,748

 

FirstCapital Bank (T)

 

22,648

 

 

 

19,486

 

 

 

18,436

 

 

 

7,790

 

 

 

5,320

 

 

 

4,858

 

 

 

30,438

 

 

 

24,806

 

 

 

23,294

 

Total

 

368,247

 

 

 

19,992

 

 

 

18,681

 

 

 

327,842

 

 

 

7,914

 

 

 

7,361

 

 

 

696,089

 

 

 

27,906

 

 

 

26,042

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired portfolio loan balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired banks (S)

 

12,286,159

 

 

 

1,043,525

 

 

 

977,286

 

 

 

689,573

 

 

 

58,310

 

 

 

56,982

 

 

 

12,975,732

 

 

 

1,101,835

 

 

 

1,034,268

 

FirstCapital Bank (T)

 

1,021,694

 

 

 

780,284

 

 

 

699,277

 

 

 

627,991

 

 

 

475,343

 

 

 

438,092

 

 

 

1,649,685

 

 

 

1,255,627

 

 

 

1,137,369

 

Total

 

13,307,853

 

 

 

1,823,809

 

 

 

1,676,563

 

 

 

1,317,564

 

 

 

533,653

 

 

 

495,074

 

 

 

14,625,417

 

 (U)

 

2,357,462

 

 

 

2,171,637

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired portfolio loan balances less loan marks

$

12,939,606

 

 

$

1,803,817

 

 

$

1,657,882

 

 

$

989,722

 

 

$

525,739

 

 

$

487,713

 

 

$

13,929,328

 

 

$

2,329,556

 

 

$

2,145,595

 

 

(Q) Includes other MSA and non-MSA regions.

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

(S) Includes Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank, The F&M Bank & Trust Company, Tradition Bank and LegacyTexas Bank.

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

(U) Actual principal balances acquired.

 

Page 15

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

 

Three Months Ended

 

 

Mar 31, 2024

 

 

Dec 31, 2023

 

 

Sep 30, 2023

 

 

Jun 30, 2023

 

 

Mar 31, 2023

 

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

$

78,475

 

 

$

68,688

 

 

$

59,729

 

 

$

57,723

 

 

$

22,496

 

Accruing loans 90 or more days past due

 

3,035

 

 

 

2,195

 

 

 

397

 

 

 

1,744

 

 

 

—

 

Total nonperforming loans

 

81,510

 

 

 

70,883

 

 

 

60,126

 

 

 

59,467

 

 

 

22,496

 

Repossessed assets

 

97

 

 

 

76

 

 

 

35

 

 

 

153

 

 

 

—

 

Other real estate

 

2,204

 

 

 

1,708

 

 

 

9,320

 

 

 

3,107

 

 

 

1,989

 

Total nonperforming assets

$

83,811

 

 

$

72,667

 

 

$

69,481

 

 

$

62,727

 

 

$

24,485

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (includes energy)

$

10,199

 

 

$

8,957

 

 

$

22,219

 

 

$

24,027

 

 

$

2,832

 

Construction, land development and other land loans

 

15,826

 

 

 

17,343

 

 

 

8,684

 

 

 

4,245

 

 

 

3,210

 

1-4 family residential (includes home equity)

 

30,206

 

 

 

26,096

 

 

 

23,708

 

 

 

19,609

 

 

 

16,951

 

Commercial real estate (includes multi-family residential)

 

23,720

 

 

 

18,775

 

 

 

13,341

 

 

 

13,504

 

 

 

1,051

 

Agriculture (includes farmland)

 

3,714

 

 

 

1,460

 

 

 

1,511

 

 

 

1,284

 

 

 

432

 

Consumer and other

 

146

 

 

 

36

 

 

 

18

 

 

 

58

 

 

 

9

 

Total

$

83,811

 

 

$

72,667

 

 

$

69,481

 

 

$

62,727

 

 

$

24,485

 

Number of loans/properties

 

319

 

 

 

292

 

 

 

260

 

 

 

241

 

 

 

190

 

Allowance for credit losses on loans

$

330,219

 

 

$

332,362

 

 

$

351,495

 

 

$

345,209

 

 

$

282,191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs (recoveries):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial (includes energy)

$

283

 

 

$

16,123

 

 

$

1,594

 

 

$

160

 

 

$

(1,472

)

Construction, land development and other land loans

 

(2

)

 

 

(5

)

 

 

(5

)

 

 

50

 

 

 

(13

)

1-4 family residential (includes home equity)

 

457

 

 

 

20

 

 

 

(78

)

 

 

(70

)

 

 

(140

)

Commercial real estate (includes multi-family residential)

 

(17

)

 

 

1,590

 

 

 

570

 

 

 

14,957

 

 

 

(1

)

Agriculture (includes farmland)

 

23

 

 

 

—

 

 

 

—

 

 

 

(78

)

 

 

(6

)

Consumer and other

 

1,399

 

 

 

1,405

 

 

 

1,327

 

 

 

1,046

 

 

 

1,017

 

Total

$

2,143

 

 

$

19,133

 

 

$

3,408

 

 

$

16,065

 

 

$

(615

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to average interest-earning assets

 

0.24

%

 

 

0.21

%

 

 

0.20

%

 

 

0.18

%

 

 

0.07

%

Nonperforming assets to loans and other real estate

 

0.39

%

 

 

0.34

%

 

 

0.32

%

 

 

0.29

%

 

 

0.13

%

Net charge-offs to average loans (annualized)

 

0.04

%

 

 

0.36

%

 

 

0.06

%

 

 

0.31

%

 

(0.01%)

 

Allowance for credit losses on loans to total loans

 

1.55

%

 

 

1.57

%

 

 

1.64

%

 

 

1.59

%

 

 

1.46

%

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

 

1.62

%

 

 

1.63

%

 

 

1.71

%

 

 

1.68

%

 

 

1.52

%

 

 

Page 16

 

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

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

NOTES TO SELECTED FINANCIAL DATA

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

 

 

Three Months Ended

 

 

 

Mar 31,
2024

 

 

Dec 31,
2023

 

 

Sep 30,
2023

 

 

Jun 30,
2023

 

 

Mar 31,
2023

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share (unadjusted)

 

$

1.18

 

 

$

1.02

 

 

$

1.20

 

 

$

0.94

 

 

$

1.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

110,426

 

 

$

95,476

 

 

$

112,208

 

 

$

86,938

 

 

$

124,694

 

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

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14,647

 

 

 

—

 

Merger related expenses, net of tax(V)

 

 

—

 

 

 

220

 

 

 

872

 

 

 

10,184

 

 

 

679

 

FDIC special assessment, net of tax(V)

 

 

—

 

 

 

15,736

 

 

 

—

 

 

 

—

 

 

 

—

 

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

 

$

110,426

 

 

$

111,432

 

 

$

113,080

 

 

$

111,769

 

 

$

125,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

 

93,706

 

 

 

93,715

 

 

 

93,720

 

 

 

92,930

 

 

 

91,207

 

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

 

$

—

 

 

$

—

 

 

$

—

 

 

$

0.16

 

 

$

—

 

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

 

$

—

 

 

$

—

 

 

$

0.01

 

 

$

0.11

 

 

$

0.01

 

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

 

$

—

 

 

$

0.17

 

 

$

—

 

 

$

—

 

 

$

—

 

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

 

$

1.18

 

 

$

1.19

 

 

$

1.21

 

 

$

1.21

 

 

$

1.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (unadjusted)

 

 

1.13

%

 

 

0.98

%

 

 

1.13

%

 

 

0.89

%

 

 

1.31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

110,426

 

 

$

111,432

 

 

$

113,080

 

 

$

111,769

 

 

$

125,373

 

Average total assets

 

$

38,935,530

 

 

$

38,815,211

 

 

$

39,602,039

 

 

$

39,287,626

 

 

$

38,177,853

 

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

 

 

1.13

%

 

 

1.15

%

 

 

1.14

%

 

 

1.14

%

 

 

1.31

%

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

Page 17

 

 

 

Three Months Ended

 

 

 

Mar 31,
2024

 

 

Dec 31,
2023

 

 

Sep 30,
2023

 

 

Jun 30,
2023

 

 

Mar 31,
2023

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average common equity (unadjusted)

 

 

6.20

%

 

 

5.39

%

 

 

6.39

%

 

 

5.01

%

 

 

7.38

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

110,426

 

 

$

111,432

 

 

$

113,080

 

 

$

111,769

 

 

$

125,373

 

Average shareholders' equity

 

$

7,121,252

 

 

$

7,085,839

 

 

$

7,024,493

 

 

$

6,935,682

 

 

$

6,759,443

 

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

 

 

6.20

%

 

 

6.29

%

 

 

6.44

%

 

 

6.45

%

 

 

7.42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

110,426

 

 

$

95,476

 

 

$

112,208

 

 

$

86,938

 

 

$

124,694

 

Average shareholders' equity

 

$

7,121,252

 

 

$

7,085,839

 

 

$

7,024,493

 

 

$

6,935,682

 

 

$

6,759,443

 

Less: Average goodwill and other intangible assets

 

 

(3,458,659

)

 

 

(3,462,210

)

 

 

(3,456,844

)

 

 

(3,340,275

)

 

 

(3,281,845

)

Average tangible shareholders’ equity

 

$

3,662,593

 

 

$

3,623,629

 

 

$

3,567,649

 

 

$

3,595,407

 

 

$

3,477,598

 

Return on average tangible common equity (F)

 

 

12.06

%

 

 

10.54

%

 

 

12.58

%

 

 

9.67

%

 

 

14.34

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

110,426

 

 

$

111,432

 

 

$

113,080

 

 

$

111,769

 

 

$

125,373

 

Average shareholders' equity

 

$

7,121,252

 

 

$

7,085,839

 

 

$

7,024,493

 

 

$

6,935,682

 

 

$

6,759,443

 

Less: Average goodwill and other intangible assets

 

 

(3,458,659

)

 

 

(3,462,210

)

 

 

(3,456,844

)

 

 

(3,340,275

)

 

 

(3,281,845

)

Average tangible shareholders’ equity

 

$

3,662,593

 

 

$

3,623,629

 

 

$

3,567,649

 

 

$

3,595,407

 

 

$

3,477,598

 

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

 

 

12.06

%

 

 

12.30

%

 

 

12.68

%

 

 

12.43

%

 

 

14.42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

$

7,104,544

 

 

$

7,079,330

 

 

$

7,032,677

 

 

$

6,968,116

 

 

$

6,739,117

 

Less: Goodwill and other intangible assets

 

 

(3,457,159

)

 

 

(3,460,080

)

 

 

(3,464,012

)

 

 

(3,454,826

)

 

 

(3,280,610

)

Tangible shareholders’ equity

 

$

3,647,385

 

 

$

3,619,250

 

 

$

3,568,665

 

 

$

3,513,290

 

 

$

3,458,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period end shares outstanding

 

 

93,525

 

 

 

93,722

 

 

 

93,717

 

 

 

93,721

 

 

 

90,693

 

Tangible book value per share

 

$

39.00

 

 

$

38.62

 

 

$

38.08

 

 

$

37.49

 

 

$

38.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible shareholders’ equity

 

$

3,647,385

 

 

$

3,619,250

 

 

$

3,568,665

 

 

$

3,513,290

 

 

$

3,458,507

 

Total assets

 

$

38,756,520

 

 

$

38,547,877

 

 

$

39,295,684

 

 

$

39,905,131

 

 

$

37,829,232

 

Less: Goodwill and other intangible assets

 

 

(3,457,159

)

 

 

(3,460,080

)

 

 

(3,464,012

)

 

 

(3,454,826

)

 

 

(3,280,610

)

Tangible assets

 

$

35,299,361

 

 

$

35,087,797

 

 

$

35,831,672

 

 

$

36,450,305

 

 

$

34,548,622

 

Period end tangible equity to period end tangible assets ratio

 

 

10.33

%

 

 

10.31

%

 

 

9.96

%

 

 

9.64

%

 

 

10.01

%

 

 

 

 

Page 18

 

 

 

Three Months Ended

 

 

 

Mar 31,
2024

 

 

Dec 31,
2023

 

 

Sep 30,
2023

 

 

Jun 30,
2023

 

 

Mar 31,
2023

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on loans

 

$

330,219

 

 

$

332,362

 

 

$

351,495

 

 

$

345,209

 

 

$

282,191

 

Total loans

 

$

21,265,247

 

 

$

21,180,538

 

 

$

21,432,713

 

 

$

21,653,946

 

 

$

19,334,359

 

Less: Warehouse Purchase Program loans

 

 

(864,924

)

 

 

(822,245

)

 

 

(912,327

)

 

 

(1,148,883

)

 

 

(799,115

)

Total loans less Warehouse Purchase Program

 

$

20,400,323

 

 

$

20,358,293

 

 

$

20,520,386

 

 

$

20,505,063

 

 

$

18,535,244

 

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

 

 

1.62

%

 

 

1.63

%

 

 

1.71

%

 

 

1.68

%

 

 

1.52

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

135,848

 

 

$

152,171

 

 

$

135,657

 

 

$

145,870

 

 

$

123,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

238,244

 

 

$

236,983

 

 

$

239,524

 

 

$

236,459

 

 

$

243,467

 

Noninterest income

 

 

38,870

 

 

 

36,568

 

 

 

38,743

 

 

 

39,688

 

 

 

38,266

 

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

 

 

(35

)

 

 

(84

)

 

 

(45

)

 

 

1,994

 

 

 

121

 

Less: net gain on sale of securities

 

 

298

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

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

 

 

38,607

 

 

 

36,652

 

 

 

38,788

 

 

 

37,694

 

 

 

38,145

 

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

 

$

276,851

 

 

$

273,635

 

 

$

278,312

 

 

$

274,153

 

 

$

281,612

 

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

 

 

49.07

%

 

 

55.61

%

 

 

48.74

%

 

 

53.21

%

 

 

43.68

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense

 

$

135,848

 

 

$

152,171

 

 

$

135,657

 

 

$

145,870

 

 

$

123,000

 

Less: merger related expenses

 

 

—

 

 

 

278

 

 

 

1,104

 

 

 

12,891

 

 

 

860

 

Less: FDIC special assessment

 

 

—

 

 

 

19,919

 

 

 

—

 

 

 

—

 

 

 

—

 

Noninterest expense excluding merger related expenses and FDIC special assessment

 

$

135,848

 

 

$

131,974

 

 

$

134,553

 

 

$

132,979

 

 

$

122,140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

238,244

 

 

$

236,983

 

 

$

239,524

 

 

$

236,459

 

 

$

243,467

 

Noninterest income

 

 

38,870

 

 

 

36,568

 

 

 

38,743

 

 

 

39,688

 

 

 

38,266

 

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

 

 

(35

)

 

 

(84

)

 

 

(45

)

 

 

1,994

 

 

 

121

 

Less: net gain on sale of securities

 

 

298

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

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

 

 

38,607

 

 

 

36,652

 

 

 

38,788

 

 

 

37,694

 

 

 

38,145

 

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

 

$

276,851

 

 

$

273,635

 

 

$

278,312

 

 

$

274,153

 

 

$

281,612

 

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

 

 

49.07

%

 

 

48.23

%

 

 

48.35

%

 

 

48.51

%

 

 

43.37

%

 

Page 19