8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  April 29, 2020

PROSPERITY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Texas	001-35388	74-2331986
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4295 San Felipe

Houston, Texas 77027

(Address of principal executive offices including zip code)

Registrant's telephone number, including area code: (281) 269-7199

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $1.00 per share	PB	New York Stock Exchange, Inc.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition.

On April 29, 2020, Prosperity Bancshares, Inc. publicly disseminated a press release announcing its financial results for the first quarter ended March 31, 2020. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.

As provided in General Instruction B.2 to Form 8-K, the information furnished in Item 2.02 and Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The following is furnished as an exhibit to this Current Report on Form 8-K:

Exhibit Number	Description of Exhibit
99.1	Press Release issued by Prosperity Bancshares, Inc. dated April 29, 2020.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PROSPERITY BANCSHARES, INC. (Registrant)
Dated: April 29, 2020	By:	/s/ Charlotte M. Rasche
		Charlotte M. Rasche
		Executive Vice President and General Counsel

EX-99.1

Exhibit 99.1

PRESS RELEASE	For more information contact:
Prosperity Bancshares, Inc.®	Cullen Zalman
Prosperity Bank Plaza	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

2020 EARNINGS

• First quarter earnings per share (diluted) of $1.39, an increase of 17.8% compared to the first quarter 2019

• First quarter net income of $130.848 million

• Loans increased $281.849 million or 1.50% during the first quarter 2020

• Allowance for credit losses on loans and on off-balance sheet credit exposure was $357.206 million

• Allowance for credit losses to total loans, excluding warehouse purchase program loans, of 1.88%

• Nonperforming assets remain low at 0.25% of first quarter average interest-earning assets

• Return (annualized) on first quarter average assets of 1.67%

• Returns (annualized) on first quarter averages common equity of 8.86% and average tangible common equity of 20.16%⁽¹⁾

• Repurchased 2.092 million shares during the first quarter of 2020

HOUSTON, April 29, 2020. Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, “Prosperity”), reported net income for the quarter ended March 31, 2020 of $130.848 million compared with $82.402 million for the same period in 2019. Net income per diluted common share was $1.39 compared with $1.18 for the same period in 2019. Additionally, loans increased 1.5% during the first quarter 2020 and nonperforming assets remain low at 0.25% of first quarter average interest-earning assets. On November 1, 2019, LegacyTexas Financial Group, Inc. (“LegacyTexas”), merged with Prosperity Bancshares and LegacyTexas Bank merged with Prosperity Bank (collectively, the “Merger”).

“I am proud to announce that Prosperity posted diluted earnings per share of $1.39 for the first quarter of 2020, a 17.8% increase compared with the same period in 2019. Our merger with LegacyTexas was completed on November 1, 2019 and our management teams continue to find commonalties and strengths that we expect will benefit our company, shareholders and associates going forward.  Our planned operational integration remains on schedule for June of this year,” said David Zalman, Prosperity’s Senior Chairman and Chief Executive Officer.

“In our efforts to continue enhance shareholder value, during the first quarter 2020 Prosperity repurchased 2.092 million shares of its common stock at a weighted average price of $52.59 per share,” continued Zalman.

“Also, during the first quarter of 2020, Prosperity increased its allowance for credit losses on loans to $327.206 million from $87.469 million for the fourth quarter of 2019 after adopting accounting standard ASU 2016-13, also known as CECL. The amount of the allowance is based on our CECL methodology. We believe that these additional reserves should help insulate the company during these challenging and unprecedented times. Our allowance for credit losses to total loans, excluding warehouse purchase program loans, now stands at 1.88% compared to 0.51% at December 31, 2019,” 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.

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“While today’s challenges are certainly extraordinary, Prosperity has a deep management team with experience navigating and adapting to difficult times. We entered this economic downturn from a position of strength, with sound credit quality, robust capital and liquidity and solid operating fundamentals. We believe that our team will see us through and we remain confident in our long-term future,” stated Zalman.

“I would like to thank every associate at Prosperity. Throughout the past several months, while dealing with various personal challenges related to the pandemic, our retail team operated at full capacity, enabling us to keep our locations open and serve our customers’ daily needs. Additionally, our operational staff and lending team were crucial in accepting, processing and submitting thousands of SBA PPP applications and closing the loans, working around the clock to assist our customers,” concluded Zalman.

Results of Operations for the Three Months Ended March 31, 2020

Net income was $130.848 million⁽²⁾ for the three months ended March 31, 2020 compared with $82.402 million⁽³⁾ for the same period in 2019. Net income per diluted common share was $1.39 for the three months ended March 31, 2020 compared with $1.18 for the same period in 2019. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2020 were 1.67%, 8.86% and 20.16%⁽¹⁾, respectively. Prosperity’s efficiency ratio (excluding net gains on the sale of assets and taxes) was 42.90%⁽¹⁾ for the three months ended March 31, 2020. Excluding merger related expenses of $544 thousand, net of tax, the efficiency ratio was 42.71%⁽¹⁾ for the three months ended March 31, 2020.

Net interest income before provision for credit losses for the three months ended March 31, 2020 was $256.031 million compared with $154.911 million for the same period in 2019, an increase of $101.120 million or 65.3%. The increase was primarily due to the Merger and the increase in loan discount accretion of $26.689 million. On a linked quarter basis, net interest income before provision for credit losses was $256.031 million compared with $232.030 million for the three months ended December 31, 2019. The increase was primarily due to the increase in loan discount accretion of $4.740 million and three months of combined bank earnings in the first quarter of 2020 compared with only two months in the fourth quarter 2019.

The net interest margin on a tax equivalent basis was 3.81% for the three months ended March 31, 2020 compared with 3.20% for the same period in 2019. The change was primarily due to increased interest-earning assets and the $26.689 million increase in loan discount accretion. On a linked quarter basis, the net interest margin on a tax equivalent basis was 3.81% for the three months ended March 31, 2020 compared with 3.66% for the three months ended December 31, 2019. The change was primarily due to increased interest-earning assets and the $4.740 million increase in loan discount accretion.

Noninterest income was $34.388 million for the three months ended March 31, 2020 compared with $28.144 million for the same period in 2019, an increase of $6.244 million or 22.2%. This increase was primarily due to an increase in nonsufficient funds fees, credit card, debit card and ATM card fees, mortgage income, service fees and other noninterest income primarily due to the Merger. On a linked quarter basis, noninterest income decreased $1.118 million or 3.1% to $34.388 million compared with $35.506 million for the three months ended December 31, 2019, primarily due to the decrease in other noninterest income and mortgage income, partially offset by lower net loss on write-down of assets.

Noninterest expense was $124.741 million for the three months ended March 31, 2020 compared with $78.571 million for the same period in 2019, an increase of $46.170 million or 58.8%, primarily due to the Merger. On a linked quarter basis, noninterest expense decreased $31.710 million or 20.3% to $124.741 million compared with $156.451 million for the three months ended December 31, 2019. The decrease was primarily due to the decrease of merger related expenses partially offset by increases in salaries and benefits, credit and debit card, data processing and software amortization, and net occupancy and equipment due to three months of combined bank noninterest expenses in the first quarter 2020 compared with two months in fourth quarter 2019.

Balance Sheet Information

At March 31, 2020, Prosperity had $31.743 billion in total assets, an increase of $9.389 billion or 42.0%, compared with $22.354 billion at March 31, 2019.

Loans at March 31, 2020 were $19.127 billion, an increase of $8.713 billion or 83.7%, compared with $10.414 billion at March 31, 2019. Linked quarter loans increased $281.849 million or 1.5% from $18.845 billion at December 31, 2019.

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 March 31, 2020, oil and gas loans totaled $718.654 million (net of discount) or 3.8% of total loans, of which $435.041 million were production

______________

(2) Includes purchase accounting adjustments of $24.134 million, net of tax, primarily comprised of loan discount accretion of $28.482 million, and merger related expenses of $544 thousand for the three months ended March 31, 2020.

(3) Includes purchase accounting adjustments of $1.238 million, net of tax, primarily comprised of loan discount accretion of $1.793 million for the three months ended March 31, 2019.

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loans and $283.613 million were servicing loans,compared with total oil and gas loans of $380.835 million (net of discount) or 3.7% of total loans at March 31, 2019, of which $115.571million were production loans and $265.264 million were servicing loans.In addition, as of March 31, 2020, Prosperity had total unfunded commitments to oil and gas companies of $389.515 million compared with total unfunded commitments to oil and gas companies of $231.474 million as of March 31, 2019. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Additionally, Prosperity extends credit to hotels and restaurants.  At March 31, 2020, loans to hotels totaled $374.105 million or 2.0% of total loans and loans to restaurants totaled $204.600 million or 1.1% of total loans.

Deposits at March 31, 2020 were $23.826 billion, an increase of $6.628 billion or 38.5%, compared with $17.198 billion at March 31, 2019. Linked quarter deposits decreased $373.375 million or 1.5% from $24.200 billion at December 31, 2019.

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

Balance Sheet Data (at period end)
(In thousands)
	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Loans acquired (including new production since acquisition date):
LegacyTexas:
Loans held for sale	$	54,229	$	66,745	$	—	$	—	$	—
Loans held for investment		6,713,337		6,636,855		—		—		—
Loans held for investment - Warehouse Purchase Program		1,713,762		1,552,762		—		—		—
All other loans		10,645,867		10,588,984		10,673,345		10,587,375		10,414,022
Total loans	$	19,127,195	$	18,845,346	$	10,673,345	$	10,587,375	$	10,414,022
Deposits assumed (including new deposits since acquisition date):
LegacyTexas	$	5,605,986	$	6,141,546	$	—	$	—	$	—
All other deposits		18,220,371		18,058,186		16,929,920		16,887,629		17,197,770
Total deposits	$	23,826,357	$	24,199,732	$	16,929,920	$	16,887,629	$	17,197,770

Excluding loans acquired in the Merger and new production by the acquired lending operations since November 1, 2019, loans at March 31, 2020 grew $231.845 million or 2.2% compared with March 31, 2019 and grew $56.883 million or 0.5% compared with December 31, 2019.

Excluding deposits assumed in the Merger and new deposits generated at the acquired banking centers since November 1, 2019, deposits at March 31, 2020 grew $1.023 billion or 6.0% compared with March 31, 2019 and grew $162.185 million or 0.9% compared with December 31, 2019.

Asset Quality

Nonperforming assets totaled $67.179 million or 0.25% of quarterly average interest-earning assets at March 31, 2020, compared with $40.883 million or 0.21% of quarterly average interest-earning assets at March 31, 2019, and $62.943 million or 0.25% of quarterly average interest-earning assets at December 31, 2019.

The allowance for credit losses on loans was $327.206 million or 1.71% of total loans at March 31, 2020 compared to $87.469 million or 0.46% of total loans at December 31, 2019 and $86.091 million or 0.83% of total loans at March 31, 2019.  On January 1, 2020, Prosperity adopted the measurement of current expected credit losses (“CECL”). Upon adoption of CECL, Prosperity recognized an increase in allowance for credit losses on loans of $108.698 million, of which $102.545 million was related to LegacyTexas and an increase in allowance for credit losses on off-balance sheet credit exposures of $24.443 million, of which $6.314 million was related to LegacyTexas, with a corresponding decrease in retained earnings (pre-tax). Additionally, Prosperity recognized an increase in the allowance for credit losses on loans of $131.841 million, of which $130.278 million was related to LegacyTexas, due to the reclass of purchased credit deteriorated (“PCD”) discounts as a result of adopting CECL.

Prosperity had a $13.150 million provision for credit losses reflecting forecasted credit deterioration due to the COVID-19 pandemic for the first quarter of 2020. Countering this provision, during the first quarter of 2020, several purchase credit deteriorated (“PCD”) loans were repaid in full, which cleared $8.576 million in specific reserves. Additionally, balance changes and historical loss rate improvements released $5.471 million in general reserves. Combined, these events fully offset the provision. Accordingly, there was

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no provision for credit losses for the three months ended March 31, 2020 compared with $700 thousand for the three months ended March 31, 2019 and $1.700 million for the three months ended December 31, 2019.  

Net charge-offs were $801 thousand for the three months ended March 31, 2020 compared with net charge-offs of $1.049 million for the three months ended March 31, 2019 and net charge-offs of $1.291 million for the three months ended December 31, 2019.

Dividend

Prosperity Bancshares declared a second quarter cash dividend of $0.46 per share to be paid on July 1, 2020 to all shareholders of record as of June 15, 2020.

Stock Repurchase Program

On January 29, 2020, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately

4.740 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 28, 2021, at the discretion of management. Prosperity Bancshares repurchased 2.092 million shares of its common stock at an average weighted price of $52.59 per share during the three months ended March 31, 2020.

COVID-19 Pandemic

In December 2019, a novel strain of coronavirus disease (“COVID-19”) was first reported in Wuhan, Hubei Province, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, the U.S. President announced a national emergency relating to the pandemic. On March 13, the Texas governor signed a proclamation certifying that COVID-19 poses an imminent threat of disaster in the state and declaring a state of disaster for all counties in Texas. Prosperity Bank (the “Bank”) is considered an essential business and is closely monitoring the latest developments regarding COVID-19. The health and safety of our associates, customers, and communities are of utmost importance, and the Bank remains committed to providing uninterrupted service. Additionally, the Bank has continuity plans in place to ensure critical operations are able to continue without disruption. The COVID-19 pandemic has resulted in significant economic uncertainties that could negatively impact Prosperity’s operating income, financial condition and cash flows.

Merger with LegacyTexas Financial Group, Inc.

On November 1, 2019, Prosperity completed the merger with LegacyTexas and its wholly-owned subsidiary LegacyTexas Bank headquartered in Plano, Texas. LegacyTexas Bank operated 42 locations in 19 North Texas cities in and around the Dallas-Fort Worth area.  

Pursuant to the terms of the merger agreement, Prosperity issued 26,228,148 shares of Prosperity common stock with a closing price of $69.02 per share plus $318.018 million in cash, made up of $308.585 million in cash and $9.433 million in cash for taxes withheld, for all outstanding shares of LegacyTexas. This resulted in goodwill of $1.322 billion as of March 31, 2020, which was subject to subsequent fair value adjustments.

Conference Call

Prosperity’s management team will host a conference call on Wednesday, April 29, 2020 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity’s first quarter 2020 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 elite entry number is 3056906.

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 & Calls” from the drop-down menu on the Investor Relations tab and following the instructions.

Non-GAAP Financial Measures

Prosperity’s management uses certain non-GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity, tangible equity to tangible assets ratio and the efficiency ratio, excluding net gains and losses on the sale of assets and securities. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity’s financial results and that 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

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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, 2020, Prosperity Bancshares, Inc.^® is a $31.7 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 cash management.

As of March 31, 2020, Prosperity operated 285 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 33 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; 8 in the Tulsa, Oklahoma area and 42 in the Dallas/Fort Worth area currently doing business as LegacyTexas 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. 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 the Bank’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, including LegacyTexas; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives.  Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); the possibility that the anticipated benefits of an acquisition transaction, including the LegacyTexas 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, 2019 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.

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Bryan/College Station Area	Fort Worth	Canton	East Bernard	86th Street
Bryan	Haltom City	Carthage	El Campo	98th Street
Bryan-29th Street	Keller	Corsicana	Dayton	Avenue Q
Bryan-East	Roanoke	Crockett	Galveston	North University
Bryan-North	Stockyards	Eustace	Groves	Texas Tech Student Union
Caldwell		Gilmer	Hempstead
College Station	Other Dallas/Fort Worth Area	Grapeland	Hitchcock	Midland
Crescent Point	Locations	Gun Barrel City	Liberty	Wadley
Hearne	Arlington	Jacksonville	Magnolia	Wall Street
Huntsville	Azle	Kerens	Magnolia Parkway
Madisonville	Ennis	Longview	Mont Belvieu	Odessa
Navasota	Gainesville	Mount Vernon	Nederland	Grandview
New Waverly	Glen Rose	Palestine	Needville	Grant
Rock Prairie	Granbury	Rusk	Rosenberg	Kermit Highway
Southwest Parkway	Mesquite	Seven Points	Shadow Creek	Parkway
Tower Point	Muenster	Teague	Spring
Wellborn Road	Sanger	Tyler-Beckham	Tomball	Other West Texas Area
	Waxahachie	Tyler-South Broadway	Waller	Locations
Central Texas Area	Weatherford	Tyler-University	West Columbia	Big Spring
Austin		Winnsboro	Wharton	Brownfield
Allandale	LegacyTexas Dallas/Fort Worth Area		Winnie	Brownwood
Cedar Park	LegacyTexas Dallas	Houston Area	Wirt	Cisco
Congress	14th Street	Houston		Comanche
Lakeway	Addison	Aldine	South Texas Area -	Early
Liberty Hill	Allen	Alief	Corpus Christi	Floydada
Northland	Carrollton	Bellaire	Calallen	Gorman
Oak Hill	Coppell	Beltway	Carmel	Levelland
Research Blvd	Downtown Grapevine	Clear Lake	Northwest	Littlefield
Westlake	East Plano	Copperfield	Saratoga	Merkel
	El Dorado	Cypress	Timbergate	Plainview
Other Central Texas Area	Frisco	Downtown	Water Street	San Angelo
Locations	Frisco-South	Eastex		Slaton
Bastrop	Frisco-West	Fairfield	Victoria	Snyder
Canyon Lake	Garland	First Colony	Victoria Main
Dime Box	Grapevine	Fry Road	Victoria-Navarro	Oklahoma
Dripping Springs	Grapevine Drive-thru	Gessner	Victoria-North	Central Oklahoma Area
Elgin	Lake Highlands	Gladebrook	Victoria Salem	Oklahoma City
Flatonia	LegacyTexas	Grand Parkway		23rd Street
Georgetown	McKinney	Heights	Other South Texas Area	Expressway
Gruene	McKinney-380	Highway 6 West	Locations	I-240
Kingsland	North Carrolton	Little York	Alice	Memorial
La Grange	North East Tarrant County	Medical Center	Aransas Pass
Lexington	Oak Cliff	Memorial Drive	Beeville	Other Central Oklahoma Area
New Braunfels	Park Cities	Northside	Colony Creek	Locations
Pleasanton	Plano-West	Pasadena	Cuero	Edmond
Round Rock	Preston Forest	Pecan Grove	Edna	Norman
San Antonio	Preston Road	Pin Oak	Goliad
Schulenburg	Preston Royal	River Oaks	Gonzales	Tulsa Area
Seguin	Richardson	Sugar Land	Hallettsville	Tulsa
Smithville	Richardson-West	SW Medical Center	Kingsville	Garnett
Thorndale	Rosewood Court	Tanglewood	Mathis	Harvard
Weimar	Tollroad	The Plaza	Padre Island	Memorial
	Trinity Mills	Uptown	Palacios	Sheridan
Dallas/Fort Worth Area	West 15th	Waugh Drive	Port Lavaca	S. Harvard
Dallas	West Allen	Westheimer	Portland	Utica Tower
Abrams Centre	Wylie	West University	Rockport	Yale
Balch Springs		Woodcreek	Sinton
Camp Wisdom	LegacyTexas Fort Worth		Taft	Other Tulsa Area Locations
Cedar Hill	Hulen	Katy	Yoakum	Owasso
Frisco	Museum Place	Cinco Ranch	Yorktown
Frisco-West	Renaissance Square	Katy-Spring Green
Kiest			West Texas Area
McKinney	LegacyTexas Other Dallas/Fort Worth	The Woodlands	Abilene
McKinney-Stonebridge	Area Locations	The Woodlands-College Park	Antilley Road
Midway	Flower Mound	The Woodlands-I-45	Barrow Street
Plano	Grand Prairie	The Woodlands-Research Forest	Cypress Street
Preston Forest	Jacksboro		Judge Ely
Preston Road	Runaway Bay	Other Houston Area	Mockingbird
Red Oak	Weatherford	Locations
Sachse		Angleton	Lubbock
The Colony	East Texas Area	Bay City	4th Street
Turtle Creek	Athens	Beaumont	66th Street
Westmoreland	Blooming Grove	Cleveland	82nd Street

 - - -

Page 6 of 17

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(In thousands)

	Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019
Balance Sheet Data (at period end)
Loans held for sale	$	65,035		$	80,959		$	20,284		$	20,315		$	24,398
Loans held for investment		17,348,398			17,211,625			10,653,061			10,567,060			10,389,624
Loans held for investment - Warehouse Purchase Program		1,713,762			1,552,762			—			—			—
Total loans		19,127,195			18,845,346			10,673,345			10,587,375			10,414,022
Investment securities(A)		8,295,495			8,570,056			8,495,206			8,951,940			9,137,645
Federal funds sold		676			519			521			555			566
Allowance for credit losses(B)		(327,206	)		(87,469	)		(87,061	)		(87,006	)		(86,091	)
Cash and due from banks		381,458			573,589			420,359			302,069			291,498
Goodwill		3,223,144			3,223,671			1,900,845			1,900,845			1,900,845
Core deposit intangibles, net		83,041			86,404			29,051			30,299			31,564
Other real estate owned		5,452			6,936			815			2,005			2,096
Fixed assets, net		327,293			326,832			263,703			262,479			257,595
Other assets		626,951			639,824			396,033			424,660			404,501
Total assets	$	31,743,499		$	32,185,708		$	22,092,817		$	22,375,221		$	22,354,241
Noninterest-bearing deposits	$	7,461,323		$	7,763,894		$	5,784,002		$	5,691,236		$	5,673,707
Interest-bearing deposits		16,365,034			16,435,838			11,145,918			11,196,393			11,524,063
Total deposits		23,826,357			24,199,732			16,929,920			16,887,629			17,197,770
Other borrowings		1,338,429			1,303,730			600,795			940,874			680,952
Securities sold under repurchase agreements		344,695			377,294			311,404			313,825			254,573
Subordinated notes		125,585			125,804			—			—			—
Allowance for credit losses on off-balance sheet credit exposures(B)		29,947			5,599			—			—			—
Other liabilities		222,912			202,714			123,892			104,998			111,156
Total liabilities		25,887,925			26,214,873			17,966,011			18,247,326			18,244,451
Shareholders' equity(C)		5,855,574			5,970,835			4,126,806			4,127,895			4,109,790
Total liabilities and equity	$	31,743,499		$	32,185,708		$	22,092,817		$	22,375,221		$	22,354,241

(A) Includes $(3,421),$763, $49, $1,611, and $895 in unrealized (losses) gains on available for sale securities for the quarterly periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.

(B) ASU 2016-13 became effective for Prosperity on January 1, 2020.

(C) Includes $(2,703),$602, $38, $1,273, and $706 in after-tax unrealized (losses) gains on available for sale securities for the quarterly periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.

Page 7 of 17

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(In thousands)

	Three Months Ended
	Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019
Income Statement Data
Interest income:
Loans	$	247,243		$	222,910		$	134,943		$	133,525		$	130,065
Securities(D)		48,282			49,348			50,872			53,944			55,648
Federal funds sold and other earning assets		713			600			363			318			402
Total interest income		296,238			272,858			186,178			187,787			186,115
Interest expense:
Deposits		35,018			32,759			26,939			26,562			25,128
Other borrowings		2,932			6,115			4,335			5,556			5,317
Securities sold under repurchase agreements		757			879			914			831			759
Subordinated notes and trust preferred		1,500			1,075			—			—			—
Total interest expense		40,207			40,828			32,188			32,948			31,205
Net interest income		256,031			232,030			153,990			154,838			154,911
Provision for credit losses		—			1,700			1,100			800			700
Net interest income after provision for credit losses		256,031			230,330			152,890			154,038			154,211
Noninterest income:
Nonsufficient funds (NSF) fees		9,443			9,990			8,835			7,973			7,816
Credit card, debit card and ATM card income		7,474			7,728			6,688			6,480			5,971
Service charges on deposit accounts		6,104			5,597			5,020			4,989			4,998
Trust income		2,662			2,582			2,492			2,558			2,595
Mortgage income		2,010			2,455			839			990			722
Brokerage income		650			625			522			541			673
Bank owned life insurance income		1,545			1,502			1,314			1,321			1,289
Net (loss) gain on sale or write-down of assets		(385	)		(1,870	)		(3	)		2			58
Other noninterest income		4,885			6,897			4,966			5,104			4,022
Total noninterest income		34,388			35,506			30,673			29,958			28,144
Noninterest expense:
Salaries and benefits		77,282			69,356			52,978			52,941			51,073
Net occupancy and equipment		8,980			7,420			5,607			5,492			5,466
Credit and debit card, data processing and software amortization		11,421			9,158			4,989			4,904			4,573
Regulatory assessments and FDIC insurance		2,078			2,095			1,814			2,325			2,374
Core deposit intangibles amortization		3,363			2,705			1,248			1,265			1,319
Depreciation		4,768			4,212			3,286			3,111			3,104
Communications		3,195			3,012			2,214			2,183			2,270
Other real estate expense		46			57			68			120			83
Net (gain) loss on sale or write-down of other real estate		(130	)		(49	)		(115	)		(54	)		(177	)
Merger related expenses		544			46,402			—			—			—
Other noninterest expense		13,194			12,083			8,610			8,534			8,486
Total noninterest expense		124,741			156,451			80,699			80,821			78,571
Income before income taxes		165,678			109,385			102,864			103,175			103,784
Provision for income taxes		34,830			23,251			21,106			20,917			21,382
Net income available to common shareholders	$	130,848		$	86,134		$	81,758		$	82,258		$	82,402

(D) Interest income on securities was reduced by net premium amortization of $8,005,$8,556, $8,027, $7,607 and $6,589 for the three-month periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.

Page 8 of 17

Prosperity Bancshares, Inc. ^®

Financial Highlights (Unaudited)

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

	Three Months Ended
	Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019
Profitability
Net income (E) (F)	$	130,848		$	86,134		$	81,758		$	82,258		$	82,402
Basic earnings per share	$	1.39		$	1.01		$	1.19		$	1.18		$	1.18
Diluted earnings per share	$	1.39		$	1.01		$	1.19		$	1.18		$	1.18
Return on average assets (G) (K)		1.67	%		1.19	%		1.47	%		1.46	%		1.46	%
Return on average common equity (G) (K)		8.86	%		6.33	%		7.89	%		7.92	%		8.05	%
Return on average tangible common equity(G)(H) (K)		20.16	%		12.50	%		14.77	%		14.82	%		15.24	%
Tax equivalent net interest margin (E) (F)(I)		3.81	%		3.66	%		3.16	%		3.16	%		3.20	%
Efficiency ratio (H) (J) (L)		42.90	%		58.07	%		43.70	%		43.74	%		42.94	%
Liquidity and Capital Ratios
Equity to assets		18.45	%		18.55	%		18.68	%		18.45	%		18.38	%
Common equity tier 1 capital		12.27	%		12.30	%		16.68	%		16.59	%		16.76	%
Tier 1 risk-based capital		12.27	%		12.30	%		16.68	%		16.59	%		16.76	%
Total risk-based capital		12.81	%		12.70	%		17.34	%		17.25	%		17.42	%
Tier 1 leverage capital		9.49	%		10.42	%		10.86	%		10.67	%		10.59	%
Period end tangible equity to period end tangible assets (H)		8.96	%		9.21	%		10.90	%		10.75	%		10.66	%
Other Data
Weighted-average shares used in computing earnings per common share
Basic		94,371			85,573			68,738			69,806			69,847
Diluted		94,371			85,573			68,738			69,806			69,847
Period end shares outstanding		92,652			94,746			68,397			69,261			69,846
Cash dividends paid per common share	$	0.46		$	0.46		$	0.41		$	0.41		$	0.41
Book value per common share	$	63.20		$	63.02		$	60.34		$	59.60		$	58.84
Tangible book value per common share (H)	$	27.52		$	28.08		$	32.12		$	31.72		$	31.17
Common Stock Market Price
High	$	75.22		$	74.35		$	71.86		$	74.50		$	75.36
Low	$	42.02		$	66.60		$	62.17		$	61.85		$	61.65
Period end closing price	$	48.25		$	71.89		$	70.63		$	66.05		$	69.06
Employees – FTE		3,782			3,901			3,044			3,046			3,065
Number of banking centers		285			285			243			243			242

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

	Three Months Ended
	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Loan discount accretion
ASC 310-20	$22,463	$17,834	$1,006	$880	$1,474
ASC 310-30	$6,019	$5,908	$277	$347	$319
Securities net amortization	$194	$201	$157	$255	$234
Time deposits amortization	$2,270	$1,709	—	—	—

(F) Using effective tax rate of 21.0%, 21.3%, 20.5%, 20.3% and 20.6% for the three-month periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.

(G) Interim periods annualized.

(H) 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.

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

(J) Calculated by dividing total noninterest expense, excluding credit loss provisions and one-time merger and acquisition expenses, by net interest income plus noninterest income, excluding net gains and losses on the sale of assets and securities. Additionally, taxes are not part of this calculation.

(K) Excluding merger related expenses, net of tax, annualized returns on average assets, average common equity and average tangible common equity were 1.67%^(H), 8.89%^(H) and 20.23%^(H) for the three months ended March 31, 2020.

(L) Excluding merger related expenses, net of tax, the efficiency ratio was 42.71%^(H) for the three months ended March 31, 2020.

Page 9 of 17

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS	Three Months Ended
	Mar 31, 2020							Dec 31, 2019							Mar 31, 2019
	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate	(M)	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate	(M)	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		(M)
Interest-earning assets:
Loans held for sale	$	66,917		$	632	3.80%		$	57,171		$	570	3.96%		$	24,993		$	305	4.95%
Loans held for investment		17,263,098			236,517	5.51%			15,261,163			212,466	5.52%			10,367,242			129,760	5.08%
Loans held for investment - Warehouse Purchase Program		1,120,324			10,094	3.62%			996,903			9,874	3.93%			—			—		—
Total Loans		18,450,339			247,243	5.39%			16,315,237			222,910	5.42%			10,392,235			130,065	5.08%
Investment securities		8,434,196			48,282	2.30%	(N)		8,598,736			49,348	2.28%	(N)		9,299,963			55,648	2.43%		(N)
Federal funds sold and other earning assets		223,631			713	1.28%			305,596			600	0.78%			71,842			402	2.27%
Total interest-earning assets		27,108,166			296,238	4.40%			25,219,569			272,858	4.29%			19,764,040			186,115	3.82%
Allowance for credit losses(B)		(328,005	)						(86,795	)						(86,507	)
Noninterest-earning assets		4,577,251							3,930,651							2,864,039
Total assets	$	31,357,412						$	29,063,425						$	22,541,572
Interest-bearing liabilities:
Interest-bearing demand deposits	$	4,990,376		$	7,096	0.57%		$	4,233,880		$	5,755	0.54%		$	4,148,377		$	6,812	0.67%
Savings and money market deposits		7,965,440			14,122	0.71%			7,109,754			14,187	0.79%			5,472,789			11,184	0.83%
Certificates and other time deposits		3,404,748			13,800	1.63%			3,044,843			12,817	1.67%			2,062,753			7,132	1.40%
Other borrowings		832,961			2,932	1.42%			1,403,686			6,115	1.73%			844,873			5,317	2.55%
Securities sold under repurchase agreements		366,615			757	0.83%			351,580			879	0.99%			272,630			759	1.13%
Subordinated notes and trust preferred		125,694			1,500	4.80%			87,963			1,075	4.85%			—			—		—
Total interest-bearing liabilities		17,685,834			40,207	0.91%	(O)		16,231,706			40,828	1.00%	(O)		12,801,422			31,204	0.99%		(O)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		7,491,798							7,066,878							5,557,821
Allowance for credit losses on off-balance sheet credit exposures(B)		13,009							5,599							—
Other liabilities		262,523							315,256							86,868
Total liabilities		25,453,164							23,619,439							18,446,111
Shareholders' equity		5,904,248							5,443,986							4,095,461
Total liabilities and shareholders' equity	$	31,357,412						$	29,063,425						$	22,541,572
Net interest income and margin				$	256,031	3.80%					$	232,030	3.65%					$	154,911	3.18%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment					723							668							863
Net interest income and margin (tax equivalent basis)				$	256,754	3.81%					$	232,698	3.66%					$	155,774	3.20%

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

(N) Yield on securities was impacted by net premium amortization of $8,005, $8,556 and $6,589 for the three-month periods ended March 31, 2020, December 31, 2019 and March 31, 2020, respectively.

(O) Total cost of funds, including noninterest bearing deposits, was 0.64%, 0.70% and 0.69% for the three months ended March 31, 2020, December 31, 2019 and March 31, 2019, respectively.

Page 10 of 17

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

	Three Months Ended
	Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019
YIELD TREND (P)
Interest-Earning Assets:
Loans held for sale		3.80	%		3.96	%		5.01	%		5.12	%		4.95	%
Loans held for investment		5.51	%		5.52	%		5.05	%		5.08	%		5.09	%
Loans held for investment - Warehouse Purchase Program		3.62	%		3.93	%		—			—			—
Total loans		5.39	%		5.42	%		5.05	%		5.09	%		5.08	%
Investment securities (Q)		2.30	%		2.28	%		2.30	%		2.36	%		2.43	%
Federal funds sold and other earning assets		1.28	%		0.78	%		1.93	%		1.98	%		2.27	%
Total interest-earning assets		4.40	%		4.29	%		3.80	%		3.81	%		3.82	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits		0.57	%		0.54	%		0.62	%		0.63	%		0.67	%
Savings and money market deposits		0.71	%		0.79	%		0.90	%		0.90	%		0.83	%
Certificates and other time deposits		1.63	%		1.67	%		1.67	%		1.57	%		1.40	%
Other borrowings		1.42	%		1.73	%		2.29	%		2.52	%		2.55	%
Securities sold under repurchase agreements		0.83	%		0.99	%		1.15	%		1.15	%		1.13	%
Subordinated notes and trust preferred		4.80	%		4.85	%		—			—			—
Total interest-bearing liabilities		0.91	%		1.00	%		1.04	%		1.05	%		0.99	%
Net Interest Margin		3.80	%		3.65	%		3.14	%		3.14	%		3.18	%
Net Interest Margin (tax equivalent)		3.81	%		3.66	%		3.16	%		3.16	%		3.20	%

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

(Q) Yield on securities was impacted by net premium amortization of $8,005, $8,556, $8,027, $7,607 and $6,589 for the three-month periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.

Page 11 of 17

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

	Three Months Ended
	Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019
Balance Sheet Averages
Loans held for sale	$	66,917		$	57,171		$	21,077		$	24,787		$	24,993
Loans held for investment		17,263,098			15,261,163			10,589,272			10,495,638			10,367,242
Loans held for investment - Warehouse Purchase Program		1,120,324			996,903			—			—			—
Total Loans		18,450,339			16,315,237			10,610,349			10,520,425			10,392,235
Investment securities		8,434,196			8,598,736			8,758,056			9,185,877			9,299,963
Federal funds sold and other earning assets		223,631			305,596			74,751			64,335			71,842
Total interest-earning assets		27,108,166			25,219,569			19,443,156			19,770,637			19,764,040
Allowance for credit losses(B)		(328,005	)		(86,795	)		(86,996	)		(86,158	)		(86,507	)
Cash and due from banks		321,832			275,072			230,986			227,653			266,316
Goodwill		3,223,633			2,658,133			1,900,845			1,900,845			1,900,845
Core deposit intangibles, net		84,865			28,912			29,682			30,933			32,243
Other real estate		5,837			4,864			997			2,053			2,100
Fixed assets, net		325,337			308,692			263,495			260,054			257,811
Other assets		615,747			654,978			423,931			420,940			404,724
Total assets	$	31,357,412		$	29,063,425		$	22,206,096		$	22,526,957		$	22,541,572
Noninterest-bearing deposits	$	7,491,798		$	7,066,878		$	5,701,419		$	5,674,615		$	5,557,821
Interest-bearing demand deposits		4,990,376			4,233,880			3,575,249			3,714,968			4,148,377
Savings and money market deposits		7,965,440			7,109,754			5,524,277			5,647,494			5,472,789
Certificates and other time deposits		3,404,748			3,044,843			2,083,803			2,057,033			2,062,753
Total deposits		23,852,362			21,455,355			16,884,748			17,094,110			17,241,740
Other borrowings		832,961			1,403,686			749,814			883,557			844,873
Securities sold under repurchase agreements		366,615			351,580			315,277			288,666			272,630
Subordinated notes and trust preferred		125,694			87,963			—			—			—
Allowance for credit losses on off-balance sheet credit exposures(B)		13,009			5,673			—			—			—
Other liabilities		262,523			320,855			111,526			108,246			86,868
Shareholders' equity		5,904,248			5,443,986			4,144,731			4,152,378			4,095,461
Total liabilities and equity	$	31,357,412		$	29,063,425		$	22,206,096		$	22,526,957		$	22,541,572

Page 12 of 17

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

	Mar 31, 2020					Dec 31, 2019					Sep 30, 2019					Jun 30, 2019					Mar 31, 2019
Period End Balances
Loan Portfolio
Commercial and industrial	$	2,500,110		13.1	%	$	2,507,318		13.3	%	$	1,120,913		10.5	%	$	1,158,657		10.9	%	$	1,117,753		10.7	%
Warehouse purchase program		1,713,762		9.0	%		1,552,762		8.2	%		—		—			—		—			—		—
Construction, land development and other land loans		2,051,021		10.7	%		2,064,167		11.0	%		1,764,648		16.5	%		1,739,308		16.4	%		1,709,283		16.4	%
1-4 family residential		3,993,138		20.9	%		3,880,382		20.6	%		2,472,907		23.2	%		2,456,506		23.2	%		2,444,434		23.5	%
Home equity		516,003		2.6	%		507,029		2.6	%		250,775		2.3	%		256,772		2.4	%		262,276		2.5	%
Commercial real estate (includes multi-family residential)		6,576,213		34.4	%		6,556,285		34.9	%		3,652,176		34.3	%		3,551,668		33.6	%		3,496,688		33.6	%
Agriculture (includes farmland)		635,295		3.3	%		680,855		3.6	%		729,585		6.8	%		736,470		7.0	%		708,348		6.8	%
Consumer and other		423,000		2.2	%		398,271		2.1	%		342,839		3.2	%		321,023		3.0	%		294,405		2.8	%
Energy		718,653		3.8	%		698,277		3.7	%		339,502		3.2	%		366,971		3.5	%		380,835		3.7	%
Total loans	$	19,127,195				$	18,845,346				$	10,673,345				$	10,587,375				$	10,414,022
Deposit Types
Noninterest-bearing DDA	$	7,461,323		31.3	%	$	7,763,894		32.1	%	$	5,784,002		34.2	%	$	5,691,236		33.7	%	$	5,673,707		33.0	%
Interest-bearing DDA		4,980,090		20.9	%		5,100,938		21.1	%		3,564,419		21.0	%		3,530,581		20.9	%		3,875,109		22.5	%
Money market		5,341,525		22.4	%		5,099,024		21.1	%		3,457,728		20.4	%		3,438,164		20.3	%		3,302,445		19.2	%
Savings		2,716,247		11.4	%		2,756,297		11.3	%		2,027,621		12.0	%		2,158,159		12.8	%		2,293,134		13.3	%
Certificates and other time deposits		3,327,172		14.0	%		3,479,579		14.4	%		2,096,150		12.4	%		2,069,489		12.3	%		2,053,375		12.0	%
Total deposits	$	23,826,357				$	24,199,732				$	16,929,920				$	16,887,629				$	17,197,770
Loan to Deposit Ratio		80.3	%				77.9	%				63.0	%				62.7	%				60.6	%

Page 13 of 17

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

Construction Loans

	Mar 31, 2020					Dec 31, 2019					Sep 30, 2019					Jun 30, 2019					Mar 31, 2019
Single family residential construction	$	655,191		31.9	%	$	614,647		29.7	%	$	462,714		26.2	%	$	446,868		25.7	%	$	454,041		26.5	%
Land development		110,853		5.4	%		88,529		4.3	%		80,711		4.6	%		87,825		5.0	%		84,562		4.9	%
Raw land		265,943		12.9	%		233,559		11.3	%		171,609		9.7	%		168,531		9.7	%		156,674		9.2	%
Residential lots		136,861		6.7	%		138,961		6.7	%		123,265		7.0	%		121,586		7.0	%		119,301		7.0	%
Commercial lots		106,036		5.2	%		101,960		4.9	%		102,084		5.8	%		105,633		6.1	%		92,683		5.4	%
Commercial construction and other		778,731		37.9	%		890,597		43.1	%		825,001		46.7	%		809,680		46.5	%		802,996		47.0	%
Net unaccreted discount		(2,594	)				(4,086	)				(736	)				(815	)				(974	)
Total construction loans	$	2,051,021				$	2,064,167				$	1,764,648				$	1,739,308				$	1,709,283

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of March 31, 2020

	Houston		Dallas		Austin		OK City		Tulsa		Other (R)		Total
Collateral Type
Shopping center/retail	$	370,875	$	295,704	$	49,914	$	16,013	$	32,207	$	288,543	$	1,053,256
Commercial and industrial buildings		149,079		79,447		13,566		12,009		19,574		175,596		449,271
Office buildings		194,554		695,103		26,001		43,739		5,526		89,462		1,054,385
Medical buildings		38,769		50,872		12,832		24,711		25,620		51,514		204,318
Apartment buildings		358,231		726,145		33,207		16,028		43,127		235,595		1,412,333
Hotel		60,893		73,386		33,108		30,038		—		135,078		332,503
Other		52,565		32,165		15,770		10,376		4,444		84,748		200,068
Total	$	1,224,966	$	1,952,822	$	184,398	$	152,914	$	130,498	$	1,060,536	$	4,706,134	(S)

Acquired Loans

	Non-PCD Loans						PCD Loans							Total Acquired Loans
	Balance at Acquisition Date		Balance at Dec 31, 2019		Balance at Mar 31, 2020		Balance at Acquisition Date		Balance at Dec 31, 2019		Balance at Mar 31, 2020			Balance at Acquisition Date			Balance at Dec 31, 2019		Balance at Mar 31, 2020
Loan marks:
Acquired banks (T)	$	229,080	$	10,115	$	9,238	$	142,128	$	1,562	$	—		$	371,208		$	11,677	$	9,238
LegacyTexas merger(U)		116,519		100,015		78,375		177,924		165,758		29,460			294,443			265,773		107,835
Total		345,599		110,130		87,613		320,052		167,320		29,460	(W)		665,651			277,450		117,073
Acquired portfolio loan balances:
Acquired banks (T)		5,690,998		379,729		350,738		275,221		7,889		7,548			5,966,219			387,618		358,286
LegacyTexas merger(U)		6,595,161		5,722,811		5,393,630		414,352		402,896		347,612			7,009,513			6,125,707		5,741,242
Total		12,286,159		6,102,540		5,744,368		689,573		410,785		355,160			12,975,732	(V)		6,513,325		6,099,528
Acquired portfolio loan balances less loan marks	$	11,940,560	$	5,992,410	$	5,656,755	$	369,521	$	243,465	$	325,700		$	12,310,081		$	6,235,875	$	5,982,455

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

(S) Represents a portion of total commercial real estate loans of $6.576 billion as of March 31, 2020.

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

(U) LegacyTexas merger was completed on November 1, 2019.  During the fourth quarter of 2019, LegacyTexas added $7.010 billion in loans with related purchase accounting adjustments of $294.443 million at acquisition date.

(V) Actual principal balances acquired.

(W) ASU 2016-13 became effective for Prosperity on January 1, 2020.

Page 14 of 17

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

	Three Months Ended
	Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019
Asset Quality
Nonaccrual loans	$	58,194		$	55,243		$	49,973		$	37,289		$	37,491
Accruing loans 90 or more days past due		3,255			441			341			1,594			647
Total nonperforming loans		61,449			55,684			50,314			38,883			38,138
Repossessed assets		278			324			28			670			649
Other real estate		5,452			6,935			815			2,005			2,096
Total nonperforming assets	$	67,179		$	62,943		$	51,157		$	41,558		$	40,883
Nonperforming assets:
Commercial and industrial (includes energy)	$	15,987		$	17,086		$	15,974		$	17,592		$	17,119
Construction, land development and other land loans		1,125			1,177			874			2,296			1,488
1-4 family residential (includes home equity)		28,996			26,453			19,600			16,641			17,508
Commercial real estate (includes multi-family residential)		20,155			18,031			14,384			4,352			4,166
Agriculture (includes farmland)		896			101			285			616			542
Consumer and other		20			95			40			61			60
Total	$	67,179		$	62,943		$	51,157		$	41,558		$	40,883
Number of loans/properties		198			236			89			92			84
Allowance for credit losses at end of period(X)	$	327,206		$	87,469		$	87,061		$	87,006		$	86,091
Net charge-offs (recoveries):
Commercial and industrial (includes energy)	$	(28	)	$	76		$	(83	)	$	(828	)	$	1,719
Construction, land development and other land loans		(12	)		(6	)		(6	)		7			—
1-4 family residential (includes home equity)		5			20			(9	)		11			(3	)
Commercial real estate (includes multi-family residential)		(81	)		254			(1	)		(1	)		(1	)
Agriculture (includes farmland)		(1	)		(18	)		278			46			(1,278	)
Consumer and other		918			965			867			650			612
Total	$	801		$	1,291		$	1,046		$	(115	)	$	1,049
Asset Quality Ratios
Nonperforming assets to average interest-earning assets		0.25	%		0.25	%		0.26	%		0.21	%		0.21	%
Nonperforming assets to loans and other real estate		0.35	%		0.33	%		0.48	%		0.39	%		0.39	%
Net charge-offs to average loans (annualized)		0.02	%		0.03	%		0.04	%	—				0.04	%
Allowance for credit losses to total loans(X)		1.71	%		0.46	%		0.82	%		0.82	%		0.83	%
Allowance for credit losses to total loans, excluding Warehouse Purchase Program loans(X)		1.88	%		0.51	%		0.82	%		0.82	%		0.83	%

(X) ASU 2016-13 became effective for Prosperity on January 1, 2020.

Page 15 of 17

Prosperity Bancshares, Inc.^®

Notes to Selected Financial Data (Unaudited)

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

NOTES TO SELECTED FINANCIAL DATA

Prosperity’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews diluted earnings per share excluding merger related expenses, tangible book value per share, return on average tangible common equity, the tangible equity to tangible assets ratio and the efficiency ratio, excluding net gains and losses on the sale 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 to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30 and 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, 2020			Dec 31, 2019			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019
Reconciliation of diluted earnings per share to diluted earnings per share, excluding merger related expenses:
Net income	$	130,848		$	86,134		$	81,758		$	82,258		$	82,402
Add: merger related expenses, net of tax(Y)		430			36,658			—			—			—
Net income, excluding merger related expenses, net of tax(Y)	$	131,278		$	122,792		$	81,758		$	82,258		$	82,402
Weighted average diluted shares outstanding		94,371			85,573			68,738			69,806			69,847
Merger related expenses per diluted share, net of tax(Y)	$	—		$	0.43		$	—		$	—		$	—
Diluted earnings per share, excluding merger related expenses, net of tax(Y)	$	1.39		$	1.44		$	1.19		$	1.18		$	1.18
Reconciliation of return on average assets to return on average assets excluding merger related expenses, net of tax:
Net income, excluding merger related expenses, net of tax(Y)	$	131,278		$	122,792		$	81,758		$	82,258		$	82,402
Average total assets	$	31,357,412		$	29,063,425		$	22,206,096		$	22,526,957		$	22,541,572
Return on average assets excluding merger related expenses, net of tax (G) (Y)		1.67	%		1.69	%		1.47	%		1.46	%		1.46	%
Reconciliation of return on average common equity to return on average common equity excluding merger related expenses, net of tax:
Net income, excluding merger related expenses, net of tax(Y)	$	131,278		$	122,792		$	81,758		$	82,258		$	82,402
Average shareholders' equity	$	5,904,248		$	5,443,986		$	4,144,731		$	4,152,378		$	4,095,461
Return on average common equity excluding merger related expenses, net of tax (G) (Y)		8.89	%		9.02	%		7.89	%		7.92	%		8.05	%
Reconciliation of return on average common equity to return on average tangible common equity:
Net income	$	130,848		$	86,134		$	81,758		$	82,258		$	82,402
Average shareholders' equity	$	5,904,248		$	5,443,986		$	4,144,731		$	4,152,378		$	4,095,461
Less: Average goodwill and other intangible assets		(3,308,498	)		(2,687,045	)		(1,930,527	)		(1,931,778	)		(1,933,088	)
Average tangible shareholders’ equity	$	2,595,750		$	2,756,941		$	2,214,204		$	2,220,600		$	2,162,373
Return on average tangible common equity(G)		20.16	%		12.50	%		14.77	%		14.82	%		15.24	%
Reconciliation of return on average common equity to return on average tangible common equity excluding merger related expenses, net of tax:
Net income excluding merger related expenses, net of tax(Y)	$	131,278		$	122,792		$	81,758		$	82,258		$	82,402
Average shareholders' equity	$	5,904,248		$	5,443,986		$	4,144,731		$	4,152,378		$	4,095,461
Less: Average goodwill and other intangible assets		(3,308,498	)		(2,687,045	)		(1,930,527	)		(1,931,778	)		(1,933,088	)
Average tangible shareholders’ equity	$	2,595,750		$	2,756,941		$	2,214,204		$	2,220,600		$	2,162,373
Return on average tangible common equity excluding merger related expenses, net of tax (F) (Y)		20.23	%		17.82	%		14.77	%		14.82	%		15.24	%

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

Page 16 of 17

	Three Months Ended
	Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019
Reconciliation of book value per share to tangible book value per share:
Shareholders’ equity	$	5,855,574		$	5,970,835		$	4,126,806		$	4,127,895		$	4,109,790
Less: Goodwill and other intangible assets		(3,306,185	)		(3,310,075	)		(1,929,896	)		(1,931,144	)		(1,932,409	)
Tangible shareholders’ equity	$	2,549,389		$	2,660,760		$	2,196,910		$	2,196,751		$	2,177,381
Period end shares outstanding		92,652			94,746			68,397			69,261			69,846
Tangible book value per share:	$	27.52		$	28.08		$	32.12		$	31.72		$	31.17
Reconciliation of equity to assets ratio to period end tangible equity to period end tangible assets ratio:
Tangible shareholders’ equity	$	2,549,389		$	2,660,760		$	2,196,910		$	2,196,751		$	2,177,381
Total assets	$	31,743,499		$	32,185,708		$	22,092,817		$	22,375,221		$	22,354,241
Less: Goodwill and other intangible assets		(3,306,185	)		(3,310,075	)		(1,929,896	)		(1,931,144	)		(1,932,409	)
Tangible assets	$	28,437,314		$	28,875,633		$	20,162,921		$	20,444,077		$	20,421,832
Period end tangible equity to period end tangible assets ratio:		8.96	%		9.21	%		10.90	%		10.75	%		10.66	%
Reconciliation of allowance for credit losses to total loans to allowance for credit losses to total loans, excluding Warehouse Purchase Program loans:
Allowance for credit losses (X)	$	327,206		$	87,469		$	87,061		$	87,006		$	86,091
Total loans	$	19,127,195		$	18,845,346		$	10,673,345		$	10,587,375		$	10,414,022
Less: Warehouse Purchase Program loans		1,713,762			1,552,762			—			—			—
Total loans less Warehouse Purchase Program loans	$	17,413,433		$	17,292,584		$	10,673,345		$	10,587,375		$	10,414,022
Allowance for credit losses to total loans, excluding Warehouse Purchase Program loans		1.88	%		0.51	%		0.82	%		0.82	%		0.83	%
Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets and securities:
Noninterest expense	$	124,741		$	156,451		$	80,699		$	80,821		$	78,571
Net interest income	$	256,031		$	232,030		$	153,990		$	154,838		$	154,911
Noninterest income		34,388			35,506			30,673			29,958			28,144
Less: net (loss) gain on sale of assets		(385	)		(1,870	)		(3	)		2			58
Noninterest income excluding net gains and losses on the sale of assets and securities		34,773			37,376			30,676			29,956			28,086
Total income excluding net gains and losses on the sale of assets and securities	$	290,804		$	269,406		$	184,666		$	184,794		$	182,997
Efficiency ratio, excluding net gains and losses on the sale of assets and securities		42.90	%		58.07	%		43.70	%		43.74	%		42.94	%
Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets and securities and merger related expenses:
Noninterest expense	$	124,741		$	156,451		$	80,699		$	80,821		$	78,571
Less: merger related expenses		544			46,402			—			—			—
Noninterest expense excluding merger related expenses	$	124,197		$	110,049		$	80,699		$	80,821		$	78,571
Net interest income	$	256,031		$	232,030		$	153,990		$	154,838		$	154,911
Noninterest income		34,388			35,506			30,673			29,958			28,144
Less: net (loss) gain on sale of assets		(385	)		(1,870	)		(3	)		2			58
Noninterest income excluding net gains and losses on the sale of assets and securities		34,773			37,376			30,676			29,956			28,086
Total income excluding net gains and losses on the sale of assets and securities	$	290,804		$	269,406		$	184,666		$	184,794		$	182,997
Efficiency ratio, excluding net gains and losses on the sale of assets and securities and merger related expenses		42.71	%		40.85	%		43.70	%		43.74	%		42.94	%

Page 17 of 17

XML

Document and Entity Information	Apr. 29, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Apr. 29, 2020
Entity Registrant Name	PROSPERITY BANCSHARES INC
Entity Central Index Key	0001068851
Entity Emerging Growth Company	false
Entity File Number	001-35388
Entity Incorporation State Country Code	TX
Entity Tax Identification Number	74-2331986
Entity Address Address Line1	4295 San Felipe
Entity Address City Or Town	Houston
Entity Address State Or Province	TX
Entity Address Postal Zip Code	77027
City Area Code	281
Local Phone Number	269-7199
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $1.00 per share
Trading Symbol	PB
Security Exchange Name	NYSE