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):  October 28, 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 October 28, 2020, Prosperity Bancshares, Inc. publicly disseminated a press release announcing its financial results for the third quarter ended September 30, 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 October 28, 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: October 28, 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 THIRD QUARTER

2020 EARNINGS

• Third quarter earnings per share (diluted) of $1.40, an increase of 17.6% compared to the third quarter 2019

• Third quarter net income of $130.1 million

• Deposits increased $306.5 million or 1.2% (4.7% annualized) during the third quarter 2020

• Allowance for credit losses on loans and off-balance sheet credit exposure was $353.6 million

• Allowance for credit losses to total loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program loans, of 1.94%⁽¹⁾

• Nonperforming assets remain low at 0.24% of third quarter average interest-earning assets

• Return (annualized) on third quarter average assets of 1.58%

• Returns (annualized) on third quarter average common equity of 8.64% and average tangible common equity of 19.19%⁽¹⁾

• Third quarter efficiency ratio of 40.17%⁽¹⁾

• Increase in dividend of 6.5% to $0.49 for the fourth quarter 2020

HOUSTON, October 28, 2020. Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, “Prosperity”), reported net income for the quarter ended September 30, 2020 of $130.1 million compared with $81.8 million for the same period in 2019. Net income per diluted common share was $1.40 compared with $1.19 for the same period in 2019. Additionally, deposits increased $306.5 million or 1.2% (4.7% annualized) during the third quarter 2020 and nonperforming assets remain low at 0.24% of third quarter average interest-earning assets with an annualized return on third quarter average assets of 1.58%. On November 1, 2019, LegacyTexas Financial Group, Inc. (“LegacyTexas”) merged with Prosperity Bancshares and LegacyTexas Bank merged with Prosperity Bank (collectively, the “Merger”).

“We are pleased with our third quarter 2020 results of $1.40 in earnings per share and annualized returns on average tangible equity of 19.19% and on average assets of 1.58%. Because of these metrics, our strong capital position and confidence in our business, Prosperity Bancshares’ Board has approved a 6.5% increase in the fourth quarter dividend to $0.49 per share,” said David Zalman, Prosperity’s Senior Chairman and Chief Executive Officer.

“Our asset quality remains sound, with nonperforming assets at $69.5 million or 0.24% of average interest earning assets for the third quarter, a decrease of $8.4 million compared with the second quarter 2020. Loans on forbearance decreased from 17.2% of total loans as of June 30, 2020 to 1.1% as of October 26, 2020. Our allowance for credit losses as a percent of total loans is higher than at any time in my banking career and equates to a coverage ratio of 5.6 times our nonperforming loans,” continued 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 of 21

“Linked quarter deposits increased $306.5 million or 1.2% (4.7% annualized) from $26.153 billion at June 30, 2020. Based on our experience, people are spending more money and generating more account activity than earlier this year. Mortgage production continues to be robust, with consumers taking advantage of the historically low interest rates,” stated Zalman.

“We are starting to see green shoots in the economy, with consumers and businesses feeling more confident. The unemployment numbers are better than predicted and we believe third quarter GDP will also be higher than predicted,” concluded Zalman.

Results of Operations for the Three Months Ended September 30, 2020

Net income was $130.1 million⁽²⁾ for the three months ended September 30, 2020 compared with $81.8 million⁽³⁾ for the same period in 2019, an increase of $48.3 million or 59.1%, primarily due to the Merger. Net income per diluted common share was $1.40 for the three months ended September 30, 2020 compared with $1.19 for the same period in 2019, an increase of 17.6%. Net income was $130.1 million⁽²⁾ for the three months ended September 30, 2020 compared with $130.9 million⁽⁴⁾ for the three months ended June 30, 2020, a decrease of $837 thousand or 0.6%. Net income per diluted common share was $1.40 for the three months ended September 30, 2020 compared with $1.41 for the three months ended June 30, 2020, a decrease of 0.7%. Net income for the second quarter of 2020 included a tax benefit for net operating losses (“NOL”) of $20.1 million and merger related expenses of $7.5 million. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended September 30, 2020 were 1.58%, 8.64% and 19.19%⁽¹⁾, respectively. Prosperity’s efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 40.17%⁽¹⁾ for the three months ended September 30, 2020.

Net interest income before provision for credit losses for the three months ended September 30, 2020 was $258.1 million compared with $154.0 million for the same period in 2019, an increase of $104.1 million or 67.6%. The increase was primarily due to the Merger and the increase in loan discount accretion of $21.3 million. On a linked quarter basis, net interest income before provision for credit losses was $258.1 million compared with $259.0 million for the three months ended June 30, 2020, a decrease of $842 thousand or 0.3%. The decrease was primarily due to a decrease in loan discount accretion of $1.7 million and interest income on securities partially offset by decrease in interest expense.

The net interest margin on a tax equivalent basis was 3.57% for the three months ended September 30, 2020 compared with 3.16% for the same period in 2019. The change was primarily due to increased interest-earning assets related to the Merger and a $21.3 million increase in loan discount accretion. On a linked quarter basis, the net interest margin on a tax equivalent basis was 3.57% for the three months ended September 30, 2020 compared with 3.69% for the three months ended June 30, 2020. This change was primarily due to a $1.7 million decrease in loan discount accretion, higher net premium amortization on securities and higher cash balances due to excess liquidity.

Noninterest income was $34.9 million for the three months ended September 30, 2020 compared with $30.7 million for the same period in 2019, an increase of $4.3 million or 13.9%. This increase was primarily due to increases in mortgage income, which was primarily due to the Merger and increased activity, credit card, debit card and ATM card income and other noninterest income primarily due to the Merger, that was partially offset by a decrease in nonsufficient funds (“NSF”) fees. On a linked quarter basis, noninterest income increased $9.2 million or 36.0% to $34.9 million compared with $25.7 million for the three months ended June 30, 2020. This increase was primarily due to a lower loss on write-down of assets and increases in NSF fees, other noninterest income, mortgage income and credit card, debit card and ATM income.

Noninterest expense was $117.9 million for the three months ended September 30, 2020 compared with $80.7 million for the same period in 2019, an increase of $37.2 million or 46.1%, primarily due to the Merger. On a linked quarter basis, noninterest expense decreased $16.4 million or 12.2% to $117.9 million compared with $134.4 million for the three months ended June 30, 2020. The decrease was primarily due to no merger related expenses in the third quarter and decreases in salaries and benefits, credit and debit card, data processing and software amortization and other noninterest expense due to efficiencies gained following the LegacyTexas system conversion.

Results of Operations for the Nine Months Ended September 30, 2020

Net income was $391.8 million⁽⁵⁾ for the nine months ended September 30, 2020 compared with $246.4 million⁽⁶⁾ for the same period in 2019, an increase of $145.4 million or 59.0%. Net income per diluted common share was $4.20 for the nine months ended

______________

(2) Includes purchase accounting adjustments of $18.7 million, net of tax, primarily comprised of loan discount accretion of $22.5 million for the three months ended September 30, 2020.

(3) Includes purchase accounting adjustments of $895 thousand, net of tax, primarily comprised of loan discount accretion of $1.3 million for the three months ended September 30, 2019.

(4) Includes purchase accounting adjustments of $20.4 million, net of tax, primarily comprised of loan discount accretion of $24.3 million, and merger related expenses of $7.5 million for the three months ended June 30, 2020.

(5) Includes purchase accounting adjustments of $63.3 million, net of tax, primarily comprised of loan discount accretion of $75.3 million, and merger related expenses of $8.0 million for the nine months ended September 30, 2020.

(6) Includes purchase accounting adjustments of $2.9 million, net of tax, primarily comprised of loan discount accretion of $4.3 million for the nine months ended September 30, 2019.

Page 2 of 21

September 30, 2020 compared with $3.55 for the same period in 2019, an increase of 18.3%.The increase in net income and earnings per diluted common share for the nine months ended September 30, 2020 was primarily due to the Merger and a tax benefit for NOLs of $20.1 million, partially offset by merger related expenses of $8.0 million.Annualized returns on average assets, average common equity and average tangible common equity for the nine months ended September 30, 2020 were 1.62%, 8.78% and 19.77%⁽¹⁾, respectively. Excluding merger related expenses, net of tax, and the NOL tax benefit, annualized returns on average assets, average common equity and average tangible common equity for the nine months ended September 30, 2020 were 1.56%⁽¹⁾, 8.47%⁽¹⁾ and 19.07%⁽¹⁾, respectively. Prosperity’s efficiency ratio (excluding net gains and losses on the sale of assets and taxes) was 43.19%⁽¹⁾ for the nine months ended September 30, 2020.Excluding merger related expenses, the efficiency ratio was 42.27%⁽¹⁾ for the nine months ended September 30, 2020.

Net interest income before provision for credit losses for the nine months ended September 30, 2020 was $773.1 million compared with $463.7 million for the same period in 2019, an increase of $309.4 million or 66.7%. This change was primarily due to the Merger and the increase in loan discount accretion of $71.0 million.  

The net interest margin on a tax equivalent basis for the nine months ended September 30, 2020 was 3.69% compared with 3.17% for the same period in 2019. This change was primarily due to increased interest-earning assets related to the Merger and the increase in loan discount accretion of $71.0 million.

Noninterest income was $95.0 million for the nine months ended September 30, 2020 compared with $88.8 million for the same period in 2019, an increase of $6.2 million or7.0%. This increase was primarily due to increases in mortgage income, which was primarily due to the Merger and increased activity, credit card, debit card and ATM card income, other noninterest income and service charges on deposit accounts due to the Merger, partially offset by a net loss on write-down of assets of $4.9 million and decrease in NSF fees.

Noninterest expense was $377.0 million for the nine months ended September 30, 2020 compared with $240.1 million for the same period in 2019, an increase of $136.9 million or 57.0%. The change was primarily due to the increase in salaries and benefits, credit and debit card, data processing and software amortization, net occupancy and equipment and other noninterest expense due to the Merger and $8.0 million of merger related expenses.

Balance Sheet Information

At September 30, 2020, Prosperity had $33.198 billion in total assets, an increase of $11.105 billion or 50.3% compared with $22.093 billion at September 30, 2019.

Loans at September 30, 2020 were $20.796 billion, an increase of $10.122 billion or 94.8%, compared with $10.673 billion at September 30, 2019. Linked quarter loans decreased $229.5 million or 1.1% from $21.025 billion at June 30, 2020. At September 30, 2020, the Company had $1.394 billion of Paycheck Protection Program (“PPP”) loans.

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 September 30, 2020, oil and gas loans totaled $604.7 million (net of discount and excluding PPP loans totaling $115.3 million) or 2.9% of total loans, of which $359.6 million were production loans and $245.1 million were servicing loans, compared with total oil and gas loans of $339.5 million (net of discount) or 3.2% of total loans at September 30, 2019, of which $82.4 million were production loans and $257.1 million were servicing loans. In addition, as of September 30, 2020, Prosperity had total unfunded commitments to oil and gas companies of $258.1 million compared with total unfunded commitments to oil and gas companies of $248.9 million as of September 30, 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 September 30, 2020, loans to hotels totaled $386.3 million (excluding PPP loans totaling $8.8 million) or 1.9% of total loans and loans to restaurants totaled $215.1 million (excluding PPP loans totaling $110.9 million) or 1.0% of total loans.

Deposits at September 30, 2020 were $26.459 billion, an increase of $9.529 billion or 56.3%, compared with $16.930 billion at September 30, 2019. Linked quarter deposits increased $306.5 million or 1.2% from $26.153 billion at June 30, 2020.

Page 3 of 21

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)
	Sep 30, 2020		Jun 30, 2020		Mar 31, 2020		Dec 31, 2019		Sep 30, 2019
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Loans acquired (including new production since acquisition date):
LegacyTexas:
Loans held for sale (1)	$	—	$	15,725	$	54,229	$	66,745	$	—
Loans held for investment		6,349,251		6,601,006		6,713,337		6,636,855		—
Loans held for investment - Warehouse Purchase Program		2,730,614		2,557,183		1,713,762		1,552,762		—
All other loans		11,715,776		11,851,259		10,645,867		10,588,984		10,673,345
Total loans	$	20,795,641	$	21,025,173	$	19,127,195	$	18,845,346	$	10,673,345
Deposits assumed (including new deposits since acquisition date):
LegacyTexas	$	5,977,357	$	5,997,395	$	5,605,986	$	6,141,546	$	—
All other deposits		20,481,849		20,155,293		18,220,371		18,058,186		16,929,920
Total deposits	$	26,459,206	$	26,152,688	$	23,826,357	$	24,199,732	$	16,929,920

(1) The LegacyTexas mortgage business was combined with the Prosperity Bank mortgage business in the second quarter of 2020. Accordingly, all loans held for sale will be reported only for Prosperity Bank going forward and not separately tracked for LegacyTexas.  

Excluding loans acquired in the Merger and new production by the acquired lending operations since November 1, 2019, loans at September 30, 2020 grew $1.042 billion or 9.8% compared with September 30, 2019 and decreased $135.5 million or 1.1% compared with June 30, 2020.

Excluding deposits assumed in the Merger and new deposits generated at the acquired banking centers since November 1, 2019, deposits at September 30, 2020 grew $3.552 billion or 21.0% compared with September 30, 2019 and grew $326.6 million or 1.6% compared with June 30, 2020.

Asset Quality

Nonperforming assets totaled $69.5 million or 0.24% of quarterly average interest-earning assets at September 30, 2020, compared with $51.2 million or 0.26% of quarterly average interest-earning assets at September 30, 2019, and $77.9 million or 0.28% of quarterly average interest-earning assets at June 30, 2020.

The allowance for credit losses on loans was $323.6 million or 1.56% of total loans at September 30, 2020 compared to $324.2 million or 1.54% of total loans at June 30, 2020 and $87.1 million or 0.82% of total loans at September 30, 2019. The allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and PPP loans, was 1.94%⁽¹⁾ at September 30, 2020 compared with 1.90%⁽¹⁾ at June 30, 2020 and 0.82%⁽¹⁾ at September 30, 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 $108.7 million, of which $102.5 million was related to LegacyTexas and an increase in allowance for credit losses on off-balance sheet credit exposures of $24.4 million, of which $6.3 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 $131.8 million, of which $130.3 million was related to LegacyTexas, due to the reclass of purchased credit deteriorated (“PCD”) discounts as a result of adopting CECL.

The provision for credit losses was $10.0 million for the three months ended September 30, 2020 compared with $1.1 million for the three months ended September 30, 2019 and $10.0 million for the three months ended June 30, 2020.  The provision for credit losses was $20.0 million for the nine months ended September 30, 2020 compared with $2.6 million for the nine months ended September 30, 2019.

Net charge-offs were $10.6 million for the three months ended September 30, 2020 compared with net charge-offs of $1.0 million for the three months ended September 30, 2019 and net charge-offs of $13.0 million for the three months ended June 30, 2020. Net charge-offs for the third quarter of 2020 included $8.6 million related to resolved PCD loans. These PCD loans had specific reserves of $15.7 million, of which $8.6 million was allocated to the charge-offs and $7.1 million was moved to the general reserve. Additionally, $6.1 million of specific reserves on resolved PCD loans was released to the general reserve without taking any charge-off. Net charge-offs were $24.4 million for the nine months ended September 30, 2020 compared with $2.0 million for the nine

Page 4 of 21

months ended September 30, 2019.Net charge-offs for the nine months ended September 30, 2020 included $21.0 million related to resolved PCD loans. These PCD loans had specific reserves of $44.2 million, of which $21.0 million was allocated to the charge-offs and $23.2million was moved to the general reserve.

Dividend

Prosperity Bancshares declared a fourth quarter cash dividend of $0.49 per share to be paid on January 4, 2021 to all shareholders of record as of December 15, 2020.

Stock Repurchase Program

On January 29, 2020, 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 28, 2021, at the discretion of management. Prosperity Bancshares repurchased 98.0 thousand shares of its common stock at an average weighted price of $49.99 during the three months ended September 30, 2020 and 2.2 million shares of its common stock at an average weighted price of $52.47 per share during the nine months ended September 30, 2020.

Planned Redemption of Outstanding Subordinated Notes

In September 2020, Prosperity Bancshares notified the Trustee of its intent to redeem $125.0 million in subordinated notes assumed in the Merger. The redemption will occur on December 1, 2020 and will be funded by dividends from Prosperity Bank.

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. On March 13, 2020, the U.S. President announced a national emergency relating to the pandemic, which has since been extended. On August 8, 2020, the Governor of Texas extended the 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 and on September 17, 2020, signed an Executive Order that detailed the ongoing plan to open businesses and activities in Texas. On September 25, 2020, the Governor of Oklahoma extended the executive order that declared an emergency caused by the impending threat of COVID-19 to the people of Oklahoma. The Bank is considered an essential business and is closely monitoring the latest developments regarding COVID-19. The COVID-19 pandemic has resulted in significant economic uncertainties that have had, and could continue to have, an adverse impact on the Company’s operating income, financial condition and cash flows. The extent to which the COVID-19 pandemic will impact the Company’s operations and financial results during the remainder of 2020 cannot be reasonably or reliably estimated at this time.

The health and safety of the Bank’s associates, customers, and communities are of utmost importance; and the Company has taken additional measures in an effort to ensure this safety, including restricting nonessential employee travel, expanding remote access availability, distancing work stations, professional cleaning of its facilities, and signs and distancing reminders for customers in the banking centers. Further, the Company remains committed to providing uninterrupted and reliable banking service and has business continuity plans and protocols in place to ensure critical operations are able to continue without disruption.

In response to the COVID-19 pandemic, on March 27, 2020 the President of the United States signed the CARES Act into law. The CARES Act provides assistance for American workers, families and small businesses. The Paycheck Protection Program (“PPP”), established by the CARES Act and implemented by the Small Business Administration (“SBA”) with support from the Department of the Treasury, provides small businesses with funds to pay payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities. On June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act of 2020 (“PPP Flexibility Act”), which modified the covered expense period from eight weeks to 24 weeks, extended the maturity date of the loans out to five years and gave greater flexibility to employers having difficulty hiring workers. PPP loans originated prior to June 5, 2020, have a two year term and earn interest at 1%. PPP loans originated on and after June 5, 2020, have a five year term. The loans are eligible for early forgiveness by the SBA as provided by the CARES Act and the PPP Flexibility Act and related regulations and guidance. Additionally, the Bank is entitled to a per loan processing fee based on a tiered schedule ranging from 5% to 1% of the loan balance. The PPP application period expired on August 8, 2020.  As of September 30, 2020, the Company has obtained SBA approvals on approximately 11,948 loans totaling $1.394 billion. The Company has also provided relief to its loan customers through loan extensions and deferrals.

Page 5 of 21

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 $318.0 million in cash, made up of $308.6 million in cash and $9.4 million in cash for taxes withheld, for all outstanding shares of LegacyTexas. This resulted in goodwill of $1.331 billion as of September 30, 2020, which was subject to subsequent fair value adjustments. During the second quarter of 2020, Prosperity completed the operational conversion of LegacyTexas Bank.

Conference Call

Prosperity’s management team will host a conference call on Wednesday, October 28, 2020 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity’s third 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 participant elite entry number is 6937658.

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

Non-GAAP Financial Measures

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

Prosperity Bancshares, Inc. ®

As of September 30, 2020, Prosperity Bancshares, Inc.^® is a $33.198 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 September 30, 2020, Prosperity operated 275 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 65 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.

Page 6 of 21

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, Quarterly Report on Form 10-Q for the period ended June 30, 2020, and other reports and statements Prosperity Bancshares has filed with the Securities and Exchange Commission (“SEC”). Copies of the SEC filings for Prosperity Bancshares may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

Page 7 of 21

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

 - - -

Page 8 of 21

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(In thousands)

	Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019
Balance Sheet Data (at period end)
Loans held for sale	$	51,694		$	39,516		$	65,035		$	80,959		$	20,284
Loans held for investment		18,013,333			18,428,474			17,348,398			17,211,625			10,653,061
Loans held for investment - Warehouse Purchase Program		2,730,614			2,557,183			1,713,762			1,552,762			—
Total loans		20,795,641			21,025,173			19,127,195			18,845,346			10,673,345
Investment securities(A)		7,431,495			7,717,586			8,295,495			8,570,056			8,495,206
Federal funds sold		56,469			568			676			519			521
Allowance for credit losses(B)		(323,635	)		(324,205	)		(327,206	)		(87,469	)		(87,061	)
Cash and due from banks		1,031,193			332,873			381,458			573,589			420,359
Goodwill		3,231,692			3,231,964			3,223,144			3,223,671			1,900,845
Core deposit intangibles, net		76,478			79,748			83,041			86,404			29,051
Other real estate owned		11,548			6,160			5,452			6,936			815
Fixed assets, net		325,994			324,975			327,293			326,832			263,703
Other assets		560,724			571,807			626,951			639,824			396,033
Total assets	$	33,197,599		$	32,966,649		$	31,743,499		$	32,185,708		$	22,092,817
Noninterest-bearing deposits	$	8,998,328		$	9,040,257		$	7,461,323		$	7,763,894		$	5,784,002
Interest-bearing deposits		17,460,878			17,112,431			16,365,034			16,435,838			11,145,918
Total deposits		26,459,206			26,152,688			23,826,357			24,199,732			16,929,920
Other borrowings		2,570			103,131			1,338,429			1,303,730			600,795
Securities sold under repurchase agreements		380,274			365,335			344,695			377,294			311,404
Subordinated notes		125,146			125,365			125,585			125,804			—
Allowance for credit losses on off-balance sheet credit exposures(B)		29,947			29,947			29,947			5,599			—
Other liabilities		165,579			242,061			222,912			202,714			123,892
Total liabilities		27,162,722			27,018,527			25,887,925			26,214,873			17,966,011
Shareholders' equity(C)		6,034,877			5,948,122			5,855,574			5,970,835			4,126,806
Total liabilities and equity	$	33,197,599		$	32,966,649		$	31,743,499		$	32,185,708		$	22,092,817

(A) Includes $(442), $(1,767), $(3,421),$763 and $49 in unrealized (losses) gains on available for sale securities for the quarterly periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively.

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

(C) Includes $(349), $(1,396), $(2,703),$602 and $38 in after-tax unrealized (losses) gains on available for sale securities for the quarterly periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively.

Page 9 of 21

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(In thousands)

	Three Months Ended															Year-to-Date
	Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Sep 30, 2020			Sep 30, 2019
Income Statement Data
Interest income:
Loans	$	244,255		$	242,772		$	247,243		$	222,910		$	134,943		$	734,270		$	398,533
Securities(D)		38,033			43,776			48,282			49,348			50,872			130,091			160,464
Federal funds sold and other earning assets		144			45			713			600			363			902			1,083
Total interest income		282,432			286,593			296,238			272,858			186,178			865,263			560,080
Interest expense:
Deposits		22,458			25,269			35,018			32,759			26,939			82,745			78,629
Other borrowings		52			533			2,932			6,115			4,335			3,517			15,208
Securities sold under repurchase agreements		309			337			757			879			914			1,403			2,504
Subordinated notes and trust preferred		1,500			1,499			1,500			1,075			—			4,499			—
Total interest expense		24,319			27,638			40,207			40,828			32,188			92,164			96,341
Net interest income		258,113			258,955			256,031			232,030			153,990			773,099			463,739
Provision for credit losses		10,000			10,000			-			1,700			1,100			20,000			2,600
Net interest income after provision for credit losses		248,113			248,955			256,031			230,330			152,890			753,099			461,139
Noninterest income:
Nonsufficient funds (NSF) fees		7,156			5,645			9,443			9,990			8,835			22,244			24,624
Credit card, debit card and ATM card income		8,315			7,263			7,474			7,728			6,688			23,052			19,139
Service charges on deposit accounts		5,920			5,790			6,104			5,597			5,020			17,814			15,007
Trust income		2,502			2,242			2,662			2,582			2,492			7,406			7,645
Mortgage income		2,958			1,820			2,010			2,455			839			6,788			2,551
Brokerage income		628			584			650			625			522			1,862			1,736
Bank owned life insurance income		1,449			1,508			1,545			1,502			1,314			4,502			3,924
Net (loss) gain on sale or write-down of assets		(528	)		(3,945	)		(385	)		(1,870	)		(3	)		(4,858	)		57
Other noninterest income		6,524			4,768			4,885			6,897			4,966			16,177			14,092
Total noninterest income		34,924			25,675			34,388			35,506			30,673			94,987			88,775
Noninterest expense:
Salaries and benefits		75,068			79,109			77,282			69,356			52,978			231,459			156,992
Net occupancy and equipment		8,644			9,190			8,980			7,420			5,607			26,814			16,565
Credit and debit card, data processing and software amortization		8,776			11,690			11,421			9,158			4,989			31,887			14,466
Regulatory assessments and FDIC insurance		2,512			2,601			2,078			2,095			1,814			7,191			6,513
Core deposit intangibles amortization		3,270			3,293			3,363			2,705			1,248			9,926			3,832
Depreciation		4,605			4,598			4,768			4,212			3,286			13,971			9,501
Communications		3,027			3,324			3,195			3,012			2,214			9,546			6,667
Other real estate expense		258			40			46			57			68			344			271
Net (gain) loss on sale or write-down of other real estate		(137	)		4			(130	)		(49	)		(115	)		(263	)		(346	)
Merger related expenses		—			7,474			544			46,402			—			8,018			—
Other noninterest expense		11,896			13,045			13,194			12,083			8,610			38,135			25,630
Total noninterest expense		117,919			134,368			124,741			156,451			80,699			377,028			240,091
Income before income taxes		165,118			140,262			165,678			109,385			102,864			471,058			309,823
Provision for income taxes		35,054			9,361			34,830			23,251			21,106			79,245			63,405
Net income available to common shareholders	$	130,064		$	130,901		$	130,848		$	86,134		$	81,758		$	391,813		$	246,418

(D) Interest income on securities was reduced by net premium amortization of $10,089, $9,224, $8,005,$8,556 and $8,027 for the three-month periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively, and $27,318 and $22,223 for the nine-month periods ended September 30, 2020 and September 30, 2019, respectively.

Page 10 of 21

Prosperity Bancshares, Inc. ^®

Financial Highlights (Unaudited)

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

	Three Months Ended																		Year-to-Date
	Sep 30, 2020			Jun 30, 2020				Mar 31, 2020				Dec 31, 2019				Sep 30, 2019			Sep 30, 2020				Sep 30, 2019
Profitability
Net income (E) (F)	$	130,064		$	130,901			$	130,848			$	86,134			$	81,758		$	391,813			$	246,418
Basic earnings per share	$	1.40		$	1.41			$	1.39			$	1.01			$	1.19		$	4.20			$	3.55
Diluted earnings per share	$	1.40		$	1.41			$	1.39			$	1.01			$	1.19		$	4.20			$	3.55
Return on average assets (G)		1.58	%		1.61	%	(K)		1.67	%	(K)		1.19	%	(K)		1.47	%		1.62	%	(K)		1.47	%
Return on average common equity (G)		8.64	%		8.84	%	(K)		8.86	%	(K)		6.33	%	(K)		7.89	%		8.78	%	(K)		7.95	%
Return on average tangible common equity(G)(H)		19.19	%		19.98	%	(K)		20.16	%	(K)		12.50	%	(K)		14.77	%		19.77	%	(K)		14.94	%
Tax equivalent net interest margin (E) (F)(I)		3.57	%		3.69	%			3.81	%			3.66	%			3.16	%		3.69	%			3.17	%
Efficiency ratio (H) (J)		40.17	%		46.56	%	(L)		42.90	%	(L)		58.07	%	(L)		43.70	%		43.19	%	(L)		43.46	%
Liquidity and Capital Ratios
Equity to assets		18.18	%		18.04	%			18.45	%			18.55	%			18.68	%		18.18	%			18.68	%
Common equity tier 1 capital		13.17	%		12.29	%			12.27	%			12.30	%			16.68	%		13.17	%			16.68	%
Tier 1 risk-based capital		13.17	%		12.29	%			12.27	%			12.30	%			16.68	%		13.17	%			16.68	%
Total risk-based capital		14.28	%		13.36	%			12.81	%			12.70	%			17.34	%		14.28	%			17.34	%
Tier 1 leverage capital		9.57	%		9.41	%			9.49	%			10.42	%			10.86	%		9.57	%			10.86	%
Period end tangible equity to period end tangible assets (H)		9.12	%		8.89	%			8.96	%			9.21	%			10.90	%		9.12	%			10.90	%
Other Data
Weighted-average shares used in computing earnings per common share
Basic		92,656			92,658				94,371				85,573				68,738			93,226				69,463
Diluted		92,656			92,658				94,371				85,573				68,738			93,226				69,463
Period end shares outstanding		92,562			92,660				92,652				94,746				68,397			92,562				68,397
Cash dividends paid per common share	$	0.46		$	0.46			$	0.46			$	0.46			$	0.41		$	1.38			$	1.23
Book value per common share	$	65.20		$	64.19			$	63.20			$	63.02			$	60.34		$	65.20			$	60.34
Tangible book value per common share (H)	$	29.46		$	28.45			$	27.52			$	28.08			$	32.12		$	29.46			$	32.12
Common Stock Market Price
High	$	60.63		$	72.95			$	75.22			$	74.35			$	71.86		$	75.22			$	75.36
Low	$	48.80		$	43.68			$	42.02			$	66.60			$	62.17		$	42.02			$	61.65
Period end closing price	$	51.83		$	59.38			$	48.25			$	71.89			$	70.63		$	51.83			$	70.63
Employees – FTE (excluding overtime)		3,716			3,793				3,801				3,867				3,019			3,716				3,044
Number of banking centers		275			275				285				285				243			275				243

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

	Three Months Ended					Year-to-Date
	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019		Sep 30, 2020	Sep 30, 2019
Loan discount accretion
ASC 310-20	$16,729	$17,999	$22,463	$17,834	$1,006		$57,191	$3,360
ASC 310-30	$5,805	$6,267	$6,019	$5,908	$277		$18,091	$943
Securities net amortization	$116	$203	$194	$201	$157		$513	$646
Time deposits amortization	$1,240	$1,793	$2,270	$1,709	—		$5,303	—

(F) Using effective tax rate of 21.2%, 6.7%, 21.0%, 21.3% and 20.5% for the three-month periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively, and 16.8% and 20.5% for the nine-month periods ended September 30, 2020 and September 30, 2019, respectively.  Net income for the second quarter of 2020 includes a tax benefit for NOLs due to the CARES Act.

(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 day basis.

(J) 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.

(K) For calculations of the annualized returns on average assets, average common equity and average tangible common equity excluding merger related expenses, net of tax, and NOL carryback, 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.

(L) For calculations of the efficiency ratio excluding merger related expenses, net of tax,  refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

Page 11 of 21

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS	Three Months Ended
	Sep 30, 2020							Jun 30, 2020							Sep 30, 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	$	50,606		$	420	3.30%		$	63,338		$	523	3.32%		$	21,077		$	266	5.01%
Loans held for investment		18,267,559			225,596	4.91%			18,135,226			228,062	5.06%			10,589,272			134,677	5.05%
Loans held for investment - Warehouse Purchase Program		2,279,461			18,239	3.18%			1,843,097			14,187	3.10%			—			—		—
Total Loans		20,597,626			244,255	4.72%			20,041,661			242,772	4.87%			10,610,349			134,943	5.05%
Investment securities		7,603,762			38,033	1.99%	(N)		8,054,008			43,776	2.19%	(N)		8,758,056			50,872	2.30%		(N)
Federal funds sold and other earning assets		618,228			144	0.09%			172,761			45	0.10%			74,751			363	1.93%
Total interest-earning assets		28,819,616			282,432	3.90%			28,268,430			286,593	4.08%			19,443,156			186,178	3.80%
Allowance for credit losses(B)		(321,424	)						(325,720	)						(86,996	)
Noninterest-earning assets		4,482,646							4,562,016							2,849,936
Total assets	$	32,980,838						$	32,504,726						$	22,206,096
Interest-bearing liabilities:
Interest-bearing demand deposits	$	5,221,722		$	5,028	0.38%		$	4,949,023		$	4,621	0.38%		$	3,575,249		$	5,602	0.62%
Savings and money market deposits		8,937,751			7,833	0.35%			8,537,352			8,745	0.41%			5,524,277			12,588	0.90%
Certificates and other time deposits		3,103,290			9,597	1.23%			3,224,196			11,903	1.48%			2,083,803			8,749	1.67%
Other borrowings		13,898			52	1.49%			474,867			533	0.45%			749,814			4,335	2.29%
Securities sold under repurchase agreements		378,888			309	0.32%			365,077			337	0.37%			315,277			914	1.15%
Subordinated notes and trust preferred		125,256			1,500	4.76%			125,475			1,499	4.80%			—			—		—
Total interest-bearing liabilities		17,780,805			24,319	0.54%	(O)		17,675,990			27,638	0.63%	(O)		12,248,420			32,188	1.04%		(O)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		8,980,814							8,583,734							5,701,419
Allowance for credit losses on off-balance sheet credit exposures(B)		29,947							29,947							—
Other liabilities		167,532							289,899							111,526
Total liabilities		26,959,098							26,579,570							18,061,365
Shareholders' equity		6,021,740							5,925,156							4,144,731
Total liabilities and shareholders' equity	$	32,980,838						$	32,504,726						$	22,206,096
Net interest income and margin				$	258,113	3.56%					$	258,955	3.68%					$	153,990	3.14%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment					658							690							791
Net interest income and margin (tax equivalent basis)				$	258,771	3.57%					$	259,645	3.69%					$	154,781	3.16%

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

(N) Yield on securities was impacted by net premium amortization of $10,089, $9,224 and $8,027 for the three-month periods ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

(O) Total cost of funds, including noninterest bearing deposits, was 0.36%, 0.42% and 0.71% for the three-month periods ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

Page 12 of 21

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS	Year-to-Date
	Sep 30, 2020							Sep 30, 2019
	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate	(P)	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		(P)
Interest-earning assets:
Loans held for sale	$	60,256		$	1,575	3.49%		$	23,605		$	887	5.02%
Loans held for investment		17,890,010			690,175	5.15%			10,484,864			397,646	5.07%
Loans held for investment - Warehouse Purchase Program		1,749,568			42,520	3.25%			—			—		—
Total loans		19,699,834			734,270	4.98%			10,508,469			398,533	5.07%
Investment securities		8,029,097			130,091	2.16%	(Q)		9,079,314			160,464	2.36%		(Q)
Federal funds sold and other earning assets		339,229			902	0.36%			70,320			1,083	2.06%
Total interest-earning assets		28,068,160			865,263	4.12%			19,658,103			560,080	3.81%
Allowance for credit losses(B)		(325,036	)						(86,556	)
Noninterest-earning assets		4,540,440							2,852,098
Total assets	$	32,283,564						$	22,423,645
Interest-bearing liabilities:
Interest-bearing demand deposits	$	5,054,320		$	16,745	0.44%		$	3,810,765		$	18,227	0.64%
Savings and money market deposits		8,481,852			30,700	0.48%			5,548,375			36,494	0.88%
Certificates and other time deposits		3,243,564			35,300	1.45%			2,067,940			23,908	1.55%
Other borrowings		439,018			3,517	1.07%			825,733			15,208	2.46%
Securities sold under repurchase agreements		370,225			1,403	0.51%			292,347			2,504	1.15%
Subordinated notes and trust preferred		125,475			4,499	4.79%			—			—		—
Total interest-bearing liabilities		17,714,454			92,164	0.69%	(R)		12,545,160			96,341	1.03%		(R)
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		8,354,410							5,645,145
Allowance for credit losses on off-balance sheet credit exposures(B)		24,321							—
Other liabilities		239,747							102,299
Total liabilities		26,332,932							18,292,604
Shareholders' equity		5,950,632							4,131,041
Total liabilities and shareholders' equity		32,283,564						$	22,423,645
Net interest income and margin				$	773,099	3.68%					$	463,739	3.15%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment					2,071							2,481
Net interest income and margin (tax equivalent basis)				$	775,170	3.69%					$	466,220	3.17%

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

(Q) Yield on securities was impacted by net premium amortization of $27,318 and $22,223 for the nine-month periods ended September 30, 2020 and 2019, respectively.

(R) Total cost of funds, including noninterest bearing deposits, was 0.47% and 0.71% for the nine-month periods ended September 30, 2020 and 2019, respectively.

Page 13 of 21

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

	Three Months Ended
	Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019
YIELD TREND (S)
Interest-Earning Assets:
Loans held for sale		3.30	%		3.32	%		3.80	%		3.96	%		5.01	%
Loans held for investment		4.91	%		5.06	%		5.51	%		5.52	%		5.05	%
Loans held for investment - Warehouse Purchase Program		3.18	%		3.10	%		3.62	%		3.93	%		—
Total loans		4.72	%		4.87	%		5.39	%		5.42	%		5.05	%
Investment securities (T)		1.99	%		2.19	%		2.30	%		2.28	%		2.30	%
Federal funds sold and other earning assets		0.09	%		0.10	%		1.28	%		0.78	%		1.93	%
Total interest-earning assets		3.90	%		4.08	%		4.40	%		4.29	%		3.80	%
Interest-Bearing Liabilities:
Interest-bearing demand deposits		0.38	%		0.38	%		0.57	%		0.54	%		0.62	%
Savings and money market deposits		0.35	%		0.41	%		0.71	%		0.79	%		0.90	%
Certificates and other time deposits		1.23	%		1.48	%		1.63	%		1.67	%		1.67	%
Other borrowings		1.49	%		0.45	%		1.42	%		1.73	%		2.29	%
Securities sold under repurchase agreements		0.32	%		0.37	%		0.83	%		0.99	%		1.15	%
Subordinated notes and trust preferred		4.76	%		4.80	%		4.80	%		4.85	%		—
Total interest-bearing liabilities		0.54	%		0.63	%		0.91	%		1.00	%		1.04	%
Net Interest Margin		3.56	%		3.68	%		3.80	%		3.65	%		3.14	%
Net Interest Margin (tax equivalent)		3.57	%		3.69	%		3.81	%		3.66	%		3.16	%

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

(T) Yield on securities was impacted by net premium amortization of $10,089, $9,224, $8,005, $8,556 and $8,027 for the three-month periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively.

Page 14 of 21

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

	Three Months Ended
	Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019
Balance Sheet Averages
Loans held for sale	$	50,606		$	63,338		$	66,917		$	57,171		$	21,077
Loans held for investment		18,267,559			18,135,226			17,263,098			15,261,163			10,589,272
Loans held for investment - Warehouse Purchase Program		2,279,461			1,843,097			1,120,324			996,903			—
Total Loans		20,597,626			20,041,661			18,450,339			16,315,237			10,610,349
Investment securities		7,603,762			8,054,008			8,434,196			8,598,736			8,758,056
Federal funds sold and other earning assets		618,228			172,761			223,631			305,596			74,751
Total interest-earning assets		28,819,616			28,268,430			27,108,166			25,219,569			19,443,156
Allowance for credit losses(B)		(321,424	)		(325,720	)		(328,005	)		(86,795	)		(86,996	)
Cash and due from banks		267,887			247,426			321,832			275,072			230,986
Goodwill		3,231,976			3,223,469			3,223,633			2,658,133			1,900,845
Core deposit intangibles, net		78,269			81,539			84,865			28,912			29,682
Other real estate		8,061			5,666			5,837			4,864			997
Fixed assets, net		325,958			327,811			325,337			308,692			263,495
Other assets		570,495			676,105			615,747			654,978			423,931
Total assets	$	32,980,838		$	32,504,726		$	31,357,412		$	29,063,425		$	22,206,096
Noninterest-bearing deposits	$	8,980,814		$	8,583,734		$	7,491,798		$	7,066,878		$	5,701,419
Interest-bearing demand deposits		5,221,722			4,949,023			4,990,376			4,233,880			3,575,249
Savings and money market deposits		8,937,751			8,537,352			7,965,440			7,109,754			5,524,277
Certificates and other time deposits		3,103,290			3,224,196			3,404,748			3,044,843			2,083,803
Total deposits		26,243,577			25,294,305			23,852,362			21,455,355			16,884,748
Other borrowings		13,898			474,867			832,961			1,403,686			749,814
Securities sold under repurchase agreements		378,888			365,077			366,615			351,580			315,277
Subordinated notes and trust preferred		125,256			125,475			125,694			87,963			—
Allowance for credit losses on off-balance sheet credit exposures(B)		29,947			29,947			13,009			5,673			—
Other liabilities		167,532			289,899			262,523			320,855			111,526
Shareholders' equity		6,021,740			5,925,156			5,904,248			5,443,986			4,144,731
Total liabilities and equity	$	32,980,838		$	32,504,726		$	31,357,412		$	29,063,425		$	22,206,096

Page 15 of 21

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

	Sep 30, 2020					Jun 30, 2020					Mar 31, 2020					Dec 31, 2019					Sep 30, 2019
Period End Balances
Loan Portfolio
Commercial and industrial	$	2,171,302		10.5	%	$	2,214,742		10.5	%	$	2,500,110		13.1	%	$	2,507,318		13.3	%	$	1,120,913		10.5	%
Warehouse purchase program		2,730,614		13.1	%		2,557,183		12.2	%		1,713,762		9.0	%		1,552,762		8.2	%		—		—
Construction, land development and other land loans		2,081,762		10.0	%		2,033,037		9.7	%		2,051,021		10.7	%		2,064,167		11.0	%		1,764,648		16.5	%
1-4 family residential		4,189,852		20.1	%		4,184,972		19.9	%		3,993,138		20.9	%		3,880,382		20.6	%		2,472,907		23.2	%
Home equity		477,552		2.3	%		437,098		2.1	%		516,003		2.6	%		507,029		2.6	%		250,775		2.3	%
Commercial real estate (includes multi-family residential)		6,179,901		29.7	%		6,550,086		31.2	%		6,576,213		34.4	%		6,556,285		34.9	%		3,652,176		34.3	%
Agriculture (includes farmland)		598,972		2.9	%		612,694		2.9	%		635,295		3.3	%		680,855		3.6	%		729,585		6.8	%
Consumer and other		367,231		1.8	%		403,462		1.9	%		423,000		2.2	%		398,271		2.1	%		342,839		3.2	%
Energy		604,698		2.9	%		639,402		3.0	%		718,653		3.8	%		698,277		3.7	%		339,502		3.2	%
Paycheck Protection Program		1,393,757		6.7	%		1,392,497		6.6	%		—		—			—		—			—		—
Total loans	$	20,795,641				$	21,025,173				$	19,127,195				$	18,845,346				$	10,673,345
Deposit Types
Noninterest-bearing DDA	$	8,998,328		34.0	%	$	9,040,257		34.6	%	$	7,461,323		31.3	%	$	7,763,894		32.1	%	$	5,784,002		34.2	%
Interest-bearing DDA		5,297,802		20.0	%		5,130,495		19.6	%		4,980,090		20.9	%		5,100,938		21.1	%		3,564,419		21.0	%
Money market		6,324,127		23.9	%		6,148,206		23.5	%		5,341,525		22.4	%		5,099,024		21.1	%		3,457,728		20.4	%
Savings		2,772,492		10.5	%		2,722,718		10.4	%		2,716,247		11.4	%		2,756,297		11.3	%		2,027,621		12.0	%
Certificates and other time deposits		3,066,457		11.6	%		3,111,012		11.9	%		3,327,172		14.0	%		3,479,579		14.4	%		2,096,150		12.4	%
Total deposits	$	26,459,206				$	26,152,688				$	23,826,357				$	24,199,732				$	16,929,920
Loan to Deposit Ratio		78.6	%				80.4	%				80.3	%				77.9	%				63.0	%

Page 16 of 21

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

Construction Loans

	Sep 30, 2020					Jun 30, 2020					Mar 31, 2020					Dec 31, 2019					Sep 30, 2019
Single family residential construction	$	654,933		31.5	%	$	710,401		34.9	%	$	655,191		31.9	%	$	614,647		29.7	%	$	462,714		26.2	%
Land development		114,937		5.5	%		114,748		5.6	%		110,853		5.4	%		88,529		4.3	%		80,711		4.6	%
Raw land		240,154		11.5	%		274,159		13.5	%		265,943		12.9	%		233,559		11.3	%		171,609		9.7	%
Residential lots		137,615		6.6	%		144,765		7.1	%		136,861		6.7	%		138,961		6.7	%		123,265		7.0	%
Commercial lots		109,569		5.3	%		103,267		5.1	%		106,036		5.2	%		101,960		4.9	%		102,084		5.8	%
Commercial construction and other		825,053		39.6	%		687,618		33.8	%		778,731		37.9	%		890,597		43.1	%		825,001		46.7	%
Net unaccreted discount		(499	)				(1,921	)				(2,594	)				(4,086	)				(736	)
Total construction loans	$	2,081,762				$	2,033,037				$	2,051,021				$	2,064,167				$	1,764,648

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of September 30, 2020

	Houston		Dallas		Austin		OK City		Tulsa		Other (U)		Total
Collateral Type
Shopping center/retail	$	376,417	$	284,715	$	50,127	$	16,920	$	31,641	$	272,171	$	1,031,991
Commercial and industrial buildings		147,107		156,806		19,927		14,835		19,419		164,408		522,502
Office buildings		190,334		542,135		31,465		74,651		5,218		82,444		926,247
Medical buildings		37,367		40,855		14,234		25,179		25,107		57,283		200,025
Apartment buildings		404,936		512,803		22,666		15,619		19,070		177,745		1,152,839
Hotel		63,380		73,942		43,343		28,996		—		138,579		348,240
Other		57,229		55,436		23,033		11,522		2,486		82,171		231,877
Total	$	1,276,770	$	1,666,692	$	204,795	$	187,722	$	102,941	$	974,801	$	4,413,721	(V)

Acquired Loans

	Non-PCD Loans						PCD Loans							Total Acquired Loans
	Balance at Acquisition Date		Balance at Jun 30, 2020		Balance at Sep 30, 2020		Balance at Acquisition Date		Balance at Jun 30, 2020			Balance at Sep 30, 2020		Balance at Acquisition Date			Balance at Jun 30, 2020		Balance at Sep 30, 2020
Loan marks:
Acquired banks (W)	$	229,080	$	7,436	$	6,622	$	142,128	$	—		$	—	$	371,208		$	7,436	$	6,622
LegacyTexas merger(X)		116,519		62,424		46,493		177,924		22,565			16,760		294,443			84,989		63,253
Total		345,599		69,860		53,115		320,052		22,565	(Z)		16,760		665,651			92,425		69,875
Acquired portfolio loan balances:
Acquired banks (W)		5,690,998		308,692		281,766		275,221		6,952			4,061		5,966,219			315,644		285,827
LegacyTexas merger(X)		6,595,161		4,808,987		4,187,077		414,352		283,237			222,019		7,009,513			5,092,224		4,409,096
Total		12,286,159		5,117,679		4,468,843		689,573		290,189			226,080		12,975,732	(Y)		5,407,868		4,694,923
Acquired portfolio loan balances less loan marks	$	11,940,560	$	5,047,819	$	4,415,728	$	369,521	$	267,624		$	209,320	$	12,310,081		$	5,315,443	$	4,625,048

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

(V) Represents a portion of total commercial real estate loans of $6.180 billion as of September 30, 2020.

(W) 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.

(X) The 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 $294.4 million at acquisition date.

(Y) Actual principal balances acquired.

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

Page 17 of 21

Prosperity Bancshares, Inc.^®

Financial Highlights (Unaudited)

(Dollars in thousands)

	Three Months Ended															Year-to-Date
	Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Sep 30, 2020			Sep 30, 2019
Asset Quality
Nonaccrual loans	$	57,412		$	62,904		$	58,194		$	55,243		$	49,973		$	57,412		$	49,973
Accruing loans 90 or more days past due		462			8,691			3,255			441			341			462			341
Total nonperforming loans		57,874			71,595			61,449			55,684			50,314			57,874			50,314
Repossessed assets		120			187			278			324			28			120			28
Other real estate		11,548			6,160			5,452			6,935			815			11,548			815
Total nonperforming assets	$	69,542		$	77,942		$	67,179		$	62,943		$	51,157		$	69,542		$	51,157
Nonperforming assets:
Commercial and industrial (includes energy)	$	17,273		$	15,238		$	15,987		$	17,086		$	15,974		$	17,273		$	15,974
Construction, land development and other land loans		2,633			10,530			1,125			1,177			874			2,633			874
1-4 family residential (includes home equity)		29,953			29,812			28,996			26,453			19,600			29,953			19,600
Commercial real estate (includes multi-family residential)		16,069			20,748			20,155			18,031			14,384			16,069			14,384
Agriculture (includes farmland)		1,931			1,501			896			101			285			1,931			285
Consumer and other		1,683			113			20			95			40			1,683			40
Total	$	69,542		$	77,942		$	67,179		$	62,943		$	51,157		$	69,542		$	51,157
Number of loans/properties		198			213			198			236			89			198			89
Allowance for credit losses at end of period	$	323,635		$	324,205		$	327,206		$	87,469		$	87,061		$	323,635		$	87,061
Net charge-offs (recoveries):
Commercial and industrial (includes energy)	$	8,344		$	12,206		$	(28	)	$	76		$	(83	)	$	20,522		$	808
Construction, land development and other land loans		478			(6	)		(12	)		(6	)		(6	)		460			1
1-4 family residential (includes home equity)		252			51			5			20			(9	)		308			(1	)
Commercial real estate (includes multi-family residential)		676			—			(81	)		254			(1	)		595			(3	)
Agriculture (includes farmland)		(17	)		(3	)		(1	)		(18	)		278			(21	)		(954	)
Consumer and other		837			753			918			965			867			2,508			2,129
Total	$	10,570		$	13,001		$	801		$	1,291		$	1,046		$	24,372		$	1,980
Asset Quality Ratios
Nonperforming assets to average interest-earning assets		0.24	%		0.28	%		0.25	%		0.25	%		0.26	%		0.25	%		0.26	%
Nonperforming assets to loans and other real estate		0.33	%		0.37	%		0.35	%		0.33	%		0.48	%		0.33	%		0.48	%
Net charge-offs to average loans (annualized)		0.21	%		0.26	%		0.02	%		0.03	%		0.04	%		0.17	%		0.03	%
Allowance for credit losses to total loans(AA)		1.56	%		1.54	%		1.71	%		0.46	%		0.82	%		1.56	%		0.82	%
Allowance for credit losses to total loans, excluding Warehouse Purchase Program loans and Paycheck Protection Program loans (H)(AA)		1.94	%		1.90	%		1.88	%		0.51	%		0.82	%		1.94	%		0.82	%

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

Page 18 of 21

Prosperity Bancshares, Inc.^®

Notes to Selected Financial Data (Unaudited)

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

NOTES TO SELECTED FINANCIAL DATA

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

	Three Months Ended															Year-to-Date
	Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Sep 30, 2020			Sep 30, 2019
Reconciliation of diluted earnings per share to diluted earnings per share, excluding merger related expenses, net of tax, and net operating losses carryback:
Net income	$	130,064		$	130,901		$	130,848		$	86,134		$	81,758		$	391,813		$	246,418
Add: merger related expenses, net of tax(AB)		—			5,904			430			36,658			—			6,334			—
Less: net operating losses carryback (AC)		—			(20,145	)		—			—			—			(20,145	)		—
Net income, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)	$	130,064		$	116,660		$	131,278		$	122,792		$	81,758		$	378,002		$	246,418
Weighted average diluted shares outstanding		92,656			92,658			94,371			85,573			68,738			93,226			68,397
Merger related expenses per diluted share, net of tax(AB)	$	—		$	0.06		$	—		$	0.43		$	—		$	0.07			—
Net operating losses carryback per diluted share (AB)	$	—		$	(0.22	)	$	—		$	—		$	—		$	(0.22	)	$	—
Diluted earnings per share, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)	$	1.40		$	1.25		$	1.39		$	1.44		$	1.19		$	4.05		$	3.60
Reconciliation of return on average assets to return on average assets excluding merger related expenses, net of tax, and net operating losses carryback:
Net income, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)	$	130,064		$	116,660		$	131,278		$	122,792		$	81,758		$	378,002		$	246,418
Average total assets	$	32,980,838		$	32,504,726		$	31,357,412		$	29,063,425		$	22,206,096		$	32,283,564		$	22,206,096
Return on average assets excluding merger related expenses, net of tax, and net operating losses carryback (G) (AB) (AC)		1.58	%		1.44	%		1.67	%		1.69	%		1.47	%		1.56	%		1.48	%
Reconciliation of return on average common equity to return on average common equity excluding merger related expenses, net of tax, and net operating losses carryback:
Net income, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)	$	130,064		$	116,660		$	131,278		$	122,792		$	81,758		$	378,002		$	246,418
Average shareholders' equity	$	6,021,740		$	5,925,156		$	5,904,248		$	5,443,986		$	4,144,731		$	5,950,632		$	4,131,041
Return on average common equity excluding merger related expenses, net of tax, and net operating losses carryback (G) (AB) (AC)		8.64	%		7.88	%		8.89	%		9.02	%		7.89	%		8.47	%		7.95	%
Reconciliation of return on average common equity to return on average tangible common equity:
Net income	$	130,064		$	130,901		$	130,848		$	86,134		$	81,758		$	391,813		$	246,418
Average shareholders' equity	$	6,021,740		$	5,925,156		$	5,904,248		$	5,443,986		$	4,144,731		$	5,950,632		$	4,131,041
Less: Average goodwill and other intangible assets		(3,310,245	)		(3,305,008	)		(3,308,498	)		(2,687,045	)		(1,930,527	)		(3,307,925	)		(1,931,788	)
Average tangible shareholders’ equity	$	2,711,495		$	2,620,148		$	2,595,750		$	2,756,941		$	2,214,204		$	2,642,707		$	2,199,253
Return on average tangible common equity(G)		19.19	%		19.98	%		20.16	%		12.50	%		14.77	%		19.77	%		14.94	%

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

(AC) Net income for the second quarter of 2020 includes a tax benefit for NOLs due to the CARES Act.

Page 19 of 21

	Three Months Ended															Year-to-Date
	Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Sep 30, 2020			Sep 30, 2019
Reconciliation of return on average common equity to return on average tangible common equity excluding merger related expenses, net of tax, and net operating losses carryback:
Net income, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)	$	130,064		$	116,660		$	131,278		$	122,792		$	81,758		$	378,002		$	246,418
Average shareholders' equity	$	6,021,740		$	5,925,156		$	5,904,248		$	5,443,986		$	4,144,731		$	5,950,632		$	4,131,041
Less: Average goodwill and other intangible assets		(3,310,245	)		(3,305,008	)		(3,308,498	)		(2,687,045	)		(1,930,527	)		(3,307,925	)		(1,931,788	)
Average tangible shareholders’ equity	$	2,711,495		$	2,620,148		$	2,595,750		$	2,756,941		$	2,214,204		$	2,642,707		$	2,199,253
Return on average tangible common equity excluding merger related expenses, net of tax, and net operating losses carryback (G) (AB) (AC)		19.19	%		17.81	%		20.23	%		17.82	%		14.77	%		19.07	%		14.94	%
Reconciliation of book value per share to tangible book value per share:
Shareholders’ equity	$	6,034,877		$	5,948,122		$	5,855,574		$	5,970,835		$	4,126,806		$	6,034,877		$	4,126,806
Less: Goodwill and other intangible assets		(3,308,170	)		(3,311,712	)		(3,306,185	)		(3,310,075	)		(1,929,896	)		(3,308,170	)		(1,929,896	)
Tangible shareholders’ equity	$	2,726,707		$	2,636,410		$	2,549,389		$	2,660,760		$	2,196,910		$	2,726,707		$	2,196,910
Period end shares outstanding		92,562			92,660			92,652			94,746			68,397			92,562			68,397
Tangible book value per share:	$	29.46		$	28.45		$	27.52		$	28.08		$	32.12		$	29.46			32.12
Reconciliation of equity to assets ratio to period end tangible equity to period end tangible assets ratio:
Tangible shareholders’ equity	$	2,726,707		$	2,636,410		$	2,549,389		$	2,660,760		$	2,196,910		$	2,726,707		$	2,196,910
Total assets	$	33,197,599		$	32,966,649		$	31,743,499		$	32,185,708		$	22,092,817		$	33,197,599		$	22,092,817
Less: Goodwill and other intangible assets		(3,308,170	)		(3,311,712	)		(3,306,185	)		(3,310,075	)		(1,929,896	)		(3,308,170	)		(1,929,896	)
Tangible assets	$	29,889,429		$	29,654,937		$	28,437,314		$	28,875,633		$	20,162,921		$	29,889,429		$	20,162,921
Period end tangible equity to period end tangible assets ratio:		9.12	%		8.89	%		8.96	%		9.21	%		10.90	%		9.12	%		10.90	%
Reconciliation of allowance for credit losses to total loans to allowance for credit losses to total loans, excluding Warehouse Purchase Program and Paycheck Protection Program loans:
Allowance for credit losses (AA)	$	323,635		$	324,205		$	327,206		$	87,469		$	87,061		$	323,635		$	87,061
Total loans	$	20,795,641		$	21,025,173		$	19,127,195		$	18,845,346		$	10,673,345		$	20,795,641		$	10,673,345
Less: Warehouse Purchase Program loans		(2,730,614	)		(2,557,183	)		(1,713,762	)		(1,552,762	)		—			(2,730,614	)		—
Less: Paycheck Protection Program loans		(1,393,757	)		(1,392,497	)		—			—			—			(1,393,757	)		—
Total loans less Warehouse Purchase Program and Paycheck Protection Program loans	$	16,671,270		$	17,075,493		$	17,413,433		$	17,292,584		$	10,673,345		$	16,671,270		$	10,673,345
Allowance for credit losses to total loans, excluding Warehouse Purchase Program and Paycheck Protection Program loans		1.94	%		1.90	%		1.88	%		0.51	%		0.82	%		1.94	%		0.82	%
Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets and taxes:
Noninterest expense	$	117,919		$	134,368		$	124,741		$	156,451		$	80,699		$	377,028		$	240,091
Net interest income	$	258,113		$	258,955		$	256,031		$	232,030		$	153,990		$	773,099		$	463,739
Noninterest income		34,924			25,675			34,388			35,506			30,673			94,987			88,775
Less: net (loss) gain on sale or write down of assets		(528	)		(3,945	)		(385	)		(1,870	)		(3	)		(4,858	)		57
Noninterest income excluding net gains and losses on the sale or write down of assets and taxes		35,452			29,620			34,773			37,376			30,676			99,845			88,718
Total income excluding net gains and losses on the sale or write down of assets and taxes	$	293,565		$	288,575		$	290,804		$	269,406		$	184,666		$	872,944		$	552,457
Efficiency ratio, excluding net gains and losses on the sale or write down of assets and taxes		40.17	%		46.56	%		42.90	%		58.07	%		43.70	%		43.19	%		43.46	%

Page 20 of 21

	Three Months Ended															Year-to-Date
	Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Sep 30, 2020			Sep 30, 2019
Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets, taxes and merger related expenses:
Noninterest expense	$	117,919		$	134,368		$	124,741		$	156,451		$	80,699		$	377,028		$	240,091
Less: merger related expenses		—			7,474			544			46,402			—			8,018			—
Noninterest expense excluding merger related expenses	$	117,919		$	126,894		$	124,197		$	110,049		$	80,699		$	369,010		$	240,091
Net interest income	$	258,113		$	258,955		$	256,031		$	232,030		$	153,990		$	773,099		$	463,739
Noninterest income		34,924			25,675			34,388			35,506			30,673			94,987			88,775
Less: net (loss) gain on sale or write down of assets		(528	)		(3,945	)		(385	)		(1,870	)		(3	)		(4,858	)		57
Noninterest income excluding net gains and losses on the sale or write down of assets and taxes		35,452			29,620			34,773			37,376			30,676			99,845			88,718
Total income excluding net gains and losses on the sale or write down of assets and taxes	$	293,565		$	288,575		$	290,804		$	269,406		$	184,666		$	872,944		$	552,457
Efficiency ratio, excluding net gains and losses on the sale or write down of assets, taxes and merger related expenses		40.17	%		43.97	%		42.71	%		40.85	%		43.70	%		42.27	%		43.46	%

Page 21 of 21

XML

Document and Entity Information	Oct. 28, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 28, 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