pb-ex991_6.htm

HOUSTON, October 27, 2021. Prosperity Bancshares, Inc.^® (NYSE: PB), the parent company of Prosperity Bank^® (collectively, “Prosperity”), reported net income of $128.6 million for the quarter ended September 30, 2021 compared with $130.1 million for the same period in 2020. Net income per diluted common share was $1.39 for the quarter ended September 30, 2021, compared with $1.40 for the same period in 2020, and the annualized return on third quarter average assets was 1.42%. Additionally, loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program (“PPP”) loans, increased $217.6 million or 1.3% (5.3% annualized) and deposits increased $341.4 million or 1.2% (4.7% annualized) during the third quarter of 2021. Nonperforming assets remain low at 0.11% of third quarter average interest-earning assets.

“I am pleased to report that the Board of Directors has voted to increase the fourth quarter dividend to $0.52 a share, a 6.1% increase from the third quarter. The increase represents the confidence the Board has in Prosperity’s continuing success. Additionally, Prosperity Bancshares repurchased 767,134 shares of its stock during the third quarter 2021 at an average price of $67.87,” said David Zalman, Prosperity’s Senior Chairman and Chief Executive Officer.

“Prosperity Bank was ranked by Forbes as the 2nd Best Bank in America for 2021 and has been in the Top 10 of Forbes’ list since 2010,” continued Zalman.

“The Texas and Oklahoma economies continue to benefit by companies relocating from states with higher taxes and more regulation. Texas is projected to increase jobs by 493,000 in 2021. This increase, combined with people moving to the state, requires additional housing and infrastructure, a driver for loans and increased business opportunities. We are seeing higher prices for most crops and higher oil prices, which should help local economies. Inflation continues to be higher than we would like, but we hope that it will moderate next year as the Federal Reserve begins tapering its asset purchases as expected. We believe there are also signs that inventories are starting to increase and supply chains are improving, although it will take some time to stabilize and return to normal,” added Zalman.

“Prosperity continues to exhibit solid operating metrics in net income, return on tangible equity and return on assets, and maintain sound credit quality, with low nonperforming assets. Net interest margins have been stressed throughout the low-rate environment, however we believe this should improve if interest rates rise as projected,” stated Zalman.

“We look forward to continuing to build our company through organic growth as well as mergers and acquisitions, when they make sense and are appropriately accretive to earnings. Thank you to our customers for their loyalty and business and to our associates and board members for their work and dedication,” concluded Zalman.

Net income was $128.6 million⁽²⁾ for the three months ended September 30, 2021 compared with $130.1 million⁽³⁾ for the same period in 2020, a decrease of $1.5 million or 1.1%. The change was primarily due to decreases in loan income and loan discount accretion of $17.2 million, partially offset by an increase in securities income and a decrease in interest expenses. Net income per diluted common share was $1.39 for the three months ended September 30, 2021 compared with $1.40 for the same period in 2020, a decrease of 0.7%. Net income was $128.6 million⁽²⁾ for the three months ended September 30, 2021 compared with $130.6 million⁽⁴⁾ for the three months ended June 30, 2021, a decrease of $2.0 million or 1.5%. The change was primarily due to a decrease in loan discount accretion of $6.8 million, partially offset by an increase in securities income and a decrease in interest expense. Net income per diluted common share was $1.39 for the three months ended September 30, 2021 compared with $1.41 for the three months ended June 30, 2021, a decrease of 1.4%. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended September 30, 2021 were 1.42%, 8.07% and 16.72%⁽¹⁾, respectively. Prosperity’s efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 42.34%⁽¹⁾ for the three months ended September 30, 2021.

Net interest income before provision for credit losses for the three months ended September 30, 2021 was $248.6 million compared with $258.1 million for the same period in 2020, a decrease of $9.5 million or 3.7%. The change was primarily due to a decrease in the average balance and average rate on loans and a decrease in loan discount accretion of $17.2 million, partially offset by an increase in the average investment securities balance and a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, net interest income before provision for credit losses was $248.6 million compared with $245.4 million for the three months ended June 30, 2021, an increase of $3.2 million or 1.3%. The change was primarily due to a decrease in the average rate on interest-bearing liabilities and an increase in average investment securities balance, partially offset by a $6.8 million decrease in loan discount accretion.

The net interest margin on a tax equivalent basis was 3.10% for the three months ended September 30, 2021 compared with 3.57% for the same period in 2020. The change was primarily due to a decrease in the average rate on loans and a decrease in loan discount accretion of $17.2 million, partially offset by an increase in the average investment securities balance and a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, the net interest margin on a tax equivalent basis was 3.10% for the three months ended September 30, 2021 compared with 3.11% for the three months ended June 30, 2021.

Noninterest income was $34.6 million for the three months ended September 30, 2021 compared with $34.9 million for the same period in 2020, a decrease of $279 thousand or 0.8%. On a linked quarter basis, noninterest income decreased $911 thousand or 2.6% to $34.6 million compared with $35.6 million for the three months ended June 30, 2021. This change was primarily due to a decrease in mortgage income and decrease in other noninterest income, partially offset by an increase in nonsufficient funds (“NSF”) fees.

Noninterest expense was $119.8 million for the three months ended September 30, 2021 compared with $117.9 million for the same period in 2020, an increase of $1.9 million or 1.6%. This increase was primarily due to an increase in salaries and benefits, partially offset by a decrease in other noninterest expense. On a linked quarter basis, noninterest expense increased $4.6 million or 4.0% to $119.8 million compared with $115.2 million for the three months ended June 30, 2021. This increase was primarily due to an increase in salaries and benefits and gains on sale of other real estate of $1.8 million recorded during the second quarter of 2021.

Net income was $392.5 million⁽⁵⁾ for the nine months ended September 30, 2021 compared with $391.8 million⁽⁶⁾ for the same period in 2020, an increase of $697 thousand or 0.2%. Net income per diluted common share was $4.23 for the nine months ended September 30, 2021 compared with $4.20 for the same period in 2020, an increase of 0.7%. Annualized returns on average assets, average common equity and average tangible common equity for the nine months ended September 30, 2021 were 1.47%, 8.32% and 17.53%⁽¹⁾, respectively. Prosperity’s efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 41.52%⁽¹⁾ for the nine months ended September 30, 2021.

Net interest income before provision for credit losses for the nine months ended September 30, 2021 was $748.5 million compared with $773.1 million for the prior year, a decrease of $24.6 million or 3.2%. The change was primarily due to a decrease in the average rate on interest-earning assets and a decrease in loan discount accretion of $41.4 million, partially offset by a decrease in the average rate on interest-bearing liabilities.

The net interest margin on a tax equivalent basis for the nine months ended September 30, 2021 was 3.20% compared with 3.69% for the same period in 2020. The change was primarily due to a decrease in the average rate on loans, a decrease in loan discount accretion of $41.4 million, lower rates on investment securities and higher cash balances due to excess liquidity, partially offset by a decrease in the average rate on interest-bearing liabilities.

Noninterest income was $104.2 million for the nine months ended September 30, 2021 compared with $95.0 million for the same period in 2020, an increase of $9.2 million or 9.7%. This increase was primarily due to lower net loss on write-down of assets, an increase in credit card, debit card and ATM card income and an increase in other noninterest income.

Noninterest expense was $354.1 million for the nine months ended September 30, 2021 compared with $377.0 million for the same period in 2020, a decrease of $22.9 million or 6.1%. The change was primarily due to decreases in merger related expenses, data processing, net occupancy and equipment and other noninterest expense as a result of efficiencies gained following the LegacyTexas Bank system conversion during the second quarter of 2020 and net gains on sale of other real estate of $2.7 million, partially offset by an increase in salaries and benefits.

At September 30, 2021, Prosperity had $36.512 billion in total assets, an increase of $3.315 billion or 10.0% compared with $33.198 billion at September 30, 2020.

Loans at September 30, 2021 were $18.958 billion, a decrease of $1.838 billion or 8.8%, compared with $20.796 billion at September 30, 2020, primarily due to a decrease in commercial real estate, PPP and Warehouse Purchase Program loans, partially offset by an increase in 1-4 family residential loans. Linked quarter loans decreased $294.1 million or 1.5% from $19.252 billion at June 30, 2021, primarily due to a $414.1 million decrease in PPP loans. At September 30, 2021, the Company had $365.8 million of PPP loans compared to $1.394 billion of PPP loans at September 30, 2020 and $780.0 million of PPP loans at June 30, 2021. Linked quarter loans, excluding Warehouse Purchase Program and PPP loans, increased $217.6 million or 1.3% (5.3% annualized) from $16.376 billion at June 30, 2021.

As part of its lending activities, Prosperity extends credit to oil and gas production and servicing companies. Oil and gas production loans are loans to companies directly involved in the exploration and/or production of oil and gas. Oil and gas servicing loans are loans to companies that provide services for oil and gas production and exploration. At September 30, 2021, oil and gas loans totaled $569.3 million (net of discount and excluding PPP loans totaling $55.8 million) or 3.0% of total loans, of which $352.4 million were production loans and $216.9 million were servicing loans, compared with total oil and gas loans of $604.7 million (net of discount and excluding PPP loans totaling $115.3 million) or 2.9% of total loans at September 30, 2020, of which $359.6 million were production loans and $245.1 million were servicing loans. In addition, as of September 30, 2021, Prosperity had total unfunded commitments to oil and gas companies of $363.3 million compared with total unfunded commitments to oil and gas companies of $258.1 million as of September 30, 2020. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Additionally, Prosperity extends credit to hotels and restaurants. At September 30, 2021, loans to hotels totaled $407.1 million (excluding PPP loans totaling $5.7 million) or 2.1% of total loans, an increase of $20.8 million or 5.4%, compared with $386.3 million (excluding PPP loans totaling $8.8 million) at September 30, 2020. At September 30, 2021, loans to restaurants totaled $198.2 million

(excluding PPP loans totaling $49.7 million) or 1.0% of total loans, a decrease of $16.9 million or 7.9%, compared with $215.1 million (excluding PPP loans totaling $110.9 million) at September 30, 2020.

Deposits at September 30, 2021 were $29.452 billion, an increase of $2.992 billion or 11.3%, compared with $26.459 billion at September 30, 2020. Linked quarter deposits increased $341.4 million or 1.2% (4.7% annualized) from $29.110 billion at June 30, 2021.

Nonperforming assets totaled $36.5 million or 0.11% of quarterly average interest-earning assets at September 30, 2021, compared with $69.5 million or 0.24% of quarterly average interest-earning assets at September 30, 2020, and $33.7 million or 0.11% of quarterly average interest-earning assets at June 30, 2021.

The allowance for credit losses on loans was $287.2 million or 1.51% of total loans at September 30, 2021 compared with $302.9 million or 1.57% of total loans at June 30, 2021 and $323.6 million or 1.56% of total loans at September 30, 2020. The allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and PPP loans, was 1.73%⁽¹⁾ at September 30, 2021 compared with 1.94%⁽¹⁾ at September 30, 2020 and 1.85%⁽¹⁾ at June 30, 2021.

There was no provision for credit losses for the three months ended September 30, 2021 compared with $10.0 million for the three months ended September 30, 2020 and no provision for credit losses for the three months ended June 30, 2021. There was no provision for credit losses for the nine months ended September 30, 2021 compared with $20.0 million for the nine months ended September 30, 2020.

Net charge-offs were $15.7 million for the three months ended September 30, 2021 compared with net charge-offs of $10.6 million for the three months ended September 30, 2020 and net charge-offs of $4.3 million for the three months ended June 30, 2021. Net charge-offs for the third quarter of 2021 included $4.6 million related to resolved purchased credit deteriorated (“PCD”) loans and $10.8 million related to the partial charge-off of one commercial real estate loan obtained through acquisition. The PCD loans had specific reserves of $3.1 million, of which $2.2 million was allocated to the charge-offs and $944 thousand was moved to the general reserve. Further, an additional $14.3 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Net charge-offs were $28.9 million for the nine months ended September 30, 2021 compared with $24.4 million for the nine months ended September 30, 2020. Net charge-offs for the nine months ended September 30, 2021 included $12.7 million related to resolved PCD loans and $10.8 million related to the partial charge-off of one commercial real estate loan obtained through acquisition. The PCD loans had specific reserves of $12.9 million, of which $9.9 million was allocated to the charge-offs and $3.0 million was moved to the general reserve. Further, an additional $19.9 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Prosperity Bancshares declared a fourth quarter cash dividend of $0.52 per share to be paid on January 3, 2022 to all shareholders of record as of December 15, 2021.

On January 26, 2021, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately

4.65 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 26, 2022, at the discretion of management. Prosperity Bancshares repurchased 767,134 shares of its common stock at an average weighted price of $67.87 per share during the three and nine months ended September 30, 2021.

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

Since the implementation of the Paycheck Protection Program in 2020, Prosperity has obtained SBA approvals on approximately 18,700 loans totaling $2.036 billion and, as of September 30, 2021, had an outstanding balance of 3,233 loans totaling $365.8 million.

Also, in response to the COVID-19 pandemic, Prosperity has provided relief to its loan customers through loan extensions and deferrals. Prosperity’s troubled debt restructurings do not include loan modifications related to COVID-19. Beginning in mid-March of 2020, Prosperity began offering deferral and modification of principal and/or interest payments to selected borrowers on a case-by-case basis. As of September 30, 2021, Prosperity had approximately $79.5 million in outstanding loans subject to deferral and modification agreements.

Prosperity’s management team will host a conference call on Wednesday, October 27, 2021 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity’s third quarter 2021 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The participant elite entry number is 0916027.

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

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

As of September 30, 2021, Prosperity Bancshares, Inc.^® is a $36.512 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma. Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

Prosperity currently operates 273 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 63 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area; 6 in the Central Oklahoma area; and 8 in the Tulsa, Oklahoma area.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity’s management on the conference call may contain, forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,” “is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,” “will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will result,” “would be,” variations of such words or phrases (including where the word “could,” “may,” or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other

than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity’s possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity’s future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity’s loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity’s future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity’s operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement, as well as expectations regarding the effects of the COVID-19 pandemic on Prosperity’s operating income, financial condition and cash flows. These forward‑looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity’s control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); the possibility that the anticipated benefits of an acquisition transaction, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of two companies or as a result of the strength of the economy and competitive factors generally; a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity’s securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate, interest rate and commodity price fluctuations; the effect, impact, potential duration or other implications of the COVID-19 pandemic; and weather. These and various other factors are discussed in Prosperity Bancshares’ Annual Report on Form 10-K for the year ended December 31, 2020 and other reports and statements Prosperity Bancshares has filed with the Securities and Exchange Commission (“SEC”). Copies of the SEC filings for Prosperity Bancshares may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

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

	Sep 30, 2021			Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020
Balance Sheet Data (at period end)
Loans held for sale	$	10,197		$	9,080		$	20,991		$	46,777		$	51,694
Loans held for investment		16,949,486			17,147,146			17,345,506			17,357,788			18,013,333
Loans held for investment - Warehouse Purchase Program		1,998,049			2,095,559			2,272,389			2,842,379			2,730,614
Total loans		18,957,732			19,251,785			19,638,886			20,246,944			20,795,641

Investment securities^(A)		12,629,368			11,918,691			10,088,002			8,542,820			7,431,495
Federal funds sold		237			281			8,986			553			56,469
Allowance for credit losses		(287,187	)		(302,884	)		(307,210	)		(316,068	)		(323,635	)
Cash and due from banks		1,055,386			1,059,879			1,947,235			1,342,996			1,031,193
Goodwill		3,231,636			3,231,636			3,231,636			3,231,636			3,231,692
Core deposit intangibles, net		64,539			67,417			70,304			73,235			76,478
Other real estate owned		150			144			462			10,593			11,548
Fixed assets, net		322,799			324,502			326,970			323,572			325,994
Other assets		537,459			548,473			553,147			602,994			560,724
Total assets	$	36,512,119		$	36,099,924		$	35,558,418		$	34,059,275		$	33,197,599

Noninterest-bearing deposits	$	10,326,489		$	10,099,149		$	9,820,445		$	9,151,233		$	8,998,328
Interest-bearing deposits		19,125,163			19,011,092			18,942,660			18,209,259			17,460,878
Total deposits		29,451,652			29,110,241			28,763,105			27,360,492			26,459,206
Other borrowings		—			—			—			—			2,570
Securities sold under repurchase agreements		440,969			433,069			377,106			389,583			380,274
Subordinated notes		—			—			—			—			125,146
Allowance for credit losses on off-balance sheet credit exposures		29,947			29,947			29,947			29,947			29,947
Other liabilities		244,110			216,330			166,414			148,584			165,579
Total liabilities		30,166,678			29,789,587			29,336,572			27,928,606			27,162,722
Shareholders' equity^(B)		6,345,441			6,310,337			6,221,846			6,130,669			6,034,877
Total liabilities and equity	$	36,512,119		$	36,099,924		$	35,558,418		$	34,059,275		$	33,197,599

(A) Includes $2,483, $1,394, $970, $974 and $(442) in unrealized gains (losses) on available for sale securities for the quarterly periods ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively.

(B) Includes $1,961, $1,101, $766, $769 and $(349) in after-tax unrealized gains (losses) on available for sale securities for the quarterly periods ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively.

	Three Months Ended														Year-to-Date
	Sep 30, 2021		Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Sep 30, 2021			Sep 30, 2020
Income Statement Data
Interest income:
Loans	$	213,821	$	216,803		$	233,075		$	241,625		$	244,255		$	663,699		$	734,270
Securities^(C)		46,217		43,708			38,677			36,721			38,033			128,602			130,091
Federal funds sold and other earning assets		302		340			351			301			144			993			902
Total interest income		260,340		260,851			272,103			278,647			282,432			793,294			865,263

Interest expense:
Deposits		11,578		15,288			17,362			19,757			22,458			44,228			82,745
Other borrowings		—		—			—			33			52			—			3,517
Securities sold under repurchase agreements		195		164			159			224			309			518			1,403
Subordinated notes and trust preferred		—		—			—			999			1,500			—			4,499
Total interest expense		11,773		15,452			17,521			21,013			24,319			44,746			92,164
Net interest income		248,567		245,399			254,582			257,634			258,113			748,548			773,099
Provision for credit losses		—		—			—			—			10,000			—			20,000
Net interest income after provision for credit losses		248,567		245,399			254,582			257,634			248,113			748,548			753,099

Noninterest income:
Nonsufficient funds (NSF) fees		7,962		6,560			6,687			8,051			7,156			21,209			22,244
Credit card, debit card and ATM card income		8,837		8,918			8,031			8,193			8,315			25,786			23,052
Service charges on deposit accounts		6,115		6,062			5,978			6,046			5,920			18,155			17,814
Trust income		2,467		2,276			2,837			2,192			2,502			7,580			7,406
Mortgage income		1,396		2,914			3,307			3,989			2,958			7,617			6,788
Brokerage income		861		795			711			642			628			2,367			1,862
Bank owned life insurance income		1,325		1,294			1,292			1,252			1,449			3,911			4,502
Net gain (loss) on sale or write-down of assets		255		(244	)		(79	)		(675	)		(528	)		(68	)		(4,858	)
Other noninterest income		5,427		6,981			5,244			6,857			6,524			17,652			16,177
Total noninterest income		34,645		35,556			34,008			36,547			34,924			104,209			94,987

Noninterest expense:
Salaries and benefits		78,412		75,611			80,037			77,809			75,068			234,060			231,459
Net occupancy and equipment		8,165		8,046			7,833			8,223			8,644			24,044			26,814
Credit and debit card, data processing and software amortization		9,103		8,718			8,233			8,442			8,776			26,054			31,887
Regulatory assessments and FDIC insurance		2,497		2,670			2,670			2,670			2,512			7,837			7,191
Core deposit intangibles amortization		2,878		2,887			2,931			3,243			3,270			8,696			9,926
Depreciation		4,524		4,513			4,540			4,261			4,605			13,577			13,971
Communications		3,013		2,982			2,899			2,931			3,027			8,894			9,546
Other real estate expense		30		198			244			279			258			472			344
Net loss (gain) on sale or write-down of other real estate		4		(1,839	)		(887	)		(195	)		(137	)		(2,722	)		(263	)
Merger related expenses		—		—			—			—			—			—			8,018
Other noninterest expense		11,189		11,405			10,576			12,542			11,896			33,170			38,135
Total noninterest expense		119,815		115,191			119,076			120,205			117,919			354,082			377,028
Income before income taxes		163,397		165,764			169,514			173,976			165,118			498,675			471,058
Provision for income taxes		34,807		35,153			36,205			36,885			35,054			106,165			79,245
Net income available to common shareholders	$	128,590	$	130,611		$	133,309		$	137,091		$	130,064		$	392,510		$	391,813

(C) Interest income on securities was reduced by net premium amortization of $15,141, $14,436, $12,844, $11,509 and $10,089 for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively, and $42,421 and $27,318 for the nine months ended September 30, 2021 and September 30, 2020, respectively.

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

	Three Months Ended															Year-to-Date
	Sep 30, 2021			Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Sep 30, 2021			Sep 30, 2020
Profitability
Net income ^(D) (E)	$	128,590		$	130,611		$	133,309		$	137,091		$	130,064		$	392,510		$	391,813

Basic earnings per share	$	1.39		$	1.41		$	1.44		$	1.48		$	1.40		$	4.23		$	4.20
Diluted earnings per share	$	1.39		$	1.41		$	1.44		$	1.48		$	1.40		$	4.23		$	4.20

Return on average assets ^(F)		1.42	%		1.45	%		1.54	%		1.63	%		1.58	%		1.47	%		1.62	%	^(J)
Return on average common equity ^(F)		8.07	%		8.31	%		8.60	%		8.98	%		8.64	%		8.32	%		8.78	%	^(J)
Return on average tangible common equity ^(F)^(G)		16.72	%		17.49	%		18.43	%		19.57	%		19.19	%		17.53	%		19.77	%	^(J)
Tax equivalent net interest margin ^{(D) (E)}^(H)		3.10	%		3.11	%		3.41	%		3.49	%		3.57	%		3.20	%		3.69	%
Efficiency ratio ^{(G) (I)}		42.34	%		40.96	%		41.25	%		40.77	%		40.17	%		41.52	%		43.19	%	^(K)

Liquidity and Capital Ratios
Equity to assets		17.38	%		17.48	%		17.50	%		18.00	%		18.18	%		17.38	%		18.18	%
Common equity tier 1 capital		14.84	%		15.26	%		14.60	%		13.74	%		13.17	%		14.84	%		13.17	%
Tier 1 risk-based capital		14.84	%		15.26	%		14.60	%		13.74	%		13.17	%		14.84	%		13.17	%
Total risk-based capital		15.20	%		15.71	%		15.07	%		14.23	%		14.28	%		15.20	%		14.28	%
Tier 1 leverage capital		9.55	%		9.50	%		9.68	%		9.67	%		9.57	%		9.55	%		9.57	%
Period end tangible equity to period end tangible assets ^(G)		9.18	%		9.18	%		9.05	%		9.19	%		9.12	%		9.18	%		9.12	%

Other Data
Weighted-average shares used in computing earnings per common share
Basic		92,683			92,935			92,854			92,559			92,656			92,823			93,226
Diluted		92,683			92,935			92,854			92,559			92,656			92,823			93,226
Period end shares outstanding		92,160			92,935			92,929			92,571			92,562			92,160			92,562
Cash dividends paid per common share	$	0.49		$	0.49		$	0.49		$	0.49		$	0.46		$	1.47		$	1.38
Book value per common share	$	68.85		$	67.90		$	66.95		$	66.23		$	65.20		$	68.85		$	65.20
Tangible book value per common share ^(G)	$	33.09		$	32.40		$	31.42		$	30.53		$	29.46		$	33.09		$	29.46

Common Stock Market Price
High	$	72.97		$	78.06		$	83.02		$	70.38		$	60.63		$	83.02		$	75.22
Low	$	64.40		$	69.83		$	66.45		$	50.43		$	48.80		$	64.40		$	42.02
Period end closing price	$	71.13		$	71.80		$	76.16		$	69.36		$	51.83		$	71.13		$	51.83
Employees – FTE (excluding overtime)		3,625			3,724			3,724			3,756			3,716			3,625			3,716
Number of banking centers		273			274			275			275			275			273			275

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

(E) Using effective tax rate of 21.3%, 21.2%, 21.4%, 21.2% and 21.2% for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively, and 21.3% and 16.8% for the nine months ended September 30, 2021 and September 30, 2020, respectively. Net income for the second quarter of 2020 includes a tax benefit for NOL related to the CARES Act.

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

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

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

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

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

YIELD ANALYSIS	Three Months Ended
	Sep 30, 2021								Jun 30, 2021								Sep 30, 2020
	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		^(L)	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		^(L)	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate	^(L)
Interest-earning assets:
Loans held for sale	$	11,714		$	91	3.08%			$	13,716		$	109	3.19%			$	50,606		$	420	3.30%
Loans held for investment		17,102,998			199,019	4.62%				17,305,259			200,817	4.65%				18,267,559			225,596	4.91%
Loans held for investment - Warehouse Purchase Program		1,836,252			14,711	3.18%				1,984,305			15,877	3.21%				2,279,461			18,239	3.18%
Total Loans		18,950,964			213,821	4.48%				19,303,280			216,803	4.50%				20,597,626			244,255	4.72%
Investment securities		12,184,964			46,217	1.50%		^(M)		11,180,948			43,708	1.57%		^(M)		7,603,762			38,033	1.99%	^(M)
Federal funds sold and other earning assets		734,787			302	0.16%				1,221,993			340	0.11%				618,228			144	0.09%
Total interest-earning assets		31,870,715			260,340	3.24%				31,706,221			260,851	3.30%				28,819,616			282,432	3.90%
Allowance for credit losses		(301,011	)							(306,059	)							(321,424	)
Noninterest-earning assets		4,728,965								4,695,860								4,482,646
Total assets	$	36,298,669							$	36,096,022							$	32,980,838

Interest-bearing liabilities:
Interest-bearing demand deposits	$	6,089,678		$	3,614	0.24%			$	6,281,068		$	5,471	0.35%			$	5,221,722		$	5,028	0.38%
Savings and money market deposits		9,944,664			4,522	0.18%				9,872,624			5,490	0.22%				8,937,751			7,833	0.35%
Certificates and other time deposits		2,897,123			3,442	0.47%				2,980,186			4,327	0.58%				3,103,290			9,597	1.23%
Other borrowings		—			—		—			—			—		—			13,898			52	1.49%
Securities sold under repurchase agreements		448,338			195	0.17%				383,975			164	0.17%				378,888			309	0.32%
Subordinated notes		—			—		—			—			—		—			125,256			1,500	4.76%
Total interest-bearing liabilities		19,379,803			11,773	0.24%		^(N)		19,517,853			15,452	0.32%		^(N)		17,780,805			24,319	0.54%	^(N)

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		10,286,062								10,062,085								8,980,814
Allowance for credit losses on off-balance sheet credit exposures		29,947								29,947								29,947
Other liabilities		229,502								198,748								167,532
Total liabilities		29,925,314								29,808,633								26,959,098
Shareholders' equity		6,373,355								6,287,389								6,021,740
Total liabilities and shareholders' equity	$	36,298,669							$	36,096,022							$	32,980,838

Net interest income and margin				$	248,567	3.09%						$	245,399	3.10%						$	258,113	3.56%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment					551								586								658
Net interest income and margin (tax equivalent basis)				$	249,118	3.10%						$	245,985	3.11%						$	258,771	3.57%

(M) Yield on securities was impacted by net premium amortization of $15,141, $14,436, and $10,089 for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

(N) Total cost of funds, including noninterest bearing deposits, was 0.16%, 0.21% and 0.36% for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

YIELD ANALYSIS	Year-to-Date
	Sep 30, 2021								Sep 30, 2020
	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate		^(O)	Average Balance			Interest Earned/ Interest Paid		Average Yield/ Rate	^(O)
Interest-earning assets:
Loans held for sale	$	19,507		$	439	3.01%			$	60,256		$	1,575	3.49%
Loans held for investment		17,228,462			613,813	4.76%				17,890,010			690,175	5.15%
Loans held for investment - Warehouse Purchase Program		2,061,432			49,447	3.21%				1,749,568			42,520	3.25%
Total loans		19,309,401			663,699	4.60%				19,699,834			734,270	4.98%
Investment securities		10,849,373			128,602	1.58%		^(P)		8,029,097			130,091	2.16%	^(P)
Federal funds sold and other earning assets		1,151,647			993	0.12%				339,229			902	0.36%
Total interest-earning assets		31,310,421			793,294	3.39%				28,068,160			865,263	4.12%
Allowance for credit losses		(307,500	)							(325,036	)
Noninterest-earning assets		4,644,874								4,540,440
Total assets	$	35,647,795							$	32,283,564

Interest-bearing liabilities:
Interest-bearing demand deposits	$	6,160,988		$	15,028	0.33%			$	5,054,320		$	16,745	0.44%
Savings and money market deposits		9,747,706			15,765	0.22%				8,481,852			30,700	0.48%
Certificates and other time deposits		2,969,151			13,435	0.60%				3,243,564			35,300	1.45%
Other borrowings		—			—		—			439,018			3,517	1.07%
Securities sold under repurchase agreements		403,254			518	0.17%				370,225			1,403	0.51%
Subordinated notes		—			—		—			125,475			4,499	4.79%
Total interest-bearing liabilities		19,281,099			44,746	0.31%		^(Q)		17,714,454			92,164	0.69%	^(Q)

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		9,855,599								8,354,410
Allowance for credit losses on off-balance sheet credit exposures		29,947								24,321
Other liabilities		194,347								239,747
Total liabilities		29,360,992								26,332,932
Shareholders' equity		6,286,803								5,950,632
Total liabilities and shareholders' equity		35,647,795							$	32,283,564

Net interest income and margin				$	748,548	3.20%						$	773,099	3.68%
Non-GAAP to GAAP reconciliation:
Tax equivalent adjustment					1,772								2,071
Net interest income and margin (tax equivalent basis)				$	750,320	3.20%						$	775,170	3.69%

(P) Yield on securities was impacted by net premium amortization of $42,421 and $27,318 for the nine months ended September 30, 2021 and 2020, respectively.

(Q) Total cost of funds, including noninterest bearing deposits, was 0.21% and 0.47% for the nine months ended September 30, 2021 and 2020, respectively.

	Three Months Ended
	Sep 30, 2021			Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020
YIELD TREND ^(R)

Interest-Earning Assets:
Loans held for sale		3.08	%		3.19	%		2.90	%		3.23	%		3.30	%
Loans held for investment		4.62	%		4.65	%		5.02	%		4.95	%		4.91	%
Loans held for investment - Warehouse Purchase Program		3.18	%		3.21	%		3.23	%		3.20	%		3.18	%
Total loans		4.48	%		4.50	%		4.80	%		4.72	%		4.72	%
Investment securities ^(S)		1.50	%		1.57	%		1.71	%		1.83	%		1.99	%
Federal funds sold and other earning assets		0.16	%		0.11	%		0.09	%		0.11	%		0.09	%
Total interest-earning assets		3.24	%		3.30	%		3.64	%		3.76	%		3.90	%

Interest-Bearing Liabilities:
Interest-bearing demand deposits		0.24	%		0.35	%		0.39	%		0.38	%		0.38	%
Savings and money market deposits		0.18	%		0.22	%		0.25	%		0.30	%		0.35	%
Certificates and other time deposits		0.47	%		0.58	%		0.76	%		0.98	%		1.23	%
Other borrowings		—			—			—			5.39	%		1.49	%
Securities sold under repurchase agreements		0.17	%		0.17	%		0.17	%		0.24	%		0.32	%
Subordinated notes		—			—			—			4.87	%		4.76	%
Total interest-bearing liabilities		0.24	%		0.32	%		0.38	%		0.46	%		0.54	%

Net Interest Margin		3.09	%		3.10	%		3.40	%		3.48	%		3.56	%
Net Interest Margin (tax equivalent)		3.10	%		3.11	%		3.41	%		3.49	%		3.57	%

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

(S) Yield on securities was impacted by net premium amortization of $15,141, $14,436, $12,844, $11,509 and $10,089 for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively.

	Three Months Ended
	Sep 30, 2021			Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020
Balance Sheet Averages
Loans held for sale	$	11,714		$	13,716		$	33,327		$	42,856		$	50,606
Loans held for investment		17,102,998			17,305,259			17,279,066			17,700,756			18,267,559
Loans held for investment - Warehouse Purchase Program		1,836,252			1,984,305			2,369,601			2,603,455			2,279,461
Total Loans		18,950,964			19,303,280			19,681,994			20,347,067			20,597,626

Investment securities		12,184,964			11,180,948			9,148,841			8,001,679			7,603,762
Federal funds sold and other earning assets		734,787			1,221,993			1,506,645			1,094,487			618,228
Total interest-earning assets		31,870,715			31,706,221			30,337,480			29,443,233			28,819,616
Allowance for credit losses		(301,011	)		(306,059	)		(315,590	)		(322,138	)		(321,424	)
Cash and due from banks		570,765			521,737			308,787			289,579			267,887
Goodwill		3,231,637			3,231,637			3,233,231			3,231,850			3,231,976
Core deposit intangibles, net		65,955			68,830			71,763			74,919			78,269
Other real estate		279			3,001			6,385			14,573			8,061
Fixed assets, net		323,584			326,570			326,004			325,485			325,958
Other assets		536,745			544,085			576,300			633,405			570,495
Total assets	$	36,298,669		$	36,096,022		$	34,544,360		$	33,690,906		$	32,980,838

Noninterest-bearing deposits	$	10,286,062		$	10,062,085		$	9,206,791		$	9,103,742		$	8,980,814
Interest-bearing demand deposits		6,089,678			6,281,068			6,112,469			5,545,298			5,221,722
Savings and money market deposits		9,944,664			9,872,624			9,420,064			9,170,179			8,937,751
Certificates and other time deposits		2,897,123			2,980,186			3,031,621			3,047,475			3,103,290
Total deposits		29,217,527			29,195,963			27,770,945			26,866,694			26,243,577
Other borrowings		—			—			—			2,435			13,898
Securities sold under repurchase agreements		448,338			383,975			376,662			376,779			378,888
Subordinated notes		—			—			—			81,570			125,256
Allowance for credit losses on off-balance sheet credit exposures		29,947			29,947			29,947			29,947			29,947
Other liabilities		229,502			198,748			169,138			224,907			167,532
Shareholders' equity		6,373,355			6,287,389			6,197,668			6,108,574			6,021,740
Total liabilities and equity	$	36,298,669		$	36,096,022		$	34,544,360		$	33,690,906		$	32,980,838

	Sep 30, 2021					Jun 30, 2021					Mar 31, 2021					Dec 31, 2020					Sep 30, 2020
Period End Balances

Loan Portfolio
Commercial and industrial	$	1,841,899		9.7	%	$	2,021,951		10.5	%	$	2,104,116		10.7	%	$	2,210,003		10.9	%	$	2,171,302		10.5	%
Warehouse purchase program		1,998,049		10.6	%		2,095,559		10.9	%		2,272,389		11.6	%		2,842,379		14.0	%		2,730,614		13.1	%
Construction, land development and other land loans		2,269,417		12.0	%		2,147,474		11.2	%		2,031,355		10.4	%		1,956,960		9.7	%		2,081,762		10.0	%
1-4 family residential		4,709,468		24.8	%		4,531,589		23.5	%		4,310,437		21.9	%		4,253,331		21.0	%		4,189,852		20.1	%
Home equity		746,426		3.9	%		637,431		3.3	%		554,278		2.8	%		504,207		2.5	%		477,552		2.3	%
Commercial real estate (includes multi-family residential)		5,550,841		29.3	%		5,681,184		29.5	%		5,858,475		29.8	%		6,078,764		30.0	%		6,179,901		29.7	%
Agriculture (includes farmland)		631,497		3.3	%		590,135		3.1	%		571,783		2.9	%		581,352		2.9	%		598,972		2.9	%
Consumer and other		274,980		1.5	%		264,652		1.4	%		293,023		1.5	%		344,028		1.7	%		367,231		1.8	%
Energy		569,314		3.0	%		501,821		2.6	%		503,947		2.6	%		512,735		2.5	%		604,698		2.9	%
Paycheck Protection Program		365,841		1.9	%		779,989		4.0	%		1,139,083		5.8	%		963,185		4.8	%		1,393,757		6.7	%
Total loans	$	18,957,732				$	19,251,785				$	19,638,886				$	20,246,944				$	20,795,641

Deposit Types
Noninterest-bearing DDA	$	10,326,489		35.0	%	$	10,099,149		34.7	%	$	9,820,445		34.1	%	$	9,151,233		33.4	%	$	8,998,328		34.0	%
Interest-bearing DDA		6,088,923		20.7	%		6,185,115		21.2	%		6,158,641		21.4	%		5,899,051		21.6	%		5,297,802		20.0	%
Money market		6,864,664		23.3	%		6,706,252		23.0	%		6,714,889		23.4	%		6,381,014		23.3	%		6,324,127		23.9	%
Savings		3,293,850		11.2	%		3,160,606		10.9	%		3,083,447		10.7	%		2,863,086		10.5	%		2,772,492		10.5	%
Certificates and other time deposits		2,877,726		9.8	%		2,959,119		10.2	%		2,985,683		10.4	%		3,066,108		11.2	%		3,066,457		11.6	%
Total deposits	$	29,451,652				$	29,110,241				$	28,763,105				$	27,360,492				$	26,459,206

Loan to Deposit Ratio		64.4	%				66.1	%				68.3	%				74.0	%				78.6	%

	Sep 30, 2021					Jun 30, 2021					Mar 31, 2021					Dec 31, 2020					Sep 30, 2020

Single family residential construction	$	659,248		29.0	%	$	624,954		29.1	%	$	590,223		29.1	%	$	579,761		29.6	%	$	654,933		31.5	%
Land development		92,623		4.1	%		97,709		4.6	%		97,267		4.8	%		103,307		5.3	%		114,937		5.5	%
Raw land		315,803		13.9	%		245,484		11.4	%		243,394		12.0	%		247,628		12.7	%		240,154		11.5	%
Residential lots		195,201		8.6	%		165,645		7.7	%		176,884		8.6	%		158,441		8.1	%		137,615		6.6	%
Commercial lots		169,189		7.5	%		153,714		7.2	%		137,512		6.8	%		114,427		5.8	%		109,569		5.3	%
Commercial construction and other		837,436		36.9	%		860,069		40.0	%		786,192		38.7	%		753,587		38.5	%		825,053		39.6	%
Net unaccreted discount		(83	)				(101	)				(117	)				(191	)				(499	)
Total construction loans	$	2,269,417				$	2,147,474				$	2,031,355				$	1,956,960				$	2,081,762

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of September 30, 2021

	Houston		Dallas		Austin		OK City		Tulsa		Other ^(T)		Total
Collateral Type
Shopping center/retail	$	344,431	$	287,295	$	43,715	$	16,729	$	28,842	$	316,601	$	1,037,613
Commercial and industrial buildings		159,540		83,393		19,884		20,930		18,037		158,211		459,995
Office buildings		122,714		471,358		28,437		72,232		4,783		77,257		776,781
Medical buildings		105,696		23,741		2,617		23,053		39,699		65,846		260,652
Apartment buildings		259,581		145,045		37,544		15,854		35,052		179,293		672,369
Hotel		74,641		77,389		42,971		29,372		—		152,221		376,594
Other		75,713		68,519		18,409		8,442		3,769		72,250		247,102
Total	$	1,142,316	$	1,156,740	$	193,577	$	186,612	$	130,182	$	1,021,679	$	3,831,106	^(U)

	Non-PCD Loans						PCD Loans						Total Acquired Loans
	Balance at Acquisition Date		Balance at Jun 30, 2021		Balance at Sep 30, 2021		Balance at Acquisition Date		Balance at Jun 30, 2021		Balance at Sep 30, 2021		Balance at Acquisition Date			Balance at Jun 30, 2021		Balance at Sep 30, 2021
Loan marks:
Acquired banks ^(V)	$	345,599	$	16,535	$	12,774	$	320,052	$	8,695	$	5,569	$	665,651		$	25,230	$	18,343

Acquired portfolio loan balances:
Acquired banks ^(V)		12,286,159		2,913,494		2,585,926		689,573		144,694		89,833		12,975,732	^(W)		3,058,188		2,675,759

Acquired portfolio loan balances less loan marks	$	11,940,560	$	2,896,959	$	2,573,152	$	369,521	$	135,999	$	84,264	$	12,310,081		$	3,032,958	$	2,657,416

(U) Represents a portion of total commercial real estate loans of $5.551 billion as of September 30, 2021.

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

	Three Months Ended															Year-to-Date
	Sep 30, 2021			Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Sep 30, 2021			Sep 30, 2020
Asset Quality
Nonaccrual loans	$	35,035		$	32,880		$	43,025		$	47,185		$	57,412		$	35,035		$	57,412
Accruing loans 90 or more days past due		1,038			330			313			1,699			462			1,038			462
Total nonperforming loans		36,073			33,210			43,338			48,884			57,874			36,073			57,874
Repossessed assets		326			310			362			93			120			326			120
Other real estate		150			144			462			10,593			11,548			150			11,548
Total nonperforming assets	$	36,549		$	33,664		$	44,162		$	59,570		$	69,542		$	36,549		$	69,542

Nonperforming assets:
Commercial and industrial (includes energy)	$	8,199		$	8,613		$	11,290		$	16,176		$	17,273		$	8,199		$	17,273
Construction, land development and other land loans		803			1,423			1,692			1,566			2,633			803			2,633
1-4 family residential (includes home equity)		11,117			11,681			11,920			25,830			29,953			11,117			29,953
Commercial real estate (includes multi-family residential)		15,691			11,266			16,896			12,315			16,069			15,691			16,069
Agriculture (includes farmland)		643			661			803			2,075			1,931			643			1,931
Consumer and other		96			20			1,561			1,608			1,683			96			1,683
Total	$	36,549		$	33,664		$	44,162		$	59,570		$	69,542		$	36,549		$	69,542
Number of loans/properties		155			152			167			208			198			155			198
Allowance for credit losses at end of period	$	287,187		$	302,884		$	307,210		$	316,068		$	323,635		$	287,187		$	323,635

Net charge-offs (recoveries):
Commercial and industrial (includes energy)	$	3,763		$	3,529		$	1,584		$	4,085		$	8,344		$	8,876		$	20,522
Construction, land development and other land loans		(4	)		(105	)		(5	)		(110	)		478			(114	)		460
1-4 family residential (includes home equity)		66			(6	)		47			1,982			252			107			308
Commercial real estate (includes multi-family residential)		11,180			517			6,589			626			676			18,286			595
Agriculture (includes farmland)		(63	)		(9	)		33			(4	)		(17	)		(39	)		(21	)
Consumer and other		755			400			610			988			837			1,765			2,508
Total	$	15,697		$	4,326		$	8,858		$	7,567		$	10,570		$	28,881		$	24,372

Asset Quality Ratios
Nonperforming assets to average interest-earning assets		0.11	%		0.11	%		0.15	%		0.20	%		0.24	%		0.12	%		0.25	%
Nonperforming assets to loans and other real estate		0.19	%		0.17	%		0.22	%		0.29	%		0.33	%		0.19	%		0.33	%
Net charge-offs to average loans (annualized)		0.33	%		0.09	%		0.18	%		0.15	%		0.21	%		0.20	%		0.17	%
Allowance for credit losses to total loans		1.51	%		1.57	%		1.56	%		1.56	%		1.56	%		1.51	%		1.56	%
Allowance for credit losses to total loans, excluding Warehouse Purchase Program loans and Paycheck Protection Program loans ^(G)		1.73	%		1.85	%		1.89	%		1.92	%		1.94	%		1.73	%		1.94	%

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

	Three Months Ended															Year-to-Date
	Sep 30, 2021			Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Sep 30, 2021			Sep 30, 2020
Reconciliation of diluted earnings per share to diluted earnings per share, excluding merger related expenses, net of tax, and NOL tax benefit:
Net income	$	128,590		$	130,611		$	133,309		$	137,091		$	130,064		$	392,510		$	391,813
Add: merger related expenses, net of tax^(X)		—			—			—			—			—			—			6,334
Less: NOL tax benefit ^(Y)		—			—			—			—			—			—			(20,145	)
Net income, excluding merger related expenses, net of tax, and NOL tax benefit ^{(X) (Y)}	$	128,590		$	130,611		$	133,309		$	137,091		$	130,064		$	392,510		$	378,002

Weighted average diluted shares outstanding		92,683			92,935			92,854			92,559			92,656			92,823			93,226
Merger related expenses per diluted share, net of tax^(X)	$	—		$	—		$	—		$	—		$	—		$	—		$	0.07
NOL tax benefit per diluted share ^(X)	$	—		$	—		$	—		$	—		$	—		$	—		$	(0.22	)
Diluted earnings per share, excluding merger related expenses, net of tax, and NOL tax benefit ^{(X) (Y)}	$	1.39		$	1.41		$	1.44		$	1.48		$	1.40		$	4.23		$	4.05

Reconciliation of return on average assets to return on average assets excluding merger related expenses, net of tax, and NOL tax benefit:
Net income, excluding merger related expenses, net of tax, and NOL tax benefit ^{(X) (Y)}	$	128,590		$	130,611		$	133,309		$	137,091		$	130,064		$	392,510		$	378,002
Average total assets	$	36,298,669		$	36,096,022		$	34,544,360		$	33,690,906		$	32,980,838		$	35,647,795		$	32,283,564
Return on average assets excluding merger related expenses, net of tax, and NOL tax benefit^{(F) (X) (Y)}		1.42	%		1.45	%		1.54	%		1.63	%		1.58	%		1.47	%		1.56	%

Reconciliation of return on average common equity to return on average common equity excluding merger related expenses, net of tax, and NOL tax benefit:
Net income, excluding merger related expenses, net of tax, and NOL tax benefit ^{(X) (Y)}	$	128,590		$	130,611		$	133,309		$	137,091		$	130,064		$	392,510		$	378,002
Average shareholders' equity	$	6,373,355		$	6,287,389		$	6,197,668		$	6,108,574		$	6,021,740		$	6,286,803		$	5,950,632
Return on average common equity excluding merger related expenses, net of tax, and NOL tax benefit ^{(F) (X) (Y)}		8.07	%		8.31	%		8.60	%		8.98	%		8.64	%		8.32	%		8.47	%

Reconciliation of return on average common equity to return on average tangible common equity:
Net income	$	128,590		$	130,611		$	133,309		$	137,091		$	130,064		$	392,510		$	391,813
Average shareholders' equity	$	6,373,355		$	6,287,389		$	6,197,668		$	6,108,574		$	6,021,740		$	6,286,803		$	5,950,632
Less: Average goodwill and other intangible assets		(3,297,592	)		(3,300,467	)		(3,304,994	)		(3,306,769	)		(3,310,245	)		(3,300,990	)		(3,307,925	)
Average tangible shareholders’ equity	$	3,075,763		$	2,986,922		$	2,892,674		$	2,801,805		$	2,711,495		$	2,985,813		$	2,642,707
Return on average tangible common equity ^(F)		16.72	%		17.49	%		18.43	%		19.57	%		19.19	%		17.53	%		19.77	%

(Y) Net income for the second quarter of 2020 includes a tax benefit for NOL related to the CARES Act.

	Three Months Ended															Year-to-Date
	Sep 30, 2021			Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Sep 30, 2021			Sep 30, 2020

Reconciliation of return on average common equity to return on average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit:
Net income, excluding merger related expenses, net of tax, and NOL tax benefit^{(X) (Y)}	$	128,590		$	130,611		$	133,309		$	137,091		$	130,064		$	392,510		$	378,002
Average shareholders' equity	$	6,373,355		$	6,287,389		$	6,197,668		$	6,108,574		$	6,021,740		$	6,286,803		$	5,950,632
Less: Average goodwill and other intangible assets		(3,297,592	)		(3,300,467	)		(3,304,994	)		(3,306,769	)		(3,310,245	)		(3,300,990	)		(3,307,925	)
Average tangible shareholders’ equity	$	3,075,763		$	2,986,922		$	2,892,674		$	2,801,805		$	2,711,495		$	2,985,813		$	2,642,707
Return on average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit ^{(F) (X) (Y)}		16.72	%		17.49	%		18.43	%		19.57	%		19.19	%		17.53	%		19.07	%


Reconciliation of book value per share to tangible book value per share:
Shareholders’ equity	$	6,345,441		$	6,310,337		$	6,221,846		$	6,130,669		$	6,034,877		$	6,345,441		$	6,034,877
Less: Goodwill and other intangible assets		(3,296,175	)		(3,299,053	)		(3,301,940	)		(3,304,871	)		(3,308,170	)		(3,296,175	)		3,308,170
Tangible shareholders’ equity	$	3,049,266		$	3,011,284		$	2,919,906		$	2,825,798		$	2,726,707		$	3,049,266		$	2,726,707

Period end shares outstanding		92,160			92,935			92,929			92,571			92,562			92,160			92,562
Tangible book value per share	$	33.09		$	32.40		$	31.42		$	30.53		$	29.46		$	33.09			29.46

Reconciliation of equity to assets ratio to period end tangible equity to period end tangible assets ratio:
Tangible shareholders’ equity	$	3,049,266		$	3,011,284		$	2,919,906		$	2,825,798		$	2,726,707		$	3,049,266		$	2,726,707
Total assets	$	36,512,119		$	36,099,924		$	35,558,418		$	34,059,275		$	33,197,599		$	36,512,119		$	33,197,599
Less: Goodwill and other intangible assets		(3,296,175	)		(3,299,053	)		(3,301,940	)		(3,304,871	)		(3,308,170	)		(3,296,175	)		(3,308,170	)
Tangible assets	$	33,215,944		$	32,800,871		$	32,256,478		$	30,754,404		$	29,889,429		$	33,215,944		$	29,889,429
Period end tangible equity to period end tangible assets ratio		9.18	%		9.18	%		9.05	%		9.19	%		9.12	%		9.18	%		9.12	%

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	$	287,187		$	302,884		$	307,210		$	316,068		$	323,635		$	287,187		$	323,635
Total loans	$	18,957,732		$	19,251,785		$	19,638,886		$	20,246,944		$	20,795,641		$	18,957,732		$	20,795,641
Less: Warehouse Purchase Program loans		(1,998,049	)		(2,095,559	)		(2,272,389	)		(2,842,379	)		(2,730,614	)		(1,998,049	)		(2,730,614	)
Less: Paycheck Protection Program loans		(365,841	)		(779,989	)		(1,139,083	)		(963,185	)		(1,393,757	)		(365,841	)		(1,393,757	)
Total loans less Warehouse Purchase Program and Paycheck Protection Program loans	$	16,593,842		$	16,376,237		$	16,227,414		$	16,441,380		$	16,671,270		$	16,593,842		$	16,671,270
Allowance for credit losses to total loans, excluding Warehouse Purchase Program and Paycheck Protection Program loans		1.73	%		1.85	%		1.89	%		1.92	%		1.94	%		1.73	%		1.94	%

Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets and taxes:
Noninterest expense	$	119,815		$	115,191		$	119,076		$	120,205		$	117,919		$	354,082		$	377,028

Net interest income	$	248,567		$	245,399		$	254,582		$	257,634		$	258,113		$	748,548		$	773,099
Noninterest income		34,645			35,556			34,008			36,547			34,924			104,209			94,987
Less: net gain (loss) on sale or write down of assets		255			(244	)		(79	)		(675	)		(528	)		(68	)		(4,858	)
Noninterest income excluding net gains and losses on the sale or write down of assets and securities		34,390			35,800			34,087			37,222			35,452			104,277			99,845
Total income excluding net gains and losses on the sale or write down of assets and taxes	$	282,957		$	281,199		$	288,669		$	294,856		$	293,565		$	852,825		$	872,944
Efficiency ratio, excluding net gains and losses on the sale or write down of assets and taxes		42.34	%		40.96	%		41.25	%		40.77	%		40.17	%		41.52	%		43.19	%

	Three Months Ended															Year-to-Date
	Sep 30, 2021			Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Sep 30, 2021			Sep 30, 2020

Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets, taxes and merger related expenses:
Noninterest expense	$	119,815		$	115,191		$	119,076		$	120,205		$	117,919		$	354,082		$	377,028
Less: merger related expenses		—			—			—			—			—			—			8,018
Noninterest expense excluding merger related expenses	$	119,815		$	115,191		$	119,076		$	120,205		$	117,919		$	354,082		$	369,010

Net interest income	$	248,567		$	245,399		$	254,582		$	257,634		$	258,113		$	748,548		$	773,099
Noninterest income		34,645			35,556			34,008			36,547			34,924			104,209			94,987
Less: net gain (loss) on sale or write down of assets		255			(244	)		(79	)		(675	)		(528	)		(68	)		(4,858	)
Noninterest income excluding net gains and losses on the sale or write down of assets and taxes		34,390			35,800			34,087			37,222			35,452			104,277			99,845
Total income excluding net gains and losses on the sale or write down of assets and taxes	$	282,957		$	281,199		$	288,669		$	294,856		$	293,565		$	852,825		$	872,944
Efficiency ratio, excluding net gains and losses on the sale or write down of assets, taxes and merger related expenses		42.34	%		40.96	%		41.25	%		40.77	%		40.17	%		41.52	%		42.27	%

PRESS RELEASE	For more information contact:

Prosperity Bancshares, Inc.^®	Cullen Zalman
Prosperity Bank Plaza	Senior Vice President – Banking and Corporate Activities
4295 San Felipe	281.269.7199
Houston, Texas 77027	cullen.zalman@prosperitybankusa.com

	Three Months Ended					Year-to-Date
	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Sep 30, 2021	Sep 30, 2020
Loan discount accretion
ASC 310-20	$3,761	$9,731	$13,313	$13,514	$16,729	$26,805	$57,191
ASC 310-30	$1,618	$2,462	$3,027	$2,545	$5,805	$7,107	$18,091
Securities net amortization	$136	$171	$111	$66	$116	$418	$513
Time deposits amortization	$201	$327	$507	$790	$1,240	$1,035	$5.303