Group 1 - The timing of the opening pitch for Prosperity Bancshares (NYSE: PB) was not ideal, coinciding with a significant market event referred to as the "Liberation Day" tariff sell-off [1] - The company adopts a long-term, buy-and-hold investment strategy, focusing on stocks that can consistently deliver high-quality earnings, particularly in the dividend and income sectors [1] Group 2 - The article reflects the author's personal opinions and does not involve any compensation from the companies mentioned, indicating a lack of business relationships with those companies [2]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 001-35388 PROSPERITY BANCSHARES, INC.® (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorp ...

Core Viewpoint - Prosperity Bancshares Inc. reported strong second-quarter 2025 adjusted earnings per share (EPS) of $1.42, surpassing the Zacks Consensus Estimate of $1.40 and increasing from $1.22 in the prior-year quarter, driven by higher net interest income and lower expenses [1][9]. Financial Performance - Net income available to common shareholders rose to $135.2 million from $111.6 million in the year-ago quarter [2]. - Total revenues for the quarter were $310.7 million, a 1.9% increase year over year, but fell short of the Zacks Consensus Estimate of $312.5 million [3]. - Net interest income (NII) increased by 3.5% year over year to $267.7 million, with net interest margin (NIM) expanding by 24 basis points to 3.18% [3]. - Non-interest income decreased by 6.6% to $43 million, attributed to lower net gains on securities, while adjusted non-interest income rose by 14.9% to $41.6 million [4]. - Non-interest expenses declined by 9.3% to $138.6 million, reflecting a decrease in most cost components [5]. - The adjusted efficiency ratio improved to 44.80%, down from 49.13% in the prior year, indicating enhanced profitability [6]. Loan and Deposit Trends - Total loans increased by 1% to $22.2 billion, while total deposits fell by 2% to $27.5 billion [6][9]. Credit Quality - Total non-performing assets rose to $110.5 million from $89.6 million in the prior-year quarter, with the allowance for credit losses to total loans ratio decreasing to 1.56% [7]. - Net charge-offs were $3 million, down from $4.4 million in the year-ago period, and no provision for credit losses was recorded during the quarter [7]. Capital and Profitability Ratios - The common equity tier 1 capital ratio improved to 17.10% from 15.42% in the prior year, and the total risk-based capital ratio increased to 18.35% from 16.67% [10]. - The annualized return on average assets rose to 1.41% from 1.12%, and the return on average common equity increased to 7.13% from 6.10% [10]. Strategic Outlook - The company's focus on strategic acquisitions is expected to bolster long-term financial strength, supported by a solid loan portfolio and improving fee income [11].

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $135 million, an increase of $23 million or 21% compared to $111 million in Q2 2024 [9] - Earnings per diluted common share rose to $1.42, up 21% from $1.17 in the same period last year [9] - Annualized return on average assets was 1.41% and return on average tangible common equity was 13.44%, compared to 1.17% and 12.34% respectively in Q2 2024 [10] - Net interest margin increased to 3.18% from 2.94% in Q2 2024 [10][17] - Noninterest income was $43 million for Q2 2025, compared to $46 million in Q2 2024 [17] Business Line Data and Key Metrics Changes - Total loans were $22.1 billion at the end of Q2 2025, a decrease of $123 million from $22.3 billion a year earlier [11] - Core commercial loans, excluding mortgage warehouse loans, increased by $73 million or 2.4% annualized [11] - Deposits decreased to $27.4 billion, down $459 million or 1.6% from $27.9 billion in Q2 2024 [12] Market Data and Key Metrics Changes - Nonperforming assets totaled $110 million, representing 33 basis points of quarterly average interest-earning assets, compared to $89 million or 25 basis points in Q2 2024 [12] - The allowance for credit losses on loans was $346 million, which is 3.47 times the amount of nonperforming assets [13] Company Strategy and Development Direction - The company announced a definitive agreement to merge with American Bank Holding Company, enhancing its presence in South Texas and Central Texas [7][9] - The focus remains on building core customer relationships, maintaining asset quality, and investing in technology [15] - The company is open to further mergers and acquisitions, indicating a strategy of growth through consolidation [13][61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth in the second half of the year, citing improved monthly production numbers [11] - The company anticipates continued positive trends in net interest margin and net interest income [39][45] - Management noted that the Texas business environment remains favorable, contributing to the company's growth strategy [14] Other Important Information - The efficiency ratio improved to 44.8% from 51.8% in Q2 2024 [18] - The company expects noninterest expense for Q3 2025 to be in the range of $141 million to $144 million [18] Q&A Session Summary Question: Update on loan growth expectations - Management indicated that loan growth has started better than previous quarters, with a pipeline looking good for low single-digit growth for the rest of the year [27][31] Question: Margin momentum and factors affecting it - Management discussed that net interest margin continues to grow, with expectations of reaching 3.35% in six months under stable interest rates [35][39] Question: NII accretion from the acquisition - The acquisition of American Bank is expected to bring an annual NII of approximately $85 million to $90 million, with additional benefits from fair value adjustments [58] Question: Quality of American Bank's loans and deposits - Management expressed confidence in the quality of American Bank's loans and deposits, indicating minimal expected runoff post-acquisition [66][73] Question: Future M&A activity - Management confirmed that they remain active in pursuing additional M&A opportunities even with the pending acquisition [97] Question: Regulatory pressures and deal timelines - Management noted a hopeful return to quicker deal closures, estimating a timeline of three to four months for future acquisitions [102]

Financial Data and Key Metrics Changes - Net income for the three months ending June 30, 2025, was $135 million, an increase of $23 million or 21% compared to $111 million for the same period in 2024 [6][7] - Net income per diluted common share increased to $1.42 for the three months ending June 30, 2025, from $1.17 for the same period in 2024, reflecting a 21% increase [6] - Annualized return on average assets was 1.41% and return on average tangible common equity was 13.44% for the quarter ending June 30, 2025, compared to 1.17% and 12.34% respectively for the same period in 2024 [8] - Net interest margin on a tax-equivalent basis was 3.18% for the three months ending June 30, 2025, up from 2.94% for the same period in 2024 [8][15] Business Line Data and Key Metrics Changes - Loans totaled $22.1 billion at June 30, 2025, a decrease of $123 million compared to $22.3 billion at June 30, 2024 [9] - Core commercial loans, excluding mortgage warehouse loans, increased by $73 million or 2.4% annualized [9] - Deposits were $27.4 billion at June 30, 2025, a decrease of $459 million or 1.6% compared to $27.9 billion at June 30, 2024 [9][10] Market Data and Key Metrics Changes - Non-performing assets totaled $110 million or 33 basis points of quarterly average interest-earning assets at June 30, 2025, compared to $89 million or 25 basis points at June 30, 2024 [10] - The allowance for credit losses on loans was 3.47 times the amount of non-performing assets at June 30, 2025 [11] Company Strategy and Development Direction - The company entered into a definitive agreement to merge with American Bank Holding Company, which is expected to strengthen its presence in South Texas and enhance operations in Central Texas, including San Antonio [5][6] - The company aims to continue growing both organically and through mergers and acquisitions, focusing on building core customer relationships and maintaining sound asset quality [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth in the second half of the year, citing consistently higher monthly new production numbers in the second quarter [9] - The company anticipates continued positive tailwinds for net interest margin and net interest income, despite some challenges in deposit pricing and competition [8][35] Other Important Information - Non-interest income for the three months ended June 30, 2025, was $43 million, compared to $46 million for the same period in 2024 [15] - The efficiency ratio improved to 44.8% for the three months ended June 30, 2025, compared to 51.8% for the same period in 2024 [16] Q&A Session Summary Question: Update on loan growth expectations - Management indicated that loan growth has started off better than prior quarters, with a pipeline looking good and single low single-digit growth for the rest of the year being achievable [24][25] Question: Margin outlook and factors affecting it - Management discussed that net interest margin continues to grow, with expectations of further expansion due to bond portfolio repricing and loan growth [32][34] Question: Insights on the American Bank acquisition - The acquisition is expected to be accretive to net interest income, with a strong deposit base and loan yields higher than the company's current levels [54][56] Question: Concerns about Lone Star portfolio performance - Management noted that the Lone Star portfolio had higher-cost deposits but overall loan quality was good, with expectations of stabilization in loans and deposits [60][64] Question: Future M&A activity - Management confirmed that they remain active in M&A discussions and are open to further acquisitions beyond the American Bank deal [94]

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Financial Highlights - Net income reached $135.2 million, with diluted earnings per share at $1.42 for the three months ended June 30, 2025, marking a 21.1% increase compared to Q2 2024[6] - The company's assets totaled $38.4 billion, with total loans amounting to $22.2 billion and deposits at $27.5 billion as of June 30, 2025[6] - Noninterest-bearing deposits stood at $9.4 billion, representing 34.3% of total deposits[6] - Net interest margin increased by 24 basis points to 3.18% compared to the second quarter of 2024[6] - The allowance for credit losses on loans and off-balance sheet credit exposures was $383.7 million, with the allowance for credit losses on loans to total loans, excluding the Warehouse Purchase Program, at 1.66%[6] Capital and Ratios - The common equity tier 1 ratio was 17.10%, and the leverage ratio was 11.62% as of June 30, 2025[6] - Return on second quarter average assets was 1.41% annualized, and return on average tangible common equity was 13.44% in the second quarter of 2025[6] Strategic Developments - A cash dividend of $0.58 was declared for the third quarter of 2025[6] - The company announced a definitive merger agreement with American Bank Holding Corporation on July 18th, 2025[6] Market Presence - The company has a strong presence in Texas and Oklahoma, operating 283 full-service locations[7, 8] - The company is ranked 2 in deposit market share in Texas[10]

Core Insights - Prosperity Bancshares reported revenue of $310.7 million for the quarter ended June 2025, reflecting a year-over-year increase of 1.9% and an EPS of $1.42, up from $1.22 in the same quarter last year [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $312.52 million, resulting in a revenue surprise of -0.58%, while the EPS exceeded the consensus estimate of $1.40, yielding an EPS surprise of +1.43% [1] Financial Performance Metrics - Net Interest Margin (Tax Equivalent Basis) was reported at 3.2%, matching the average estimate of six analysts [4] - Efficiency Ratio stood at 44.8%, better than the estimated 45.5% by six analysts [4] - Net charge-offs to average loans were 0.1%, consistent with the estimate from five analysts [4] - Average balance of Total interest-earning assets was $33.81 billion, below the estimated $34.23 billion [4] - Total nonperforming assets reached $110.49 million, exceeding the estimated $84.42 million [4] - Total nonperforming loans were reported at $102.61 million, higher than the estimated $75.69 million [4] - Tier 1 Leverage Capital Ratio was 11.6%, above the average estimate of 11.3% [4] - Tier 1 Risk-based Capital Ratio was 17.1%, compared to the average estimate of 16.8% [4] - Total Risk-based Capital Ratio was 18.4%, slightly above the estimated 18.2% [4] - Total Noninterest Income was $42.98 million, surpassing the average estimate of $39.52 million [4] - Net Interest Income was reported at $267.72 million, below the average estimate of $273.09 million [4] - Net Interest Income (Tax Equivalent Basis) was $268.3 million, lower than the average estimate of $274.67 million [4] Stock Performance - Shares of Prosperity Bancshares have returned +5.2% over the past month, compared to a +5.9% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Prosperity Bancshares reported quarterly earnings of $1.42 per share, exceeding the Zacks Consensus Estimate of $1.4 per share, and showing an increase from $1.22 per share a year ago, indicating a positive earnings surprise of +1.43% [1][2] Financial Performance - The company achieved revenues of $310.7 million for the quarter ended June 2025, which was slightly below the Zacks Consensus Estimate by 0.58%, but an increase from $304.79 million year-over-year [2] - Over the last four quarters, Prosperity Bancshares has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - Prosperity Bancshares shares have declined approximately 3.3% since the beginning of the year, contrasting with the S&P 500's gain of 7.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.45 on revenues of $323 million, and for the current fiscal year, it is $5.75 on $1.27 billion in revenues [7] - The trend of estimate revisions for Prosperity Bancshares was mixed prior to the earnings release, which may change following the recent results [6] Industry Context - The Banks - Southwest industry, to which Prosperity Bancshares belongs, is currently ranked in the top 13% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

PRESS RELEASE For more information contact: Exhibit 99.1 ® FOR IMMEDIATE RELEASE Prosperity Bancshares, Inc. Cullen Zalman Prosperity Bank Plaza Executive Vice President – Banking and Corporate Activities 4295 San Felipe 281.269.7199 Houston, Texas 77027 cullen.zalman@prosperitybankusa.com HOUSTON, July 23, 2025. Prosperity Bancshares, Inc. ® (NYSE: PB) ("Prosperity Bancshares"), the parent company of Prosperity Bank ® (collectively, "Prosperity"), reported net income of $135.2 million for the quarter ended ...