Core Viewpoint - Prosperity Bancshares Inc. reported strong first-quarter 2025 adjusted earnings per share (EPS) of $1.37, surpassing estimates and showing year-over-year growth, driven by increased net interest income and adjusted non-interest income [1][2] Financial Performance - Adjusted total revenues for the quarter reached $306.7 million, a 10.7% increase from the prior-year quarter, although it slightly missed the Zacks Consensus Estimate of $307.1 million [3] - Net interest income (NII) was $265.4 million, reflecting an 11.4% year-over-year increase, with the net interest margin (NIM) expanding by 35 basis points to 3.14% [3] - Non-interest income amounted to $41.3 million, up 6.3%, driven by increases in most components except for credit card and trust income [4] - Non-interest expenses rose by 3.3% to $140.3 million, primarily due to increases in various cost components, while the adjusted efficiency ratio improved to 45.71% from 49.07% year-over-year, indicating better profitability [5] Asset and Deposit Trends - As of March 31, 2025, total loans were $22 billion, showing a slight decline from the previous quarter, while total deposits decreased by 1.2% to $28.03 billion [6] Credit Quality - Total non-performing assets decreased to $81.4 million from $83.8 million year-over-year, with the allowance for credit losses to total loans ratio increasing to 1.59% [7] Capital and Profitability Ratios - The common equity tier 1 capital ratio improved to 16.97% from 15.75% year-over-year, and the total risk-based capital ratio rose to 18.22% from 17.00% [8] - The annualized return on average assets increased to 1.34% from 1.13%, and the return on average common equity rose to 6.94% from 6.20% [8] Strategic Outlook - The company's focus on strategic acquisitions is expected to enhance long-term financial strength, supported by a solid loan and deposit mix, along with improving fee income [9]

Financial Data and Key Metrics Changes - Net income for Q1 2025 was $130 million, an increase of 17.9% from $110 million in Q1 2024 [11] - Net income per diluted common share rose to $1.37, up 16.1% from $1.18 in the same period last year [11] - The annualized return on average assets was 1.34% and on average tangible common equity was 13.23% [11] - The efficiency ratio improved to 45.7% compared to 49.1% in Q1 2024 [23] Business Line Data and Key Metrics Changes - Total loans reached $21.9 billion, a 3.3% increase from $21.2 billion in Q1 2024, primarily due to the merger with Lonestar State Bancshares [12] - Deposits increased to $28 billion, up 3.1% from $27 billion in Q1 2024 [13] - Noninterest income was $41.3 million for Q1 2025, compared to $38.9 million in Q1 2024 [22] Market Data and Key Metrics Changes - Nonperforming assets totaled $81.4 million, stable compared to $81 million in Q1 2024 [15][25] - The Texas economy showed solid employment growth and increased sales tax revenue, indicating a strong economic environment [16][17] Company Strategy and Development Direction - The company aims to maintain strong asset quality and solid earnings while focusing on long-term customer relationships [9] - Management is optimistic about potential acquisition opportunities despite market volatility [18] - The company is prepared to utilize its capital for acquisitions, buybacks, or dividends as opportunities arise [114] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth despite current sluggishness, with expectations of low single-digit growth for 2025 [35][38] - The company is closely monitoring economic conditions and customer sentiment, which remain optimistic despite uncertainties [40][42] - Management anticipates that net interest margins will continue to improve as the bond and loan portfolios reprice [15][74] Other Important Information - The tangible equity to tangible asset ratio was maintained at 11.2% with tangible equity of $3.9 billion [10] - The cost of funds was reported at 1.66% and the cost of deposits at 1.38% [14] Q&A Session Summary Question: Insights on loan growth and expectations for 2025 - Management expects low single-digit loan growth for 2025, with recent loan pipelines showing modest increases [35][38] Question: Balance sheet trends and high-cost borrowings - The company has reduced borrowings from $3.9 billion to $2.7 billion and does not anticipate significant further reductions [53][56] Question: Thoughts on stock buybacks given current prices - Management is focused on M&A opportunities but is open to stock buybacks if prices decline further [61][63] Question: M&A environment and potential deals - Management believes M&A activity will resume as companies are still interested despite recent market volatility [70][126] Question: Credit quality and provision expectations - The company does not expect to take significant provisions unless economic conditions worsen significantly [96][97]

First Quarter 2025 Investor Presentation "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995 "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This presentation contains, and the remar ks 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 193 ...

Company Overview - Prosperity Bancshares (PB) is headquartered in Houston and operates in the Finance sector, experiencing a price change of -10.87% since the start of the year [3] - The company currently pays a dividend of $0.58 per share, resulting in a dividend yield of 3.45%, which is significantly higher than the Banks - Southwest industry's yield of 1.16% and the S&P 500's yield of 1.69% [3] Dividend Performance - The annualized dividend of Prosperity Bancshares is $2.32, reflecting a 2.7% increase from the previous year [4] - Over the past 5 years, the company has increased its dividend 5 times, achieving an average annual increase of 4.82% [4] - The current payout ratio is 45%, indicating that the company pays out 45% of its trailing 12-month earnings per share as dividends [4] Earnings Outlook - For the fiscal year 2025, the Zacks Consensus Estimate projects earnings of $5.79 per share, with an expected increase of 13.31% from the previous year [5] Investment Considerations - Dividends are favored by investors for various reasons, including improving stock investing profits and providing tax advantages [6] - While high-growth firms and tech start-ups typically do not offer dividends, established companies like Prosperity Bancshares are viewed as strong dividend options [7] - The stock currently holds a Zacks Rank of 3 (Hold), indicating it is a compelling investment opportunity due to its strong dividend profile [7]

For the quarter ended March 2025, Prosperity Bancshares (PB) reported revenue of $306.68 million, up 10.7% over the same period last year. EPS came in at $1.37, compared to $1.18 in the year-ago quarter.The reported revenue represents a surprise of -0.14% over the Zacks Consensus Estimate of $307.12 million. With the consensus EPS estimate being $1.35, the EPS surprise was +1.48%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to dete ...

Financial Performance - First quarter earnings per share (diluted) increased by 16.1% to $1.37 compared to the first quarter of 2024[2] - Net income for the first quarter rose 17.9% to $130.2 million compared to $110.4 million in the same period last year[2] - Net income available to common shareholders for the quarter was $130,225 thousand, compared to $130,076 thousand in the previous quarter, an increase of 0.11%[51] - Net income for Q1 2025 reached $130.225 million, compared to $130.076 million in Q4 2024 and $110.426 million in Q1 2024, reflecting a year-over-year increase of 18%[85] Asset and Loan Growth - Total assets at March 31, 2025, were $38.765 billion, an increase of $8.2 million year-over-year[20] - Loans increased by 3.3% to $21.978 billion compared to $21.265 billion at March 31, 2024[21] - Total loans reached $21,842,882, with interest earned of $319,023, reflecting an average yield of 5.92%[62] - Total loans amounted to $21.978 billion, down from $22.149 billion in the previous quarter, indicating a reduction in lending activity[88] Deposit and Interest Metrics - Deposits rose by 3.1% to $28.027 billion compared to $27.176 billion at March 31, 2024[23] - Interest expense on deposits decreased to $95,597 thousand from $102,050 thousand, a decrease of 6.06%[51] - The total cost of funds, including noninterest-bearing deposits, was 1.66% for the three months ended March 31, 2025, down from 1.80% in the previous quarter[63] Noninterest Income and Expenses - Noninterest income grew by 6.3% to $41.3 million compared to $38.9 million in the first quarter of 2024[16] - Noninterest income increased to $41,301 thousand from $39,837 thousand, an increase of 3.66%[51] - Noninterest expense for the quarter was $140.301 million, a slight decrease from $141.545 million in the previous quarter, indicating cost control measures[88] Credit Quality and Allowance for Losses - Nonperforming assets remained low at 0.24% of quarterly average interest-earning assets[27] - The allowance for credit losses on loans was $349.1 million, or 1.59% of total loans[29] - The allowance for credit losses on loans was $349.101 million, representing 1.59% of total loans as of March 31, 2025[83] - Net charge-offs for the three months ended March 31, 2025, were $2.704 million, with a net charge-off ratio of 0.05%[83] Mergers and Acquisitions - Prosperity completed the merger with Lone Star State Bancshares on April 1, 2024, which included 5 full-service banking offices in West Texas[33] - The merger involved issuing 2,376,182 shares of common stock and approximately $64.1 million in cash, resulting in goodwill of $106.7 million as of March 31, 2025[34] - The merger completed on April 1, 2024, added $1.075 billion in loans, with related purchase accounting adjustments of $24.9 million[79] Capital and Equity - Shareholders' equity increased to $7,517,061 thousand from $7,438,495 thousand, an increase of 1.06%[47] - Common equity tier 1 capital ratio was 16.97% as of March 31, 2025, an increase from 16.42% in the previous quarter[53] - Tangible book value per share increased to $41.48 in Q1 2025 from $40.61 in Q4 2024[86] Operational Efficiency - The efficiency ratio improved to 45.71% for the three months ended March 31, 2025, compared to 46.10% in the previous quarter[53] - The efficiency ratio, excluding certain items, is used by the company for internal planning and forecasting purposes, reflecting its focus on operational performance[84] - The efficiency ratio, excluding net gains and losses on the sale, write-down or write-up of assets and securities, improved to 45.71% from 46.10% in the previous quarter, demonstrating enhanced operational efficiency[88] Future Outlook and Guidance - Forward-looking statements indicate expectations for future economic performance, including revenues and earnings per share, but are subject to inherent uncertainties and risks[42] - The company emphasizes the importance of reviewing consolidated financial statements in their entirety, as non-GAAP measures should not be considered substitutes for GAAP measures[38]

Core Insights - Prosperity Bancshares reported a net income of $130.2 million for Q1 2025, a 17.9% increase from $110.4 million in Q1 2024, with diluted earnings per share rising to $1.37 from $1.18 [1][7] - The net interest margin improved to 3.14% in Q1 2025, up from 2.79% in Q1 2024, driven by higher asset repricing [9][11] - The company maintained strong asset quality with nonperforming assets at 0.24% of average interest-earning assets [21] Financial Performance - Net interest income before provision for credit losses was $265.4 million for Q1 2025, an increase of 11.4% from $238.2 million in Q1 2024 [8][11] - Noninterest income rose to $41.3 million in Q1 2025, a 6.3% increase compared to $38.9 million in Q1 2024 [10][11] - Noninterest expense increased to $140.3 million in Q1 2025, up 3.3% from $135.8 million in Q1 2024, primarily due to salary increases related to the merger [13][11] Balance Sheet Highlights - Total assets as of March 31, 2025, were $38.765 billion, a slight increase from $38.757 billion a year earlier [14] - Loans increased to $21.978 billion, up 3.3% from $21.265 billion in Q1 2024, largely due to the merger [15][11] - Deposits reached $28.027 billion, a 3.1% increase from $27.176 billion in Q1 2024 [16][11] Capital and Asset Quality - The tangible equity to tangible assets ratio was 11.2%, with tangible equity amounting to $3.952 billion [4][11] - The allowance for credit losses on loans was $349.1 million, representing 1.59% of total loans [23][11] - Net charge-offs for Q1 2025 were $2.7 million, compared to $2.1 million in Q1 2024 [24][11] Market Recognition - Prosperity Bancshares has been recognized as one of Forbes' Best Banks since 2010 and was named the "Best Overall Bank in Texas" for 2024-2025 [3][11] - The company was also ranked among "America's Best Regional Banks" by Newsweek in 2025 [3][11] Economic Context - The Texas economy is experiencing solid employment growth and increased sales tax revenue, indicating a favorable economic environment for banking operations [5][11] - Despite uncertainties related to tariffs, management remains optimistic based on customer feedback regarding future outlooks and plans [6][11]

Core Viewpoint - Prosperity Bancshares (PB) is expected to report quarterly earnings of $1.35 per share, a 14.4% increase year-over-year, with revenues projected at $307.12 million, reflecting a 10.8% increase compared to the same period last year [1] Earnings Projections - The consensus EPS estimate has been revised 0.1% lower over the last 30 days, indicating a reevaluation by analysts [2] - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3] Key Financial Metrics - Analysts predict an 'Efficiency Ratio' of 46.4%, down from 49.1% a year ago [5] - The 'Average balance - Total interest-earning assets' is estimated at $34.45 billion, slightly lower than the previous year's $34.51 billion [5] - 'Total nonperforming assets' are expected to be $83.48 million, down from $83.81 million last year, while 'Total nonperforming loans' are projected at $77.67 million, compared to $81.51 million a year ago [6] Capital Ratios - The 'Tier 1 Leverage Capital Ratio' is expected to be 10.8%, up from 10.4% last year [7] - The 'Tier 1 Risk-based Capital Ratio' is forecasted at 16.4%, compared to 15.8% in the same quarter last year [7] - The 'Total Risk-based Capital Ratio' is projected to reach 17.7%, up from 17.1% a year ago [7] Income Estimates - 'Total Noninterest Income' is estimated at $38.34 million, down from $38.87 million last year [8] - 'Net Interest Income' is expected to be $269.00 million, compared to $238.24 million in the same quarter last year [8] - 'Net Interest Income (Tax Equivalent Basis)' is projected at $269.14 million, up from $239.05 million a year ago [9] - 'Credit card, debit card and ATM card income' is expected to reach $9.09 million, compared to $8.86 million last year [9] - 'Nonsufficient funds (NSF) fees' are projected at $9.10 million, up from $8.29 million in the same quarter last year [10] Stock Performance - Over the past month, Prosperity Bancshares shares have recorded a return of -6.7%, compared to the Zacks S&P 500 composite's -5.6% change [12] - Based on its Zacks Rank 3 (Hold), PB is expected to perform in line with the overall market in the upcoming period [12]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Prosperity Bancshares, driven by higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2] Earnings Expectations - Prosperity Bancshares is expected to report earnings of $1.35 per share, reflecting a +14.4% year-over-year change, with revenues projected at $307.12 million, up 10.8% from the previous year [3] - The earnings report is scheduled for April 23, 2025, and could influence stock movement based on whether results exceed or fall short of expectations [2] Estimate Revisions - The consensus EPS estimate has been revised down by 0.14% over the last 30 days, indicating a reassessment by analysts [4] - The Most Accurate Estimate for Prosperity Bancshares is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +0.53% [10][11] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8] - Prosperity Bancshares has a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [11] Historical Performance - In the last reported quarter, Prosperity Bancshares exceeded the expected earnings of $1.33 per share by delivering $1.37, resulting in a surprise of +3.01% [12] - The company has beaten consensus EPS estimates in each of the last four quarters [13] Industry Comparison - BOK Financial, a peer in the Zacks Banks - Southwest industry, is expected to report earnings of $2.01 per share, with a year-over-year change of +5.2% and revenues of $518.5 million, up 13.9% [17] - BOK Financial's consensus EPS estimate has remained unchanged, but a lower Most Accurate Estimate has resulted in a negative Earnings ESP of -0.50%, combined with a Zacks Rank of 4, making it difficult to predict an earnings beat [18]

Financial Performance - The Company reported total assets of $1.38 billion, total loans of $1.07 billion, and total deposits of $1.24 billion from the recent acquisition of Lone Star State Bancshares, Inc.[17] - The merger with First Bancshares of Texas, Inc. resulted in total assets of $2.14 billion, total loans of $1.65 billion, and total deposits of $1.71 billion as of March 31, 2023[19] - Total loans increased to $22.15 billion as of December 31, 2024, up by $968.7 million or 4.6% from $21.18 billion at December 31, 2023[37] - The Company declared quarterly dividends aggregating $2.26 per share for 2024, compared to $2.21 per share for 2023[198] - The Company repurchased approximately 1.2 million shares of its common stock at an average price of $60.35 per share during the year ended December 31, 2024[205] Operational Efficiency - The Company's average cost of funds was 1.87%, and the average cost of deposits was 1.47% for the year ended December 31, 2024[31] - The Company plans to maintain stringent cost control practices to enhance operational efficiency[39] - The Company is focusing on cross-selling efforts to increase product offerings to existing customers[40] - The Company has maintained profitability every year since its inception, including during adverse economic conditions in Texas and Oklahoma[15] Regulatory Compliance - Regulatory compliance is critical, with the Company subject to extensive federal and state regulations impacting its operations[43] - The Federal Reserve Board requires bank holding companies to act as a source of strength for their banking subsidiaries[53] - The Company must adhere to limitations on dividends and share repurchases as mandated by federal and state laws[48] - The Company is committed to maintaining sound banking practices to avoid regulatory penalties and ensure financial stability[57] - The Company and the Bank are required to maintain a minimum leverage ratio of 4%[69] Capital and Risk Management - As of December 31, 2024, the Company's CET1 ratio to risk-weighted assets was 16.42%, Tier 1 capital to risk-weighted assets was 16.42%, total capital to risk-weighted assets was 17.67%, and Tier 1 capital to average quarterly assets (leverage ratio) was 10.82%[75] - The capital conservation buffer required is 2.5% above each minimum risk-based capital ratio to absorb losses during economic stress[70] - The Company and the Bank's regulatory capital ratios were above the applicable well-capitalized standards and met the capital conservation buffer in 2024[75] - The Company maintains an allowance for credit losses to cover estimated losses in its loan portfolio, but this may not be sufficient if actual credit losses exceed expectations[115] Cybersecurity and Technology - The Company’s cybersecurity risk management program is designed to protect sensitive data and mitigate risks across various operational areas[182] - The Company has not experienced any cybersecurity incidents that materially impacted its business strategy or financial condition to date[187] - The Company is subject to evolving cybersecurity regulations, with significant penalties for non-compliance[98] - The SEC requires disclosure of material cybersecurity incidents within four business days, impacting the Company's reporting obligations[99] - Cybersecurity threats are evolving, and the Company's measures to prevent cyberattacks may not fully mitigate risks, potentially leading to significant financial and reputational damage[147] Market and Competitive Environment - The banking business remains highly competitive, with the Company emphasizing customer service and technology to maintain its market position[42] - The Company faces intense competition from various financial institutions, which could adversely affect its growth and profitability[178] - The market for acquisitions remains highly competitive, and the Company may struggle to find suitable candidates for growth, impacting its strategic objectives[138] Economic and Credit Risks - The Company's profitability is significantly influenced by local economic conditions in Texas and Oklahoma, where slower population or income growth could adversely affect its financial performance[117] - The Company faces increased credit risks associated with commercial real estate loans, which typically have larger balances and are more sensitive to economic conditions[121] - The Company is exposed to risks from geopolitical events and economic conditions, which could impact borrowers' ability to repay loans and the overall credit quality of its portfolio[112] - The Company's loan portfolio, particularly in energy lending, is vulnerable to declines in oil and natural gas prices, which could lead to increased loan delinquencies[124] Environmental and Social Governance (ESG) - Climate change poses immediate and long-term risks, including operational, credit, and reputational risks, which could adversely affect the Company's financial condition[165] - Increasing scrutiny regarding Environmental, Social, and Governance (ESG) practices may impose additional costs and regulatory risks on the Company[168] Legal and Litigation Risks - The Company is subject to claims and litigation related to intellectual property, which could result in substantial damages and increased operating expenses[159] - Legal actions regarding fiduciary responsibilities may lead to significant financial liabilities and adversely affect market perception and customer demand[161]