Investor Presentation Third Quarter 2025 These forward-looking statements are not guarantees of future performance and are based on expectations and assumptions Prosperity currently believes to be valid. Because forward-looking statements relate to future 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; quality could deteriorate; action ...

Core Insights - Prosperity Bancshares reported quarterly earnings of $1.45 per share, matching the Zacks Consensus Estimate, and showing an increase from $1.34 per share a year ago [1] - The company posted revenues of $314.67 million for the quarter ended September 2025, which was 0.6% below the Zacks Consensus Estimate, but up from $302.79 million year-over-year [2] - The stock has underperformed the market, losing about 16% since the beginning of the year compared to the S&P 500's gain of 17.2% [3] Earnings Performance - The company has surpassed consensus EPS estimates three times over the last four quarters [1] - The current consensus EPS estimate for the upcoming quarter is $1.42, with expected revenues of $335.32 million, and for the current fiscal year, the estimate is $5.69 on $1.27 billion in revenues [7] Market Outlook - The estimate revisions trend for Prosperity Bancshares was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The outlook for the industry, specifically the Banks - Southwest sector, is currently in the top 26% of Zacks industries, suggesting a favorable environment for stocks in this category [8]

Financial Performance - Net income for Q3 2025 was $137.6 million, an increase of 8.1% from $127.3 million in Q3 2024[2] - Earnings per diluted common share for Q3 2025 were $1.45, up 8.2% from $1.34 in Q3 2024[2] - Net income available to common shareholders for Q3 2025 was $137,556,000, up from $135,155,000 in Q2 2025, reflecting a 1.78% increase[71] - Net income for Q3 2025 reached $137.556 million, compared to $135.155 million in Q2 2025 and $130.225 million in Q1 2025, with a year-to-date total of $402.936 million versus $349.310 million in 2024[103] - Return on average assets for Q3 2025 was 1.44%, slightly up from 1.41% in Q2 2025[71] - Return on average assets for Q3 2025 was 1.44%, an increase from 1.41% in Q2 2025 and 1.34% in Q1 2025[103] - Return on average common equity (unadjusted) for Q3 2025 was 7.18%, up from 7.13% in Q2 2025 and 6.94% in Q1 2025[104] - Year-to-date net interest income reached $806,539, compared to $758,721 in the previous year, a growth of 6.3%[105] Asset and Loan Management - Total assets were $38.330 billion as of September 30, 2025, a decrease from $40.115 billion a year earlier[23] - Loans were $22.028 billion at September 30, 2025, down $353.1 million from $22.381 billion a year earlier[24] - Total loans held for investment decreased to $20,738,294 thousand as of September 30, 2025, from $20,903,944 thousand as of June 30, 2025, representing a decline of approximately 0.8%[66] - The total loan portfolio reached $22.03 billion, a slight decrease from $22.20 billion in the previous quarter[92] - The 1-4 family residential loans accounted for 33.9% of the total loan portfolio, totaling $7.46 billion, consistent with the previous quarter[92] - Nonaccrual loans increased to $105,529 thousand in Q3 2025 from $102,031 thousand in Q2 2025, representing a 2.5% increase[100] - Total nonperforming loans rose to $105,797 thousand in Q3 2025, up from $102,607 thousand in Q2 2025, indicating a 2.3% increase[100] Deposits and Funding - Deposits increased by $308.7 million during Q3 2025, representing a 4.5% annualized growth[4] - Total deposits rose to $27,782,094 thousand at the end of September 2025, up from $27,473,411 thousand at the end of June 2025, marking an increase of about 1.1%[66] - Noninterest-bearing deposits increased to $9,522,028 thousand as of September 30, 2025, compared to $9,426,657 thousand as of June 30, 2025, indicating a growth of approximately 1.0%[66] - The loan to deposit ratio stood at 79.3%, down from 80.8% in the previous quarter, indicating a slight increase in deposits relative to loans[92] Credit Quality and Allowance for Losses - Nonperforming assets were low at 0.36% of average interest-earning assets for Q3 2025[4] - The allowance for credit losses on loans was $377.3 million at September 30, 2025, compared to $392.0 million a year earlier[26] - The allowance for credit losses on loans was $339.6 million, or 1.54% of total loans, as of September 30, 2025, a decrease from 1.56% at June 30, 2025, and 1.58% at September 30, 2024[27] - Net charge-offs for the three months ended September 30, 2025, were $6.5 million, compared to $3.0 million for the previous quarter and $5.5 million for the same period in 2024[28] - The allowance for credit losses on loans decreased to $339,626 thousand in Q3 2025 from $346,084 thousand in Q2 2025, a decline of 1.3%[100] Mergers and Acquisitions - The company signed a definitive merger agreement with Southwest Bancshares, Inc., adding 4 branches in the San Antonio metro area[3] - Prosperity Bancshares signed a merger agreement with Southwest Bancshares, Inc., with a total consideration valued at approximately $268.9 million based on a closing price of $65.97 on September 29, 2025[33] - Prosperity Bancshares also announced a merger agreement with American Bank Holding Corporation, with a total consideration valued at approximately $321.5 million based on a closing price of $72.40 on July 16, 2025[35] - The company plans to file a registration statement with the SEC for the proposed transaction with Southwest, which will include a proxy statement/prospectus for shareholders[45] - The integration of Southwest's and American's businesses into Prosperity may face delays or increased costs, impacting the expected synergies from the transactions[44] Dividends and Shareholder Returns - The board approved a dividend increase of 3.45% to $0.60 per share for Q4 2025, marking the 22nd consecutive annual increase[4] - Prosperity Bancshares declared a fourth quarter 2025 cash dividend of $0.60 per share, an increase of $0.02 per share, or 3.45%, from the prior quarter[30] - Prosperity Bancshares announced a stock repurchase program to acquire up to 5% of its outstanding common stock, approximately 4.8 million shares, by January 21, 2026[31] Operational Efficiency - The efficiency ratio improved to 44.06% in Q3 2025 from 44.80% in Q2 2025, indicating better cost management[71] - Total noninterest expense for Q3 2025 was $138,635,000, marginally up from $138,565,000 in Q2 2025, reflecting a 0.05% increase[70] - Noninterest income for the quarter was $41,238, slightly down from $41,099 year-over-year, a decrease of 0.3%[105]

Core Viewpoint - Prosperity Bancshares, Inc. has declared a quarterly common stock dividend of $0.60 per share for Q4 2025, marking a 3.45% increase from the previous quarter [1]. Company Overview - Prosperity Bancshares, Inc. is a regional financial holding company based in Houston, Texas, with total assets of $38.417 billion as of June 30, 2025, providing personal banking services and investments primarily in Texas and Oklahoma [2]. - The company operates under a community banking philosophy, offering a range of financial solutions including traditional deposit and loan products, digital banking, credit and debit cards, mortgage services, retail brokerage, trust and wealth management, and treasury management [3]. Operational Footprint - Prosperity Bancshares operates 283 full-service banking locations across various regions, including 62 in the Houston area, 33 in South Texas, 61 in the Dallas/Fort Worth area, and others in East, Central, and West Texas, as well as Oklahoma [4].

Core Viewpoint - Prosperity Bancshares (PB) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, continuing a strong trend of surpassing expectations in previous quarters [1][6]. Group 1: Earnings Performance - Prosperity Bancshares has consistently exceeded earnings estimates, averaging a 1.46% beat over the last two quarters [2]. - In the last reported quarter, the company achieved earnings of $1.42 per share, surpassing the Zacks Consensus Estimate of $1.40 per share by 1.43% [3]. - For the previous quarter, the company reported earnings of $1.37 per share against an expectation of $1.35 per share, resulting in a surprise of 1.48% [3]. Group 2: Earnings Estimates and Predictions - The estimates for Prosperity Bancshares have been trending upward, influenced by its history of earnings surprises [6]. - The company currently has a positive Earnings ESP of +0.52%, indicating increased analyst optimism regarding its near-term earnings potential [9]. - The next earnings report for Prosperity Bancshares is anticipated to be released on October 29, 2025 [9]. Group 3: Zacks Rank and Earnings ESP - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with historical data showing that this combination leads to positive surprises nearly 70% of the time [7][9]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [8].

Core Viewpoint - Prosperity Bancshares, Inc. has announced a definitive merger agreement to acquire Southwest Bancshares, Inc. and its subsidiary Texas Partners Bank, aiming to expand its presence in Central Texas, particularly in the San Antonio area [1][6]. Company Overview - Prosperity Bancshares, Inc. is a regional financial holding company based in Houston, Texas, with total assets of approximately $38.417 billion as of June 30, 2025 [8]. - Southwest Bancshares, Inc. operates Texas Partners Bank, which has total assets of $2.4 billion, total loans of $1.9 billion, and total deposits of $2.1 billion as of June 30, 2025 [2][11]. Merger Details - Under the merger agreement, Prosperity will issue 4,062,520 shares of its common stock for all outstanding shares of Southwest common stock, valuing the total consideration at approximately $268.9 million based on Prosperity's closing price of $65.97 on September 29, 2025 [3]. - The merger has been unanimously approved by the Boards of Directors of both companies and is expected to close in the first quarter of 2026, pending shareholder and regulatory approvals [6]. Management Integration - Key executives from Texas Partners Bank, including Brent Given and Tom Moreno, will join Prosperity Bank in senior management roles, ensuring continuity in leadership [4][5]. - Gene Dawson, Jr., Interim Chairman and CEO of Southwest, will join the Board of Directors of Prosperity Bank post-merger [5]. Strategic Rationale - The merger is aimed at enhancing Prosperity's footprint in the fast-growing San Antonio and Hill Country areas, with plans to operate ten banking centers in the San Antonio area and expand into additional Texas locations [6]. - Texas Partners Bank's customers will gain access to Prosperity's extensive network across Texas and Oklahoma after operational integration [6].

Core Viewpoint - Prosperity Bancshares, Inc. is set to announce its Third Quarter 2025 earnings on October 29, 2025, with a conference call scheduled for 10:30 AM Central Time, highlighting the company's ongoing commitment to transparency and communication with investors [1][2]. Company Overview - Prosperity Bancshares, Inc. is a regional financial holding company based in Houston, Texas, with total assets of $38.417 billion as of June 30, 2025, providing personal banking services and investments primarily in Texas and Oklahoma [3]. - Founded in 1983, the company adheres to a community banking philosophy, offering a range of financial solutions including traditional deposit and loan products, digital banking, credit and debit cards, mortgage services, treasury management, and wealth management services [4]. Operational Footprint - Prosperity operates 283 full-service banking locations across various regions, including 62 in the Houston area, 33 in South Texas, 61 in the Dallas/Fort Worth area, and additional branches in East, Central, and West Texas, as well as in Oklahoma [5].

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]

Financial Position - Total assets decreased to $38.42 billion as of June 30, 2025, down from $39.57 billion at December 31, 2024, representing a decline of 2.9%[160] - Total deposits decreased to $27.47 billion, a decline of $907.9 million or 3.2% from $28.38 billion at December 31, 2024[160] - Total liabilities decreased to $31.13 billion as of June 30, 2025, from $32.22 billion as of June 30, 2024, a reduction of approximately 3.4%[186] - Total shareholders' equity rose to $7.60 billion, an increase of $161.2 million or 2.2% from $7.44 billion at December 31, 2024[160] Loans and Credit Quality - Total loans increased slightly to $22.20 billion, up by $48.2 million or 0.2% from $22.15 billion at December 31, 2024[160] - Total loans held for investment increased slightly to $20.93 billion for the six months ended June 30, 2025, from $20.87 billion for the same period in 2024[186] - Nonperforming assets increased by $28.9 million to $110.5 million at June 30, 2025, compared to $81.5 million at December 31, 2024[218] - Total nonperforming loans amounted to $102.6 million as of June 30, 2025, with nonaccrual loans at $102.0 million[219] - The allowance for credit losses on loans was 337.3% of total nonperforming loans at June 30, 2025, down from 463.9% at December 31, 2024[220] Income and Revenue - For the quarter ended June 30, 2025, net income available to common shareholders was $135.2 million, an increase of $23.6 million or 21.1% compared to $111.6 million for the same period in 2024[172] - Net interest income remains the largest source of revenue, influenced by interest rates and the volume of earning assets[158] - Net interest income before the provision for credit losses was $267.7 million for the quarter ended June 30, 2025, an increase of $8.9 million or 3.5% compared to $258.8 million for the same period in 2024[174] - Noninterest income totaled $43.0 million for the three months ended June 30, 2025, a decrease of $3.0 million or 6.6% compared to $46.0 million for the same period in 2024[196] Interest Rates and Margins - The net interest margin on a tax-equivalent basis was 3.18% for the quarter ended June 30, 2025, an increase of 24 basis points compared to 2.94% for the same period in 2024[177] - The net interest margin improved to 3.16% for the six months ended June 30, 2025, compared to 2.86% for the same period in 2024[186] - Average interest-bearing liabilities were $21.03 billion for the quarter ended June 30, 2025, a decrease of $1.45 billion or 6.5% compared to $22.48 billion for the same period in 2024[176] Acquisitions and Mergers - The merger with Lone Star State Bancshares, effective April 1, 2024, added $1.38 billion in total assets, $1.08 billion in total loans, and $1.24 billion in total deposits[161] - The upcoming acquisition of American Bank Holding Corporation is valued at approximately $321.5 million, based on Bancshares' closing price of $72.40 on July 16, 2025[164] - The Company recognized $106.7 million in goodwill as of June 30, 2025, related to the Lone Star merger[162] Expenses and Taxation - Noninterest expense for Q2 2025 was $138.6 million, down $14.3 million or 9.3% from $152.8 million in Q2 2024, primarily due to lower regulatory assessments and merger-related expenses[199] - Income tax expense increased to $37.0 million in Q2 2025, up $5.7 million or 18.2% from $31.3 million in Q2 2024[202] - The effective tax rate for Q2 2025 was 21.5%, down from 21.9% in Q2 2024[202] Market Risk Management - The Company manages market risk primarily through interest rate risk strategies approved by the Board of Directors[280] - The Company employs simulation analysis to assess the impact of market changes on net interest income and market value[281] - There have been no material changes in the Company's market risk exposures since the disclosures in the 2024 Form 10-K[281] Capital Ratios - The Company's CET1 capital ratio is 17.10%, significantly above the minimum required of 4.50% and the well-capitalized standard of 7.00%[278] - The Company's total capital ratio stands at 18.35%, exceeding the minimum required of 8.00% and the well-capitalized standard of 10.50%[278] - The Company's Tier 1 capital to average assets (leverage ratio) is 11.62%, well above the required minimum of 4.00%[278]

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].