Prosperity Bancshares(US:PB)2024-11-07 21:11Financial Performance - For the quarter ended September 30, 2024, net income available to common shareholders was $127.3 million or $1.34 per diluted common share, an increase from $112.2 million or $1.20 per diluted common share for the same period in 2023, representing a 13.5% increase[162] - The annualized return on average common equity for the quarter ended September 30, 2024, was 6.93%, compared to 6.39% for the same period in 2023, indicating improved profitability[163] - Net interest income before the provision for credit losses for the quarter ended September 30, 2024, was $261.7 million, an increase of $22.2 million or 9.3% compared to $239.5 million for the same period in 2023[165] - Interest income on loans for the quarter ended September 30, 2024, was $337.5 million, an increase of $28.8 million or 9.3% compared to $308.7 million for the same period in 2023[166] - Noninterest income rose to $41.1 million for the three months ended September 30, 2024, an increase of $2.4 million or 6.1% from $38.7 million in the same period last year[189] - Noninterest expense totaled $140.3 million for the quarter ended September 30, 2024, reflecting an increase of $4.7 million or 3.5% compared to $135.7 million in the prior year[192] - Income tax expense for Q3 2024 was $35.2 million, an increase of $4.8 million or 15.7% compared to Q3 2023[194] - The Company’s net income for the period was $349.3 million, contributing to the increase in shareholders' equity[269] Asset and Liability Management - Total assets increased to $40.12 billion as of September 30, 2024, up by $1.57 billion or 4.1% from $38.55 billion at December 31, 2023[152] - Total loans rose to $22.38 billion, reflecting an increase of $1.20 billion or 5.7% compared to $21.18 billion at December 31, 2023[152] - Total deposits reached $28.09 billion, an increase of $907.8 million or 3.3% from $27.18 billion at December 31, 2023[152] - Total shareholders' equity grew to $7.36 billion, up by $281.9 million or 4.0% from $7.08 billion at December 31, 2023[152] - The carrying cost of securities decreased to $11.30 billion at September 30, 2024, down by $1.50 billion or 11.7% from $12.80 billion at December 31, 2023[242] - Securities represented 28.2% of total assets at September 30, 2024, compared to 33.2% at December 31, 2023[242] - Cash and cash equivalents significantly increased to $2.21 billion, up by $1.75 billion or 382.1% from $458.4 million at December 31, 2023[256] Mergers and Acquisitions - 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[153] - The acquisition of First Bancshares of Texas, effective May 1, 2023, contributed $2.14 billion in total assets, $1.65 billion in total loans, and $1.71 billion in total deposits[155] - Goodwill recognized from the Lone Star merger was $108.0 million as of September 30, 2024[154] - Goodwill from the First Bancshares merger totaled $164.8 million, including final fair value adjustments[156] Credit Quality and Allowance for Credit Losses - The allowance for credit losses on loans was $341,659, compared to $303,518 in the previous year[178] - Nonperforming assets increased by $17.3 million to $89.9 million as of September 30, 2024, compared to $72.7 million at December 31, 2023[210] - Nonperforming assets represented 0.40% of total loans and other real estate at September 30, 2024, up from 0.34% at December 31, 2023[212] - The allowance for credit losses on loans was 422.0% of total nonperforming loans as of September 30, 2024, compared to 468.9% at December 31, 2023[212] - The provision for credit losses was $10,727 thousand for originated loans and $(2,804) thousand for acquired loans, resulting in a total provision of $7,923 thousand[229] - The allowance for credit losses on loans increased to $354.4 million at September 30, 2024, up by $22.0 million or 6.6% from $332.4 million at December 31, 2023[234] Capital and Regulatory Ratios - The Company's CET1 capital ratio was 15.84% as of September 30, 2024, significantly above the minimum required ratio of 4.50%[272] - The total capital ratio for the Company was 17.09% as of September 30, 2024, exceeding the minimum required ratio of 8.00%[272] - The Bank's total capital ratio was 17.04% as of September 30, 2024, also above the minimum required ratio of 8.00%[272] - The Company has a capital conservation buffer requirement of 2.5% under Basel III Capital Rules, which it exceeds comfortably[270] Operational Efficiency - The company focuses on internal growth, efficient operations, and strategic acquisitions as key components of its growth strategy[151] - The company operates 287 full-service banking locations across Texas and Oklahoma as of September 30, 2024[148] Loan Portfolio - Total loans held for investment increased to $72.1 billion as of September 30, 2024, compared to $58.9 billion in the previous year[182] - Loans held for investment reached $21,312,440, with interest earned of $928,973, reflecting a yield of 5.82%[178] - The loan portfolio includes $18.32 billion in originated loans and $1.31 billion in re-underwritten acquired loans[197] - Commercial and industrial loans are primarily secured by short-term assets and involve higher credit risk compared to residential mortgage loans[198] - The Company provides agriculture loans for short-term livestock and crop production, evaluating borrowers based on historical profitability and financial capacity[205] Interest Rate and Margin - The net interest margin on a tax-equivalent basis for the quarter ended September 30, 2024, was 2.95%, an increase of 23 basis points compared to 2.72% for the same period in 2023[169] - The net interest margin improved to 2.85% for the nine months ended September 30, 2024, compared to 2.78% in the prior year[178] - The net interest rate spread was 1.88%, down from 1.97% in the previous year[178] Other Financial Metrics - The average interest-bearing deposits to total average deposits ratio increased to 65.3% for the first nine months of 2024, compared to 62.4% for the same period in 2023[248] - The Bank Term Funding Program balance outstanding was $3.90 billion as of September 30, 2024, with an interest rate of 4.76%[250] - The Company had outstanding commitments to extend credit of $4.04 billion as of September 30, 2024[254]