Prosperity Bancshares(PB) - 2025 Q1 - Quarterly Report

Financial Performance - For the quarter ended March 31, 2025, net income available to common shareholders was $130.2 million, or $1.37 per diluted common share, compared to $110.4 million, or $1.18 per diluted common share for the same period in 2024, reflecting a 17.4% increase in net income[164]. - Net interest income before the provision for credit losses was $265.4 million for the quarter ended March 31, 2025, an increase of $27.1 million or 11.4% compared to $238.2 million for the same period in 2024[166]. - Noninterest income totaled $41.3 million for the three months ended March 31, 2025, an increase of $2.4 million or 6.3% compared to $38.9 million for the same period in 2024[181]. - Noninterest expense increased by $4.5 million or 3.3% to $140.3 million for the quarter ended March 31, 2025, primarily due to higher salaries and benefits related to the merger[183]. - The efficiency ratio improved to 45.71% for the quarter ended March 31, 2025, compared to 49.07% for the same period in 2024[164]. Asset and Loan Management - Total assets decreased by $802.1 million or 2.0% to $38.76 billion as of March 31, 2025, compared to $39.57 billion at December 31, 2024[155]. - Total loans decreased by $171.6 million or 0.8% to $21.98 billion as of March 31, 2025, compared to $22.15 billion at December 31, 2024[155]. - Total deposits decreased by $354.5 million or 1.2% to $28.03 billion as of March 31, 2025, compared to $28.38 billion at December 31, 2024[155]. - The total originated loans were $18.18 billion, while re-underwritten acquired loans totaled $1.47 billion, with total loans held for investment at $21.97 billion[189]. - Loans represented 56.7% of total assets at March 31, 2025, compared to 56.0% at December 31, 2024[190]. Credit Losses and Allowances - The allowance for credit losses is established based on historical loan loss experience and current economic conditions, ensuring it is adequate to cover expected losses[161]. - The allowance for credit losses on loans was 475.8% of total nonperforming loans at March 31, 2025, compared to 463.9% at December 31, 2024[206]. - The allowance for credit losses on originated loans at the end of the period was $234,187 thousand, representing a ratio of 1.29% to end of period loans[221]. - The total charge-offs for the three months ended March 31, 2025, were $3.9 million, partially offset by total recoveries of $1.2 million[223]. - The provision for credit losses for the three months ended March 31, 2025, was $9,539 thousand for originated loans and $(9,539) thousand for acquired loans[221]. 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[156]. - The Company issued 2,376,182 shares of common stock and approximately $64.1 million in cash for the acquisition of Lone Star, resulting in goodwill of $106.7 million[157]. - Average deposits for Q1 2025 were $28.16 billion, an increase of $1.00 billion or 3.7% compared to Q1 2024, primarily due to the Merger[237]. Capital and Ratios - The CET1 capital ratio was maintained above the required minimum of 7.0% as per Basel III Capital Rules[256]. - As of March 31, 2025, the Company's CET1 capital ratio was 16.92%, significantly above the minimum required level of 4.50%[258]. - The Company's total capital ratio was 18.17%, exceeding the minimum required level of 8.00%[258]. - The Bank's CET1 capital ratio was 15.92%, above the minimum required level of 4.50%[258]. - The Bank's total capital ratio was 17.17%, surpassing the minimum required level of 8.00%[258]. Market Risk Management - The Company manages market risk primarily through interest rate risk strategies approved by the Board of Directors[260]. - The Company utilizes simulation analysis to assess the impact of market changes on net interest income and market value[261]. - There have been no material changes in the Company's market risk exposures since the disclosures in the 2024 Form 10-K[261]. - The Company considers macroeconomic variables and liquidity in quantifying market risk[261].