Prosperity Bancshares(PB) - 2025 Q2 - Quarterly Results

Executive Summary Prosperity Bancshares reported strong Q2 2025 earnings with double-digit growth in net income and EPS, improved net interest margin, and announced a strategic acquisition of American Bank Holding Corporation to expand its Texas presence Second Quarter 2025 Performance Highlights Prosperity Bancshares reported strong second quarter 2025 earnings, with net income and diluted earnings per share increasing by over 21% year-over-year. The company also saw an improvement in its net interest margin and continued loan growth, while maintaining low nonperforming assets Key Financial Highlights (Q2 2025 vs Q2 2024): | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :------ | :------ | :----- | | Net Income ($ millions) | $135.2 | $111.6 | +21.1% | | Diluted EPS ($) | $1.42 | $1.17 | +21.4% | | Net Interest Margin (%) | 3.18% | 2.94% | +24 bps | | Loans Increase (during Q2 2025) ($ millions) | $219.8 | - | - | | Nonperforming Assets (% of avg. interest-earning assets) | 0.33% | - | - | | Return (annualized) on avg. assets (%) | 1.41% | - | - | | Return (annualized) on avg. tangible common equity (%) | 13.44% | - | - | CEO Commentary David Zalman, Prosperity's Senior Chairman and CEO, expressed satisfaction with the bank's double-digit growth in net income and EPS, improved net interest margin, and continued loan growth. He anticipates positive tailwinds for the next 12-24 months and highlighted the favorable business environment in Texas and Oklahoma - CEO David Zalman noted "double digit increases in net income and earnings per share compared with the second quarter of 2024." He also stated, "Our net interest margin also improved to 3.28%, a 24 basis point increase compared with the second quarter of 2024 as our interest-bearing assets continue to reprice"[3] - Loans grew $219.8 million during the second quarter of 2025, with cautious enthusiasm from customers[3] - Texas and Oklahoma continue to attract people and companies due to business-friendly political structures and no state income tax, with Texas rated as the second-best state for business in 2025 by CNBC[6] Strategic Acquisition Announcement Prosperity Bancshares announced a definitive merger agreement to acquire American Bank Holding Corporation, a move expected to strengthen its presence in South and Central Texas, including the high-growth San Antonio area. The transaction is valued at approximately $321.5 million and is anticipated to close in late 2025 or early 2026 - Prosperity Bancshares entered into a definitive merger agreement with American Bank Holding Company, headquartered in Corpus Christi, Texas[4][34] - The acquisition will strengthen Prosperity's presence and operations in South Texas and surrounding areas, and enhance its presence in Central Texas, including San Antonio[4] American Bank Holding Corporation (as of March 31, 2025): | Metric | Amount | | :---------------- | :------------- | | Total Assets ($ billion) | $2.517 | | Total Loans ($ billion) | $1.752 | | Total Deposits ($ billion) | $2.270 | - The total consideration for the merger is valued at approximately $321.5 million, based on the issuance of 4,439,981 shares of Prosperity Bancshares common stock[35] - The transaction is expected to close during the fourth quarter of 2025 or the first quarter of 2026, subject to regulatory and shareholder approvals[35] Results of Operations - Three Months Ended June 30, 2025 The second quarter of 2025 saw significant year-over-year growth in net income and EPS, improved net interest margin, and a decrease in noninterest expenses, partially offset by a decline in noninterest income Net Income and Earnings Per Share Net income for the second quarter of 2025 increased by 21.1% year-over-year and 3.8% linked-quarter, reaching $135.2 million. Diluted EPS also saw significant growth, rising 21.4% year-over-year to $1.42 Net Income (Three Months Ended): | Period | Amount ($ millions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Jun 30, 2025 | 135.2 | +21.1% | +3.8% | | Jun 30, 2024 | 111.6 | - | - | | Mar 31, 2025 | 130.2 | - | - | Diluted Earnings Per Share (Three Months Ended): | Period | Amount ($) | Change YoY | Change QoQ | | :----- | :--------- | :--------- | :--------- | | Jun 30, 2025 | 1.42 | +21.4% | +3.6% | | Jun 30, 2024 | 1.17 | - | - | | Mar 31, 2025 | 1.37 | - | - | - Annualized returns for Q2 2025 were 1.41% on average assets, 7.13% on average common equity, and 13.44% on average tangible common equity. The efficiency ratio (excluding net gains/losses on asset/security sales) was 44.80%[8] Net Interest Income and Margin Net interest income before provision for credit losses increased by 3.5% year-over-year and 0.9% linked-quarter, reaching $267.7 million. The net interest margin on a tax equivalent basis improved to 3.18% in Q2 2025, a 24 basis point increase from Q2 2024 Net Interest Income Before Provision for Credit Losses (Three Months Ended): | Period | Amount ($ millions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Jun 30, 2025 | 267.7 | +3.5% | +0.9% | | Jun 30, 2024 | 258.8 | - | - | | Mar 31, 2025 | 265.4 | - | - | Net Interest Margin (Tax Equivalent Basis, Three Months Ended): | Period | Rate (%) | Change YoY (bps) | Change QoQ (bps) | | :----- | :--- | :--------------- | :--------------- | | Jun 30, 2025 | 3.18% | +24 | +4 | | Jun 30, 2024 | 2.94% | - | - | | Mar 31, 2025 | 3.14% | - | - | - The improvement in net interest income and margin was primarily due to a decrease in average balances and average rates on other borrowings and interest-bearing deposits, partially offset by a decrease in average rates on loans and average balances on investment securities[9][10] Noninterest Income Noninterest income for Q2 2025 was $43.0 million, representing a 6.6% decrease year-over-year but a 4.1% increase linked-quarter. This change was mainly influenced by a decrease in net gain on sale or write-down of securities Noninterest Income (Three Months Ended): | Period | Amount ($ millions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Jun 30, 2025 | 43.0 | -6.6% | +4.1% | | Jun 30, 2024 | 46.0 | - | - | | Mar 31, 2025 | 41.3 | - | - | - The decrease year-over-year was primarily due to a decrease in net gain on sale or write-down of securities, partially offset by an increase in other noninterest income, service charges on deposit accounts, and net gain on sale or write-down of assets[11] Noninterest Expense Noninterest expense decreased by 9.3% year-over-year and 1.2% linked-quarter, totaling $138.6 million in Q2 2025. This reduction was largely due to lower regulatory assessments, FDIC insurance, and merger-related expenses compared to the prior year, which included costs from the Lone Star Merger Noninterest Expense (Three Months Ended): | Period | Amount ($ millions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Jun 30, 2025 | 138.6 | -9.3% | -1.2% | | Jun 30, 2024 | 152.8 | - | - | | Mar 31, 2025 | 140.3 | - | - | - The decrease was primarily driven by lower regulatory assessment and FDIC insurance, merger related expenses, salaries and benefits, and other noninterest expense[12] - Noninterest expenses in Q2 2024 were higher due to the merger of Lone Star State Bancshares, Inc. with Prosperity Bancshares, effective April 1, 2024[12] Results of Operations - Six Months Ended June 30, 2025 Year-to-date results for June 30, 2025, show strong growth in net income and EPS, an increase in net interest income and margin, and a decrease in noninterest expenses Net Income and Earnings Per Share (YTD) For the first six months of 2025, net income increased by 19.5% year-over-year to $265.4 million, with diluted EPS rising 19.2% to $2.79. This growth was mainly attributed to increased net interest income and reduced merger-related costs Net Income (Six Months Ended): | Period | Amount ($ millions) | Change YoY | | :----- | :------------------ | :--------- | | Jun 30, 2025 | 265.4 | +19.5% | | Jun 30, 2024 | 222.0 | - | Diluted Earnings Per Share (Six Months Ended): | Period | Amount ($) | Change YoY | | :----- | :--------- | :--------- | | Jun 30, 2025 | 2.79 | +19.2% | | Jun 30, 2024 | 2.34 | - | - Returns for the six months ended June 30, 2025, were 1.37% on average assets, 7.03% on average common equity, and 13.33% on average tangible common equity[18] Net Interest Income (YTD) Year-to-date net interest income before provision for credit losses increased by 7.3% to $533.1 million, driven by favorable trends in borrowing costs and loan balances Net Interest Income Before Provision for Credit Losses (Six Months Ended): | Period | Amount ($ millions) | Change YoY | | :----- | :------------------ | :--------- | | Jun 30, 2025 | 533.1 | +7.3% | | Jun 30, 2024 | 497.0 | - | - The increase was primarily due to a decrease in average balances and average rates on other borrowings, a decrease in average rates on interest-bearing deposits, and an increase in average balances on loans, partially offset by a decrease in average balances on investment securities[19] Net Interest Margin (YTD) The year-to-date net interest margin on a tax equivalent basis improved to 3.16% for the six months ended June 30, 2025, an increase of 29 basis points compared to the same period in 2024 Net Interest Margin (Tax Equivalent Basis, Six Months Ended): | Period | Rate (%) | Change YoY (bps) | | :----- | :--- | :--------------- | | Jun 30, 2025 | 3.16% | +29 | | Jun 30, 2024 | 2.87% | - | - The change was primarily due to a decrease in the average balances and average rates on other borrowings and a decrease in the average rates on interest-bearing deposits, partially offset by a decrease in the average balances on investment securities[20] Noninterest Income and Expense (YTD) Year-to-date noninterest income remained relatively stable with a slight decrease of 0.7%, while noninterest expense decreased by 3.4%, primarily due to lower regulatory assessments and merger-related costs Noninterest Income (Six Months Ended): | Period | Amount ($ millions) | Change YoY | | :----- | :------------------ | :--------- | | Jun 30, 2025 | 84.3 | -0.7% | | Jun 30, 2024 | 84.9 | - | Noninterest Expense (Six Months Ended): | Period | Amount ($ millions) | Change YoY | | :----- | :------------------ | :--------- | | Jun 30, 2025 | 278.9 | -3.4% | | Jun 30, 2024 | 288.7 | - | - The decrease in noninterest expense was primarily due to decreases in regulatory assessment and FDIC insurance, merger related expenses, and other noninterest expense[21] Balance Sheet Information Prosperity's balance sheet shows a decrease in total assets and deposits, primarily due to seasonal public fund movements, while loans demonstrated organic growth when adjusted for merger impacts Total Assets, Loans, and Deposits Overview Prosperity's total assets decreased both year-over-year and linked-quarter. Loans showed a linked-quarter increase but a year-over-year decrease, while deposits declined in both periods, mainly due to seasonal public fund movements Total Assets: | Period | Amount ($ billions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Jun 30, 2025 | 38.417 | -3.4% | -0.9% | | Jun 30, 2024 | 39.762 | - | - | | Mar 31, 2025 | 38.765 | - | - | Total Loans: | Period | Amount ($ billions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Jun 30, 2025 | 22.197 | -0.6% | +1.0% | | Jun 30, 2024 | 22.321 | - | - | | Mar 31, 2025 | 21.978 | - | - | Total Deposits: | Period | Amount ($ billions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Jun 30, 2025 | 27.473 | -1.6% | -2.0% | | Jun 30, 2024 | 27.933 | - | - | | Mar 31, 2025 | 28.027 | - | - | - The decrease in deposits was primarily due to a decrease in public fund deposits and business deposits, reflecting typical seasonality where public fund customers use tax dollars throughout the year[24] Loan and Deposit Trends (Excluding Lone Star Merger Impact) Excluding the impact of the Lone Star Merger, loans showed an increase both year-over-year and linked-quarter, indicating organic growth. Conversely, deposits, when adjusted for the merger, experienced decreases in both periods - Loans, excluding Warehouse Purchase Program loans, were $20.910 billion at June 30, 2025, a decrease of $329.5 million (1.6%) compared to June 30, 2024, and a decrease of $9.7 million compared to March 31, 2025[23] - Excluding loans acquired in the Lone Star Merger and new production at acquired banking centers since April 1, 2024, loans at June 30, 2025, increased $55.5 million compared with June 30, 2024, and increased $290.8 million compared with March 31, 2025[26] - Excluding deposits assumed in the Lone Star Merger and new deposits generated at acquired banking centers, deposits at June 30, 2025, decreased by $212.6 million compared with June 30, 2024, and decreased by $510.8 million compared with March 31, 2025[27] Asset Quality Asset quality metrics show an increase in nonperforming assets and loans, a decrease in the allowance for credit losses, and a reduction in net charge-offs for the quarter and year-to-date Nonperforming Assets and Loans Nonperforming assets increased to $110.5 million at June 30, 2025, representing 0.33% of quarterly average interest-earning assets. This marks an increase both year-over-year and linked-quarter Nonperforming Assets: | Period | Amount ($ millions) | % of Avg. Interest-Earning Assets | Change YoY | Change QoQ | | :----- | :------------------ | :-------------------------------- | :--------- | :--------- | | Jun 30, 2025 | 110.5 | 0.33% | +23.3% | +35.7% | | Jun 30, 2024 | 89.6 | 0.25% | - | - | | Mar 31, 2025 | 81.4 | 0.24% | - | - | Total Nonperforming Loans: | Period | Amount ($ thousands) | Change QoQ | | :----- | :------------------- | :--------- | | Jun 30, 2025 | 102,607 | +39.8% | | Mar 31, 2025 | 73,378 | - | Allowance for Credit Losses The allowance for credit losses on loans and off-balance sheet credit exposures decreased to $383.7 million at June 30, 2025. Notably, there was no provision for credit losses recorded for the three and six months ended June 30, 2025, contrasting with a $9.1 million provision in the prior year Allowance for Credit Losses on Loans and Off-Balance Sheet Credit Exposures: | Period | Amount ($ millions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Jun 30, 2025 | 383.7 | -3.5% | -0.8% | | Jun 30, 2024 | 397.5 | - | - | | Mar 31, 2025 | 386.7 | - | - | - There was no provision for credit losses for the three and six months ended June 30, 2025, compared to a $9.1 million provision for the same periods in 2024[29] Allowance for Credit Losses on Loans to Total Loans: | Period | Ratio (%) | Change YoY (bps) | Change QoQ (bps) | | :----- | :---- | :--------------- | :--------------- | | Jun 30, 2025 | 1.56% | -5 | -3 | | Jun 30, 2024 | 1.61% | - | - | | Mar 31, 2025 | 1.59% | - | - | Net Charge-offs Net charge-offs for the second quarter of 2025 were $3.0 million, a decrease from $4.4 million in Q2 2024. For the year-to-date, net charge-offs were $5.7 million, down from $6.5 million in the prior year Net Charge-offs (Three Months Ended): | Period | Amount ($ millions) | Change YoY | Change QoQ | | :----- | :------------------ | :--------- | :--------- | | Jun 30, 2025 | 3.0 | -31.8% | +11.1% | | Jun 30, 2024 | 4.4 | - | - | | Mar 31, 2025 | 2.7 | - | - | Net Charge-offs (Six Months Ended): | Period | Amount ($ millions) | Change YoY | | :----- | :------------------ | :--------- | | Jun 30, 2025 | 5.7 | -12.3% | | Jun 30, 2024 | 6.5 | - | - During Q2 2025, $2.1 million of reserves on resolved purchased credit deteriorated (PCD) loans were released to the general reserve. For the six months ended June 30, 2025, $10.4 million of such reserves were released[31][32] Dividend Declaration Prosperity Bancshares declared a third quarter 2025 cash dividend of $0.58 per share, payable in October 2025 - A cash dividend of $0.58 per share was declared for the third quarter of 2025[33] - The dividend will be paid on October 1, 2025, to shareholders of record as of September 15, 2025[33] American Bank Holding Corporation Acquisition Prosperity Bancshares announced a definitive merger agreement to acquire American Bank Holding Corporation, strengthening its Texas market presence, with the transaction expected to close by early 2026 Merger Agreement Details Prosperity Bancshares has entered into a definitive merger agreement to acquire American Bank Holding Corporation. The transaction involves American Bank, N.A. merging into Prosperity Bank, with Prosperity Bancshares issuing approximately 4.44 million shares of common stock as consideration - Prosperity Bancshares and American Bank Holding Corporation signed a definitive merger agreement on July 18, 2025[34] - American Bank, N.A. (a subsidiary of American Bank Holding Corporation) will merge with and into Prosperity Bank[34] - American Bank operates 18 banking offices and 2 loan production offices in South and Central Texas, including Corpus Christi, San Antonio, Austin, and Victoria[34] American Bank Holding Corporation Financials (as of March 31, 2025): | Metric | Amount | | :---------------- | :------------- | | Total Assets ($ billion) | $2.517 | | Total Loans ($ billion) | $1.752 | | Total Deposits ($ billion) | $2.270 | - Prosperity Bancshares will issue 4,439,981 shares of its common stock for all outstanding shares of American common stock, valued at approximately $321.5 million based on Prosperity's closing price of $72.40 on July 16, 2025[35] Strategic Rationale and Expected Timeline The acquisition is strategically important for strengthening Prosperity's market presence in key Texas regions, particularly in high-growth areas like San Antonio. The transaction is subject to customary closing conditions and is projected to be finalized by early 2026 - The combination will strengthen Prosperity's presence and operations in South Texas and surrounding areas, and enhances its presence in Central Texas, including San Antonio, a highly desirable, high growth area[4] - The transaction is subject to customary closing conditions, including required regulatory approvals and approval of American's shareholders[35] - The transaction is expected to close during the fourth quarter of 2025 or the first quarter of 2026[35] Company Profile & Operations Prosperity Bancshares, a Houston-based regional financial holding company, operates 283 full-service banking locations across Texas and Oklahoma, offering a comprehensive range of banking services About Prosperity Bancshares, Inc. Prosperity Bancshares, Inc. is a regional financial holding company based in Houston, Texas, with $38.417 billion in total assets as of June 30, 2025. Founded in 1983, it operates with a community banking philosophy, offering a wide range of personal and business banking services across Texas and Oklahoma - Prosperity Bancshares, Inc. is a $38.417 billion Houston, Texas based regional financial holding company as of June 30, 2025[39] - Founded in 1983, Prosperity operates with a community banking philosophy, providing financial solutions to consumers and businesses throughout Texas and Oklahoma[39] - Services include traditional deposit and loan products, digital banking, credit/debit cards, mortgage services, retail brokerage, trust and wealth management, and treasury management[39] Branch Network Locations Prosperity Bancshares operates 283 full-service banking locations across various regions in Texas and Oklahoma, with a detailed list of cities and areas provided in the report - Prosperity currently operates 283 full-service banking locations[40][72] - The branch network is distributed across Texas (Houston, South Texas, Dallas/Fort Worth, East Texas, Central Texas, West Texas, Bryan/College Station areas) and Oklahoma (Central Oklahoma, Tulsa areas)[40][41] - A comprehensive list of specific branch locations is provided on pages 12 of the report[50][51][53][55][56][58][59][61][63][64] Conference Call Details Prosperity's management will host a conference call on July 23, 2025, to discuss the second quarter 2025 earnings. Participants can join via phone or a live webcast - A conference call will be held on Wednesday, July 23, 2025, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time)[36] - Domestic participants can dial 877-883-0383, international participants 412-902-6506, using participant elite entry number 9928869[36] - A live webcast of the presentation will be available on Prosperity's Investor Relations page at **www.prosperitybankusa.com**[37](index=37&type=chunk) Non-GAAP Financial Measures Prosperity's management utilizes certain non-GAAP financial measures for internal evaluation and investor understanding, believing they offer insights into core operating earnings by excluding specific items. These measures are reconciled to GAAP, with a strong recommendation for investors to review full GAAP financial statements - Prosperity's management uses non-GAAP financial measures for internal planning, forecasting, and to evaluate performance, believing they provide useful information to investors[38][101] - These non-GAAP measures exclude items such as merger-related provision for credit losses, merger-related expenses, FDIC special assessment, and net gain on sale or write-up of securities, to better reflect core operating earnings[38][101] - Non-GAAP financial measures should not be considered a substitute for, or of greater importance than, GAAP basis financial measures and results. Investors are encouraged to review consolidated financial statements in their entirety[38] Forward-Looking Statements & Additional Information This section provides cautionary notes on forward-looking statements, details on the upcoming SEC filings for the American Bank acquisition, and clarifies that the communication is for informational purposes only Cautionary Notes on Forward-Looking Statements This release contains forward-looking statements regarding future financial and operational results, including the proposed American Bank acquisition, which are subject to significant risks and uncertainties that could cause actual results to differ materially from expectations - The release includes forward-looking statements about future financial and operating results, benefits and synergies of the American Bank transaction, and future opportunities for Prosperity[42] - These statements are subject to significant risks and uncertainties, including the ability to integrate acquired businesses, credit quality deterioration, changes in laws and regulations, economic conditions, and failure to obtain necessary approvals[43] - Prosperity disclaims any obligation to update these forward-looking statements or publicly announce revisions to reflect future events or developments[44] Additional Information about the Transaction Prosperity intends to file a Registration Statement on Form S-4 with the SEC, which will include a Proxy Statement/Prospectus for American's shareholders. Investors are strongly urged to read these documents carefully for important information regarding the proposed transaction - Prosperity intends to file a Registration Statement on Form S-4 with the SEC to register shares of common stock for American's shareholders, which will include a Proxy Statement/Prospectus[45] - Investors and security holders are urged to read these documents carefully and in their entirety when available, as they will contain important information about Prosperity, American, and the proposed transaction[46] - Free copies of these documents will be available through the SEC website (http://www.sec.gov) and Prosperity's website (**http://www.prosperitybankusa.com**)[47](index=47&type=chunk) No Offer or Solicitation This communication serves solely for informational purposes and does not constitute an offer to subscribe for, buy, or sell securities, nor a solicitation of any vote or approval - This communication is for informational purposes only and does not constitute an offer to subscribe for, buy or sell securities[48] - It is also not a solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or a solicitation of any vote or approval[48] - No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, and otherwise in accordance with applicable law[48] Detailed Financial Highlights (Tables) This section provides comprehensive financial tables, including balance sheet data, income statements, profitability ratios, yield analyses, and asset quality metrics, offering detailed insights into the company's financial performance and position Balance Sheet Data (Period End) This table provides a detailed breakdown of Prosperity Bancshares' balance sheet at period end for the past five quarters, including assets, liabilities, and shareholders' equity - Key items include total loans, investment securities, federal funds sold, allowance for credit losses on loans, cash and due from banks, goodwill, core deposit intangibles, other real estate owned, fixed assets, other assets, total assets, noninterest-bearing deposits, interest-bearing deposits, total deposits, other borrowings, securities sold under repurchase agreements, allowance for credit losses on off-balance sheet credit exposures, other liabilities, total liabilities, and shareholders' equity[67] Income Statement Data This table presents a detailed income statement for the three months and year-to-date periods, covering interest income and expense, net interest income, provision for credit losses, noninterest income, noninterest expense, and net income - Content includes interest income from loans, securities, federal funds sold and other earning assets; interest expense on deposits, other borrowings, and securities sold under repurchase agreements; net interest income; provision for credit losses; various noninterest income categories (e.g., NSF fees, card income, service charges, trust income, mortgage income, brokerage income, BOIL income, net gain/loss on sale of assets/securities, other noninterest income); and various noninterest expense categories (e.g., salaries and benefits, occupancy, data processing, regulatory assessments, amortization, depreciation, communications, OREO expense, merger related expenses, other noninterest expense)[71] Profitability, Liquidity and Capital Ratios This table presents key profitability, liquidity, and capital ratios for Prosperity Bancshares over the past five quarters and year-to-date, including various returns, efficiency ratios, and capital adequacy metrics - Key metrics include net income, basic and diluted earnings per share, return on average assets, return on average common equity, return on average tangible common equity, tax equivalent net interest margin, efficiency ratio, equity to assets, common equity tier 1 capital, tier 1 risk-based capital, total risk-based capital, tier 1 leverage capital, period end tangible equity to period end tangible assets, weighted-average shares, period end shares outstanding, cash dividends paid per common share, book value per common share, tangible book value per common share, common stock market prices, employees, and number of banking centers[72] Yield Analysis - Three Months Ended This table provides a detailed yield analysis for interest-earning assets and interest-bearing liabilities for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, including average balances, interest earned/paid, and yield/rate - The analysis covers loans (held for sale, held for investment, Warehouse Purchase Program), investment securities, federal funds sold and other earning assets, interest-bearing demand deposits, savings and money market deposits, certificates and other time deposits, other borrowings, and securities sold under repurchase agreements, along with net interest income and margin[79] Yield Analysis - Year-to-Date This table presents a year-to-date yield analysis for interest-earning assets and interest-bearing liabilities for the six months ended June 30, 2025, and June 30, 2024, detailing average balances, interest earned/paid, and yield/rate - Similar to the quarterly yield analysis, this table provides average balances, interest earned/paid, and yield/rate for loans, investment securities, federal funds sold, various deposit types, other borrowings, and securities sold under repurchase agreements, culminating in net interest income and margin for the year-to-date periods[82] Yield Trend This table illustrates the yield trends for various interest-earning assets and interest-bearing liabilities, as well as net interest margin, over the past five quarters - The table shows annualized yield trends for loans (held for sale, held for investment, Warehouse Purchase Program), investment securities, federal funds sold and other earning assets, interest-bearing demand deposits, savings and money market deposits, certificates and other time deposits, other borrowings, securities sold under repurchase agreements, and total interest-bearing liabilities, alongside net interest margin (GAAP and tax equivalent)[86] Balance Sheet Averages This table provides average balance sheet data for key asset and liability categories over the past five quarters, useful for calculating annualized returns and yields - Average balances are presented for loans (held for sale, held for investment, Warehouse Purchase Program), investment securities, federal funds sold and other earning assets, allowance for credit losses on loans, cash and due from banks, goodwill, core deposit intangibles, other real estate, fixed assets, other assets, total assets, noninterest-bearing deposits, interest-bearing demand deposits, savings and money market deposits, certificates and other time deposits, total deposits, other borrowings, securities sold under repurchase agreements, allowance for credit losses on off-balance sheet credit exposures, other liabilities, and shareholders' equity[90] Loan Portfolio Composition This table details the composition of Prosperity Bancshares' loan portfolio by type at the end of each of the past five quarters, showing the distribution across various loan categories - The loan portfolio is broken down into commercial and industrial, warehouse purchase program, construction/land development and other land loans, 1-4 family residential, home equity, commercial real estate (including multi-family residential), agriculture (including farmland), consumer and other, and energy loans, with their respective percentages of total loans[92] Deposit Types This table breaks down Prosperity Bancshares' deposit base by type at the end of each of the past five quarters, including noninterest-bearing and various interest-bearing categories - Deposit types include noninterest-bearing DDA, interest-bearing DDA, money market, savings, and certificates and other time deposits, with their respective percentages of total deposits[92] Construction Loans Breakdown This table provides a detailed breakdown of the construction loan portfolio by collateral type for the past five quarters - Construction loans are categorized into single family residential construction, land development, raw land, residential lots, commercial lots, and commercial construction and other, along with net unaccreted discount, showing their percentage distribution[94] Non-Owner Occupied Commercial Real Estate Loans by MSA This table categorizes non-owner occupied commercial real estate loans by collateral type and Metropolitan Statistical Area (MSA) as of June 30, 2025 - Loans are categorized by collateral type (shopping center/retail, commercial and industrial buildings, office buildings, medical buildings, apartment buildings, hotel, other) and by MSA (Houston, Dallas, Austin, OK City, Tulsa, Other)[94] Acquired Loans Details This table provides details on acquired loans, distinguishing between Non-PCD (Purchased Credit Deteriorated) and PCD loans, including loan marks and portfolio balances from various acquired banks and the Lone Star Bank merger - The table presents loan marks and acquired portfolio loan balances for various acquired banks (e.g., Bank Arlington, American State Bank, LegacyTexas Bank) and specifically for Lone Star Bank, broken down into Non-PCD and PCD loans[95][96] - The Lone Star Merger, completed on April 1, 2024, resulted in the addition of $1.075 billion in loans with related purchase accounting adjustments[97] Asset Quality Ratios This table presents detailed asset quality metrics and ratios, including nonperforming loans and assets, net charge-offs, and various allowance for credit losses ratios, over the past five quarters and year-to-date - Key asset quality data includes nonaccrual loans, accruing loans 90 or more days past due, total nonperforming loans, repossessed assets, other real estate, total nonperforming assets (categorized by loan type), number of loans/properties, allowance for credit losses on loans, and net charge-offs (categorized by loan type)[99] - Asset quality ratios include nonperforming assets to average interest earning assets, nonperforming assets to loans and other real estate, net charge-offs to average loans (annualized), allowance for credit losses on loans to total loans, and allowance for credit losses on loans to total loans excluding Warehouse Purchase Program loans[99] Notes to Selected Financial Data (Non-GAAP Reconciliations) This section provides detailed reconciliations of various non-GAAP financial measures to their nearest GAAP equivalents, which management uses to evaluate performance and provide investors with a clearer understanding of core operating results by adjusting for specific non-recurring or non-core items - Reconciliations are provided for diluted earnings per share, return on average assets, return on average common equity, and return on average tangible common equity, each excluding merger-related provision for credit losses, merger-related expenses, FDIC special assessment, and net gain on sale or write-up of securities (all net of tax)[101][102][103] - Additional reconciliations include tangible book value per share, the tangible equity to tangible assets ratio, allowance for credit losses to total loans excluding Warehouse Purchase Program loans, and various efficiency ratios (excluding net gains/losses on asset/security sales, merger-related expenses, and FDIC special assessment)[101][103][104] - These non-GAAP measures are used for internal planning and forecasting and to provide a more complete understanding of factors and trends affecting Prosperity's business, allowing investors to view performance similarly to management and analysts[101]