Prosperity Bancshares(US:PB)2025-10-29 10:30Financial 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]