Prosperity Bancshares(US:PB)2025-11-07 00:36Financial Position - Total assets decreased by $1.24 billion or 3.1% to $38.33 billion as of September 30, 2025, compared to $39.57 billion at December 31, 2024[169] - Total loans decreased by $121.4 million or 0.5% to $22.03 billion as of September 30, 2025, compared to $22.15 billion at December 31, 2024[169] - Total deposits decreased by $599.2 million or 2.1% to $27.78 billion as of September 30, 2025, compared to $28.38 billion at December 31, 2024[169] - Total shareholders' equity increased by $226.4 million or 3.0% to $7.66 billion as of September 30, 2025, compared to $7.44 billion at December 31, 2024[169] - Total liabilities decreased to $30,471,885 thousand in Q3 2025 from $32,541,937 thousand in Q3 2024, a decline of about 6.4%[198] - Shareholders' equity increased to $7,657,978 thousand in Q3 2025, up from $7,347,265 thousand in Q3 2024, reflecting an increase of approximately 4.2%[198] - As of September 30, 2025, total deposits decreased to $27.78 billion, down $599.2 million or 2.1% from $28.38 billion at December 31, 2024[266] - Total noninterest-bearing deposits were $9.52 billion, a decrease of $276.4 million or 2.8% compared to $9.80 billion at December 31, 2024[266] Acquisitions - The acquisition of Lone Star State Bancshares, Inc. resulted in goodwill of $106.7 million and core deposit intangibles of $17.7 million[171] - Bancshares plans to acquire American Bank Holding Corporation, with total consideration valued at approximately $321.5 million based on a share price of $72.40[173] - The pending acquisition of Southwest Bancshares, Inc. is valued at approximately $268.9 million based on a share price of $65.97[176] Revenue and Income - Net interest income remains the largest source of revenue, influenced by interest rates and the volume of earning assets[167] - For the quarter ended September 30, 2025, net income available to common shareholders was $137.6 million, an increase of 8.1% from $127.3 million in the same period in 2024[183] - Net income per diluted common share for the quarter was $1.45, up 8.2% from $1.34 in the same period in 2024[183] - For the nine months ended September 30, 2025, net income available to common shareholders was $402.9 million, a 15.4% increase from $349.3 million in the same period in 2024[184] - Noninterest income totaled $41.2 million for the three months ended September 30, 2025, a slight increase from $41.1 million in the same period of 2024[211] - The company’s total noninterest income for the nine months ended September 30, 2025, was $125.5 million, a decrease of $451 thousand or 0.4% from $126.0 million in 2024[211] Interest Income and Margin - Net interest income before the provision for credit losses for the quarter was $273.4 million, a 4.5% increase from $261.7 million in the same period in 2024[187] - Interest income on loans for the quarter was $329.4 million, a decrease of 2.4% from $337.5 million in the same period in 2024[188] - The net interest margin on a tax-equivalent basis for the quarter was 3.24%, an increase of 29 basis points from 2.95% in the same period in 2024[191] - The net interest margin on a tax-equivalent basis for the nine months was 3.19%, an increase of 33 basis points from 2.86% in the same period in 2024[196] - The net interest margin improved to 3.23% in Q3 2025 compared to 2.94% in Q3 2024, indicating a positive trend in profitability[198] Loan Portfolio - Total loans held for investment decreased slightly to $20,851,896 thousand in Q3 2025 from $21,107,139 thousand in Q3 2024, a reduction of approximately 1.2%[198] - Loans represented 57.5% of total assets at September 30, 2025, compared to 56.0% at December 31, 2024[220] - Nonperforming assets increased by $38.0 million to $119.6 million at September 30, 2025, from $81.5 million at December 31, 2024[233] - The total nonperforming loans amounted to $105,797,000 at September 30, 2025, up from $75,836,000 at December 31, 2024, representing a 39.5% increase[234] - The loan portfolio includes commercial and industrial loans, which are generally riskier but yield higher returns compared to residential mortgage loans[221] - The Company’s commercial real estate loans are typically secured by first liens and have variable interest rates, with repayment dependent on property management success[223] - The Company offers a variety of mortgage loan products, including FHA and VA loans, which are generally amortized over 30 years[224] - Agriculture loans are evaluated based on borrowers' historical profitability and are subject to higher risks due to natural events[228] - Consumer loans include various types such as automobile and personal loans, which generally entail greater risk than real estate secured loans[229] Credit Losses and Allowance - The allowance for credit losses on loans was $343,872 thousand in Q3 2025, slightly improved from $358,237 thousand in Q3 2024, indicating better asset quality management[198] - The allowance for credit losses is influenced by charge-offs, recoveries, provisions charged to earnings, and provision releases[236] - As of September 30, 2025, the total allowance for credit losses on loans was $339.6 million, a decrease of $12.2 million or 3.5% from $351.8 million at December 31, 2024[255] - The allowance for credit losses on originated loans increased to $233.2 million, up by $5.9 million or 2.6% compared to $227.2 million at December 31, 2024[256] - The ratio of allowance for credit losses to total loans was 1.54% at September 30, 2025, compared to 1.59% at December 31, 2024[255] - The ratio of allowance to end of period nonperforming loans was 321.0% as of September 30, 2025[253] Operational Efficiency - The Company focuses on internal growth, efficient operations, and strategic acquisitions as key components of its growth strategy[168] - Noninterest expense decreased by $1.7 million or 1.2% to $138.6 million for the three months ended September 30, 2025, compared to $140.3 million in 2024[213] - The effective tax rate for the three months ended September 30, 2025, was 21.9%, compared to 21.6% for the same period in 2024[216] Capital Ratios - The CET1 capital ratio was 17.53% as of September 30, 2025, significantly above the minimum required ratio of 4.50%[290] - The Tier 1 capital ratio was also 17.53% as of September 30, 2025, exceeding the minimum required ratio of 6.00%[290] - Total capital to risk-weighted assets was 18.78% as of September 30, 2025, well above the minimum required ratio of 8.00%[290]