Prosperity Bancshares (PB) Up 6% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Prosperity Bancshares reported strong fourth-quarter earnings, surpassing estimates, driven by increased net interest income (NII) and non-interest income, despite a decline in loan balances [2][4]. Financial Performance - Q4 2025 adjusted earnings were $1.46, exceeding the Zacks Consensus Estimate of $1.45, marking a 6.6% year-over-year growth [2]. - Total revenues for Q4 were $317.7 million, up from $307.6 million a year earlier, slightly above the Zacks Consensus Estimate of $317.3 million [5]. - For the full year 2025, total revenues reached $1.25 billion, reflecting a 4.8% increase year over year [5]. Income and Expenses - NII increased by 4.5% year over year to $275 million, with net interest margin (NIM) expanding by 25 basis points to 3.30% [6]. - Non-interest income rose to $42.8 million, a 7.4% increase, driven by higher fee-based revenues [7]. - Non-interest expenses decreased by 2% year over year to $138.7 million, contributing to an improved efficiency ratio of 43.66% [8]. Balance Sheet and Capital Position - As of December 31, 2025, total assets were $38.46 billion, with total loans at $21.81 billion (down 1%) and deposits increasing by 2.5% to $28.48 billion [9]. - The common equity tier 1 ratio improved to 17.55%, and the total risk-based capital ratio rose to 18.80% [10]. Credit Quality - Non-performing assets increased to $150.8 million from $81.5 million a year ago, while net charge-offs rose to $5.9 million [12]. Shareholder Returns - The company repurchased 2.04 million shares at an average price of $67.10 during the reported quarter [13]. Future Outlook - NIM is expected to be at least 3.50% for 2026, with management anticipating non-interest expenses to be between $172-$176 million for Q1 2026 [14][15]. - Estimates for the stock have been trending downward, with a Zacks Rank of 3 (Hold), indicating an expectation of in-line returns in the coming months [18]. Industry Comparison - Prosperity Bancshares is part of the Zacks Banks - Southwest industry, with Texas Capital (TCBI) reporting a year-over-year revenue increase of 15.4% in its latest quarter [19].