Prosperity Bancshares(PB) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net income for Q1 2025 was $130 million, an increase of 17.9$110 million in Q1 2024 [11] - Net income per diluted common share rose to $1.37, up 16.1$1.18 in the same period last year [11] - The annualized return on average assets was 1.34% and on average tangible common equity was 13.23% [11] - The efficiency ratio improved to 45.7% compared to 49.1% in Q1 2024 [23] Business Line Data and Key Metrics Changes - Total loans reached $21.9 billion, a 3.3$21.2 billion in Q1 2024, primarily due to the merger with Lonestar State Bancshares [12] - Deposits increased to $28 billion, up 3.1$27 billion in Q1 2024 [13] - Noninterest income was $41.3 million for Q1 2025, compared to$38.9 million in Q1 2024 [22] Market Data and Key Metrics Changes - Nonperforming assets totaled $81.4 million, stable compared to$81 million in Q1 2024 [15][25] - The Texas economy showed solid employment growth and increased sales tax revenue, indicating a strong economic environment [16][17] Company Strategy and Development Direction - The company aims to maintain strong asset quality and solid earnings while focusing on long-term customer relationships [9] - Management is optimistic about potential acquisition opportunities despite market volatility [18] - The company is prepared to utilize its capital for acquisitions, buybacks, or dividends as opportunities arise [114] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth despite current sluggishness, with expectations of low single-digit growth for 2025 [35][38] - The company is closely monitoring economic conditions and customer sentiment, which remain optimistic despite uncertainties [40][42] - Management anticipates that net interest margins will continue to improve as the bond and loan portfolios reprice [15][74] Other Important Information - The tangible equity to tangible asset ratio was maintained at 11.2% with tangible equity of $3.9 billion [10] - The cost of funds was reported at 1.66$3.9 billion to $2.7 billion and does not anticipate significant further reductions [53][56] Question: Thoughts on stock buybacks given current prices - Management is focused on M&A opportunities but is open to stock buybacks if prices decline further [61][63] Question: M&A environment and potential deals - Management believes M&A activity will resume as companies are still interested despite recent market volatility [70][126] Question: Credit quality and provision expectations - The company does not expect to take significant provisions unless economic conditions worsen significantly [96][97]