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MarketScreener Homepage  >  Equities  >  Nyse  >  Prosperity Bancshares, Inc.    PB

PROSPERITY BANCSHARES, INC.

(PB)
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Prosperity Bancshares : ® Reports First Quarter 2020 Earnings

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04/29/2020 | 06:53am EDT

PRESS RELEASE

For more information contact:

Prosperity Bancshares, Inc.®

Cullen Zalman

Prosperity Bank Plaza

Vice President - Banking and Corporate Activities

4295 San Felipe

281.269.7199

Houston, Texas 77027

cullen.zalman@prosperitybankusa.com

FOR IMMEDIATE RELEASE

PROSPERITY BANCSHARES, INC.® REPORTS FIRST QUARTER

2020 EARNINGS

  • First quarter earnings per share (diluted) of $1.39, an increase of 17.8% compared to the first quarter 2019
  • First quarter net income of $130.848 million
  • Loans increased $281.849 million or 1.50% during the first quarter 2020
  • Allowance for credit losses on loans and on off-balance sheet credit exposure was $357.206 million
  • Allowance for credit losses to total loans, excluding warehouse purchase program loans, of 1.88%
  • Nonperforming assets remain low at 0.25% of first quarter average interest-earning assets
  • Return (annualized) on first quarter average assets of 1.67%
  • Returns (annualized) on first quarter averages common equity of 8.86% and average tangible common equity of 20.16%(1)
  • Repurchased 2.092 million shares during the first quarter of 2020

HOUSTON, April 29, 2020. Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income for the quarter ended March 31, 2020 of $130.848 million compared with $82.402 million for the same period in 2019. Net income per diluted common share was $1.39 compared with $1.18 for the same period in 2019. Additionally, loans increased 1.5% during the first quarter 2020 and nonperforming assets remain low at 0.25% of first quarter average interest-earning assets. On November 1, 2019, LegacyTexas Financial Group, Inc. ("LegacyTexas"), merged with Prosperity Bancshares and LegacyTexas Bank merged with Prosperity Bank (collectively, the "Merger").

"I am proud to announce that Prosperity posted diluted earnings per share of $1.39 for the first quarter of 2020, a 17.8% increase compared with the same period in 2019. Our merger with LegacyTexas was completed on November 1, 2019 and our management teams continue to find commonalties and strengths that we expect will benefit our company, shareholders and associates going forward. Our planned operational integration remains on schedule for June of this year," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"In our efforts to continue enhance shareholder value, during the first quarter 2020 Prosperity repurchased 2.092 million shares of its common stock at a weighted average price of $52.59 per share," continued Zalman.

"Also, during the first quarter of 2020, Prosperity increased its allowance for credit losses on loans to $327.206 million from $87.469 million for the fourth quarter of 2019 after adopting accounting standard ASU 2016-13, also known as CECL. The amount of the allowance is based on our CECL methodology. We believe that these additional reserves should help insulate the company during these challenging and unprecedented times. Our allowance for credit losses to total loans, excluding warehouse purchase program loans, now stands at 1.88% compared to 0.51% at December 31, 2019," added Zalman.

______________

  1. Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

Page 1 of 17

"While today's challenges are certainly extraordinary, Prosperity has a deep management team with experience navigating and adapting to difficult times. We entered this economic downturn from a position of strength, with sound credit quality, robust capital and liquidity and solid operating fundamentals. We believe that our team will see us through and we remain confident in our long-term future," stated Zalman.

"I would like to thank every associate at Prosperity. Throughout the past several months, while dealing with various personal challenges related to the pandemic, our retail team operated at full capacity, enabling us to keep our locations open and serve our customers' daily needs. Additionally, our operational staff and lending team were crucial in accepting, processing and submitting thousands of SBA PPP applications and closing the loans, working around the clock to assist our customers," concluded Zalman.

Results of Operations for the Three Months Ended March 31, 2020

Net income was $130.848 million(2) for the three months ended March 31, 2020 compared with $82.402 million(3) for the same period in 2019. Net income per diluted common share was $1.39 for the three months ended March 31, 2020 compared with $1.18 for the same period in 2019. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2020 were 1.67%, 8.86% and 20.16%(1), respectively. Prosperity's efficiency ratio (excluding net gains on the sale of assets and taxes) was 42.90%(1) for the three months ended March 31, 2020. Excluding merger related expenses of

$544 thousand, net of tax, the efficiency ratio was 42.71%(1) for the three months ended March 31, 2020.

Net interest income before provision for credit losses for the three months ended March 31, 2020 was $256.031 million compared with $154.911 million for the same period in 2019, an increase of $101.120 million or 65.3%. The increase was primarily due to the Merger and the increase in loan discount accretion of $26.689 million. On a linked quarter basis, net interest income before provision for credit losses was $256.031 million compared with $232.030 million for the three months ended December 31, 2019. The increase was primarily due to the increase in loan discount accretion of $4.740 million and three months of combined bank earnings in the first quarter of 2020 compared with only two months in the fourth quarter 2019.

The net interest margin on a tax equivalent basis was 3.81% for the three months ended March 31, 2020 compared with 3.20% for the same period in 2019. The change was primarily due to increased interest-earning assets and the $26.689 million increase in loan discount accretion. On a linked quarter basis, the net interest margin on a tax equivalent basis was 3.81% for the three months ended March 31, 2020 compared with 3.66% for the three months ended December 31, 2019. The change was primarily due to increased interest-earning assets and the $4.740 million increase in loan discount accretion.

Noninterest income was $34.388 million for the three months ended March 31, 2020 compared with $28.144 million for the same period in 2019, an increase of $6.244 million or 22.2%. This increase was primarily due to an increase in nonsufficient funds fees, credit card, debit card and ATM card fees, mortgage income, service fees and other noninterest income primarily due to the Merger. On a linked quarter basis, noninterest income decreased $1.118 million or 3.1% to $34.388 million compared with $35.506 million for the three months ended December 31, 2019, primarily due to the decrease in other noninterest income and mortgage income, partially offset by lower net loss on write-down of assets.

Noninterest expense was $124.741 million for the three months ended March 31, 2020 compared with $78.571 million for the same period in 2019, an increase of $46.170 million or 58.8%, primarily due to the Merger. On a linked quarter basis, noninterest expense decreased $31.710 million or 20.3% to $124.741 million compared with $156.451 million for the three months ended December 31, 2019. The decrease was primarily due to the decrease of merger related expenses partially offset by increases in salaries and benefits, credit and debit card, data processing and software amortization, and net occupancy and equipment due to three months of combined bank noninterest expenses in the first quarter 2020 compared with two months in fourth quarter 2019.

Balance Sheet Information

At March 31, 2020, Prosperity had $31.743 billion in total assets, an increase of $9.389 billion or 42.0%, compared with $22.354 billion at March 31, 2019.

Loans at March 31, 2020 were $19.127 billion, an increase of $8.713 billion or 83.7%, compared with $10.414 billion at March 31, 2019. Linked quarter loans increased $281.849 million or 1.5% from $18.845 billion at December 31, 2019.

As part of its lending activities, Prosperity extends credit to oil and gas production and servicing companies. Oil and gas production loans are loans to companies directly involved in the exploration and or production of oil and gas. Oil and gas servicing loans are loans to companies that provide services for oil and gas production and exploration. At March 31, 2020, oil and gas loans totaled $718.654 million (net of discount) or 3.8% of total loans, of which $435.041 million were production

______________

  1. Includes purchase accounting adjustments of $24.134 million, net of tax, primarily comprised of loan discount accretion of $28.482 million, and merger related expenses of $544 thousand for the three months ended March 31, 2020.
  2. Includes purchase accounting adjustments of $1.238 million, net of tax, primarily comprised of loan discount accretion of $1.793 million for the three months ended March 31, 2019.

Page 2 of 17

loans and $283.613 million were servicing loans, compared with total oil and gas loans of $380.835 million (net of discount) or 3.7% of total loans at March 31, 2019, of which $115.571 million were production loans and $265.264 million were servicing loans. In addition, as of March 31, 2020, Prosperity had total unfunded commitments to oil and gas companies of $389.515 million compared with total unfunded commitments to oil and gas companies of $231.474 million as of March 31, 2019. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Additionally, Prosperity extends credit to hotels and restaurants. At March 31, 2020, loans to hotels totaled $374.105 million or 2.0% of total loans and loans to restaurants totaled $204.600 million or 1.1% of total loans.

Deposits at March 31, 2020 were $23.826 billion, an increase of $6.628 billion or 38.5%, compared with $17.198 billion at March 31, 2019. Linked quarter deposits decreased $373.375 million or 1.5% from $24.200 billion at December 31, 2019.

The table below provides detail on the impact of loans acquired and deposits assumed in the Merger:

Balance Sheet Data (at period end) (In thousands)

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Loans acquired (including new production since

acquisition date):

LegacyTexas:

Loans held for sale

$

54,229

$

66,745

$

-

$

-

$

-

Loans held for investment

6,713,337

6,636,855

-

-

-

Loans held for investment - Warehouse

Purchase Program

1,713,762

1,552,762

-

-

-

All other loans

10,645,867

10,588,984

10,673,345

10,587,375

10,414,022

Total loans

$

19,127,195

$

18,845,346

$

10,673,345

$

10,587,375

$

10,414,022

Deposits assumed (including new deposits since

acquisition date):

LegacyTexas

$

5,605,986

$

6,141,546

$

-

$

-

$

-

All other deposits

18,220,371

18,058,186

16,929,920

16,887,629

17,197,770

Total deposits

$

23,826,357

$

24,199,732

$

16,929,920

$

16,887,629

$

17,197,770

Excluding loans acquired in the Merger and new production by the acquired lending operations since November 1, 2019, loans at March 31, 2020 grew $231.845 million or 2.2% compared with March 31, 2019 and grew $56.883 million or 0.5% compared with December 31, 2019.

Excluding deposits assumed in the Merger and new deposits generated at the acquired banking centers since November 1, 2019, deposits at March 31, 2020 grew $1.023 billion or 6.0% compared with March 31, 2019 and grew $162.185 million or 0.9% compared with December 31, 2019.

Asset Quality

Nonperforming assets totaled $67.179 million or 0.25% of quarterly average interest-earning assets at March 31, 2020, compared with $40.883 million or 0.21% of quarterly average interest-earning assets at March 31, 2019, and $62.943 million or 0.25% of quarterly average interest-earning assets at December 31, 2019.

The allowance for credit losses on loans was $327.206 million or 1.71% of total loans at March 31, 2020 compared to $87.469 million or 0.46% of total loans at December 31, 2019 and $86.091 million or 0.83% of total loans at March 31, 2019. On January 1, 2020, Prosperity adopted the measurement of current expected credit losses ("CECL"). Upon adoption of CECL, Prosperity recognized an increase in allowance for credit losses on loans of $108.698 million, of which $102.545 million was related to LegacyTexas and an increase in allowance for credit losses on off-balance sheet credit exposures of $24.443 million, of which $6.314 million was related to LegacyTexas, with a corresponding decrease in retained earnings (pre-tax). Additionally, Prosperity recognized an increase in the allowance for credit losses on loans of $131.841 million, of which $130.278 million was related to LegacyTexas, due to the reclass of purchased credit deteriorated ("PCD") discounts as a result of adopting CECL.

Prosperity had a $13.150 million provision for credit losses reflecting forecasted credit deterioration due to the COVID-19 pandemic for the first quarter of 2020. Countering this provision, during the first quarter of 2020, several purchase credit deteriorated ("PCD") loans were repaid in full, which cleared $8.576 million in specific reserves. Additionally, balance changes and historical loss rate improvements released $5.471 million in general reserves. Combined, these events fully offset the provision. Accordingly, there was

Page 3 of 17

no provision for credit losses for the three months ended March 31, 2020 compared with $700 thousand for the three months ended March 31, 2019 and $1.700 million for the three months ended December 31, 2019.

Net charge-offs were $801 thousand for the three months ended March 31, 2020 compared with net charge-offs of $1.049 million for the three months ended March 31, 2019 and net charge-offs of $1.291 million for the three months ended December 31, 2019.

Dividend

Prosperity Bancshares declared a second quarter cash dividend of $0.46 per share to be paid on July 1, 2020 to all shareholders of record as of June 15, 2020.

Stock Repurchase Program

On January 29, 2020, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately

4.740 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 28, 2021, at the discretion of management. Prosperity Bancshares repurchased 2.092 million shares of its common stock at an average weighted price of $52.59 per share during the three months ended March 31, 2020.

COVID-19 Pandemic

In December 2019, a novel strain of coronavirus disease ("COVID-19") was first reported in Wuhan, Hubei Province, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, the U.S. President announced a national emergency relating to the pandemic. On March 13, the Texas governor signed a proclamation certifying that COVID-19 poses an imminent threat of disaster in the state and declaring a state of disaster for all counties in Texas. Prosperity Bank (the "Bank") is considered an essential business and is closely monitoring the latest developments regarding COVID-19. The health and safety of our associates, customers, and communities are of utmost importance, and the Bank remains committed to providing uninterrupted service. Additionally, the Bank has continuity plans in place to ensure critical operations are able to continue without disruption. The COVID-19 pandemic has resulted in significant economic uncertainties that could negatively impact Prosperity's operating income, financial condition and cash flows.

Merger with LegacyTexas Financial Group, Inc.

On November 1, 2019, Prosperity completed the merger with LegacyTexas and its wholly-owned subsidiary LegacyTexas Bank headquartered in Plano, Texas. LegacyTexas Bank operated 42 locations in 19 North Texas cities in and around the Dallas-Fort Worth area.

Pursuant to the terms of the merger agreement, Prosperity issued 26,228,148 shares of Prosperity common stock with a closing price of $69.02 per share plus $318.018 million in cash, made up of $308.585 million in cash and $9.433 million in cash for taxes withheld, for all outstanding shares of LegacyTexas. This resulted in goodwill of $1.322 billion as of March 31, 2020, which was subject to subsequent fair value adjustments.

Conference Call

Prosperity's management team will host a conference call on Wednesday, April 29, 2020 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's first quarter 2020 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The elite entry number is 3056906.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at www.prosperitybankusa.com. The webcast may be accessed from Prosperity's home page by selecting "Presentations & Calls" from the drop-down menu on the Investor Relations tab and following the instructions.

Non-GAAP Financial Measures

Prosperity's management uses certain non-GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews tangible book value per share, return on average tangible common equity, tangible equity to tangible assets ratio and the efficiency ratio, excluding net gains and losses on the sale of assets and securities. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and that their presentation, together with the accompanying reconciliations, provides a more complete understanding of factors and trends affecting Prosperity's business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP financial measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP financial measures should not be considered a substitute for, nor of greater importance than, GAAP basis financial measures and results; Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. Please refer to the "Notes to Selected Financial Data" at

Page 4 of 17

the end of this Earnings Release for a reconciliation of these non-GAAP financial measures to the nearest respective GAAP financial measures.

Prosperity Bancshares, Inc. ®

As of March 31, 2020, Prosperity Bancshares, Inc.® is a $31.7 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma. Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and cash management.

As of March 31, 2020, Prosperity operated 285 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 33 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area; 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area and 42 in the Dallas/Fort Worth area currently doing business as LegacyTexas Bank.

Cautionary Notes on Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may," or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity's possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity's future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity's loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity's operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement, as well as expectations regarding the effects of the COVID-19 pandemic on the Bank's operating income, financial condition and cash flows. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks, including LegacyTexas; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); the possibility that the anticipated benefits of an acquisition transaction, including the LegacyTexas transaction, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of two companies or as a result of the strength of the economy and competitive factors generally; a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate, interest rate and commodity price fluctuations; the effect, impact potential duration or other implications of the COVID-19 pandemic; and weather. These and various other factors are discussed in Prosperity Bancshares' Annual Report on Form 10-K for the year ended December 31, 2019 and other reports and statements Prosperity Bancshares has filed with the Securities and Exchange Commission ("SEC"). Copies of the SEC filings for Prosperity Bancshares may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

Page 5 of 17

Bryan/College Station Area

Fort Worth

Canton

East Bernard

86th Street

Bryan

Haltom City

Carthage

El Campo

98th Street

Bryan-29th Street

Keller

Corsicana

Dayton

Avenue Q

Bryan-East

Roanoke

Crockett

Galveston

North University

Bryan-North

Stockyards

Eustace

Groves

Texas Tech Student Union

Caldwell

Gilmer

Hempstead

College Station

Other Dallas/Fort Worth Area

Grapeland

Hitchcock

Midland

Crescent Point

Locations

Gun Barrel City

Liberty

Wadley

Hearne

Arlington

Jacksonville

Magnolia

Wall Street

Huntsville

Azle

Kerens

Magnolia Parkway

Madisonville

Ennis

Longview

Mont Belvieu

Odessa

Navasota

Gainesville

Mount Vernon

Nederland

Grandview

New Waverly

Glen Rose

Palestine

Needville

Grant

Rock Prairie

Granbury

Rusk

Rosenberg

Kermit Highway

Southwest Parkway

Mesquite

Seven Points

Shadow Creek

Parkway

Tower Point

Muenster

Teague

Spring

Wellborn Road

Sanger

Tyler-Beckham

Tomball

Other West Texas Area

Waxahachie

Tyler-South Broadway

Waller

Locations

Central Texas Area

Weatherford

Tyler-University

West Columbia

Big Spring

Austin

Winnsboro

Wharton

Brownfield

Allandale

LegacyTexas Dallas/Fort Worth Area

Winnie

Brownwood

Cedar Park

LegacyTexas Dallas

Houston Area

Wirt

Cisco

Congress

14th Street

Houston

Comanche

Lakeway

Addison

Aldine

South Texas Area -

Early

Liberty Hill

Allen

Alief

Corpus Christi

Floydada

Northland

Carrollton

Bellaire

Calallen

Gorman

Oak Hill

Coppell

Beltway

Carmel

Levelland

Research Blvd

Downtown Grapevine

Clear Lake

Northwest

Littlefield

Westlake

East Plano

Copperfield

Saratoga

Merkel

El Dorado

Cypress

Timbergate

Plainview

Other Central Texas Area

Frisco

Downtown

Water Street

San Angelo

Locations

Frisco-South

Eastex

Slaton

Bastrop

Frisco-West

Fairfield

Victoria

Snyder

Canyon Lake

Garland

First Colony

Victoria Main

Dime Box

Grapevine

Fry Road

Victoria-Navarro

Oklahoma

Dripping Springs

Grapevine Drive-thru

Gessner

Victoria-North

Central Oklahoma Area

Elgin

Lake Highlands

Gladebrook

Victoria Salem

Oklahoma City

Flatonia

LegacyTexas

Grand Parkway

23rd Street

Georgetown

McKinney

Heights

Other South Texas Area

Expressway

Gruene

McKinney-380

Highway 6 West

Locations

I-240

Kingsland

North Carrolton

Little York

Alice

Memorial

La Grange

North East Tarrant County

Medical Center

Aransas Pass

Lexington

Oak Cliff

Memorial Drive

Beeville

Other Central Oklahoma Area

New Braunfels

Park Cities

Northside

Colony Creek

Locations

Pleasanton

Plano-West

Pasadena

Cuero

Edmond

Round Rock

Preston Forest

Pecan Grove

Edna

Norman

San Antonio

Preston Road

Pin Oak

Goliad

Schulenburg

Preston Royal

River Oaks

Gonzales

Tulsa Area

Seguin

Richardson

Sugar Land

Hallettsville

Tulsa

Smithville

Richardson-West

SW Medical Center

Kingsville

Garnett

Thorndale

Rosewood Court

Tanglewood

Mathis

Harvard

Weimar

Tollroad

The Plaza

Padre Island

Memorial

Trinity Mills

Uptown

Palacios

Sheridan

Dallas/Fort Worth Area

West 15th

Waugh Drive

Port Lavaca

S. Harvard

Dallas

West Allen

Westheimer

Portland

Utica Tower

Abrams Centre

Wylie

West University

Rockport

Yale

Balch Springs

Woodcreek

Sinton

Camp Wisdom

LegacyTexas Fort Worth

Taft

Other Tulsa Area Locations

Cedar Hill

Hulen

Katy

Yoakum

Owasso

Frisco

Museum Place

Cinco Ranch

Yorktown

Frisco-West

Renaissance Square

Katy-Spring Green

Kiest

West Texas Area

McKinney

LegacyTexas Other Dallas/Fort Worth

The Woodlands

Abilene

McKinney-Stonebridge

Area Locations

The Woodlands-College Park

Antilley Road

Midway

Flower Mound

The Woodlands-I-45

Barrow Street

Plano

Grand Prairie

The Woodlands-Research Forest

Cypress Street

Preston Forest

Jacksboro

Judge Ely

Preston Road

Runaway Bay

Other Houston Area

Mockingbird

Red Oak

Weatherford

Locations

Sachse

Angleton

Lubbock

The Colony

East Texas Area

Bay City

4th Street

Turtle Creek

Athens

Beaumont

66th Street

Westmoreland

Blooming Grove

Cleveland

82nd Street

- - -

Page 6 of 17

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

Balance Sheet Data (at period end)

Loans held for sale

Loans held for investment

Loans held for investment - Warehouse Purchase Program

Total loans

Investment securities(A)

Federal funds sold

Allowance for credit losses(B)

Cash and due from banks

Goodwill

Core deposit intangibles, net

Other real estate owned

Fixed assets, net

Other assets

Total assets

Noninterest-bearing deposits

Interest-bearing deposits

Total deposits

Other borrowings

Securities sold under repurchase agreements Subordinated notes

Allowance for credit losses on off-balance sheet credit exposures(B)

Other liabilities

Total liabilities

Shareholders' equity(C)

Total liabilities and equity

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

$

65,035

$

80,959

$

20,284

$

20,315

$

24,398

17,348,398

17,211,625

10,653,061

10,567,060

10,389,624

1,713,762

1,552,762

-

-

-

19,127,195

18,845,346

10,673,345

10,587,375

10,414,022

8,295,495

8,570,056

8,495,206

8,951,940

9,137,645

676

519

521

555

566

(327,206)

(87,469)

(87,061)

(87,006)

(86,091)

381,458

573,589

420,359

302,069

291,498

3,223,144

3,223,671

1,900,845

1,900,845

1,900,845

83,041

86,404

29,051

30,299

31,564

5,452

6,936

815

2,005

2,096

327,293

326,832

263,703

262,479

257,595

626,951

639,824

396,033

424,660

404,501

$

31,743,499

$

32,185,708

$

22,092,817

$

22,375,221

$

22,354,241

$

7,461,323

$

7,763,894

$

5,784,002

$

5,691,236

$

5,673,707

16,365,034

16,435,838

11,145,918

11,196,393

11,524,063

23,826,357

24,199,732

16,929,920

16,887,629

17,197,770

1,338,429

1,303,730

600,795

940,874

680,952

344,695

377,294

311,404

313,825

254,573

125,585

125,804

-

-

-

29,947

5,599

-

-

-

222,912

202,714

123,892

104,998

111,156

25,887,925

26,214,873

17,966,011

18,247,326

18,244,451

5,855,574

5,970,835

4,126,806

4,127,895

4,109,790

$

31,743,499

$

32,185,708

$

22,092,817

$

22,375,221

$

22,354,241

  1. Includes $(3,421), $763, $49, $1,611, and $895 in unrealized (losses) gains on available for sale securities for the quarterly periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.
  2. ASU 2016-13 became effective for Prosperity on January 1, 2020.
  3. Includes $(2,703), $602, $38, $1,273, and $706 in after-tax unrealized (losses) gains on available for sale securities for the quarterly periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.

Page 7 of 17

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

Three Months Ended

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

Income Statement Data

Interest income:

Loans

$

247,243

$

222,910

$

134,943

$

133,525

$

130,065

Securities(D)

48,282

49,348

50,872

53,944

55,648

Federal funds sold and other earning assets

713

600

363

318

402

Total interest income

296,238

272,858

186,178

187,787

186,115

Interest expense:

Deposits

35,018

32,759

26,939

26,562

25,128

Other borrowings

2,932

6,115

4,335

5,556

5,317

Securities sold under repurchase agreements

757

879

914

831

759

Subordinated notes and trust preferred

1,500

1,075

-

-

-

Total interest expense

40,207

40,828

32,188

32,948

31,205

Net interest income

256,031

232,030

153,990

154,838

154,911

Provision for credit losses

-

1,700

1,100

800

700

Net interest income after provision for credit losses

256,031

230,330

152,890

154,038

154,211

Noninterest income:

Nonsufficient funds (NSF) fees

9,443

9,990

8,835

7,973

7,816

Credit card, debit card and ATM card income

7,474

7,728

6,688

6,480

5,971

Service charges on deposit accounts

6,104

5,597

5,020

4,989

4,998

Trust income

2,662

2,582

2,492

2,558

2,595

Mortgage income

2,010

2,455

839

990

722

Brokerage income

650

625

522

541

673

Bank owned life insurance income

1,545

1,502

1,314

1,321

1,289

Net (loss) gain on sale or write-down of assets

(385)

(1,870)

(3)

2

58

Other noninterest income

4,885

6,897

4,966

5,104

4,022

Total noninterest income

34,388

35,506

30,673

29,958

28,144

Noninterest expense:

Salaries and benefits

77,282

69,356

52,978

52,941

51,073

Net occupancy and equipment

8,980

7,420

5,607

5,492

5,466

Credit and debit card, data processing and software

amortization

11,421

9,158

4,989

4,904

4,573

Regulatory assessments and FDIC insurance

2,078

2,095

1,814

2,325

2,374

Core deposit intangibles amortization

3,363

2,705

1,248

1,265

1,319

Depreciation

4,768

4,212

3,286

3,111

3,104

Communications

3,195

3,012

2,214

2,183

2,270

Other real estate expense

46

57

68

120

83

Net (gain) loss on sale or write-down of other real estate

(130)

(49)

(115)

(54)

(177)

Merger related expenses

544

46,402

-

-

-

Other noninterest expense

13,194

12,083

8,610

8,534

8,486

Total noninterest expense

124,741

156,451

80,699

80,821

78,571

Income before income taxes

165,678

109,385

102,864

103,175

103,784

Provision for income taxes

34,830

23,251

21,106

20,917

21,382

Net income available to common shareholders

$

130,848

$

86,134

$

81,758

$

82,258

$

82,402

  1. Interest income on securities was reduced by net premium amortization of $8,005, $8,556, $8,027, $7,607 and $6,589 for the three-month periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.

Page 8 of 17

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

(Dollars and share amounts in thousands, except per share data and market prices)

Profitability

Net income (E) (F)

Basic earnings per share

Diluted earnings per share

Return on average assets (G) (K)

Return on average common equity (G) (K)

Return on average tangible common equity (G) (H) (K)

Tax equivalent net interest margin (E) (F) (I)

Efficiency ratio (H) (J) (L)

Liquidity and Capital Ratios

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 (H)

Other Data

Weighted-average shares used in computing earnings per common share

Basic

Diluted

Period end shares outstanding

Cash dividends paid per common share

Book value per common share

Tangible book value per common share (H)

Common Stock Market Price

High

Low

Period end closing price

Employees - FTE

Number of banking centers

Three Months Ended

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

$

130,848

$

86,134

$

81,758

$

82,258

$

82,402

$

1.39

$

1.01

$

1.19

$

1.18

$

1.18

$

1.39

$

1.01

$

1.19

$

1.18

$

1.18

1.67 %

1.19 %

1.47 %

1.46 %

1.46 %

8.86 %

6.33 %

7.89 %

7.92 %

8.05 %

20.16 %

12.50 %

14.77 %

14.82 %

15.24 %

3.81 %

3.66 %

3.16 %

3.16 %

3.20 %

42.90 %

58.07 %

43.70 %

43.74 %

42.94 %

18.45 %

18.55 %

18.68 %

18.45 %

18.38 %

12.27 %

12.30 %

16.68 %

16.59 %

16.76 %

12.27 %

12.30 %

16.68 %

16.59 %

16.76 %

12.81 %

12.70 %

17.34 %

17.25 %

17.42 %

9.49 %

10.42 %

10.86 %

10.67 %

10.59 %

8.96 %

9.21 %

10.90 %

10.75 %

10.66 %

94,371

85,573

68,738

69,806

69,847

94,371

85,573

68,738

69,806

69,847

92,652

94,746

68,397

69,261

69,846

$

0.46

$

0.46

$

0.41

$

0.41

$

0.41

$

63.20

$

63.02

$

60.34

$

59.60

$

58.84

$

27.52

$

28.08

$

32.12

$

31.72

$

31.17

$

75.22

$

74.35

$

71.86

$

74.50

$

75.36

$

42.02

$

66.60

$

62.17

$

61.85

$

61.65

$

48.25

$

71.89

$

70.63

$

66.05

$

69.06

3,782

3,901

3,044

3,046

3,065

285

285

243

243

242

(E) Includes purchase accounting adjustments for the periods presented as follows:

Three Months Ended

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

Loan discount accretion

ASC 310-20

$22,463

$17,834

$1,006

$880

$1,474

ASC 310-30

$6,019

$5,908

$277

$347

$319

Securities net amortization

$194

$201

$157

$255

$234

Time deposits amortization

$2,270

$1,709

-

-

-

  1. Using effective tax rate of 21.0%, 21.3%, 20.5%, 20.3% and 20.6% for the three-month periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.
  2. Interim periods annualized.
  3. Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.
  4. Net interest margin for all periods presented is based on average balances on an actual 365 day or 366 days basis.
  5. Calculated by dividing total noninterest expense, excluding credit loss provisions and one-time merger and acquisition expenses, by net interest income plus noninterest income, excluding net gains and losses on the sale of assets and securities. Additionally, taxes are not part of this calculation.
  6. Excluding merger related expenses, net of tax, annualized returns on average assets, average common equity and average tangible common equity were 1.67%(H), 8.89%(H) and 20.23%(H) for the three months ended March 31, 2020.
  7. Excluding merger related expenses, net of tax, the efficiency ratio was 42.71%(H) for the three months ended March 31, 2020.

Page 9 of 17

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS

Interest-earning assets:

Loans held for sale

Loans held for investment

Loans held for investment - Warehouse Purchase Program

Total Loans

Investment securities

Federal funds sold and other earning assets Total interest-earning assets

Allowance for credit losses(B)

Noninterest-earning assets

Total assets

Three Months Ended

Mar 31, 2020

Dec 31, 2019

Mar 31, 2019

Interest

Interest

Interest

Earned/

Average

Earned/

Average

Earned/

Average

Average

Interest

Yield/

Average

Interest

Yield/

Average

Interest

Yield/

Balance

Paid

Rate

(M)

Balance

Paid

Rate

(M)

Balance

Paid

Rate

(M)

$

66,917

$

632

3.80%

$

57,171

$

570

3.96%

$

24,993

$

305

4.95%

17,263,098

236,517

5.51%

15,261,163

212,466

5.52%

10,367,242

129,760

5.08%

1,120,324

10,094

3.62%

996,903

9,874

3.93%

-

-

-

18,450,339

247,243

5.39%

16,315,237

222,910

5.42%

10,392,235

130,065

5.08%

8,434,196

48,282

2.30%

(N)

8,598,736

49,348

2.28%

(N)

9,299,963

55,648

2.43%

(N)

223,631

713

1.28%

305,596

600

0.78%

71,842

402

2.27%

27,108,166

296,238

4.40%

25,219,569

272,858

4.29%

19,764,040

186,115

3.82%

(328,005

)

(86,795

)

(86,507

)

4,577,251

3,930,651

2,864,039

$

31,357,412

$

29,063,425

$

22,541,572

Interest-bearing liabilities: Interest-bearing demand deposits Savings and money market deposits Certificates and other time deposits Other borrowings

Securities sold under repurchase agreements Subordinated notes and trust preferred

Total interest-bearing liabilities

Noninterest-bearing liabilities: Noninterest-bearing demand deposits Allowance for credit losses on off-balance

sheet credit exposures(B) Other liabilities

Total liabilities

Shareholders' equity

Total liabilities and shareholders' equity

$

4,990,376

$

7,096

0.57%

$

4,233,880

$

5,755

0.54%

$

4,148,377

$

6,812

0.67%

7,965,440

14,122

0.71%

7,109,754

14,187

0.79%

5,472,789

11,184

0.83%

3,404,748

13,800

1.63%

3,044,843

12,817

1.67%

2,062,753

7,132

1.40%

832,961

2,932

1.42%

1,403,686

6,115

1.73%

844,873

5,317

2.55%

366,615

757

0.83%

351,580

879

0.99%

272,630

759

1.13%

125,694

1,500

4.80%

87,963

1,075

4.85%

-

-

-

17,685,834

40,207

0.91%

(O)

16,231,706

40,828

1.00%

(O)

12,801,422

31,204

0.99%

(O)

7,491,798

7,066,878

5,557,821

13,009

5,599

-

262,523

315,256

86,868

25,453,164

23,619,439

18,446,111

5,904,248

5,443,986

4,095,461

$

31,357,412

$

29,063,425

$

22,541,572

Net interest income and margin

Non-GAAP to GAAP reconciliation: Tax equivalent adjustment

Net interest income and margin (tax equivalent basis)

$ 256,031 3.80% $ 232,0303.65% $ 154,9113.18%

723

668

863

$ 256,754

3.81%

$ 232,698

3.66%

$ 155,774

3.20%

  1. Annualized and based on an actual 365 day or 366 day basis.
  2. Yield on securities was impacted by net premium amortization of $8,005, $8,556 and $6,589 for the three-month periods ended March 31, 2020, December 31, 2019 and March 31, 2020, respectively.
  3. Total cost of funds, including noninterest bearing deposits, was 0.64%, 0.70% and 0.69% for the three months ended March 31, 2020, December 31, 2019 and March 31, 2019, respectively.

Page 10 of 17

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD TREND (P)

Interest-Earning Assets:

Loans held for sale

Loans held for investment

Loans held for investment - Warehouse Purchase Program

Total loans

Investment securities (Q)

Federal funds sold and other earning assets Total interest-earning assets

Interest-Bearing Liabilities:

Interest-bearing demand deposits

Savings and money market deposits

Certificates and other time deposits

Other borrowings

Securities sold under repurchase agreements Subordinated notes and trust preferred

Total interest-bearing liabilities

Net Interest Margin

Net Interest Margin (tax equivalent)

Three Months Ended

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

3.80%

3.96%

5.01%

5.12%

4.95%

5.51%

5.52%

5.05%

5.08%

5.09%

3.62%

3.93%

-

-

-

5.39%

5.42%

5.05%

5.09%

5.08%

2.30%

2.28%

2.30%

2.36%

2.43%

1.28%

0.78%

1.93%

1.98%

2.27%

4.40%

4.29%

3.80%

3.81%

3.82%

0.57%

0.54%

0.62%

0.63%

0.67%

0.71%

0.79%

0.90%

0.90%

0.83%

1.63%

1.67%

1.67%

1.57%

1.40%

1.42%

1.73%

2.29%

2.52%

2.55%

0.83%

0.99%

1.15%

1.15%

1.13%

4.80%

4.85%

-

-

-

0.91%

1.00%

1.04%

1.05%

0.99%

3.80%

3.65%

3.14%

3.14%

3.18%

3.81%

3.66%

3.16%

3.16%

3.20%

  1. Annualized and based on average balances on an actual 365 day or 366 day basis.
  2. Yield on securities was impacted by net premium amortization of $8,005, $8,556, $8,027, $7,607 and $6,589 for the three-month periods ended March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, respectively.

Page 11 of 17

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Balance Sheet Averages

Loans held for sale

Loans held for investment

Loans held for investment - Warehouse Purchase Program

Total Loans

Investment securities

Federal funds sold and other earning assets Total interest-earning assets

Allowance for credit losses(B)

Cash and due from banks

Goodwill

Core deposit intangibles, net

Other real estate

Fixed assets, net

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 Subordinated notes and trust preferred Allowance for credit losses on off-balance sheet

credit exposures(B) Other liabilities Shareholders' equity

Total liabilities and equity

Three Months Ended

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

$

66,917

$

57,171

$

21,077

$

24,787

$

24,993

17,263,098

15,261,163

10,589,272

10,495,638

10,367,242

1,120,324

996,903

-

-

-

18,450,339

16,315,237

10,610,349

10,520,425

10,392,235

8,434,196

8,598,736

8,758,056

9,185,877

9,299,963

223,631

305,596

74,751

64,335

71,842

27,108,166

25,219,569

19,443,156

19,770,637

19,764,040

(328,005

)

(86,795

)

(86,996

)

(86,158

)

(86,507

)

321,832

275,072

230,986

227,653

266,316

3,223,633

2,658,133

1,900,845

1,900,845

1,900,845

84,865

28,912

29,682

30,933

32,243

5,837

4,864

997

2,053

2,100

325,337

308,692

263,495

260,054

257,811

615,747

654,978

423,931

420,940

404,724

$

31,357,412

$

29,063,425

$

22,206,096

$

22,526,957

$

22,541,572

$

7,491,798

$

7,066,878

$

5,701,419

$

5,674,615

$

5,557,821

4,990,376

4,233,880

3,575,249

3,714,968

4,148,377

7,965,440

7,109,754

5,524,277

5,647,494

5,472,789

3,404,748

3,044,843

2,083,803

2,057,033

2,062,753

23,852,362

21,455,355

16,884,748

17,094,110

17,241,740

832,961

1,403,686

749,814

883,557

844,873

366,615

351,580

315,277

288,666

272,630

125,694

87,963

-

-

-

13,009

5,673

-

-

-

262,523

320,855

111,526

108,246

86,868

5,904,248

5,443,986

4,144,731

4,152,378

4,095,461

$

31,357,412

$

29,063,425

$

22,206,096

$

22,526,957

$

22,541,572

Page 12 of 17

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

Period End Balances

Loan Portfolio

Commercial and industrial

$

2,500,110

13.1

%

$

2,507,318

13.3

%

$

1,120,913

10.5

%

$

1,158,657

10.9

%

$

1,117,753

10.7

%

Warehouse purchase program

1,713,762

9.0

%

1,552,762

8.2

%

-

-

-

-

-

-

Construction, land development and

other land loans

2,051,021

10.7%

2,064,167

11.0%

1,764,648

16.5%

1,739,308

16.4%

1,709,283

16.4%

1-4 family residential

3,993,138

20.9

%

3,880,382

20.6

%

2,472,907

23.2

%

2,456,506

23.2

%

2,444,434

23.5

%

Home equity

516,003

2.6

%

507,029

2.6

%

250,775

2.3

%

256,772

2.4

%

262,276

2.5

%

Commercial real estate (includes

multi-family residential)

6,576,213

34.4%

6,556,285

34.9%

3,652,176

34.3%

3,551,668

33.6%

3,496,688

33.6%

Agriculture (includes farmland)

635,295

3.3

%

680,855

3.6

%

729,585

6.8

%

736,470

7.0

%

708,348

6.8

%

Consumer and other

423,000

2.2

%

398,271

2.1

%

342,839

3.2

%

321,023

3.0

%

294,405

2.8

%

Energy

718,653

3.8

%

698,277

3.7

%

339,502

3.2

%

366,971

3.5

%

380,835

3.7

%

Total loans

$

19,127,195

$

18,845,346

$

10,673,345

$

10,587,375

$

10,414,022

Deposit Types

Noninterest-bearing DDA

Interest-bearing DDA

Money market

Savings

Certificates and other time deposits Total deposits

Loan to Deposit Ratio

$

7,461,323

31.3

%

$

7,763,894

32.1

%

$

5,784,002

34.2

%

$

5,691,236

33.7

%

$

5,673,707

33.0

%

4,980,090

20.9

%

5,100,938

21.1

%

3,564,419

21.0

%

3,530,581

20.9

%

3,875,109

22.5

%

5,341,525

22.4

%

5,099,024

21.1

%

3,457,728

20.4

%

3,438,164

20.3

%

3,302,445

19.2

%

2,716,247

11.4

%

2,756,297

11.3

%

2,027,621

12.0

%

2,158,159

12.8

%

2,293,134

13.3

%

3,327,172

14.0

%

3,479,579

14.4

%

2,096,150

12.4

%

2,069,489

12.3

%

2,053,375

12.0

%

$

23,826,357

$

24,199,732

$

16,929,920

$

16,887,629

$

17,197,770

80.3 %

77.9 %

63.0 %

62.7 %

60.6 %

Page 13 of 17

Construction Loans

Single family residential construction Land development

Raw land

Residential lots

Commercial lots

Commercial construction and other Net unaccreted discount

Total construction loans

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

$

655,191

31.9 %

$

614,647

29.7 %

$

462,714

26.2 %

$

446,868

25.7 %

$

454,041

26.5 %

110,853

5.4 %

88,529

4.3 %

80,711

4.6 %

87,825

5.0 %

84,562

4.9 %

265,943

12.9 %

233,559

11.3 %

171,609

9.7 %

168,531

9.7 %

156,674

9.2 %

136,861

6.7 %

138,961

6.7 %

123,265

7.0 %

121,586

7.0 %

119,301

7.0 %

106,036

5.2 %

101,960

4.9 %

102,084

5.8 %

105,633

6.1 %

92,683

5.4 %

778,731

37.9 %

890,597

43.1 %

825,001

46.7 %

809,680

46.5 %

802,996

47.0 %

(2,594 )

(4,086 )

(736 )

(815 )

(974 )

$

2,051,021

$

2,064,167

$

1,764,648

$

1,739,308

$

1,709,283

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of March 31, 2020

Houston

Dallas

Austin

OK City

Tulsa

Other (R)

Total

Collateral Type

Shopping center/retail

$

370,875

$

295,704

$

49,914

$

16,013

$

32,207

$

288,543

$

1,053,256

Commercial and industrial buildings

149,079

79,447

13,566

12,009

19,574

175,596

449,271

Office buildings

194,554

695,103

26,001

43,739

5,526

89,462

1,054,385

Medical buildings

38,769

50,872

12,832

24,711

25,620

51,514

204,318

Apartment buildings

358,231

726,145

33,207

16,028

43,127

235,595

1,412,333

Hotel

60,893

73,386

33,108

30,038

-

135,078

332,503

Other

52,565

32,165

15,770

10,376

4,444

84,748

200,068

Total

$

1,224,966

$

1,952,822

$

184,398

$

152,914

$

130,498

$

1,060,536

$

4,706,134

(S)

Acquired Loans

Non-PCD Loans

PCD Loans

Total Acquired Loans

Loan marks:

Acquired banks (T)

LegacyTexas merger(U)

Total

Balance

Balance

Balance at

Balance at

Balance at

Balance at

at

at

Balance at

Balance at

Balance at

Acquisition

Dec 31,

Mar 31,

Acquisition

Dec 31,

Mar 31,

Acquisition

Dec 31,

Mar 31,

Date

2019

2020

Date

2019

2020

Date

2019

2020

$

229,080

$

10,115

$

9,238

$

142,128

$

1,562

$

-

$

371,208

$

11,677

$

9,238

116,519

100,015

78,375

177,924

165,758

29,460

294,443

265,773

107,835

345,599

110,130

87,613

320,052

167,320

29,460

(W)

665,651

277,450

117,073

Acquired portfolio loan balances:

Acquired banks (T)

LegacyTexas merger(U)

Total

Acquired portfolio loan balances less loan marks

5,690,998

379,729

350,738

275,221

7,889

7,548

5,966,219

387,618

358,286

6,595,161

5,722,811

5,393,630

414,352

402,896

347,612

7,009,513

6,125,707

5,741,242

12,286,159

6,102,540

5,744,368

689,573

410,785

355,160

12,975,732

(V)

6,513,325

6,099,528

$ 11,940,560

$ 5,992,410

$ 5,656,755

$

369,521

$ 243,465

$ 325,700

$ 12,310,081

$ 6,235,875

$ 5,982,455

  1. Includes other MSA and non-MSA regions.
  2. Represents a portion of total commercial real estate loans of $6.576 billion as of March 31, 2020.
  3. Includes Bank of Texas, Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank, The F&M Bank & Trust Company and Tradition Bank.
  4. LegacyTexas merger was completed on November 1, 2019. During the fourth quarter of 2019, LegacyTexas added $7.010 billion in loans with related purchase accounting adjustments of $294.443 million at acquisition date.
  5. Actual principal balances acquired.
  6. ASU 2016-13 became effective for Prosperity on January 1, 2020.

Page 14 of 17

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

Asset Quality

Nonaccrual loans

$

58,194

$

55,243

$

49,973

$

37,289

$

37,491

Accruing loans 90 or more days past due

3,255

441

341

1,594

647

Total nonperforming loans

61,449

55,684

50,314

38,883

38,138

Repossessed assets

278

324

28

670

649

Other real estate

5,452

6,935

815

2,005

2,096

Total nonperforming assets

$

67,179

$

62,943

$

51,157

$

41,558

$

40,883

Nonperforming assets:

Commercial and industrial (includes energy)

$

15,987

$

17,086

$

15,974

$

17,592

$

17,119

Construction, land development and other land loans

1,125

1,177

874

2,296

1,488

1-4 family residential (includes home equity)

28,996

26,453

19,600

16,641

17,508

Commercial real estate (includes multi-family residential)

20,155

18,031

14,384

4,352

4,166

Agriculture (includes farmland)

896

101

285

616

542

Consumer and other

20

95

40

61

60

Total

$

67,179

$

62,943

$

51,157

$

41,558

$

40,883

Number of loans/properties

198

236

89

92

84

Allowance for credit losses at end of period(X)

$

327,206

$

87,469

$

87,061

$

87,006

$

86,091

Net charge-offs (recoveries):

Commercial and industrial (includes energy)

$

(28)

$

76

$

(83)

$

(828)

$

1,719

Construction, land development and other land loans

(12)

(6)

(6)

7

-

1-4 family residential (includes home equity)

5

20

(9)

11

(3)

Commercial real estate (includes multi-family residential)

(81)

254

(1)

(1)

(1)

Agriculture (includes farmland)

(1)

(18)

278

46

(1,278)

Consumer and other

918

965

867

650

612

Total

$

801

$

1,291

$

1,046

$

(115)

$

1,049

Asset Quality Ratios

Nonperforming assets to average interest-earning assets

0.25 %

0.25 %

0.26 %

0.21 %

0.21 %

Nonperforming assets to loans and other real estate

0.35 %

0.33 %

0.48 %

0.39 %

0.39 %

Net charge-offs to average loans (annualized)

0.02 %

0.03 %

0.04 %

-

0.04 %

Allowance for credit losses to total loans(X)

1.71 %

0.46 %

0.82 %

0.82 %

0.83 %

Allowance for credit losses to total loans, excluding Warehouse

Purchase Program loans(X)

1.88%

0.51%

0.82%

0.82%

0.83%

(X) ASU 2016-13 became effective for Prosperity on January 1, 2020.

Page 15 of 17

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

(Dollars and share amounts in thousands, except per share data)

NOTES TO SELECTED FINANCIAL DATA

Prosperity's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews diluted earnings per share excluding merger related expenses, tangible book value per share, return on average tangible common equity, the tangible equity to tangible assets ratio and the efficiency ratio, excluding net gains and losses on the sale of assets and securities, for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP financial measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding acquired loans accounted for under ASC Topics 310-20 and 310-30 and Warehouse Purchase Program loans). Prosperity has included information below relating to these non-GAAP financial measures for the applicable periods presented.

Reconciliation of diluted earnings per share to diluted earnings per share, excluding merger related expenses:

Net income

Add: merger related expenses, net of tax(Y)

Net income, excluding merger related expenses, net of tax(Y)

Weighted average diluted shares outstanding

Merger related expenses per diluted share, net of tax(Y)

Diluted earnings per share, excluding merger related expenses, net of tax(Y)

Three Months Ended

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

$

130,848

$

86,134

$

81,758

$

82,258

$

82,402

430

36,658

-

-

-

$

131,278

$

122,792

$

81,758

$

82,258

$

82,402

94,371

85,573

68,738

69,806

69,847

$

-

$

0.43

$

-

$

-

$

-

$

1.39

$

1.44

$

1.19

$

1.18

$

1.18

Reconciliation of return on average assets to return on average assets excluding merger related expenses, net of tax:

Net income, excluding merger related expenses, net of tax(Y) Average total assets

Return on average assets excluding merger related expenses, net of

tax (G) (Y)

$

131,278

$

$

31,357,412

$

1.67 %

122,792

$

81,758

$

82,258

$

82,402

29,063,425

$

22,206,096

$

22,526,957

$

22,541,572

1.69 %

1.47 %

1.46 %

1.46 %

Reconciliation of return on average common equity to return on average common equity excluding merger related expenses, net of tax:

Net income, excluding merger related expenses, net of tax(Y) Average shareholders' equity

Return on average common equity excluding merger related expenses, net of tax (G) (Y)

$

131,278

$

$

5,904,248

$

8.89 %

122,792

$

81,758

$

5,443,986

$

4,144,731

$

9.02 %

7.89 %

82,258

$

82,402

4,152,378

$

4,095,461

7.92 %

8.05 %

Reconciliation of return on average common equity to return on average tangible common equity:

Net income

Average shareholders' equity

Less: Average goodwill and other intangible assets

Average tangible shareholders' equity

Return on average tangible common equity (G)

Reconciliation of return on average common equity to return on average tangible common equity excluding merger related expenses, net of tax:

Net income excluding merger related expenses, net of tax(Y) Average shareholders' equity

Less: Average goodwill and other intangible assets

Average tangible shareholders' equity

Return on average tangible common equity excluding merger related expenses, net of tax (F) (Y)

$

130,848

$

86,134

$

81,758

$

82,258

$

82,402

$

5,904,248

$

5,443,986

$

4,144,731

$

4,152,378

$

4,095,461

(3,308,498 )

(2,687,045 )

(1,930,527 )

(1,931,778 )

(1,933,088 )

$

2,595,750

$

2,756,941

$

2,214,204

$

2,220,600

$

2,162,373

20.16 %

12.50 %

14.77 %

14.82 %

15.24 %

$

131,278

$

122,792

$

81,758

$

82,258

$

82,402

$

5,904,248

$

5,443,986

$

4,144,731

$

4,152,378

$

4,095,461

(3,308,498 )

(2,687,045 )

(1,930,527 )

(1,931,778 )

(1,933,088 )

$

2,595,750

$

2,756,941

$

2,214,204

$

2,220,600

$

2,162,373

20.23

%

17.82

%

14.77

%

14.82

%

15.24

%

(Y) Calculated assuming a federal tax rate of 21.0%.

Page 16 of 17

Three Months Ended

Reconciliation of book value per share to tangible book value per share:

Shareholders' equity

Less: Goodwill and other intangible assets

Tangible shareholders' equity

Period end shares outstanding

Tangible book value per share:

Reconciliation of equity to assets ratio to period end tangible equity to period end tangible assets ratio:

Tangible shareholders' equity

Total assets

Less: Goodwill and other intangible assets

Tangible assets

Period end tangible equity to period end tangible assets ratio:

Reconciliation of allowance for credit losses to total loans to allowance for credit losses to total loans, excluding Warehouse Purchase Program loans:

Allowance for credit losses (X)

Total loans

Less: Warehouse Purchase Program loans

Total loans less Warehouse Purchase Program loans

Allowance for credit losses to total loans, excluding Warehouse Purchase Program loans

Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets and securities:

Noninterest expense

Net interest income

Noninterest income

Less: net (loss) gain on sale of assets

Noninterest income excluding net gains and losses on the sale of assets and securities

Total income excluding net gains and losses on the sale of assets and securities

Efficiency ratio, excluding net gains and losses on the sale of assets and securities

Reconciliation of efficiency ratio to efficiency ratio, excluding net gains and losses on the sale of assets and securities and merger related expenses:

Noninterest expense

Less: merger related expenses

Noninterest expense excluding merger related expenses

Net interest income

Noninterest income

Less: net (loss) gain on sale of assets

Noninterest income excluding net gains and losses on the sale of assets and securities

Total income excluding net gains and losses on the sale of assets and securities

Efficiency ratio, excluding net gains and losses on the sale of assets and securities and merger related expenses

Mar 31, 2020

Dec 31, 2019

Sep 30, 2019

Jun 30, 2019

Mar 31, 2019

$

5,855,574

$

5,970,835

$

4,126,806

$

4,127,895

$

4,109,790

(3,306,185 )

(3,310,075 )

(1,929,896 )

(1,931,144 )

(1,932,409 )

$

2,549,389

$

2,660,760

$

2,196,910

$

2,196,751

$

2,177,381

92,652

94,746

68,397

69,261

69,846

$

27.52

$

28.08

$

32.12

$

31.72

$

31.17

$

2,549,389

$

2,660,760

$

2,196,910

$

2,196,751

$

2,177,381

$

31,743,499

$

32,185,708

$

22,092,817

$

22,375,221

$

22,354,241

(3,306,185 )

(3,310,075 )

(1,929,896 )

(1,931,144 )

(1,932,409 )

$

28,437,314

$

28,875,633

$

20,162,921

$

20,444,077

$

20,421,832

8.96 %

9.21 %

10.90 %

10.75 %

10.66 %

$

327,206

$

87,469

$

87,061

$

87,006

$

86,091

$

19,127,195

$

18,845,346

$

10,673,345

$

10,587,375

$

10,414,022

1,713,762

1,552,762

-

-

-

$

17,413,433

$

17,292,584

$

10,673,345

$

10,587,375

$

10,414,022

1.88 %

0.51 %

0.82 %

0.82 %

0.83 %

$

124,741

$

156,451

$

80,699

$

80,821

$

78,571

$

256,031

$

232,030

$

153,990

$

154,838

$

154,911

34,388

35,506

30,673

29,958

28,144

(385 )

(1,870 )

(3 )

2

58

34,773

37,376

30,676

29,956

28,086

$

290,804

$

269,406

$

184,666

$

184,794

$

182,997

42.90 %

58.07 %

43.70 %

43.74 %

42.94 %

$

124,741

$

156,451

$

80,699

$

80,821

$

78,571

544

46,402

-

-

-

$

124,197

$

110,049

$

80,699

$

80,821

$

78,571

$

256,031

$

232,030

$

153,990

$

154,838

$

154,911

34,388

35,506

30,673

29,958

28,144

(385 )

(1,870 )

(3 )

2

58

34,773

37,376

30,676

29,956

28,086

$

290,804

$

269,406

$

184,666

$

184,794

$

182,997

42.71 %

40.85 %

43.70 %

43.74 %

42.94 %

Page 17 of 17

Disclaimer

Prosperity Bancshares Inc. published this content on 29 April 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2020 10:52:03 UTC


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Financials (USD)
Sales 2020 1 144 M - -
Net income 2020 500 M - -
Net Debt 2020 - - -
P/E ratio 2020 10,9x
Yield 2020 3,16%
Capitalization 5 423 M 5 423 M -
Capi. / Sales 2020 4,74x
Capi. / Sales 2021 4,94x
Nbr of Employees 3 901
Free-Float 95,8%
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Technical analysis trends PROSPERITY BANCSHARES, INC.
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TrendsBullishBearishNeutral
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 67,25 $
Last Close Price 58,53 $
Spread / Highest target 36,7%
Spread / Average Target 14,9%
Spread / Lowest Target -2,61%
EPS Revisions
Managers
NameTitle
David E. Zalman Senior Chairman & Chief Executive Officer
Kevin J. Hanigan President, Chief Operating Officer & Director
H. E. Timanus Chairman
Asylbek Osmonov Chief Financial Officer
Harrison Stafford Independent Director
Sector and Competitors