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Prosperity Bancshares, Inc.® Reports Second Quarter 2021 Earnings

Prosperity Bancshares, Inc.® Reports Second Quarter 2021 Earnings

- Second quarter earnings per share (diluted) of $1.41

- Second quarter net income of $130.6 million

- Loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program loans, increased $148.8 million or 0.9% (3.7% annualized) during the second quarter 2021

- Deposits increased $347.1 million or 1.2% (4.8% annualized) during the second quarter 2021

- Allowance for credit losses to total loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program loans, of 1.85%(1)

- Nonperforming assets remain low at 0.11% of second quarter average interest-earning assets

- Return (annualized) on second quarter average assets of 1.45%

- Returns (annualized) on second quarter average common equity of 8.31% and average tangible common equity of 17.49%(1)

- Second quarter efficiency ratio of 40.96%(1)

PR Newswire

HOUSTON, July 28, 2021 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income of  $130.6 million for the quarter ended June 30, 2021 compared with $130.9 million for the same period in 2020. Net income per diluted common share was $1.41 for the quarter ended June 30, 2021, unchanged from the same period in 2020, and the annualized return on second quarter average assets was 1.45%. The second quarter of 2020 includes a tax benefit for net operating losses ("NOL") of $20.1 million, or $0.22(1) per diluted common share, as a result of the enactment of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Additionally, loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program ("PPP") loans, increased $148.8 million or 0.9% (3.7% annualized) and deposits increased $347.1 million or 1.2% (4.8% annualized) during the second quarter of 2021. Nonperforming assets remain low at 0.11% of second quarter average interest-earning assets. 

"For the second quarter of 2021, Prosperity had strong earnings, core loan growth, deposit growth, continued sound asset quality, impressive cost controls, a return on average tangible common equity of 17.49% and remains well reserved," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer. 

"Unemployment rates continue to decrease and GDP growth continues at a high level, as forecasted last year with the re-opening of the economy. We are seeing increased oil and gas prices as well as increased farm commodity prices, both of which are positive for the Texas and Oklahoma economies. Further, businesses and individuals continue to move to Texas for lower tax rates and a better quality of life," continued Zalman.

"We believe that Prosperity is well positioned to grow along with the Texas and Oklahoma economies. For 2021, Prosperity Bank was ranked the 2nd Best Bank in America by Forbes and has been ranked in the Top 10 of Forbes America's Best Banks since 2010. We have a deep bench of associates with a passion to help Prosperity and our customers succeed," concluded Zalman.

Results of Operations for the Three Months Ended June 30, 2021

Net income was $130.6 million(2) for the three months ended June 30, 2021 compared with $130.9 million(3) for the same period in 2020, a decrease of $290 thousand or 0.2%. Net income per diluted common share was $1.41 for the three months ended June 30, 2021 and 2020. Net income for the second quarter of 2020 includes a tax benefit for NOL of $20.1 million and merger related expenses of $7.5 million. Net income was $130.6 million(2) for the three months ended June 30, 2021 compared with $133.3 million(4) for the three months ended March 31, 2021, a decrease of $2.7 million or 2.0%. The change was primarily due to a decrease in PPP fee income and a decrease in loan discount accretion of $4.1 million, partially offset by an increase in securities income. Net income per diluted common share was $1.41 for the three months ended June 30, 2021 compared with $1.44 for the three months ended March 31, 2021, a decrease of 2.1%. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2021 were 1.45%, 8.31% and 17.49%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 40.96%(1) for the three months ended June 30, 2021.

Net interest income before provision for credit losses for the three months ended June 30, 2021 was $245.4 million compared with $259.0 million for the same period in 2020, a decrease of $13.6 million or 5.2%. The decrease was primarily due to a decrease in the average loan balance and average rate on loans and a decrease in loan discount accretion of $12.1 million, partially offset by a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, net interest income before provision for credit losses was $245.4 million compared with $254.6 million for the three months ended March 31, 2021, a decrease of $9.2 million or 3.6%. The decrease was primarily due to a decrease in the average rate on loans and a decrease in loan discount accretion of $4.1 million, partially offset by a decrease in the average rate on interest-bearing liabilities and an increase in average investment securities balance.

The net interest margin on a tax equivalent basis was 3.11% for the three months ended June 30, 2021 compared with 3.69% for the same period in 2020. The change was primarily due to a decrease in the average loan balance and average rate on loans, an increase in lower yielding securities, a decrease in loan discount accretion of $12.1 million and higher cash balances due to excess liquidity, partially offset by a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, the net interest margin on a tax equivalent basis was 3.11% for the three months ended June 30, 2021 compared with 3.41% for the three months ended March 31, 2021. The change was primarily due to a lower average yield on loans, a $4.1 million decrease in loan discount accretion and higher net premium amortization on securities, partially offset by a decrease in the average rate on interest-bearing liabilities.

Noninterest income was $35.6 million for the three months ended June 30, 2021 compared with $25.7 million for the same period in 2020, an increase of $9.9 million or 38.5%. This increase was primarily due to an increase in credit card, debit card and ATM card income, an increase in mortgage income, lower loss on write-down of assets and an increase in other noninterest income. On a linked quarter basis, noninterest income increased $1.5 million or 4.6% to $35.6 million compared with $34.0 million for the three months ended March 31, 2021. This increase was primarily due to an increase in other noninterest income.

Noninterest expense was $115.2 million for the three months ended June 30, 2021 compared with $134.4 million for the same period in 2020, a decrease of $19.2 million or 14.3%, primarily due to decreases in merger related expenses, salaries and benefits and data processing as a result of efficiencies gained following the LegacyTexas Bank system conversion during the second quarter of 2020, partially offset by gains on sale of other real estate. On a linked quarter basis, noninterest expense decreased $3.9 million or 3.3% to $115.2 million compared with $119.1 million for the three months ended March 31, 2021. This decrease was primarily due to a decrease in salaries and benefits.

Results of Operations for the Six Months Ended June 30, 2021

Net income was $263.9 million(5) for the six months ended June 30, 2021 compared with $261.7 million(6) for the same period in 2020, an increase of $2.2 million or 0.8%. Net income per diluted common share was $2.84 for the six months ended June 30, 2021 compared with $2.80 for the same period in 2020, an increase of 1.4%. Annualized returns on average assets, average common equity and average tangible common equity for the six months ended June 30, 2021 were 1.49%, 8.46% and 17.95%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 41.11%(1) for the six months ended June 30, 2021.

Net interest income before provision for credit losses for the six months ended June 30, 2021 was $500.0 million compared with $515.0 million for the prior year, a decrease of $15.0 million or 2.9%. The decrease was primarily due to a decrease in the average rate on interest-earning assets and a decrease in loan discount accretion of $24.2 million, partially offset by a decrease in the average rate on interest-bearing liabilities.

The net interest margin on a tax equivalent basis for the six months ended June 30, 2021 was 3.26% compared with 3.75% for the same period in 2020. The change was primarily due to an increase in lower yielding loans, a decrease in loan discount accretion of $24.2 million, higher net premium amortization on securities and higher cash balances due to excess liquidity, partially offset by a decrease in the average rate on interest-bearing liabilities.

Noninterest income was $69.6 million for the six months ended June 30, 2021 compared with $60.1 million for the same period in 2020, an increase of $9.5 million or 15.8%. This increase was primarily due to an increase in credit card, debit card and ATM card income, an increase in mortgage income, lower net loss on write-downs of assets and an increase in other noninterest income, partially offset by a decrease in nonsufficient funds ("NSF") fees.

Noninterest expense was $234.3 million for the six months ended June 30, 2021 compared with $259.1 million for the same period in 2020, a decrease of $24.8 million or 9.6%. The change was primarily due to decreases in merger related expenses, data processing, net occupancy and equipment and other noninterest expense as a result of efficiencies gained following the LegacyTexas Bank system conversion during the second quarter of 2020, partially offset by a gain on sale of other real estate.

Balance Sheet Information

At June 30, 2021, Prosperity had $36.100 billion in total assets, an increase of $3.133 billion or 9.5% compared with $32.967 billion at June 30, 2020.

Loans at June 30, 2021 were $19.252 billion, a decrease of $1.773 billion or 8.4%, compared with $21.025 billion at June 30, 2020, primarily due to a decrease in commercial real estate, PPP and Warehouse Purchase Program loans. Linked quarter loans decreased $387.1 million or 2.0% from $19.639 billion at March 31, 2021, primarily due to a $359.1 million decrease in PPP loans. At June 30, 2021, the Company had $780.0 million of PPP loans compared to $1.392 billion of PPP loans at June 30, 2020 and $1.139 billion of PPP loans at March 31, 2021.  Linked quarter loans, excluding Warehouse Purchase Program and PPP loans, increased $148.8 million or 0.9% (3.7% annualized) from $16.227 billion at March 31, 2021.

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 June 30, 2021, oil and gas loans totaled $501.8 million (net of discount and excluding PPP loans totaling $92.3 million) or 2.6% of total loans, of which $283.1 million were production loans and $218.7 million were servicing loans, compared with total oil and gas loans of $639.4 million (net of discount and excluding PPP loans totaling $118.6 million) or 3.0% of total loans at June 30, 2020, of which $394.4 million were production loans and $245.0 million were servicing loans. In addition, as of June 30, 2021, Prosperity had total unfunded commitments to oil and gas companies of $298.4 million compared with total unfunded commitments to oil and gas companies of $276.9 million as of June 30, 2020. 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 June 30, 2021, loans to hotels totaled $394.2 million (excluding PPP loans totaling $10.6 million) or 2.0% of total loans, an increase of $9.4 million or 2.4%, compared with $384.8 million (excluding PPP loans totaling $8.8 million) or 1.8% of total loans at June 30, 2020.  At June 30, 2021, loans to restaurants totaled $201.9 million (excluding PPP loans totaling $92.1 million) or 1.0% of total loans, a decrease of $10.4 million or 4.9%, compared with $212.3 million (excluding PPP loans totaling $110.7 million) or 1.0% of total loans at June 30, 2020.

Deposits at June 30, 2021 were $29.110 billion, an increase of $2.958 billion or 11.3%, compared with $26.153 billion at June 30, 2020. Linked quarter deposits increased $347.1 million or 1.2% (4.8% annualized) from $28.763 billion at March 31, 2021.

Asset Quality

Nonperforming assets totaled $33.7 million or 0.11% of quarterly average interest-earning assets at June 30, 2021, compared with $77.9 million or 0.28% of quarterly average interest-earning assets at June 30, 2020, and $44.2 million or 0.15% of quarterly average interest-earning assets at March 31, 2021.

The allowance for credit losses on loans was $302.9 million or 1.57% of total loans at June 30, 2021 compared to $307.2 million or 1.56% of total loans at March 31, 2021 and $324.2 million or 1.54% of total loans at June 30, 2020. The allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and PPP loans, was 1.85%(1) at June 30, 2021 compared with 1.89%(1) at March 31, 2021 and 1.90%(1) at June 30, 2020.

There was no provision for credit losses for the three months ended June 30, 2021 compared with $10.0 million for the three months ended June 30, 2020 and no provision for credit losses for the three months ended March 31, 2021.  There was no provision for credit losses for the six months ended June 30, 2021 compared with $10.0 million for the six months ended June 30, 2020.

Net charge-offs were $4.3 million for the three months ended June 30, 2021 compared with net charge-offs of $13.0 million for the three months ended June 30, 2020 and net charge-offs of $8.9 million for the three months ended March 31, 2021. Net charge-offs for the second quarter of 2021 included $1.0 million related to resolved PCD loans. These PCD loans had specific reserves of $3.1 million, of which $1.0 million was allocated to the charge-offs and $2.1 million was moved to the general reserve. Further, an additional $1.4 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Net charge-offs were $13.2 million for the six months ended June 30, 2021 compared with $13.8 million for the six months ended June 30, 2020. Net charge-offs for the six months ended June 30, 2021 included $8.2 million related to resolved PCD loans. These PCD loans had specific reserves of $9.8 million, of which $7.7 million was allocated to the charge-offs and $2.1 million was moved to the general reserve. Further, an additional $5.6 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Dividend

Prosperity Bancshares declared a third quarter cash dividend of $0.49 per share to be paid on October 1, 2021 to all shareholders of record as of September 15, 2021.

COVID-19 Pandemic

Prosperity continues to monitor the latest developments regarding COVID-19. As of June 30, 2021, the states of Texas and Oklahoma have lifted their respective restrictions on all business and activities. The COVID-19 pandemic has resulted in significant economic uncertainties that have had, and could continue to have, an adverse impact on Prosperity's operating income, financial condition and cash flows. The extent to which the COVID-19 pandemic will impact Prosperity's operations and financial results during 2021 cannot be reasonably or reliably estimated at this time.

Since the implementation of the Paycheck Protection Program in 2020, Prosperity has obtained SBA approvals on approximately 18,700 loans totaling $2.036 billion and, as of June 30, 2021, had an outstanding balance of 7,770 loans totaling $780.0 million after remittance.

Also, in response to the COVID-19 pandemic, Prosperity has provided relief to its loan customers through loan extensions and deferrals. Prosperity's troubled debt restructurings do not include loan modifications related to COVID-19. Beginning in mid-March of 2020, Prosperity began offering deferral and modification of principal and/or interest payments to selected borrowers on a case-by-case basis. As of June 30, 2021, Prosperity had approximately $210.4 million in outstanding loans subject to deferral and modification agreements.

Conference Call

Prosperity's management team will host a conference call on Wednesday, July 28, 2021 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's second quarter 2021 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 participant elite entry number is 4866823.

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, Webcast & Calls" from the menu on the Investor Relations link and following the instructions.

Non-GAAP Financial Measures

Prosperity's management uses certain non-GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews diluted earnings per share excluding merger related expenses, net of tax, and net operating loss ("NOL") tax benefit; return on average assets excluding merger related expenses, net of tax, and NOL tax benefit; return on average common equity excluding merger related expenses, net of tax, and NOL tax benefit; return on average tangible common equity; return on average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program and PPP loans; the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities and merger related expenses, for internal planning and forecasting purposes. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and 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 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 June 30, 2021, Prosperity Bancshares, Inc.® is a $36.100 billionHouston, 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 treasury management.

As of June 30, 2021, Prosperity operated 274 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 64 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; and 8 in the Tulsa, Oklahoma area.

PROSPERITY BANCSHARES, INC. (PRNewsfoto/Prosperity Bancshares, Inc.)

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 Prosperity'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; 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, 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, 2020 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.

Bryan/College Station Area


Garland


Longview


Hitchcock


Avenue Q

Bryan


Grapevine


Mount Vernon


Liberty


North University

Bryan-29th Street


Grapevine Main


Palestine


Magnolia


Texas Tech Student Union

Bryan-East


Kiest


Rusk


Magnolia Parkway



Bryan-North


Lake Highlands


Seven Points


Mont Belvieu


Midland

Caldwell


McKinney


Teague


Nederland


Wadley

College Station


McKinney Eldorado


Tyler-Beckham


Needville


Wall Street

Crescent Point


McKinney Redbud


Tyler-South Broadway


Rosenberg



Hearne


North Carrolton


Tyler-University


Shadow Creek


Odessa

Huntsville


Oak Cliff


Winnsboro


Spring


Grandview

Madisonville


Park Cities




Tomball


Grant

Navasota


Plano


Houston Area


Waller


Kermit Highway

New Waverly


Plano-West


Houston


West Columbia


Parkway

Rock Prairie


Preston Forest


Aldine


Wharton



Southwest Parkway


Preston Parker


Alief


Winnie


Other West Texas Area

Tower Point


Preston Royal


Bellaire


Wirt


Locations

Wellborn Road


Red Oak


Beltway




Big Spring



Richardson


Clear Lake


South Texas Area -


Brownfield

Central Texas Area


Richardson-West


Copperfield


Corpus Christi


Brownwood

Austin


Rosewood Court


Cypress


Calallen


Cisco

Allandale


The Colony


Downtown


Carmel


Comanche

Cedar Park


Tollroad


Eastex


Northwest


Early

Congress


Trinity Mills


Fairfield


Saratoga


Floydada

Lakeway


Turtle Creek


First Colony


Timbergate


Gorman

Liberty Hill


West 15th Plano


Fry Road


Water Street


Levelland

Northland


West Allen


Gessner




Littlefield

Oak Hill


Westmoreland


Gladebrook


Victoria


Merkel

Research Blvd


Wylie


Grand Parkway


Victoria Main


Plainview

Westlake




Heights


Victoria-Navarro


San Angelo



Fort Worth


Highway 6 West


Victoria-North


Slaton

Other Central Texas Area


Haltom City


Little York


Victoria Salem


Snyder

Locations


Hulen


Medical Center





Bastrop


Keller


Memorial Drive


Other South Texas Area


Oklahoma

Canyon Lake


Museum Place


Northside


 Locations


Central Oklahoma Area

Dime Box


Renaissance Square


Pasadena


Alice


Oklahoma City

Dripping Springs


Roanoke


Pecan Grove


Aransas Pass


23rd Street

Elgin


Stockyards


Pin Oak


Beeville


Expressway

Flatonia




River Oaks


Colony Creek


I-240

Georgetown


Other Dallas/Fort Worth Area


Sugar Land


Cuero


Memorial

Gruene


Locations


SW Medical Center


Edna



Kingsland


Arlington


Tanglewood


Goliad


Other Central Oklahoma Area

La Grange


Azle


The Plaza


Gonzales


 Locations

Lexington


Ennis


Uptown


Hallettsville


Edmond

New Braunfels


Flower Mound


Waugh Drive


Kingsville


Norman

Pleasanton


Gainesville


Westheimer


Mathis



Round Rock


Glen Rose


West University


Padre Island


Tulsa Area

San Antonio


Granbury


Woodcreek


Palacios


Tulsa

Schulenburg


Grand Prairie




Port Lavaca


Garnett

Seguin


Jacksboro


Katy


Portland


Harvard

Smithville


Mesquite


Cinco Ranch


Rockport


Memorial

Thorndale


Muenster


Katy-Spring Green


Sinton


Sheridan

Weimar


Runaway Bay




Taft


S. Harvard



Sanger


The Woodlands


Yoakum


Utica Tower

Dallas/Fort Worth Area


Waxahachie


The Woodlands-College Park


Yorktown


Yale

Dallas


Weatherford


The Woodlands-I-45





14th Street Plano




The Woodlands-Research Forest


West Texas Area


Other Tulsa Area Locations

Abrams Centre


East Texas Area




Abilene


Owasso

Addison


Athens


Other Houston Area


Antilley Road



Allen


Blooming Grove


Locations


Barrow Street



Balch Springs


Canton


Angleton


Cypress Street



Camp Wisdom


Carthage


Bay City


Judge Ely



Carrollton


Corsicana


Beaumont


Mockingbird



Cedar Hill


Crockett


Cleveland





Coppell


Eustace


East Bernard


Lubbock



East Plano


Gilmer


El Campo


4th Street



Euless


Grapeland


Dayton


66th Street



Frisco


Gun Barrel City


Galveston


82nd Street



Frisco Warren


Jacksonville


Groves


86th Street



Frisco-West


Kerens


Hempstead


98th Street



 







(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.

(2)

Includes purchase accounting adjustments of $9.8 million, net of tax, primarily comprised of loan discount accretion of $12.2 million for the three months ended June 30, 2021.

(3)

Includes purchase accounting adjustments of $20.4 million, net of tax, primarily comprised of loan discount accretion of $24.3 million, and merger related expenses of $7.5 million for the three months ended June 30, 2020.

(4)

Includes purchase accounting adjustments of $13.2 million, net of tax, primarily comprised of loan discount accretion of $16.3 million for the three months ended March 31, 2021.

(5)

Includes purchase accounting adjustments of $23.0 million, net of tax, primarily comprised of loan discount accretion of $28.5 million for the six months ended June 30, 2021.

(6)

Includes purchase accounting adjustments of $44.6 million, net of tax, primarily comprised of loan discount accretion of $52.7 million, and merger related expenses of $8.0 million for the six months ended June 30, 2020.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020


Balance Sheet Data (at period end)





















Loans held for sale


$

9,080



$

20,991



$

46,777



$

51,694



$

39,516


Loans held for investment



17,147,146




17,345,506




17,357,788




18,013,333




18,428,474


Loans held for investment - Warehouse Purchase Program



2,095,559




2,272,389




2,842,379




2,730,614




2,557,183


Total loans



19,251,785




19,638,886




20,246,944




20,795,641




21,025,173























Investment securities(A)



11,918,691




10,088,002




8,542,820




7,431,495




7,717,586


Federal funds sold



281




8,986




553




56,469




568


Allowance for credit losses



(302,884)




(307,210)




(316,068)




(323,635)




(324,205)


Cash and due from banks



1,059,879




1,947,235




1,342,996




1,031,193




332,873


Goodwill



3,231,636




3,231,636




3,231,636




3,231,692




3,231,964


Core deposit intangibles, net



67,417




70,304




73,235




76,478




79,748


Other real estate owned



144




462




10,593




11,548




6,160


Fixed assets, net



324,502




326,970




323,572




325,994




324,975


Other assets



548,473




553,147




602,994




560,724




571,807


Total assets


$

36,099,924



$

35,558,418



$

34,059,275



$

33,197,599



$

32,966,649























Noninterest-bearing deposits


$

10,099,149



$

9,820,445



$

9,151,233



$

8,998,328



$

9,040,257


Interest-bearing deposits



19,011,092




18,942,660




18,209,259




17,460,878




17,112,431


Total deposits



29,110,241




28,763,105




27,360,492




26,459,206




26,152,688


Other borrowings












2,570




103,131


Securities sold under repurchase agreements



433,069




377,106




389,583




380,274




365,335


Subordinated notes












125,146




125,365


Allowance for credit losses on off-balance sheet credit exposures



29,947




29,947




29,947




29,947




29,947


Other liabilities



216,330




166,414




148,584




165,579




242,061


Total liabilities



29,789,587




29,336,572




27,928,606




27,162,722




27,018,527


Shareholders' equity(B)



6,310,337




6,221,846




6,130,669




6,034,877




5,948,122


Total liabilities and equity


$

36,099,924



$

35,558,418



$

34,059,275



$

33,197,599



$

32,966,649




(A)

Includes $1,394, $970, $974, $(442) and $(1,767) in unrealized gains (losses) on available for sale securities for the quarterly periods ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.

(B)

Includes $1,101, $766, $770, $(349) and $(1,396) in after-tax unrealized gains (losses) on available for sale securities for the quarterly periods ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Three Months Ended



Year-to-Date




Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Jun 30, 2021



Jun 30, 2020


Income Statement Data





























Interest income:





























Loans


$

216,803



$

233,075



$

241,625



$

244,255



$

242,772



$

449,878



$

490,015


Securities(C)



43,708




38,677




36,721




38,033




43,776




82,385




92,058


Federal funds sold and other earning assets



340




351




301




144




45




691




758


Total interest income



260,851




272,103




278,647




282,432




286,593




532,954




582,831































Interest expense:





























Deposits



15,288




17,362




19,757




22,458




25,269




32,650




60,287


Other borrowings









33




52




533







3,465


Securities sold under repurchase agreements



164




159




224




309




337




323




1,094


Subordinated notes and trust preferred









999




1,500




1,499







2,999


Total interest expense



15,452




17,521




21,013




24,319




27,638




32,973




67,845


Net interest income



245,399




254,582




257,634




258,113




258,955




499,981




514,986


Provision for credit losses












10,000




10,000







10,000


Net interest income after provision for credit losses



245,399




254,582




257,634




248,113




248,955




499,981




504,986































Noninterest income:





























Nonsufficient funds (NSF) fees



6,560




6,687




8,051




7,156




5,645




13,247




15,088


Credit card, debit card and ATM card income



8,918




8,031




8,193




8,315




7,263




16,949




14,737


Service charges on deposit accounts



6,062




5,978




6,046




5,920




5,790




12,040




11,894


Trust income



2,276




2,837




2,192




2,502




2,242




5,113




4,904


Mortgage income



2,914




3,307




3,989




2,958




1,820




6,221




3,830


Brokerage income



795




711




642




628




584




1,506




1,234


Bank owned life insurance income



1,294




1,292




1,252




1,449




1,508




2,586




3,053


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



(244)




(79)




(675)




(528)




(3,945)




(323)




(4,330)


Other noninterest income



6,981




5,244




6,857




6,524




4,768




12,225




9,653


Total noninterest income



35,556




34,008




36,547




34,924




25,675




69,564




60,063































Noninterest expense:





























Salaries and benefits



75,611




80,037




77,809




75,068




79,109




155,648




156,391


Net occupancy and equipment



8,046




7,833




8,223




8,644




9,190




15,879




18,170


Credit and debit card, data processing and software amortization



8,718




8,233




8,442




8,776




11,690




16,951




23,111


Regulatory assessments and FDIC insurance



2,670




2,670




2,670




2,512




2,601




5,340




4,679


Core deposit intangibles amortization



2,887




2,931




3,243




3,270




3,293




5,818




6,656


Depreciation



4,513




4,540




4,261




4,605




4,598




9,053




9,366


Communications



2,982




2,899




2,931




3,027




3,324




5,881




6,519


Other real estate expense



198




244




279




258




40




442




86


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



(1,839)




(887)




(195)




(137)




4




(2,726)




(126)


Merger related expenses















7,474







8,018


Other noninterest expense



11,405




10,576




12,542




11,896




13,045




21,981




26,239


Total noninterest expense



115,191




119,076




120,205




117,919




134,368




234,267




259,109


Income before income taxes



165,764




169,514




173,976




165,118




140,262




335,278




305,940


Provision for income taxes



35,153




36,205




36,885




35,054




9,361




71,358




44,191


Net income available to common shareholders


$

130,611



$

133,309



$

137,091



$

130,064



$

130,901



$

263,920



$

261,749




(C)

Interest income on securities was reduced by net premium amortization of $14,436, $12,844, $11,509, $10,089 and $9,224 for the three months ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively, and $27,280 and $17,229 for the six months ended June 30, 2021 and June 30, 2020, respectively.

 

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

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




Three Months Ended



Year-to-Date





Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Jun 30, 2021



Jun 30, 2020



Profitability






























Net income (D) (E)


$

130,611



$

133,309



$

137,091



$

130,064



$

130,901



$

263,920



$

261,749

































Basic earnings per share


$

1.41



$

1.44



$

1.48



$

1.40



$

1.41



$

2.84



$

2.80



Diluted earnings per share


$

1.41



$

1.44



$

1.48



$

1.40



$

1.41



$

2.84



$

2.80

































Return on average assets (F)



1.45

%



1.54

%



1.63

%



1.58

%



1.61

%

(J)


1.49

%



1.64

%

(J)

Return on average common equity (F)



8.31

%



8.60

%



8.98

%



8.64

%



8.84

%

(J)


8.46

%



8.85

%

(J)

Return on average tangible common equity (F) (G)



17.49

%



18.43

%



19.57

%



19.19

%



19.98

%

(J)


17.95

%



20.07

%

(J)

Tax equivalent net interest margin (D) (E) (H)



3.11

%



3.41

%



3.49

%



3.57

%



3.69

%



3.26

%



3.75

%


Efficiency ratio (G) (I)



40.96

%



41.25

%



40.77

%



40.17

%



46.56

%

(K)


41.11

%



44.72

%

(K)































Liquidity and Capital Ratios






























Equity to assets



17.48

%



17.50

%



18.00

%



18.18

%



18.04

%



17.48

%



18.04

%


Common equity tier 1 capital



15.26

%



14.60

%



13.74

%



13.17

%



12.29

%



15.26

%



12.29

%


Tier 1 risk-based capital



15.26

%



14.60

%



13.74

%



13.17

%



12.29

%



15.26

%



12.29

%


Total risk-based capital



15.71

%



15.07

%



14.23

%



14.28

%



13.36

%



15.71

%



13.36

%


Tier 1 leverage capital



9.50

%



9.68

%



9.67

%



9.57

%



9.41

%



9.50

%



9.41

%


Period end tangible equity to period end tangible assets (G)



9.18

%



9.05

%



9.19

%



9.12

%



8.89

%



9.18

%



8.89

%
































Other Data






























Weighted-average shares used in computing earnings per common share






























Basic



92,935




92,854




92,559




92,656




92,658




92,895




93,514



Diluted



92,935




92,854




92,559




92,656




92,658




92,895




93,514



Period end shares outstanding



92,935




92,929




92,571




92,562




92,660




92,935




92,660



Cash dividends paid per common share


$

0.49



$

0.49



$

0.49



$

0.46



$

0.46



$

0.98



$

0.92



Book value per common share


$

67.90



$

66.95



$

66.23



$

65.20



$

64.19



$

67.90



$

64.19



Tangible book value per common share (G)


$

32.40



$

31.42



$

30.53



$

29.46



$

28.45



$

32.40



$

28.45

































Common Stock Market Price






























High


$

78.06



$

83.02



$

70.38



$

60.63



$

72.95



$

83.02



$

75.22



Low


$

69.83



$

66.45



$

50.43



$

48.80



$

43.68



$

66.45



$

42.02



Period end closing price


$

71.80



$

76.16



$

69.36



$

51.83



$

59.38



$

71.80



$

59.38



Employees – FTE (excluding overtime)



3,724




3,724




3,756




3,716




3,793




3,724




3,793



Number of banking centers



274




275




275




275




275




274




275





 (D)

Includes purchase accounting adjustments for the periods presented as follows:




Three Months Ended


Year-to-Date


Jun 30, 2021


Mar 31, 2021


Dec 31, 2020


Sep 30, 2020


Jun 30, 2020


Jun 30, 2021


Jun 30, 2020

Loan discount accretion














ASC 310-20

$9,731


$13,313


$13,514


$16,729


$17,999


$23,044


$40,462

ASC 310-30

$2,462


$3,027


$2,545


$5,805


$6,267


$5,489


$12,286

Securities net amortization

$171


$111


$66


$116


$203


$282


$397

Time deposits amortization

$327


$507


$790


$1,240


$1,793


$834


$4,063



(E)

Using effective tax rate of 21.2%, 21.4%, 21.2%, 21.2% and 6.7% for the three months ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively, and 21.3% and 14.4% for the six months ended June 30, 2021 and June 30, 2020, respectively. Net income for the second quarter of 2020 includes a tax benefit for NOL due to the CARES Act.

(F)

Interim periods annualized.

(G)

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.

(H)

Net interest margin for all periods presented is based on average balances on an actual 365-day or 366-day basis.

(I)

Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale or write down of assets and securities. Additionally, taxes are not part of this calculation.

(J)

For calculations of the annualized returns on average assets, average common equity and average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit, 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.

(K)

For calculations of the efficiency ratio excluding merger related expenses, net of tax, 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.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


YIELD ANALYSIS


Three Months Ended





Jun 30, 2021



Mar 31, 2021



Jun 30, 2020





Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(L)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(L)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(L)

Interest-earning assets:






































Loans held for sale


$

13,716



$

109



3.19%



$

33,327



$

238



2.90%



$

63,338



$

523



3.32%



Loans held for investment



17,305,259




200,817



4.65%




17,279,066




213,978



5.02%




18,135,226




228,062



5.06%



Loans held for investment - Warehouse Purchase Program



1,984,305




15,877



3.21%




2,369,601




18,859



3.23%




1,843,097




14,187



3.10%



Total Loans



19,303,280




216,803



4.50%




19,681,994




233,075



4.80%




20,041,661




242,772



4.87%



Investment securities



11,180,948




43,708



1.57%


(M)


9,148,841




38,677



1.71%


(M)


8,054,008




43,776



2.19%


(M)

Federal funds sold and other earning assets



1,221,993




340



0.11%




1,506,645




351



0.09%




172,761




45



0.10%



Total interest-earning assets



31,706,221




260,851



3.30%




30,337,480




272,103



3.64%




28,268,430




286,593



4.08%



Allowance for credit losses



(306,059)












(315,590)












(325,720)











Noninterest-earning assets



4,695,860












4,522,470












4,562,016











Total assets


$

36,096,022











$

34,544,360











$

32,504,726

















































Interest-bearing liabilities:






































Interest-bearing demand deposits


$

6,281,068



$

5,471



0.35%



$

6,112,469



$

5,943



0.39%



$

4,949,023



$

4,621



0.38%



Savings and money market deposits



9,872,624




5,490



0.22%




9,420,064




5,753



0.25%




8,537,352




8,745



0.41%



Certificates and other time deposits



2,980,186




4,327



0.58%




3,031,621




5,666



0.76%




3,224,196




11,903



1.48%



Other borrowings





















474,867




533



0.45%



Securities sold under repurchase agreements



383,975




164



0.17%




376,662




159



0.17%




365,077




337



0.37%



Subordinated notes





















125,475




1,499



4.80%



Total interest-bearing liabilities



19,517,853




15,452



0.32%


(N)


18,940,816




17,521



0.38%


(N)


17,675,990




27,638



0.63%


(N)







































Noninterest-bearing liabilities:






































Noninterest-bearing demand deposits



10,062,085












9,206,791












8,583,734











Allowance for credit losses on off-balance sheet credit exposures



29,947












29,947












29,947











Other liabilities



198,748












169,138












289,899











Total liabilities



29,808,633












28,346,692












26,579,570











Shareholders' equity



6,287,389












6,197,668












5,925,156











Total liabilities and shareholders' equity


$

36,096,022











$

34,544,360











$

32,504,726

















































Net interest income and margin






$

245,399



3.10%







$

254,582



3.40%







$

258,955



3.68%



Non-GAAP to GAAP reconciliation:






































Tax equivalent adjustment







586












635












690







Net interest income and margin (tax equivalent basis)






$

245,985



3.11%







$

255,217



3.41%







$

259,645



3.69%





(L)

Annualized and based on an actual 365-day or 366-day basis.

(M)

Yield on securities was impacted by net premium amortization of $14,436, $12,844 and $9,224 for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

(N)

Total cost of funds, including noninterest bearing deposits, was 0.21%, 0.25% and 0.42% for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


YIELD ANALYSIS


Year-to-Date





Jun 30, 2021



Jun 30, 2020





Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(O)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(O)

Interest-earning assets:


























Loans held for sale


$

23,468



$

347



2.98%



$

65,128



$

1,155



3.57%



Loans held for investment



17,292,235




414,795



4.84%




17,699,162




464,579



5.28%



Loans held for investment - Warehouse Purchase Program



2,175,888




34,736



3.22%




1,481,710




24,281



3.30%



Total loans



19,491,591




449,878



4.65%




19,246,000




490,015



5.12%



Investment securities



10,170,508




82,385



1.63%


(P)


8,244,102




92,058



2.25%


(P)

Federal funds sold and other earning assets



1,363,533




691



0.10%




198,196




758



0.77%



Total interest-earning assets



31,025,632




532,954



3.46%




27,688,298




582,831



4.23%



Allowance for credit losses(B)



(310,798)












(326,862)











Noninterest-earning assets



4,609,640












4,569,631











Total assets


$

35,324,474











$

31,931,067





































Interest-bearing liabilities:


























Interest-bearing demand deposits


$

6,197,235



$

11,414



0.37%



$

4,969,700



$

11,717



0.47%



Savings and money market deposits



9,647,594




11,243



0.24%




8,251,396




22,867



0.56%



Certificates and other time deposits



3,005,761




9,993



0.67%




3,314,472




25,703



1.56%



Other borrowings












653,914




3,465



1.07%



Securities sold under repurchase agreements



380,339




323



0.17%




365,846




1,094



0.60%



Subordinated notes












125,585




2,999



4.80%



Total interest-bearing liabilities



19,230,929




32,973



0.35%


(Q)


17,680,913




67,845



0.77%


(Q)



























Noninterest-bearing liabilities:


























Noninterest-bearing demand deposits



9,636,800












8,037,767











Allowance for credit losses on off-balance sheet credit exposures



29,947












21,478











Other liabilities



184,023












276,211











Total liabilities



29,081,699












26,016,369











Shareholders' equity



6,242,775












5,914,698











Total liabilities and shareholders' equity



35,324,474











$

31,931,067





































Net interest income and margin






$

499,981



3.25%







$

514,986



3.74%



Non-GAAP to GAAP reconciliation:


























Tax equivalent adjustment







1,222












1,413







Net interest income and margin (tax equivalent basis)






$

501,203



3.26%







$

516,399



3.75%





(O)

Annualized and based on an actual 365-day or 366-day basis.

(P)

Yield on securities was impacted by net premium amortization of $27,280 and $17,229 for the six months ended June 30, 2021 and 2020, respectively.

(Q)

Total cost of funds, including noninterest bearing deposits, was 0.23% and 0.53% for the six months ended June 30, 2021 and 2020, respectively.

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020


YIELD TREND (R)








































Interest-Earning Assets:




















Loans held for sale


3.19

%



2.90

%



3.23

%



3.30

%



3.32

%

Loans held for investment


4.65

%



5.02

%



4.95

%



4.91

%



5.06

%

Loans held for investment - Warehouse Purchase Program


3.21

%



3.23

%



3.20

%



3.18

%



3.10

%

Total loans


4.50

%



4.80

%



4.72

%



4.72

%



4.87

%

Investment securities (S)


1.57

%



1.71

%



1.83

%



1.99

%



2.19

%

Federal funds sold and other earning assets


0.11

%



0.09

%



0.11

%



0.09

%



0.10

%

Total interest-earning assets


3.30

%



3.64

%



3.76

%



3.90

%



4.08

%





















Interest-Bearing Liabilities:




















Interest-bearing demand deposits


0.35

%



0.39

%



0.38

%



0.38

%



0.38

%

Savings and money market deposits


0.22

%



0.25

%



0.30

%



0.35

%



0.41

%

Certificates and other time deposits


0.58

%



0.76

%



0.98

%



1.23

%



1.48

%

Other borrowings








5.39

%



1.49

%



0.45

%

Securities sold under repurchase agreements


0.17

%



0.17

%



0.24

%



0.32

%



0.37

%

Subordinated notes








4.87

%



4.76

%



4.80

%

Total interest-bearing liabilities


0.32

%



0.38

%



0.46

%



0.54

%



0.63

%





















Net Interest Margin


3.10

%



3.40

%



3.48

%



3.56

%



3.68

%

Net Interest Margin (tax equivalent)


3.11

%



3.41

%



3.49

%



3.57

%



3.69

%



(R)

Annualized and based on average balances on an actual 365-day or 366-day basis.

(S)

Yield on securities was impacted by net premium amortization of $14,436, $12,844, $11,509, $10,089 and $9,224 for the three months ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Three Months Ended




Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020


Balance Sheet Averages





















Loans held for sale


$

13,716



$

33,327



$

42,856



$

50,606



$

63,338


Loans held for investment



17,305,259




17,279,066




17,700,756




18,267,559




18,135,226


Loans held for investment - Warehouse Purchase Program



1,984,305




2,369,601




2,603,455




2,279,461




1,843,097


Total Loans



19,303,280




19,681,994




20,347,067




20,597,626




20,041,661























Investment securities



11,180,948




9,148,841




8,001,679




7,603,762




8,054,008


Federal funds sold and other earning assets



1,221,993




1,506,645




1,094,487




618,228




172,761


Total interest-earning assets



31,706,221




30,337,480




29,443,233




28,819,616




28,268,430


Allowance for credit losses



(306,059)




(315,590)




(322,138)




(321,424)




(325,720)


Cash and due from banks



521,737




308,787




289,579




267,887




247,426


Goodwill



3,231,637




3,233,231




3,231,850




3,231,976




3,223,469


Core deposit intangibles, net



68,830




71,763




74,919




78,269




81,539


Other real estate



3,001




6,385




14,573




8,061




5,666


Fixed assets, net



326,570




326,004




325,485




325,958




327,811


Other assets



544,085




576,300




633,405




570,495




676,105


Total assets


$

36,096,022



$

34,544,360



$

33,690,906



$

32,980,838



$

32,504,726























Noninterest-bearing deposits


$

10,062,085



$

9,206,791



$

9,103,742



$

8,980,814



$

8,583,734


Interest-bearing demand deposits



6,281,068




6,112,469




5,545,298




5,221,722




4,949,023


Savings and money market deposits



9,872,624




9,420,064




9,170,179




8,937,751




8,537,352


Certificates and other time deposits



2,980,186




3,031,621




3,047,475




3,103,290




3,224,196


Total deposits



29,195,963




27,770,945




26,866,694




26,243,577




25,294,305


Other borrowings









2,435




13,898




474,867


Securities sold under repurchase agreements



383,975




376,662




376,779




378,888




365,077


Subordinated notes









81,570




125,256




125,475


Allowance for credit losses on off-balance sheet credit exposures



29,947




29,947




29,947




29,947




29,947


Other liabilities



198,748




169,138




224,907




167,532




289,899


Shareholders' equity



6,287,389




6,197,668




6,108,574




6,021,740




5,925,156


Total liabilities and equity


$

36,096,022



$

34,544,360



$

33,690,906



$

32,980,838



$

32,504,726


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020


Period End Balances








































































Loan Portfolio




































Commercial and industrial


$

2,021,951



10.5

%


$

2,104,116



10.7

%


$

2,210,003



10.9

%


$

2,171,302



10.5

%


$

2,214,742



10.5

%

Warehouse purchase program



2,095,559



10.9

%



2,272,389



11.6

%



2,842,379



14.0

%



2,730,614



13.1

%



2,557,183



12.2

%

Construction, land development and other land loans



2,147,474



11.2

%



2,031,355



10.4

%



1,956,960



9.7

%



2,081,762



10.0

%



2,033,037



9.7

%

1-4 family residential



4,531,589



23.5

%



4,310,437



21.9

%



4,253,331



21.0

%



4,189,852



20.1

%



4,184,972



19.9

%

Home equity



637,431



3.3

%



554,278



2.8

%



504,207



2.5

%



477,552



2.3

%



437,098



2.1

%

Commercial real estate (includes multi-family residential)



5,681,184



29.5

%



5,858,475



29.8

%



6,078,764



30.0

%



6,179,901



29.7

%



6,550,086



31.2

%

Agriculture (includes farmland)



590,135



3.1

%



571,783



2.9

%



581,352



2.9

%



598,972



2.9

%



612,694



2.9

%

Consumer and other



264,652



1.4

%



293,023



1.5

%



344,028



1.7

%



367,231



1.8

%



403,462



1.9

%

Energy



501,821



2.6

%



503,947



2.6

%



512,735



2.5

%



604,698



2.9

%



639,402



3.0

%

Paycheck Protection Program



779,989



4.0

%



1,139,083



5.8

%



963,185



4.8

%



1,393,757



6.7

%



1,392,497



6.6

%

Total loans


$

19,251,785






$

19,638,886






$

20,246,944






$

20,795,641






$

21,025,173









































Deposit Types




































Noninterest-bearing DDA


$

10,099,149



34.7

%


$

9,820,445



34.1

%


$

9,151,233



33.4

%


$

8,998,328



34.0

%


$

9,040,257



34.6

%

Interest-bearing DDA



6,185,115



21.2

%



6,158,641



21.4

%



5,899,051



21.6

%



5,297,802



20.0

%



5,130,495



19.6

%

Money market



6,706,252



23.0

%



6,714,889



23.4

%



6,381,014



23.3

%



6,324,127



23.9

%



6,148,206



23.5

%

Savings



3,160,606



10.9

%



3,083,447



10.7

%



2,863,086



10.5

%



2,772,492



10.5

%



2,722,718



10.4

%

Certificates and other time deposits



2,959,119



10.2

%



2,985,683



10.4

%



3,066,108



11.2

%



3,066,457



11.6

%



3,111,012



11.9

%

Total deposits


$

29,110,241






$

28,763,105






$

27,360,492






$

26,459,206






$

26,152,688









































Loan to Deposit Ratio



66.1

%






68.3

%






74.0

%






78.6

%






80.4

%




 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


Construction Loans



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020






































Single family residential construction


$

624,954



29.1

%


$

590,223



29.1

%


$

579,761



29.6

%


$

654,933



31.5

%


$

710,401



34.9

%

Land development



97,709



4.6

%



97,267



4.8

%



103,307



5.3

%



114,937



5.5

%



114,748



5.6

%

Raw land



245,484



11.4

%



243,394



12.0

%



247,628



12.7

%



240,154



11.5

%



274,159



13.5

%

Residential lots



165,645



7.7

%



176,884



8.6

%



158,441



8.1

%



137,615



6.6

%



144,765



7.1

%

Commercial lots



153,714



7.2

%



137,512



6.8

%



114,427



5.8

%



109,569



5.3

%



103,267



5.1

%

Commercial construction and other



860,069



40.0

%



786,192



38.7

%



753,587



38.5

%



825,053



39.6

%



687,618



33.8

%

Net unaccreted discount



(101)







(117)







(191)







(499)







(1,921)





Total construction loans


$

2,147,474






$

2,031,355






$

1,956,960






$

2,081,762






$

2,033,037










































Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of June 30, 2021



Houston



Dallas



Austin



OK City



Tulsa



Other (T)



Total



Collateral Type





























Shopping center/retail

$

380,117



$

270,891



$

52,981



$

19,350



$

29,253



$

297,645



$

1,050,237



Commercial and industrial buildings


157,719




89,284




20,485




20,970




17,691




172,869




479,018



Office buildings


158,722




494,963




30,440




73,335




4,912




72,207




834,579



Medical buildings


105,852




25,139




2,639




23,839




39,217




78,944




275,630



Apartment buildings


246,330




257,044




24,080




14,993




35,917




162,749




741,113



Hotel


79,503




70,388




43,372




28,996







131,253




353,512



Other


76,469




62,065




24,118




8,211




3,560




65,570




239,993



Total

$

1,204,712



$

1,269,774



$

198,115



$

189,694



$

130,550



$

981,237



$

3,974,082


(U)


Acquired Loans




Non-PCD Loans



PCD Loans



Total Acquired Loans




Balance at

Acquisition

Date



Balance at

Mar 31, 2021



Balance at

Jun 30, 2021



Balance at

Acquisition

Date



Balance at

Mar 31, 2021



Balance at

Jun 30, 2021



Balance at

Acquisition

Date



Balance at

Mar 31, 2021



Balance at

Jun 30, 2021


Loan marks:





































Acquired banks (V)


$

345,599



$

26,285



$

16,535



$

320,052



$

11,157



$

8,695



$

665,651



$

37,442



$

25,230







































Acquired portfolio loan balances:





































Acquired banks (V)



12,286,159




3,339,670




2,913,494




689,573




163,191




144,694




12,975,732


(W)


3,502,861




3,058,188







































Acquired portfolio loan balances less loan marks


$

11,940,560



$

3,313,385



$

2,896,959



$

369,521



$

152,034



$

135,999



$

12,310,081



$

3,465,419



$

3,032,958




(T)

Includes other MSA and non-MSA regions.

(U) 

Represents a portion of total commercial real estate loans of $5.681 billion as of June 30, 2021.

(V)

Includes Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank, The F&M Bank & Trust Company, Tradition Bank and LegacyTexas Bank.

(W)

Actual principal balances acquired.

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Year-to-Date



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Jun 30, 2021



Jun 30, 2020


Asset Quality




























Nonaccrual loans

$

32,880



$

43,025



$

47,185



$

57,412



$

62,904



$

32,880



$

62,904


Accruing loans 90 or more days past due


330




313




1,699




462




8,691




330




8,691


Total nonperforming loans


33,210




43,338




48,884




57,874




71,595




33,210




71,595


Repossessed assets


310




362




93




120




187




310




187


Other real estate


144




462




10,593




11,548




6,160




144




6,160


Total nonperforming assets

$

33,664



$

44,162



$

59,570



$

69,542



$

77,942



$

33,664



$

77,942






























Nonperforming assets:




























Commercial and industrial (includes energy)

$

8,613



$

11,290



$

16,176



$

17,273



$

15,238



$

8,613



$

15,238


Construction, land development and other land loans


1,423




1,692




1,566




2,633




10,530




1,423




10,530


1-4 family residential (includes home equity)


11,681




11,920




25,830




29,953




29,812




11,681




29,812


Commercial real estate (includes multi-family residential)


11,266




16,896




12,315




16,069




20,748




11,266




20,748


Agriculture (includes farmland)


661




803




2,075




1,931




1,501




661




1,501


Consumer and other


20




1,561




1,608




1,683




113




20




113


Total

$

33,664



$

44,162



$

59,570



$

69,542



$

77,942



$

33,664



$

77,942


Number of loans/properties


152




167




208




198




213




152




213


Allowance for credit losses at end of period

$

302,884



$

307,210



$

316,068



$

323,635



$

324,205



$

302,884



$

324,205






























Net charge-offs (recoveries):




























Commercial and industrial (includes energy)

$

3,529



$

1,584



$

4,085



$

8,344



$

12,206



$

5,113



$

12,178


Construction, land development and other land loans


(105)




(5)




(110)




478




(6)




(110)




(18)


1-4 family residential (includes home equity)


(6)




47




1,982




252




51




41




56


Commercial real estate (includes multi-family residential)


517




6,589




626




676







7,106




(81)


Agriculture (includes farmland)


(9)




33




(4)




(17)




(3)




24




(4)


Consumer and other


400




610




988




837




753




1,010




1,671


Total

$

4,326



$

8,858



$

7,567



$

10,570



$

13,001



$

13,184



$

13,802






























Asset Quality Ratios




























Nonperforming assets to average interest-earning assets


0.11

%



0.15

%



0.20

%



0.24

%



0.28

%



0.11

%



0.28

%

Nonperforming assets to loans and other real estate


0.17

%



0.22

%



0.29

%



0.33

%



0.37

%



0.17

%



0.37

%

Net charge-offs to average loans (annualized)


0.09

%



0.18

%



0.15

%



0.21

%



0.26

%



0.14

%



0.14

%

Allowance for credit losses to total loans


1.57

%



1.56

%



1.56

%



1.56

%



1.54

%



1.57

%



1.54

%

Allowance for credit losses to total loans, excluding

 Warehouse Purchase Program loans and Paycheck Protection Program loans (G)


1.85

%



1.89

%



1.92

%



1.94

%



1.90

%



1.85

%



1.90

%

 

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, net of tax, and NOL tax benefit; return on average assets excluding merger related expenses, net of tax, and NOL tax benefit; return on average common equity excluding merger related expenses, net of tax, and NOL tax benefit; return on average tangible common equity; return on average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program and PPP loans; the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities and merger related expenses, 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 Warehouse Purchase Program loans and PPP loans). Prosperity has included information below relating to these non-GAAP financial measures for the applicable periods presented.




Three Months Ended



Year-to-Date




Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Jun 30, 2021



Jun 30, 2020


Reconciliation of diluted earnings per share to diluted

   earnings per share, excluding merger related
   expenses, net of tax, and NOL tax benefit:





























Net income


$

130,611



$

133,309



$

137,091



$

130,064



$

130,901



$

263,920



$

261,749


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















5,904







6,334


Less: NOL tax benefit (Y)















(20,145)







(20,145)


Net income, excluding merger related expenses, net of tax,
   and NOL tax benefit (X) (Y)


$

130,611



$

133,309



$

137,091



$

130,064



$

116,660



$

263,920



$

247,938































Weighted average diluted shares outstanding



92,935




92,854




92,559




92,656




92,658




92,895




93,514


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


$



$



$



$



$

0.06



$



$

0.07


NOL tax benefit per diluted share (X)


$



$



$



$



$

(0.22)



$



$

(0.22)


Diluted earnings per share, excluding merger related
   expenses, net of tax, and NOL tax benefit (X) (Y)


$

1.41



$

1.44



$

1.48



$

1.40



$

1.25



$

2.84



$

2.65































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





























Net income, excluding merger related expenses, net of tax,
    and NOL tax benefit (X) (Y)


$

130,611



$

133,309



$

137,091



$

130,064



$

116,660



$

263,920



$

247,938


Average total assets


$

36,096,022



$

34,544,360



$

33,690,906



$

32,980,838



$

32,504,726



$

35,324,474



$

31,931,067


Return on average assets excluding merger related

   expenses, net of tax, and NOL tax benefit (F) (X) (Y)



1.45

%



1.54

%



1.63

%



1.58

%



1.44

%



1.49

%



1.55

%






























Reconciliation of return on average common equity to

   return on average common equity excluding

    merger related expenses, net of tax, and NOL tax benefit:





























Net income, excluding merger related expenses, net of tax,
   and NOL tax benefit (X) (Y)


$

130,611



$

133,309



$

137,091



$

130,064



$

116,660



$

263,920



$

247,938


Average shareholders' equity


$

6,287,389



$

6,197,668



$

6,108,574



$

6,021,740



$

5,925,156



$

6,242,775



$

5,914,698


Return on average common equity excluding merger

   related expenses, net of tax, and NOL tax benefit (F) (X) (Y)



8.31

%



8.60

%



8.98

%



8.64

%



7.88

%



8.46

%



8.38

%






























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





























Net income


$

130,611



$

133,309



$

137,091



$

130,064



$

130,901



$

263,920



$

261,749


Average shareholders' equity


$

6,287,389



$

6,197,668



$

6,108,574



$

6,021,740



$

5,925,156



$

6,242,775



$

5,914,698


Less: Average goodwill and other intangible assets



(3,300,467)




(3,304,994)




(3,306,769)




(3,310,245)




(3,305,008)




(3,302,718)




(3,306,753)


Average tangible shareholders' equity


$

2,986,922



$

2,892,674



$

2,801,805



$

2,711,495



$

2,620,148



$

2,940,057



$

2,607,945


Return on average tangible common equity (F)



17.49

%



18.43

%



19.57

%



19.19

%



19.98

%



17.95

%



20.07

%



(X)

Calculated assuming a federal tax rate of 21.0%.

(Y)

Net income for the second quarter of 2020 includes a tax benefit for NOL due to the CARES Act.





Three Months Ended



Year-to-Date




Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Jun 30, 2021



Jun 30, 2020































Reconciliation of return on average common equity to

   return on average tangible common equity
   excluding merger related expenses, net of tax, and

   NOL tax benefit:





























Net income, excluding merger related expenses, net of tax,
   and NOL tax benefit (X) (Y)


$

130,611



$

133,309



$

137,091



$

130,064



$

116,660



$

263,920



$

247,938


Average shareholders' equity


$

6,287,389



$

6,197,668



$

6,108,574



$

6,021,740



$

5,925,156



$

6,242,775



$

5,914,698


Less: Average goodwill and other intangible assets



(3,300,467)




(3,304,994)




(3,306,769)




(3,310,245)




(3,305,008)




(3,302,718)




(3,306,753)


Average tangible shareholders' equity


$

2,986,922



$

2,892,674



$

2,801,805



$

2,711,495



$

2,620,148



$

2,940,057



$

2,607,945


Return on average tangible common equity excluding

    merger related expenses, net of tax, and NOL tax
   benefit (F) (X) (Y)



17.49

%



18.43

%



19.57

%



19.19

%



17.81

%



17.95

%



19.01

%



























































Reconciliation of book value per share to tangible book

    value per share:





























Shareholders' equity


$

6,310,337



$

6,221,846



$

6,130,669



$

6,034,877



$

5,948,122



$

6,310,337



$

5,948,122


Less: Goodwill and other intangible assets



(3,299,053)




(3,301,940)




(3,304,871)




(3,308,170)




(3,311,712)




(3,299,053)




(3,311,712)


Tangible shareholders' equity


$

3,011,284



$

2,919,906



$

2,825,798



$

2,726,707



$

2,636,410



$

3,011,284



$

2,636,410































Period end shares outstanding



92,935




92,929




92,571




92,562




92,660




92,935




92,660


Tangible book value per share


$

32.40



$

31.42



$

30.53



$

29.46



$

28.45



$

32.40




28.45































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





























Tangible shareholders' equity


$

3,011,284



$

2,919,906



$

2,825,798



$

2,726,707



$

2,636,410



$

3,011,284



$

2,636,410


Total assets


$

36,099,924



$

35,558,418



$

34,059,275



$

33,197,599



$

32,966,649



$

36,099,924



$

32,966,649


Less: Goodwill and other intangible assets



(3,299,053)




(3,301,940)




(3,304,871)




(3,308,170)




(3,311,712)




(3,299,053)




(3,311,712)


Tangible assets


$

32,800,871



$

32,256,478



$

30,754,404



$

29,889,429



$

29,654,937



$

32,800,871



$

29,654,937


Period end tangible equity to period end tangible assets ratio



9.18

%



9.05

%



9.19

%



9.12

%



8.89

%



9.18

%



8.89

%






























Reconciliation of allowance for credit losses to total
   loans to allowance for credit losses to total loans,

   excluding Warehouse Purchase Program and

   Paycheck Protection Program loans:





























Allowance for credit losses


$

302,884



$

307,210



$

316,068



$

323,635



$

324,205



$

302,884



$

324,205


Total loans


$

19,251,785



$

19,638,886



$

20,246,944



$

20,795,641



$

21,025,173



$

19,251,785



$

21,025,173


Less: Warehouse Purchase Program loans



(2,095,559)




(2,272,389)




(2,842,379)




(2,730,614)




(2,557,183)




(2,095,559)




2,557,183


Less: Paycheck Protection Program loans



(779,989)




(1,139,083)




(963,185)




(1,393,757)




(1,392,497)




(779,989)




1,392,497


Total loans less Warehouse Purchase Program and
  
Paycheck Protection Program loans


$

16,376,237



$

16,227,414



$

16,441,380



$

16,671,270



$

17,075,493



$

16,376,237



$

17,075,493


Allowance for credit losses to total loans, excluding

   Warehouse Purchase Program and
   Paycheck Protection Program loans



1.85

%



1.89

%



1.92

%



1.94

%



1.90

%



1.85

%



1.90

%






























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





























Noninterest expense


$

115,191



$

119,076



$

120,205



$

117,919



$

134,368



$

234,267



$

259,109































Net interest income


$

245,399



$

254,582



$

257,634



$

258,113



$

258,955



$

499,981



$

514,986


Noninterest income



35,556




34,008




36,547




34,924




25,675




69,564




60,063


Less: net loss on sale or write down of assets



(244)




(79)




(675)




(528)




(3,945)




(323)




(4,330)


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



35,800




34,087




37,222




35,452




29,620




69,887




64,393


Total income excluding net gains and losses on the
   sale or write down of assets and taxes


$

281,199



$

288,669



$

294,856



$

293,565



$

288,575



$

569,868



$

579,379


Efficiency ratio, excluding net gains and losses on the

      sale or write down of assets and taxes



40.96

%



41.25

%



40.77

%



40.17

%



46.56

%



41.11

%



44.72

%





Three Months Ended



Year-to-Date




Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Jun 30, 2021



Jun 30, 2020































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





























Noninterest expense


$

115,191



$

119,076



$

120,205



$

117,919



$

134,368



$

234,267



$

259,109


Less: merger related expenses















7,474







8,018


Noninterest expense excluding merger related expenses


$

115,191



$

119,076



$

120,205



$

117,919



$

126,894



$

234,267



$

251,091































Net interest income


$

245,399



$

254,582



$

257,634



$

258,113



$

258,955



$

499,981



$

514,986


Noninterest income



35,556




34,008




36,547




34,924




25,675




69,564




60,063


Less: net loss on sale or write down of assets



(244)




(79)




(675)




(528)




(3,945)




(323)




(4,330)


Noninterest income excluding net gains and losses on the

   sale or write down of assets and taxes



35,800




34,087




37,222




35,452




29,620




69,887




64,393


Total income excluding net gains and losses on the
   sale or write down of assets and taxes


$

281,199



$

288,669



$

294,856



$

293,565



$

288,575



$

569,868



$

579,379


Efficiency ratio, excluding net gains and losses on the
   sale or write down of assets, taxes and merger related expenses



40.96

%



41.25

%



40.77

%



40.17

%



43.97

%



41.11

%



43.34

%

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/prosperity-bancshares-inc-reports-second-quarter-2021-earnings-301342773.html

SOURCE Prosperity Bancshares, Inc.

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