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Prosperity Bancshares, Inc.® Reports Fourth Quarter 2020 Earnings

HOUSTON, Jan. 27, 2021 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income for the quarter ended December 31, 2020 of  $137.1 million compared with $86.1 million for the same period in 2019. Net income per diluted common share was $1.48 compared with $1.01 for the same period in 2019, which is net of merger related expenses of $0.43(1) per diluted common share. Excluding merger related expenses, the earnings per diluted common share was $1.44(1) for the fourth quarter 2019. Additionally, deposits increased $901.3 million or 3.4% (13.6% annualized) during the fourth quarter 2020 and nonperforming assets remain low at 0.20% of fourth quarter average interest-earning assets with an annualized return on fourth quarter average assets of 1.63%. On November 1, 2019, LegacyTexas Financial Group, Inc. ("LegacyTexas") merged with Prosperity Bancshares and LegacyTexas Bank merged with Prosperity Bank (collectively, the "Merger").

"Prosperity Bancshares reported some of the best results in our history, with net income of $137.1 million for the fourth quarter of 2020 and $528.9 million for the full year. Much of the success is attributed to the dedicated associates of Prosperity and LegacyTexas who helped make our combination with LegacyTexas successful. Also, during 2020 we had organic deposit growth of $3.161 billion, a 13.1% increase. Asset quality continued to improve with nonperforming assets at 0.20% of fourth quarter average earning assets. We ended the year with $59.6 million in nonperforming assets compared with $69.5 million at September 30, 2020, a 14.3% decrease," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"Texas and Oklahoma continue to benefit from a pro-business attitude. Companies continue to move to Texas, with HP and Oracle announcing a headquarters move and other companies, such as Tesla, announcing a major expansion into Texas. The Federal Reserve Bank of Dallas has projected a nationwide 5% GDP growth by year-end 2021 and an unemployment rate of 4.5%, noting that the first half of the year will be slower, with an expected increase in the second half of the year. We believe Texas will have a higher growth rate and outperform other states over the next several years," continued Zalman.

"We expect that we will face several challenges over the next few years, such as higher tax rates that will affect income and continued low interest rates that will affect our net interest margin. However, a steeper yield curve could help to mitigate both issues," added Zalman.

"Again, I would like to thank all our customers, shareholders and associates for their dedication and support of our company," concluded Zalman.

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

Net income was $137.1 million(2) for the three months ended December 31, 2020 compared with $86.1 million(3) for the same period in 2019, an increase of $51.0 million or 59.2%. Net income per diluted common share was $1.48 for the three months ended December 31, 2020 compared with $1.01 for the same period in 2019, an increase of 46.5%. Net income for the fourth quarter of 2019 included $46.4 million of merger related expenses, or $0.43(1) per diluted common share. Net income was $137.1 million(2) for the three months ended December 31, 2020 compared with $130.1 million(4) for the three months ended September 30, 2020, an increase of $7.0 million or 5.4%. Net income per diluted common share was $1.48 for the three months ended December 31, 2020 compared with $1.40 for the three months ended September 30, 2020, an increase of 5.7%. Net income for the fourth quarter of 2020 had no provision for credit losses, reflected a $3.3 million decrease in interest expense and a $6.5 million decrease in loan discount accretion compared to the net income for the third quarter of 2020. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended December 31, 2020 were 1.63%, 8.98% and 19.57%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 40.77%(1) for the three months ended December 31, 2020.

Net interest income before provision for credit losses for the three months ended December 31, 2020 was $257.6 million compared with $232.0 million for the same period in 2019, an increase of $25.6 million or 11.0%. The increase was primarily due to an increase in the average balance of interest-earning assets, a decrease in the average rate on interest-bearing liabilities and three months of combined bank earnings in the fourth quarter of 2020 compared to only two months in the fourth quarter of 2019 following the Merger, partially offset by decreases in interest income on securities and loan discount accretion of $7.7 million. On a linked quarter basis, net interest income before provision for credit losses was $257.6 million compared with $258.1 million for the three months ended September 30, 2020, a decrease of $479 thousand or 0.2%.

The net interest margin on a tax equivalent basis was 3.49% for the three months ended December 31, 2020 compared with 3.66% for the same period in 2019. The change was primarily due to an increase in lower yielding Warehouse Purchase Program and Paycheck Protection Program ("PPP") loans, a $7.7 million decrease in loan discount accretion 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 3.49% for the three months ended December 31, 2020 compared with 3.57% for the three months ended September 30, 2020. This change was primarily due to a $6.5 million decrease in loan discount accretion, higher net premium amortization on securities and higher cash balances due to excess liquidity, partially offset by higher PPP loan fee income during the fourth quarter.

Noninterest income was $36.5 million for the three months ended December 31, 2020 compared with $35.5 million for the same period in 2019, an increase of $1.0 million or 2.9%. This increase was primarily due to an increase in mortgage income and lower loss on write-down of assets, partially offset by a decrease in nonsufficient funds ("NSF") fees. On a linked quarter basis, noninterest income increased $1.6 million or 4.6% to $36.5 million compared with $34.9 million for the three months ended September 30, 2020. This increase was primarily due to increases in mortgage income and NSF fees.

Noninterest expense was $120.2 million for the three months ended December 31, 2020 compared with $156.5 million for the same period in 2019, a decrease of $36.2 million or 23.2%, primarily due to the $46.4 million of merger related expenses recorded during the fourth quarter of 2019, partially offset by higher salaries and benefits expense in the fourth quarter of 2020 due to three months of salaries and benefits compared to two months in the fourth quarter of 2019 resulting from the Merger. On a linked quarter basis, noninterest expense increased $2.3 million or 1.9% to $120.2 million compared with $117.9 million for the three months ended September 30, 2020. The increase was primarily due to an increase in salaries and benefits.

Results of Operations for the Year Ended December 31, 2020

Net income was $528.9 million(5) for the year ended December 31, 2020 compared with $332.6 million(6) for the prior year, an increase of $196.4 million or 59.0%. Net income per diluted common share was $5.68 for the year ended December 31, 2020 compared with $4.52 for the prior year, an increase of 25.7%. The increase in net income and earnings per diluted common share for the year ended December 31, 2020 was primarily due to the Merger, a $38.4 million decrease in merger related expenses and a tax benefit for net operating losses ("NOL") of $20.1 million. Annualized returns on average assets, average common equity and average tangible common equity for the year ended December 31, 2020 were 1.62%, 8.85% and 19.83%(1), respectively. Excluding merger related expenses, net of tax, and the NOL tax benefit, annualized returns on average assets, average common equity and average tangible common equity for the year ended December 31, 2020 were 1.58%(1), 8.62%(1) and 19.31%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 42.58%(1) for the year ended December 31, 2020. Excluding merger related expenses (and net gains and losses on the sale or write down of assets and taxes) the efficiency ratio was 41.89%(1) for the year ended December 31, 2020.

Net interest income before provision for credit losses for the year ended December 31, 2020 was $1.031 billion compared with $695.8 million for the prior year, an increase of $335.0 million or 48.1%. This change was primarily due to the Merger and the increase in loan discount accretion of $63.3 million

The net interest margin on a tax equivalent basis for the year ended December 31, 2020 was 3.64% compared with 3.32% for the prior year. This change was primarily due to increased interest-earning assets due to the Merger and the increase in loan discount accretion of $63.3 million.

Noninterest income was $131.5 million for the year ended December 31, 2020 compared with $124.3 million for the prior year, an increase of $7.3 million or 5.8%. This increase was primarily due to increases in mortgage income, credit card, debit card and ATM card income and service charges on deposit accounts, all primarily due to the Merger, partially offset by a higher net loss on write-down of assets of $3.7 million and decrease in NSF fees.

Noninterest expense was $497.2 million for the year ended December 31, 2020 compared with $396.5 million for the prior year, an increase of $100.7 million or 25.4%. The change was primarily due to increases in salaries and benefits, credit and debit card, data processing and software amortization, net occupancy and equipment and other noninterest expense, all primarily due to the Merger, partially offset by a $38.4 million decrease in merger related expenses.

Balance Sheet Information

At December 31, 2020, Prosperity had $34.059 billion in total assets, an increase of $1.874 billion or 5.8% compared with $32.186 billion at December 31, 2019.

Loans at December 31, 2020 were $20.247 billion, an increase of $1.402 billion or 7.4%, compared with $18.845 billion at December 31, 2019. Linked quarter loans decreased $548.7 million or 2.6% from $20.796 billion at September 30, 2020, primarily due to a $430.6 million decrease in PPP loans. At December 31, 2020, the Company had $963.2 million of PPP loans.

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 December 31, 2020, oil and gas loans totaled $512.7 million (net of discount and excluding PPP loans totaling $88.7 million) or 2.5% of total loans, of which $285.8 million were production loans and $226.9 million were servicing loans, compared with total oil and gas loans of $698.3 million (net of discount) or 3.7% of total loans at December 31, 2019, of which $401.5 million were production loans and $296.8 million were servicing loans. In addition, as of December 31, 2020, Prosperity had total unfunded commitments to oil and gas companies of $243.2 million compared with total unfunded commitments to oil and gas companies of $342.2 million as of December 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 December 31, 2020, loans to hotels totaled $393.8 million (excluding PPP loans totaling $6.5 million) or 1.9% of total loans and loans to restaurants totaled $214.7 million (excluding PPP loans totaling $83.6 million) or 1.1% of total loans.

Deposits at December 31, 2020 were $27.360 billion, an increase of $3.161 billion or 13.1%, compared with $24.200 billion at December 31, 2019. Linked quarter deposits increased $901.3 million or 3.4% from $26.459 billion at September 30, 2020.

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)























Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019




(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)


Loans acquired (including new production since acquisition date):





















LegacyTexas:





















Loans held for sale (1)


$



$



$

15,725



$

54,229



$

66,745


Loans held for investment



6,013,305




6,349,251




6,601,006




6,713,337




6,636,855


Loans held for investment - Warehouse Purchase Program



2,842,379




2,730,614




2,557,183




1,713,762




1,552,762


All other loans



11,391,260




11,715,776




11,851,259




10,645,867




10,588,984


Total loans


$

20,246,944



$

20,795,641



$

21,025,173



$

19,127,195



$

18,845,346























Deposits assumed (including new deposits since acquisition date):





















LegacyTexas


$

6,047,363



$

5,977,357



$

5,997,395



$

5,605,986



$

6,141,546


All other deposits



21,313,129




20,481,849




20,155,293




18,220,371




18,058,186


Total deposits


$

27,360,492



$

26,459,206



$

26,152,688



$

23,826,357



$

24,199,732











(1)

The LegacyTexas mortgage business was combined with the Prosperity Bank mortgage business in the second quarter of 2020. Accordingly, all loans held for sale will be reported only for Prosperity Bank going forward and not separately tracked for LegacyTexas. 

 

Excluding loans acquired in the Merger and new production by the acquired lending operations since November 1, 2019, loans at December 31, 2020 grew $802.3 million or 7.6% compared with December 31, 2019 and decreased $324.5 million or 2.8% compared with September 30, 2020.

Excluding deposits assumed in the Merger and new deposits generated at the acquired banking centers since November 1, 2019, deposits at December 31, 2020 grew $3.255 billion or 18.0% compared with December 31, 2019 and grew $831.3 million or 4.1% compared with September 30, 2020.

Asset Quality

Nonperforming assets totaled $59.6 million or 0.20% of quarterly average interest-earning assets at December 31, 2020, compared with $62.9 million or 0.25% of quarterly average interest-earning assets at December 31, 2019, and $69.5 million or 0.24% of quarterly average interest-earning assets at September 30, 2020.

The allowance for credit losses on loans was $316.1 million or 1.56% of total loans at December 31, 2020 compared to $323.6 million or 1.56% of total loans at September 30, 2020 and $87.5 million or 0.46% of total loans at December 31, 2019. The allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and PPP loans, was 1.92%(1) at December 31, 2020 compared with 1.94%(1) at September 30, 2020 and 0.51%(1) at December 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 $108.7 million, of which $102.5 million was related to LegacyTexas and an increase in allowance for credit losses on off-balance sheet credit exposures of $24.4 million, of which $6.3 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 $131.8 million, of which $130.3 million was related to LegacyTexas, due to the reclass of purchased credit deteriorated ("PCD") discounts as a result of adopting CECL.  

There was no provision for credit losses for the three months ended December 31, 2020 compared with $1.7 million for the three months ended December 31, 2019 and $10.0 million for the three months ended September 30, 2020.  The provision for credit losses was $20.0 million for the year ended December 31, 2020 compared with $4.3 million for the year ended December 31, 2019.

Net charge-offs were $7.6 million for the three months ended December 31, 2020 compared with net charge-offs of $1.3 million for the three months ended December 31, 2019 and net charge-offs of $10.6 million for the three months ended September 30, 2020. Net charge-offs for the fourth quarter of 2020 included $4.8 million related to resolved PCD loans. These PCD loans had specific reserves of $9.6 million, of which $4.8 million was allocated to the charge-offs and $4.8 million was moved to the general reserve. Further, an additional $4.8 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve. Net charge-offs were $31.9 million for the year ended December 31, 2020 compared with $3.3 million for the year ended December 31, 2019. Net charge-offs for the year ended December 31, 2020 included $25.7 million related to resolved PCD loans. These PCD loans had specific reserves of $53.8 million, of which $25.7 million was allocated to the charge-offs and $28.1 million was moved to the general reserve.

Dividend

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

Stock Repurchase Program

On January 26, 2021, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 4.65 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 26, 2022, at the discretion of management. Prosperity Bancshares repurchased 4.0 thousand shares of its common stock at an average weighted price of $50.89 during the three months ended December 31, 2020 and 2.2 million shares of its common stock at an average weighted price of $52.47 per share during the year ended December 31, 2020.

Redemption of Outstanding Subordinated Notes

On November 30, 2020, $125.0 million in subordinated notes assumed in the Merger were redeemed. The redemption was funded by dividends from Prosperity Bank.

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. On March 13, 2020, the U.S. President announced a national emergency relating to the pandemic, which has since been extended. On October 7, 2020, the Governor of Texas extended the 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 and detailed the ongoing plan to open businesses and activities in Texas. On December 14, 2020, the Governor of Oklahoma extended the executive order that declared an emergency caused by the impending threat of COVID-19 to the people of Oklahoma. The Bank is considered an essential business and is closely monitoring the latest developments regarding COVID-19. The COVID-19 pandemic has resulted in significant economic uncertainties that have had, and could continue to have, an adverse impact on the Company's operating income, financial condition and cash flows. The extent to which the COVID-19 pandemic will impact the Company's operations and financial results during 2021 cannot be reasonably or reliably estimated at this time.

The health and safety of the Bank's associates, customers, and communities are of utmost importance; and the Company has taken additional measures in an effort to ensure this safety, including restricting nonessential employee travel, expanding remote access availability, distancing work stations, professional cleaning of its facilities, and signs and distancing reminders for customers in the banking centers. Further, the Company remains committed to providing uninterrupted and reliable banking service and has business continuity plans and protocols in place to ensure critical operations are able to continue without disruption.

In response to the COVID-19 pandemic, on March 27, 2020 the President of the United States signed the CARES Act into law. The CARES Act provides assistance for American workers, families and small businesses. The Paycheck Protection Program ("PPP"), established by the CARES Act and implemented by the Small Business Administration ("SBA") with support from the Department of the Treasury, provides small businesses with funds to pay payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities and are 100% guaranteed by the SBA. On June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act of 2020 ("PPP Flexibility Act"), which modified the covered expense period from eight weeks to 24 weeks, extended the maturity date of the loans out to five years and gave greater flexibility to employers having difficulty hiring workers. PPP loans originated prior to June 5, 2020, have a two year term and earn interest at 1%. PPP loans originated on and after June 5, 2020, have a minimum five year term, which can be extended for up to five additional years if the lender and borrower both agree. The Consolidated Appropriations Act of 2021 ("CAA"), which was signed into law on December 27, 2020, extends certain provisions of the CARES Act, provides additional funding and contains new relief provisions. The CAA extended the PPP application period to March 31, 2021 and permits eligible companies to obtain a second PPP loan ("second draw") under terms specified in the CAA, with a maximum amount of $2.0 million and limit of one second draw loan.  Second draw PPP borrowers are eligible for loan forgiveness on the same terms as the first draw PPP borrowers, whose loans are eligible for early forgiveness by the SBA as provided by the CARES Act, the PPP Flexibility Act, the CAA and related regulations and guidance. Lenders that were permitted to approve first draw PPP loans are permitted to approve second draw loans. Additionally, the Bank is entitled to a per loan processing fee based on a tiered schedule ranging from 5% to 1% of the loan balance for the first draw PPP loans, and the CAA established pre-determined fees for processing and servicing the second draw PPP loans. In 2020, the Company obtained SBA approvals on approximately 11,900 loans totaling $1.397 billion and as of December 31, 2020, had an outstanding balance of 8,816 loans totaling $963.2 million after remittance. The Company has also provided relief to its loan customers through loan extensions and deferrals.

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 $318.0 million in cash, made up of $308.6 million in cash and $9.4 million in cash for taxes withheld, for all outstanding shares of LegacyTexas. This resulted in goodwill of $1.331 billion as of December 31, 2020, which was subject to subsequent fair value adjustments. During the second quarter of 2020, Prosperity completed the operational conversion of LegacyTexas Bank.

Conference Call

Prosperity's management team will host a conference call on Wednesday, January 27, 2021 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's fourth 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 participant elite entry number is 9347138.

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 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 December 31, 2020, Prosperity Bancshares, Inc.® is a $34.059 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 treasury management.

As of December 31, 2020, Prosperity operated 275 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 65 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.

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 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, Quarterly Report on Form 10-Q for the period ended September 30, 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.

 










(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 $13.3 million, net of tax, primarily comprised of loan discount accretion of $16.1 million for the three months ended December 31, 2020.

(3)

Includes purchase accounting adjustments of $20.0 million, net of tax, primarily comprised of loan discount accretion of $23.7 million, and merger related expenses of $46.4 million for the three months ended December 31, 2019.

(4)

Includes purchase accounting adjustments of $18.7 million, net of tax, primarily comprised of loan discount accretion of $22.5 million for the three months ended September 30, 2020.

(5)

Includes purchase accounting adjustments of $76.5 million, net of tax, primarily comprised of loan discount accretion of $91.3 million, and merger related expenses of $8.0 million and a tax benefit for NOL of $20.1 million for the year ended December 31, 2020.

(6)

Includes purchase accounting adjustments of $22.9 million, net of tax, primarily comprised of loan discount accretion of $28.0 million, and merger related expenses of $46.4 million for the year ended December 31, 2019.

 

Bryan/College Station Area


Frisco-West


Kerens


Hempstead


98th Street

Bryan


Garland


Longview


Hitchcock


Avenue Q

Bryan-29th Street


Grapevine


Mount Vernon


Liberty


North University

Bryan-East


Grapevine Main


Palestine


Magnolia


Texas Tech Student Union

Bryan-North


Kiest


Rusk


Magnolia Parkway



Caldwell


Lake Highlands


Seven Points


Mont Belvieu


Midland

College Station


McKinney


Teague


Nederland


Wadley

Crescent Point


McKinney Eldorado


Tyler-Beckham


Needville


Wall Street

Hearne


McKinney Redbud


Tyler-South Broadway


Rosenberg



Huntsville


North Carrolton


Tyler-University


Shadow Creek


Odessa

Madisonville


Oak Cliff


Winnsboro


Spring


Grandview

Navasota


Park Cities




Tomball


Grant

New Waverly


Plano


Houston Area


Waller


Kermit Highway

Rock Prairie


Plano-West


Houston


West Columbia


Parkway

Southwest Parkway


Preston Forest


Aldine


Wharton



Tower Point


Preston Parker


Alief


Winnie


Other West Texas Area

Wellborn Road


Preston Royal


Bellaire


Wirt


Locations



Red Oak


Beltway




Big Spring

Central Texas Area


Richardson


Clear Lake


South Texas Area -


Brownfield

Austin


Richardson-West


Copperfield


Corpus Christi


Brownwood

Allandale


Rosewood Court


Cypress


Calallen


Cisco

Cedar Park


The Colony


Downtown


Carmel


Comanche

Congress


Tollroad


Eastex


Northwest


Early

Lakeway


Trinity Mills


Fairfield


Saratoga


Floydada

Liberty Hill


Turtle Creek


First Colony


Timbergate


Gorman

Northland


West 15th Plano


Fry Road


Water Street


Levelland

Oak Hill


West Allen


Gessner




Littlefield

Research Blvd


Westmoreland


Gladebrook


Victoria


Merkel

Westlake


Wylie


Grand Parkway


Victoria Main


Plainview





Heights


Victoria-Navarro


San Angelo

Other Central Texas Area


Fort Worth


Highway 6 West


Victoria-North


Slaton

Locations


Haltom City


Little York


Victoria Salem


Snyder

Bastrop


Hulen


Medical Center





Canyon Lake


Keller


Memorial Drive


Other South Texas Area


Oklahoma

Dime Box


Museum Place


Northside


 Locations


Central Oklahoma Area

Dripping Springs


Renaissance Square


Pasadena


Alice


Oklahoma City

Elgin


Roanoke


Pecan Grove


Aransas Pass


23rd Street

Flatonia


Stockyards


Pin Oak


Beeville


Expressway

Georgetown




River Oaks


Colony Creek


I-240

Gruene


Other Dallas/Fort Worth Area


Sugar Land


Cuero


Memorial

Kingsland


Locations


SW Medical Center


Edna



La Grange


Arlington


Tanglewood


Goliad


Other Central Oklahoma Area

Lexington


Azle


The Plaza


Gonzales


 Locations

New Braunfels


Ennis


Uptown


Hallettsville


Edmond

Pleasanton


Flower Mound


Waugh Drive


Kingsville


Norman

Round Rock


Gainesville


Westheimer


Mathis



San Antonio


Glen Rose


West University


Padre Island


Tulsa Area

Schulenburg


Granbury


Woodcreek


Palacios


Tulsa

Seguin


Grand Prairie




Port Lavaca


Garnett

Smithville


Jacksboro


Katy


Portland


Harvard

Thorndale


Mesquite


Cinco Ranch


Rockport


Memorial

Weimar


Muenster


Katy-Spring Green


Sinton


Sheridan



Runaway Bay




Taft


S. Harvard

Dallas/Fort Worth Area


Sanger


The Woodlands


Yoakum


Utica Tower

Dallas


Waxahachie


The Woodlands-College Park


Yorktown


Yale

14th Street Plano


Weatherford


The Woodlands-I-45





Abrams Centre




The Woodlands-Research Forest


West Texas Area


Other Tulsa Area Locations

Addison


East Texas Area




Abilene


Owasso

Allen


Athens


Other Houston Area


Antilley Road



Balch Springs


Blooming Grove


Locations


Barrow Street



Camp Wisdom


Canton


Angleton


Cypress Street



Carrollton


Carthage


Bay City


Judge Ely



Cedar Hill


Corsicana


Beaumont


Mockingbird



Coppell


Crockett


Cleveland





East Plano


Eustace


East Bernard


Lubbock



Euless


Gilmer


El Campo


4th Street



Frisco


Grapeland


Dayton


66th Street



Frisco Gaylord


Gun Barrel City


Galveston


82nd Street



Frisco Warren


Jacksonville


Groves


86th Street



 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019


Balance Sheet Data (at period end)





















Loans held for sale


$

46,777



$

51,694



$

39,516



$

65,035



$

80,959


Loans held for investment



17,357,788




18,013,333




18,428,474




17,348,398




17,211,625


Loans held for investment - Warehouse Purchase Program



2,842,379




2,730,614




2,557,183




1,713,762




1,552,762


Total loans



20,246,944




20,795,641




21,025,173




19,127,195




18,845,346























Investment securities(A)



8,542,820




7,431,495




7,717,586




8,295,495




8,570,056


Federal funds sold



553




56,469




568




676




519


Allowance for credit losses(B)



(316,068)




(323,635)




(324,205)




(327,206)




(87,469)


Cash and due from banks



1,342,996




1,031,193




332,873




381,458




573,589


Goodwill



3,231,636




3,231,692




3,231,964




3,223,144




3,223,671


Core deposit intangibles, net



73,235




76,478




79,748




83,041




86,404


Other real estate owned



10,593




11,548




6,160




5,452




6,936


Fixed assets, net



323,572




325,994




324,975




327,293




326,832


Other assets



602,994




560,724




571,807




626,951




639,824


Total assets


$

34,059,275



$

33,197,599



$

32,966,649



$

31,743,499



$

32,185,708























Noninterest-bearing deposits


$

9,151,233



$

8,998,328



$

9,040,257



$

7,461,323



$

7,763,894


Interest-bearing deposits



18,209,259




17,460,878




17,112,431




16,365,034




16,435,838


Total deposits



27,360,492




26,459,206




26,152,688




23,826,357




24,199,732


Other borrowings






2,570




103,131




1,338,429




1,303,730


Securities sold under repurchase agreements



389,583




380,274




365,335




344,695




377,294


Subordinated notes






125,146




125,365




125,585




125,804


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



29,947




29,947




29,947




29,947




5,599


Other liabilities



148,584




165,579




242,061




222,912




202,714


Total liabilities



27,928,606




27,162,722




27,018,527




25,887,925




26,214,873


Shareholders' equity(C)



6,130,669




6,034,877




5,948,122




5,855,574




5,970,835


Total liabilities and equity


$

34,059,275



$

33,197,599



$

32,966,649



$

31,743,499



$

32,185,708




(A)   

Includes $974, $(442), $(1,767), $(3,421) and$763 in unrealized gains (losses) on available for sale securities for the quarterly periods ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively.

(B)   

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

(C)   

Includes $770, $(349), $(1,396), $(2,703) and$602 in after-tax unrealized gains (losses) on available for sale securities for the quarterly periods ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Three Months Ended



Year-to-Date




Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Dec 31, 2020



Dec 31, 2019


Income Statement Data





























Interest income:





























Loans


$

241,625



$

244,255



$

242,772



$

247,243



$

222,910



$

975,895



$

621,443


Securities(D)



36,721




38,033




43,776




48,282




49,348




166,812




209,812


Federal funds sold and other earning assets



301




144




45




713




600




1,203




1,683


Total interest income



278,647




282,432




286,593




296,238




272,858




1,143,910




832,938































Interest expense:





























Deposits



19,757




22,458




25,269




35,018




32,759




102,502




111,388


Other borrowings



33




52




533




2,932




6,115




3,550




21,323


Securities sold under repurchase agreements



224




309




337




757




879




1,627




3,383


Subordinated notes and trust preferred



999




1,500




1,499




1,500




1,075




5,498




1,075


Total interest expense



21,013




24,319




27,638




40,207




40,828




113,177




137,169


Net interest income



257,634




258,113




258,955




256,031




232,030




1,030,733




695,769


Provision for credit losses






10,000




10,000







1,700




20,000




4,300


Net interest income after provision for credit losses



257,634




248,113




248,955




256,031




230,330




1,010,733




691,469































Noninterest income:





























Nonsufficient funds (NSF) fees



8,051




7,156




5,645




9,443




9,990




30,295




34,614


Credit card, debit card and ATM card income



8,193




8,315




7,263




7,474




7,728




31,245




26,867


Service charges on deposit accounts



6,046




5,920




5,790




6,104




5,597




23,860




20,604


Trust income



2,192




2,502




2,242




2,662




2,582




9,598




10,227


Mortgage income



3,989




2,958




1,820




2,010




2,455




10,777




5,006


Brokerage income



642




628




584




650




625




2,504




2,361


Bank owned life insurance income



1,252




1,449




1,508




1,545




1,502




5,754




5,426


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



(675)




(528)




(3,945)




(385)




(1,870)




(5,533)




(1,813)


Other noninterest income



6,857




6,524




4,768




4,885




6,897




23,034




20,989


Total noninterest income



36,547




34,924




25,675




34,388




35,506




131,534




124,281































Noninterest expense:





























Salaries and benefits



77,809




75,068




79,109




77,282




69,356




309,268




226,348


Net occupancy and equipment



8,223




8,644




9,190




8,980




7,420




35,037




23,985


Credit and debit card, data processing and software amortization



8,442




8,776




11,690




11,421




9,158




40,329




23,624


Regulatory assessments and FDIC insurance



2,670




2,512




2,601




2,078




2,095




9,861




8,608


Core deposit intangibles amortization



3,243




3,270




3,293




3,363




2,705




13,169




6,537


Depreciation



4,261




4,605




4,598




4,768




4,212




18,232




13,713


Communications



2,931




3,027




3,324




3,195




3,012




12,477




9,679


Other real estate expense



279




258




40




46




57




623




328


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



(195)




(137)




4




(130)




(49)




(458)




(395)


Merger related expenses









7,474




544




46,402




8,018




46,402


Other noninterest expense



12,542




11,896




13,045




13,194




12,083




50,677




37,713


Total noninterest expense



120,205




117,919




134,368




124,741




156,451




497,233




396,542


Income before income taxes



173,976




165,118




140,262




165,678




109,385




645,034




419,208


Provision for income taxes



36,885




35,054




9,361




34,830




23,251




116,130




86,656


Net income available to common shareholders


$

137,091



$

130,064



$

130,901



$

130,848



$

86,134



$

528,904



$

332,552




(D)

Interest income on securities was reduced by net premium amortization of $11,509, $10,089, $9,224, $8,005 and $8,556 for the three-month periods ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively, and $38,827 and $30,779 for the years ended December 31, 2020 and December 31, 2019, 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





Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Dec 31, 2020



Dec 31, 2019



Profitability






























Net income (E) (F)


$

137,091



$

130,064



$

130,901



$

130,848



$

86,134



$

528,904



$

332,552

































Basic earnings per share


$

1.48



$

1.40



$

1.41



$

1.39



$

1.01



$

5.68



$

4.52



Diluted earnings per share


$

1.48



$

1.40



$

1.41



$

1.39



$

1.01



$

5.68



$

4.52

































Return on average assets (G)



1.63

%



1.58

%



1.61

%

(K)


1.67

%

(K)


1.19

%

(K)


1.62

%

(K)


1.38

%

(K)

Return on average common equity (G)



8.98

%



8.64

%



8.84

%

(K)


8.86

%

(K)


6.33

%

(K)


8.85

%

(K)


7.46

%

(K)

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



19.57

%



19.19

%



19.98

%

(K)


20.16

%

(K)


12.50

%

(K)


19.83

%

(K)


14.23

%

(K)

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



3.49

%



3.57

%



3.69

%



3.81

%



3.66

%



3.64

%



3.32

%


Efficiency ratio (H) (J)



40.77

%



40.17

%



46.56

%

(L)


42.90

%

(L)


58.07

%

(L)


42.58

%

(L)


48.25

%

(L)































Liquidity and Capital Ratios






























Equity to assets



18.00

%



18.18

%



18.04

%



18.45

%



18.55

%



18.00

%



18.55

%


Common equity tier 1 capital



13.74

%



13.17

%



12.29

%



12.27

%



12.30

%



13.74

%



12.30

%


Tier 1 risk-based capital



13.74

%



13.17

%



12.29

%



12.27

%



12.30

%



13.74

%



12.30

%


Total risk-based capital



14.23

%



14.28

%



13.36

%



12.81

%



12.70

%



14.23

%



12.70

%


Tier 1 leverage capital



9.67

%



9.57

%



9.41

%



9.49

%



10.42

%



9.67

%



10.37

%


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



9.19

%



9.12

%



8.89

%



8.96

%



9.21

%



9.19

%



9.21

%
































Other Data






























Weighted-average shares used in computing earnings per common share






























Basic



92,559




92,656




92,658




94,371




85,573




93,058




73,524



Diluted



92,559




92,656




92,658




94,371




85,573




93,058




73,524



Period end shares outstanding



92,571




92,562




92,660




92,652




94,746




92,571




94,746



Cash dividends paid per common share


$

0.49



$

0.46



$

0.46



$

0.46



$

0.46



$

1.87



$

1.69



Book value per common share


$

66.23



$

65.20



$

64.19



$

63.20



$

63.02



$

66.23



$

63.02



Tangible book value per common share (H)


$

30.53



$

29.46



$

28.45



$

27.52



$

28.08



$

30.53



$

28.08

































Common Stock Market Price






























High


$

70.38



$

60.63



$

72.95



$

75.22



$

74.35



$

75.22



$

75.36



Low


$

50.43



$

48.80



$

43.68



$

42.02



$

66.60



$

42.02



$

61.65



Period end closing price


$

69.36



$

51.83



$

59.38



$

48.25



$

71.89



$

69.36



$

71.89



Employees – FTE (excluding overtime)



3,756




3,716




3,793




3,801




3,867




3,756




3,867



Number of banking centers



275




275




275




285




285




275




285




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



Three Months Ended


Year-to-Date


Dec 31, 2020


Sep 30, 2020


Jun 30, 2020


Mar 31, 2020


Dec 31, 2019


Dec 31, 2020


Dec 31, 2019

Loan discount accretion














ASC 310-20

$13,514


$16,729


$17,999


$22,463


$17,834


$70,705


$21,194

ASC 310-30

$2,545


$5,805


$6,267


$6,019


$5,908


$20,636


$6,851

Securities net amortization

$66


$116


$203


$194


$201


$579


$847

Time deposits amortization

$790


$1,240


$1,793


$2,270


$1,709


$6,093


$1,709



(F)

Using effective tax rate of 21.2%, 21.2%, 6.7%, 21.0% and 21.3% for the three-month periods ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively, and 18.0% and 20.7% for the years ended December 31, 2020 and December 31, 2019, respectively.  Net income for the second quarter of 2020 includes a tax benefit for NOLs due to the CARES Act.

(G)

Interim periods annualized.

(H)

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.

(I)

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

(J)

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.

(K)

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.

(L)

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





Dec 31, 2020



Sep 30, 2020



Dec 31, 2019





Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(M)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(M)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(M)

Interest-earning assets:






































Loans held for sale


$

42,856



$

348



3.23%



$

50,606



$

420



3.30%



$

57,171



$

570



3.96%



Loans held for investment



17,700,756




220,357



4.95%




18,267,559




225,596



4.91%




15,261,163




212,466



5.52%



Loans held for investment - Warehouse Purchase Program



2,603,455




20,920



3.20%




2,279,461




18,239



3.18%




996,903




9,874



3.93%



Total Loans



20,347,067




241,625



4.72%




20,597,626




244,255



4.72%




16,315,237




222,910



5.42%



Investment securities



8,001,679




36,721



1.83%


(N)


7,603,762




38,033



1.99%


(N)


8,598,736




49,348



2.28%


(N)

Federal funds sold and other earning assets



1,094,487




301



0.11%




618,228




144



0.09%




305,596




600



0.78%



Total interest-earning assets



29,443,233




278,647



3.76%




28,819,616




282,432



3.90%




25,219,569




272,858



4.29%



Allowance for credit losses(B)



(322,138)












(321,424)












(86,795)











Noninterest-earning assets



4,569,811












4,482,646












3,930,651











Total assets


$

33,690,906











$

32,980,838











$

29,063,425

















































Interest-bearing liabilities:






































Interest-bearing demand deposits


$

5,545,298



$

5,301



0.38%



$

5,221,722



$

5,028



0.38%



$

4,233,880



$

5,755



0.54%



Savings and money market deposits



9,170,179




6,985



0.30%




8,937,751




7,833



0.35%




7,109,754




14,187



0.79%



Certificates and other time deposits



3,047,475




7,471



0.98%




3,103,290




9,597



1.23%




3,044,843




12,817



1.67%



Other borrowings



2,435




33



5.39%




13,898




52



1.49%




1,403,686




6,115



1.73%



Securities sold under repurchase agreements



376,779




224



0.24%




378,888




309



0.32%




351,580




879



0.99%



Subordinated notes and trust preferred



81,570




999



4.87%




125,256




1,500



4.76%




87,963




1,075



4.85%



Total interest-bearing liabilities



18,223,736




21,013



0.46%


(O)


17,780,805




24,319



0.54%


(O)


16,231,706




40,828



1.00%


(O)







































Noninterest-bearing liabilities:






































Noninterest-bearing demand deposits



9,103,742












8,980,814












7,066,878











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



29,947












29,947






















Other liabilities



224,907












167,532












320,855











Total liabilities



27,582,332












26,959,098












23,619,439











Shareholders' equity



6,108,574












6,021,740












5,443,986











Total liabilities and shareholders' equity


$

33,690,906











$

32,980,838











$

29,063,425

















































Net interest income and margin






$

257,634



3.48%







$

258,113



3.56%







$

232,030



3.65%



Non-GAAP to GAAP reconciliation:






































Tax equivalent adjustment







664












658












668







Net interest income and margin (tax equivalent basis)






$

258,298



3.49%







$

258,771



3.57%







$

232,698



3.66%





(M)

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

(N)

Yield on securities was impacted by net premium amortization of $11,509, $10,089 and $8,556 for the three-month periods ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

(O)

Total cost of funds, including noninterest bearing deposits, was 0.31%, 0.36% and 0.70% for the three-month periods ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


YIELD ANALYSIS


Year-to-Date





Dec 31, 2020



Dec 31, 2019





Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(P)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(P)

Interest-earning assets:


























Loans held for sale


$

55,883



$

1,923



3.44%



$

32,065



$

1,457



4.54%



Loans held for investment



17,842,438




910,532



5.10%




11,688,754




610,112



5.22%



Loans held for investment - Warehouse Purchase Program



1,964,206




63,440



3.23%




251,274




9,874



3.93%



Total loans



19,862,527




975,895



4.91%




11,972,093




621,443



5.19%



Investment securities



8,022,205




166,812



2.08%


(Q)


8,958,182




209,812



2.34%


(Q)

Federal funds sold and other earning assets



529,075




1,203



0.23%




129,622




1,683



1.30%



Total interest-earning assets



28,413,807




1,143,910



4.03%




21,059,897




832,938



3.96%



Allowance for credit losses(B)



(324,308)












(86,616)











Noninterest-earning assets



4,555,851












3,114,426











Total assets


$

32,645,350











$

24,087,707





































Interest-bearing liabilities:


























Interest-bearing demand deposits


$

5,177,736



$

22,046



0.43%



$

3,917,413



$

23,982



0.61%



Savings and money market deposits



8,654,874




37,685



0.44%




5,941,929




50,681



0.85%



Certificates and other time deposits



3,194,274




42,771



1.34%




2,314,174




36,725



1.59%



Other borrowings



329,276




3,550



1.08%




971,409




21,323



2.20%



Securities sold under repurchase agreements



371,872




1,627



0.44%




307,277




3,383



1.10%



Subordinated notes and trust preferred



114,499




5,498



4.80%




21,991




1,075



4.89%



Total interest-bearing liabilities



17,842,531




113,177



0.63%


(R)


13,474,193




137,169



1.02%


(R)



























Noninterest-bearing liabilities:


























Noninterest-bearing demand deposits



8,558,385












6,006,914











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



25,735






















Other liabilities



244,047












148,079











Total liabilities



26,670,698












19,629,186











Shareholders' equity



5,974,652












4,458,521











Total liabilities and shareholders' equity



32,645,350











$

24,087,707





































Net interest income and margin






$

1,030,733



3.63%







$

695,769



3.30%



Non-GAAP to GAAP reconciliation:


























Tax equivalent adjustment







2,735












3,149







Net interest income and margin (tax equivalent basis)






$

1,033,468



3.64%







$

698,918



3.32%





(P)

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

(Q)

Yield on securities was impacted by net premium amortization of $38,827 and $30,779 for the years ended December 31, 2020 and 2019, respectively.

(R)

Total cost of funds, including noninterest bearing deposits, was 0.43% and 0.70% for the years ended December 31, 2020 and 2019, respectively.

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019


YIELD TREND (S)








































Interest-Earning Assets:




















Loans held for sale


3.23

%



3.30

%



3.32

%



3.80

%



3.96

%

Loans held for investment


4.95

%



4.91

%



5.06

%



5.51

%



5.52

%

Loans held for investment - Warehouse Purchase Program


3.20

%



3.18

%



3.10

%



3.62

%



3.93

%

Total loans


4.72

%



4.72

%



4.87

%



5.39

%



5.42

%

Investment securities (T)


1.83

%



1.99

%



2.19

%



2.30

%



2.28

%

Federal funds sold and other earning assets


0.11

%



0.09

%



0.10

%



1.28

%



0.78

%

Total interest-earning assets


3.76

%



3.90

%



4.08

%



4.40

%



4.29

%





















Interest-Bearing Liabilities:




















Interest-bearing demand deposits


0.38

%



0.38

%



0.38

%



0.57

%



0.54

%

Savings and money market deposits


0.30

%



0.35

%



0.41

%



0.71

%



0.79

%

Certificates and other time deposits


0.98

%



1.23

%



1.48

%



1.63

%



1.67

%

Other borrowings


5.39

%



1.49

%



0.45

%



1.42

%



1.73

%

Securities sold under repurchase agreements


0.24

%



0.32

%



0.37

%



0.83

%



0.99

%

Subordinated notes and trust preferred


4.87

%



4.76

%



4.80

%



4.80

%



4.85

%

Total interest-bearing liabilities


0.46

%



0.54

%



0.63

%



0.91

%



1.00

%





















Net Interest Margin


3.48

%



3.56

%



3.68

%



3.80

%



3.65

%

Net Interest Margin (tax equivalent)


3.49

%



3.57

%



3.69

%



3.81

%



3.66

%



(S)

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

(T)

Yield on securities was impacted by net premium amortization of $11,509, $10,089, $9,224, $8,005 and $8,556 for the three-month periods ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Three Months Ended




Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019


Balance Sheet Averages





















Loans held for sale


$

42,856



$

50,606



$

63,338



$

66,917



$

57,171


Loans held for investment



17,700,756




18,267,559




18,135,226




17,263,098




15,261,163


Loans held for investment - Warehouse Purchase Program



2,603,455




2,279,461




1,843,097




1,120,324




996,903


Total Loans



20,347,067




20,597,626




20,041,661




18,450,339




16,315,237























Investment securities



8,001,679




7,603,762




8,054,008




8,434,196




8,598,736


Federal funds sold and other earning assets



1,094,487




618,228




172,761




223,631




305,596


Total interest-earning assets



29,443,233




28,819,616




28,268,430




27,108,166




25,219,569


Allowance for credit losses(B)



(322,138)




(321,424)




(325,720)




(328,005)




(86,795)


Cash and due from banks



289,579




267,887




247,426




321,832




275,072


Goodwill



3,231,850




3,231,976




3,223,469




3,223,633




2,658,133


Core deposit intangibles, net



74,919




78,269




81,539




84,865




28,912


Other real estate



14,573




8,061




5,666




5,837




4,864


Fixed assets, net



325,485




325,958




327,811




325,337




308,692


Other assets



633,405




570,495




676,105




615,747




654,978


Total assets


$

33,690,906



$

32,980,838



$

32,504,726



$

31,357,412



$

29,063,425























Noninterest-bearing deposits


$

9,103,742



$

8,980,814



$

8,583,734



$

7,491,798



$

7,066,878


Interest-bearing demand deposits



5,545,298




5,221,722




4,949,023




4,990,376




4,233,880


Savings and money market deposits



9,170,179




8,937,751




8,537,352




7,965,440




7,109,754


Certificates and other time deposits



3,047,475




3,103,290




3,224,196




3,404,748




3,044,843


Total deposits



26,866,694




26,243,577




25,294,305




23,852,362




21,455,355


Other borrowings



2,435




13,898




474,867




832,961




1,403,686


Securities sold under repurchase agreements



376,779




378,888




365,077




366,615




351,580


Subordinated notes and trust preferred



81,570




125,256




125,475




125,694




87,963


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



29,947




29,947




29,947




13,009




5,673


Other liabilities



224,907




167,532




289,899




262,523




320,855


Shareholders' equity



6,108,574




6,021,740




5,925,156




5,904,248




5,443,986


Total liabilities and equity


$

33,690,906



$

32,980,838



$

32,504,726



$

31,357,412



$

29,063,425


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019


Period End Balances








































































Loan Portfolio




































Commercial and industrial


$

2,210,003



10.9

%


$

2,171,302



10.5

%


$

2,214,742



10.5

%


$

2,500,110



13.1

%


$

2,507,318



13.3

%

Warehouse purchase program



2,842,379



14.0

%



2,730,614



13.1

%



2,557,183



12.2

%



1,713,762



9.0

%



1,552,762



8.2

%

Construction, land development and other land loans



1,956,960



9.7

%



2,081,762



10.0

%



2,033,037



9.7

%



2,051,021



10.7

%



2,064,167



11.0

%

1-4 family residential



4,253,331



21.0

%



4,189,852



20.1

%



4,184,972



19.9

%



3,993,138



20.9

%



3,880,382



20.6

%

Home equity



504,207



2.5

%



477,552



2.3

%



437,098



2.1

%



516,003



2.6

%



507,029



2.6

%

Commercial real estate (includes multi-family residential)



6,078,764



30.0

%



6,179,901



29.7

%



6,550,086



31.2

%



6,576,213



34.4

%



6,556,285



34.9

%

Agriculture (includes farmland)



581,352



2.9

%



598,972



2.9

%



612,694



2.9

%



635,295



3.3

%



680,855



3.6

%

Consumer and other



344,028



1.7

%



367,231



1.8

%



403,462



1.9

%



423,000



2.2

%



398,271



2.1

%

Energy



512,735



2.5

%



604,698



2.9

%



639,402



3.0

%



718,653



3.8

%



698,277



3.7

%

Paycheck Protection Program



963,185



4.8

%



1,393,757



6.7

%



1,392,497



6.6

%











Total loans


$

20,246,944






$

20,795,641






$

21,025,173






$

19,127,195






$

18,845,346









































Deposit Types




































Noninterest-bearing DDA


$

9,151,233



33.4

%


$

8,998,328



34.0

%


$

9,040,257



34.6

%


$

7,461,323



31.3

%


$

7,763,894



32.1

%

Interest-bearing DDA



5,899,051



21.6

%



5,297,802



20.0

%



5,130,495



19.6

%



4,980,090



20.9

%



5,100,938



21.1

%

Money market



6,381,014



23.3

%



6,324,127



23.9

%



6,148,206



23.5

%



5,341,525



22.4

%



5,099,024



21.1

%

Savings



2,863,086



10.5

%



2,772,492



10.5

%



2,722,718



10.4

%



2,716,247



11.4

%



2,756,297



11.3

%

Certificates and other time deposits



3,066,108



11.2

%



3,066,457



11.6

%



3,111,012



11.9

%



3,327,172



14.0

%



3,479,579



14.4

%

Total deposits


$

27,360,492






$

26,459,206






$

26,152,688






$

23,826,357






$

24,199,732









































Loan to Deposit Ratio



74.0

%






78.6

%






80.4

%






80.3

%






77.9

%




 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


Construction Loans



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019






































Single family residential construction


$

579,761



29.6

%


$

654,933



31.5

%


$

710,401



34.9

%


$

655,191



31.9

%


$

614,647



29.7

%

Land development



103,307



5.3

%



114,937



5.5

%



114,748



5.6

%



110,853



5.4

%



88,529



4.3

%

Raw land



247,628



12.7

%



240,154



11.5

%



274,159



13.5

%



265,943



12.9

%



233,559



11.3

%

Residential lots



158,441



8.1

%



137,615



6.6

%



144,765



7.1

%



136,861



6.7

%



138,961



6.7

%

Commercial lots



114,427



5.8

%



109,569



5.3

%



103,267



5.1

%



106,036



5.2

%



101,960



4.9

%

Commercial construction and other



753,587



38.5

%



825,053



39.6

%



687,618



33.8

%



778,731



37.9

%



890,597



43.1

%

Net unaccreted discount



(191)







(499)







(1,921)







(2,594)







(4,086)





Total construction loans


$

1,956,960






$

2,081,762






$

2,033,037






$

2,051,021






$

2,064,167





 

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



Houston



Dallas



Austin



OK City



Tulsa



Other (U)



Total



Collateral Type





























Shopping center/retail

$

385,110



$

297,801



$

51,537



$

20,041



$

34,050



$

282,655



$

1,071,194



Commercial and industrial buildings


160,522




96,304




18,897




14,146




18,613




165,228




473,710



Office buildings


186,978




518,496




34,392




72,623




5,109




80,726




898,324



Medical buildings


36,975




38,031




3,512




24,195




24,583




58,597




185,893



Apartment buildings


388,780




503,734




26,505




15,439




8,942




194,904




1,138,304



Hotel


70,153




76,272




43,389




28,996







139,546




358,356



Other


59,870




29,318




27,869




8,667




2,738




57,518




185,980



Total

$

1,288,388



$

1,559,956



$

206,101



$

184,107



$

94,035



$

979,174



$

4,311,761


(V)

 

Acquired Loans




Non-PCD Loans



PCD Loans



Total Acquired Loans




Balance at

Acquisition

Date



Balance at

Sep 30, 2020



Balance at

Dec 31, 2020



Balance at

Acquisition

Date



Balance at

Sep 30, 2020



Balance at

Dec 31, 2020



Balance at

Acquisition

Date



Balance at

Sep 30, 2020



Balance at

Dec 31, 2020


Loan marks:





































Acquired banks (W)


$

229,080



$

6,622



$

5,973



$

142,128



$



$



$

371,208



$

6,622



$

5,973


LegacyTexas merger(X)



116,519




46,493




33,614




177,924




16,760




14,216




294,443




63,253




47,830


Total



345,599




53,115




39,587




320,052




16,760


(Z)


14,216




665,651




69,875




53,803







































Acquired portfolio loan balances:





































Acquired banks (W)



5,690,998




281,766




266,036




275,221




4,061




3,523




5,966,219




285,827




269,559


LegacyTexas merger(X)



6,595,161




4,187,077




3,603,169




414,352




222,019




192,108




7,009,513




4,409,096




3,795,277


Total



12,286,159




4,468,843




3,869,205




689,573




226,080




195,631




12,975,732


(Y)


4,694,923




4,064,836







































Acquired portfolio loan balances less loan marks


$

11,940,560



$

4,415,728



$

3,829,618



$

369,521



$

209,320



$

181,415



$

12,310,081



$

4,625,048



$

4,011,033




(U)

Includes other MSA and non-MSA regions.

(V)

Represents a portion of total commercial real estate loans of $6.079 billion as of December 31, 2020.

(W)

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.

(X)

The 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 $294.4 million at acquisition date.

(Y)

Actual principal balances acquired.

(Z)

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

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Year-to-Date



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Dec 31, 2020



Dec 31, 2019


Asset Quality




























Nonaccrual loans

$

47,185



$

57,412



$

62,904



$

58,194



$

55,243



$

47,185



$

55,243


Accruing loans 90 or more days past due


1,699




462




8,691




3,255




441




1,699




441


Total nonperforming loans


48,884




57,874




71,595




61,449




55,684




48,884




55,684


Repossessed assets


93




120




187




278




324




93




324


Other real estate


10,593




11,548




6,160




5,452




6,935




10,593




6,935


Total nonperforming assets

$

59,570



$

69,542



$

77,942



$

67,179



$

62,943



$

59,570



$

62,943






























Nonperforming assets:




























Commercial and industrial (includes energy)

$

16,176



$

17,273



$

15,238



$

15,987



$

17,086



$

16,176



$

17,086


Construction, land development and other land loans


1,566




2,633




10,530




1,125




1,177




1,566




1,177


1-4 family residential (includes home equity)


25,830




29,953




29,812




28,996




26,453




25,830




26,453


Commercial real estate (includes multi-family residential)


12,315




16,069




20,748




20,155




18,031




12,315




18,031


Agriculture (includes farmland)


2,075




1,931




1,501




896




101




2,075




101


Consumer and other


1,608




1,683




113




20




95




1,608




95


Total

$

59,570



$

69,542



$

77,942



$

67,179



$

62,943



$

59,570



$

62,943


Number of loans/properties


208




198




213




198




236




208




236


Allowance for credit losses at end of period

$

316,068



$

323,635



$

324,205



$

327,206



$

87,469



$

316,068



$

87,469






























Net charge-offs (recoveries):




























Commercial and industrial (includes energy)

$

4,085



$

8,344



$

12,206



$

(28)



$

76



$

24,607



$

884


Construction, land development and other land loans


(110)




478




(6)




(12)




(6)




350




(5)


1-4 family residential (includes home equity)


1,982




252




51




5




20




2,290




19


Commercial real estate (includes multi-family residential)


626




676







(81)




254




1,221




251


Agriculture (includes farmland)


(4)




(17)




(3)




(1)




(18)




(25)




(972)


Consumer and other


988




837




753




918




965




3,496




3,094


Total

$

7,567



$

10,570



$

13,001



$

801



$

1,291



$

31,939



$

3,271






























Asset Quality Ratios




























Nonperforming assets to average interest-earning assets


0.20

%



0.24

%



0.28

%



0.25

%



0.25

%



0.21

%



0.30

%

Nonperforming assets to loans and other real estate


0.29

%



0.33

%



0.37

%



0.35

%



0.33

%



0.29

%



0.33

%

Net charge-offs to average loans (annualized)


0.15

%



0.21

%



0.26

%



0.02

%



0.03

%



0.16

%



0.03

%

Allowance for credit losses to total loans(AA)


1.56

%



1.56

%



1.54

%



1.71

%



0.46

%



1.56

%



0.46

%

Allowance for credit losses to total loans, excluding Warehouse Purchase Program loans and Paycheck Protection Program loans (H)(AA)


1.92

%



1.94

%



1.90

%



1.88

%



0.51

%



1.92

%



0.51

%


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

 

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




Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Dec 31, 2020



Dec 31, 2019


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





























Net income


$

137,091



$

130,064



$

130,901



$

130,848



$

86,134



$

528,904



$

332,552


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









5,904




430




36,658




6,334




36,658


Less: NOL tax benefit (AC)









(20,145)










(20,145)





Net income, excluding merger related expenses, net of tax, and NOL tax benefit (AB) (AC)


$

137,091



$

130,064



$

116,660



$

131,278



$

122,792



$

515,093



$

369,210































Weighted average diluted shares outstanding



92,559




92,656




92,658




94,371




85,573




93,058




73,524


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


$



$



$

0.06



$



$

0.43



$

0.07



$

0.50


NOL tax benefit per diluted share (AB)


$



$



$

(0.22)



$



$



$

(0.22)



$


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


$

1.48



$

1.40



$

1.25



$

1.39



$

1.44



$

5.54



$

5.02































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 (AB) (AC)


$

137,091



$

130,064



$

116,660



$

131,278



$

122,792



$

515,093



$

369,210


Average total assets


$

33,690,906



$

32,980,838



$

32,504,726



$

31,357,412



$

29,063,425



$

32,645,350



$

24,087,707


Return on average assets excluding merger related expenses, net of tax, and NOL tax benefit (G) (AB) (AC)



1.63

%



1.58

%



1.44

%



1.67

%



1.69

%



1.58

%



1.53

%






























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 (AB) (AC)


$

137,091



$

130,064



$

116,660



$

131,278



$

122,792



$

515,093



$

369,210


Average shareholders' equity


$

6,108,574



$

6,021,740



$

5,925,156



$

5,904,248



$

5,443,986



$

5,974,652



$

4,458,521


Return on average common equity excluding merger related expenses, net of tax, and NOL tax benefit (G) (AB) (AC)



8.98

%



8.64

%



7.88

%



8.89

%



9.02

%



8.62

%



8.28

%






























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





























Net income


$

137,091



$

130,064



$

130,901



$

130,848



$

86,134



$

528,904



$

332,552


Average shareholders' equity


$

6,108,574



$

6,021,740



$

5,925,156



$

5,904,248



$

5,443,986



$

5,974,652



$

4,458,521


Less: Average goodwill and other intangible assets



(3,306,769)




(3,310,245)




(3,305,008)




(3,308,498)




(2,687,045)




(3,307,639)




(2,122,154)


Average tangible shareholders' equity


$

2,801,805



$

2,711,495



$

2,620,148



$

2,595,750



$

2,756,941



$

2,667,013



$

2,336,367


Return on average tangible common equity (G)



19.57

%



19.19

%



19.98

%



20.16

%



12.50

%



19.83

%



14.23

%


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

(AC)   Net income for the second quarter of 2020 includes a tax benefit for NOLs due to the CARES Act.

 



Three Months Ended



Year-to-Date




Dec 31,

2020



Sep 30,

2020



Jun 30,

2020



Mar 31,

2020



Dec 31,

2019



Dec 31,

 2020



Dec 31,

2019































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 (AB) (AC)


$

137,091



$

130,064



$

116,660



$

131,278



$

122,792



$

515,093



$

369,210


Average shareholders' equity


$

6,108,574



$

6,021,740



$

5,925,156



$

5,904,248



$

5,443,986



$

5,974,652



$

4,458,521


Less: Average goodwill and other intangible assets



(3,306,769)




(3,310,245)




(3,305,008)




(3,308,498)




(2,687,045)




(3,307,639)




(2,122,154)


Average tangible shareholders' equity


$

2,801,805



$

2,711,495



$

2,620,148



$

2,595,750



$

2,756,941



$

2,667,013



$

2,336,367


Return on average tangible common equity excluding merger related expenses, net of tax, and NOL tax benefit (G) (AB) (AC)



19.57

%



19.19

%



17.81

%



20.23

%



17.82

%



19.31

%



15.80

%



























































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





























Shareholders' equity


$

6,130,669



$

6,034,877



$

5,948,122



$

5,855,574



$

5,970,835



$

6,130,669



$

5,970,835


Less: Goodwill and other intangible assets



(3,304,871)




(3,308,170)




(3,311,712)




(3,306,185)




(3,310,075)




(3,304,871)




(3,310,075)


Tangible shareholders' equity


$

2,825,798



$

2,726,707



$

2,636,410



$

2,549,389



$

2,660,760



$

2,825,798



$

2,660,760































Period end shares outstanding



92,571




92,562




92,660




92,652




94,746




92,571




94,746


Tangible book value per share


$

30.53



$

29.46



$

28.45



$

27.52



$

28.08



$

30.53




28.08































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





























Tangible shareholders' equity


$

2,825,798



$

2,726,707



$

2,636,410



$

2,549,389



$

2,660,760



$

2,825,798



$

2,660,760


Total assets


$

34,059,275



$

33,197,599



$

32,966,649



$

31,743,499



$

32,185,708



$

34,059,275



$

32,185,708


Less: Goodwill and other intangible assets



(3,304,871)




(3,308,170)




(3,311,712)




(3,306,185)




(3,310,075)




(3,304,871)




(3,310,075)


Tangible assets


$

30,754,404



$

29,889,429



$

29,654,937



$

28,437,314



$

28,875,633



$

30,754,404



$

28,875,633


Period end tangible equity to period end tangible assets ratio



9.19

%



9.12

%



8.89

%



8.96

%



9.21

%



9.19

%



9.21

%






























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 (AA)


$

316,068



$

323,635



$

324,205



$

327,206



$

87,469



$

316,068



$

87,469


Total loans


$

20,246,944



$

20,795,641



$

21,025,173



$

19,127,195



$

18,845,346



$

20,246,944



$

18,845,346


Less: Warehouse Purchase Program loans



(2,842,379)




(2,730,614)




(2,557,183)




(1,713,762)




(1,552,762)




(2,842,379)




1,552,762


Less: Paycheck Protection Program loans



(963,185)




(1,393,757)




(1,392,497)










(963,185)





Total loans less Warehouse Purchase Program and Paycheck Protection Program loans


$

16,441,380



$

16,671,270



$

17,075,493



$

17,413,433



$

17,292,584



$

16,441,380



$

10,588,437


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



1.92

%



1.94

%



1.90

%



1.88

%



0.51

%



1.92

%



0.83

%






























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





























Noninterest expense


$

120,205



$

117,919



$

134,368



$

124,741



$

156,451



$

497,233



$

396,542































Net interest income


$

257,634



$

258,113



$

258,955



$

256,031



$

232,030



$

1,030,733



$

695,769


Noninterest income



36,547




34,924




25,675




34,388




35,506




131,534




124,281


Less: net (loss) gain on sale or write down of assets



(675)




(528)




(3,945)




(385)




(1,870)




(5,533)




(1,813)


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



37,222




35,452




29,620




34,773




37,376




137,067




126,094


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


$

294,856



$

293,565



$

288,575



$

290,804



$

269,406



$

1,167,800



$

821,863


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



40.77

%



40.17

%



46.56

%



42.90

%



58.07

%



42.58

%



48.25

%

 



Three Months Ended



Year-to-Date




Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Dec 31, 2020



Dec 31, 2019































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





























Noninterest expense


$

120,205



$

117,919



$

134,368



$

124,741



$

156,451



$

497,233



$

396,542


Less: merger related expenses









7,474




544




46,402




8,018




46,402


Noninterest expense excluding merger related expenses


$

120,205



$

117,919



$

126,894



$

124,197



$

110,049



$

489,215



$

350,140































Net interest income


$

257,634



$

258,113



$

258,955



$

256,031



$

232,030



$

1,030,733



$

695,769


Noninterest income



36,547




34,924




25,675




34,388




35,506




131,534




124,281


Less: net (loss) gain on sale or write down of assets



(675)




(528)




(3,945)




(385)




(1,870)




(5,533)




(1,813)


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



37,222




35,452




29,620




34,773




37,376




137,067




126,094


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


$

294,856



$

293,565



$

288,575



$

290,804



$

269,406



$

1,167,800



$

821,863


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



40.77

%



40.17

%



43.97

%



42.71

%



40.85

%



41.89

%



42.60

%

 

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SOURCE Prosperity Bancshares, Inc.

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