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Prosperity Bancshares, Inc.® Reports First Quarter 2021 Earnings

HOUSTON, April 28, 2021 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income for the quarter ended March 31, 2021 of  $133.3 million compared with $130.8 million for the same period in 2020. Net income per diluted common share was $1.44 compared with $1.39 for the same period in 2020 and the annualized return on first quarter average assets was 1.54%.  Additionally, deposits increased $1.403 billion or 5.1% (20.5% annualized) during the first quarter 2021 and nonperforming assets remain low at 0.15% of first quarter average interest-earning assets.

"With the hard work of our entire team, the combination of Prosperity and LegacyTexas has continued to bear fruit, as reflected in our positive results for the first quarter of 2021," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"Prosperity Bank was ranked as the number 2 Best Bank in America for 2021 and in the Top 10 of Forbes' America's Best Banks since 2010.  I want to congratulate and thank all of our customers, associates, directors and shareholders for helping us achieve this great honor," continued Zalman.

"Texas and Oklahoma both have bright futures. According to the Dallas Federal Reserve, Texas now has the fastest growing population in the nation. Further, the Dallas Federal Reserve is projecting over 6% job growth, meaning over 700,000 new jobs, in Texas for 2021 and Texas is expected to outperform most of the other states for the next three years. Companies continue to move to Texas, with HP and Oracle announcing headquarter moves and other companies, such as Tesla, announcing a major expansion into Texas. Oklahoma is also projected to have population growth for 2021 and has seen expansion of many of the large businesses operating in the state, including Boeing, American Airlines, Costco and Amazon. Consumer spending in Oklahoma is above early 2020 levels and retail job additions and new housing permits are higher than the average U.S. rate," added Zalman.

"We are carefully monitoring office building, hospitality and oil and gas loans, but continue to participate in these areas with experienced borrowers that can withstand the volatility of their industries," stated Zalman.

"I want to thank all our associates for helping create the success we have had. We have a strong team and a deep bench at Prosperity, and we will continue to work hard to improve everyone's quality of life and shareholder value," concluded Zalman.

Results of Operations for the Three Months Ended March 31, 2021

Net income was $133.3 million(2) for the three months ended March 31, 2021 compared with $130.8 million(3) for the same period in 2020, an increase of $2.5 million or 1.9%. Net income per diluted common share was $1.44 for the three months ended March 31, 2021 compared with $1.39 for the same period in 2020, an increase of 3.6%. On a linked quarter basis, net income decreased $3.8 million or 2.8% to $133.3 million(2) compared with $137.1 million(4) for the three months ended December 31, 2020. Net income per diluted common share was $1.44 for the three months ended March 31, 2021 compared with $1.48 for the three months ended December 31, 2020, a decrease of 2.7%. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2021 were 1.54%, 8.60% and 18.43%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 41.25%(1) for the three months ended March 31, 2021.

Net interest income before provision for credit losses for the three months ended March 31, 2021 was $254.6 million compared with $256.0 million for the same period in 2020, a decrease of $1.4 million or 0.6%. The decrease was primarily due to a decrease in the average rate on interest-earning assets 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 $254.6 million compared with $257.6 million for the three months ended December 31, 2020, a decrease of $3.1 million or 1.2%. The decrease was primarily due to a decrease in the average loan balance, 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 3.41% for the three months ended March 31, 2021 compared with 3.81% for the same period in 2020. The change was primarily due to an increase in lower yielding Warehouse Purchase Program and Paycheck Protection Program ("PPP") loans, a $12.1 million decrease in loan discount accretion, 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. On a linked quarter basis, the net interest margin on a tax equivalent basis was 3.41% for the three months ended March 31, 2021 compared with 3.49% for the three months ended December 31, 2020. This change was primarily due to a higher net premium amortization on securities and higher cash balances due to excess liquidity.

Noninterest income was $34.0 million for the three months ended March 31, 2021 compared with $34.4 million for the same period in 2020. On a linked quarter basis, noninterest income decreased $2.5 million or 6.9% to $34.0 million compared with $36.5 million for the three months ended December 31, 2020. This decrease was primarily due to decreases in nonsufficient funds ("NSF") fees and other noninterest income.

Noninterest expense was $119.1 million for the three months ended March 31, 2021 compared with $124.7 million for the same period in 2020, a decrease of $5.7 million or 4.5%, primarily due to decreases in data processing, other noninterest expenses and net occupancy and equipment, partially offset by an increase in salaries and benefits. On a linked quarter basis, noninterest expense decreased $1.1 million or 0.9% to $119.1 million compared with $120.2 million for the three months ended December 31, 2020. This decrease was primarily due to a decrease in other noninterest expense and a net gain on sale of other real estate, partially offset by an increase in salaries and benefits.

Balance Sheet Information

At March 31, 2021, Prosperity had $35.558 billion in total assets, an increase of $3.815 billion or 12.0% compared with $31.743 billion at March 31, 2020.

Loans at March 31, 2021 were $19.639 billion, an increase of $511.7 million or 2.7%, compared with $19.127 billion at March 31, 2020, primarily due to an increase in Warehouse Purchase Program loans. Linked quarter loans decreased $608.1 million or 3.0% from $20.247 billion at December 31, 2020, primarily due to a decrease in Warehouse Purchase Program loans. At March 31, 2021, Prosperity had $1.139 billion 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 March 31, 2021, oil and gas loans totaled $503.9 million (net of discount and excluding PPP loans totaling $142.6 million) or 2.6% of total loans, of which $289.4 million were production loans and $214.5 million were servicing loans, compared with total oil and gas loans of $718.7 million (net of discount) or 3.8% of total loans at March 31, 2020, of which $435.1 million were production loans and $283.6 million were servicing loans. In addition, as of March 31, 2021, Prosperity had total unfunded commitments to oil and gas companies of $248.1 million compared with total unfunded commitments to oil and gas companies of $389.5 million as of March 31, 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 March 31, 2021, loans to hotels totaled $401.2 million (excluding PPP loans totaling $13.1 million) or 2.0% of total loans, and loans to restaurants totaled $208.7 million (excluding PPP loans totaling $125.2 million) or 1.1% of total loans.

Deposits at March 31, 2021 were $28.763 billion, an increase of $4.937 billion or 20.7%, compared with $23.826 billion at March 31, 2020. Linked quarter deposits increased $1.403 billion or 5.1% (20.5% annualized) from $27.360 billion at December 31, 2020.

Asset Quality

Nonperforming assets totaled $44.2 million or 0.15% of quarterly average interest-earning assets at March 31, 2021, compared with $67.2 million or 0.25% of quarterly average interest-earning assets at March 31, 2020, and $59.6 million or 0.20% of quarterly average interest-earning assets at December 31, 2020.

The allowance for credit losses on loans was $307.2 million or 1.56% of total loans at March 31, 2021 compared to $316.1 million or 1.56% of total loans at December 31, 2020 and $327.2 million or 1.71% of total loans at March 31, 2020. The allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and PPP loans, was 1.89%(1) at March 31, 2021 compared with 1.92%(1) at December 31, 2020 and 1.88%(1) at March 31, 2020.

There was no provision for credit losses for the three months ended March 31, 2021, December 31, 2020 and March 31, 2020. 

Net charge-offs were $8.9 million for the three months ended March 31, 2021 compared with net charge-offs of $801 thousand for the three months ended March 31, 2020 and net charge-offs of $7.6 million for the three months ended December 31, 2020. Net charge-offs for the first quarter of 2021 included $7.1 million related to resolved PCD loans, which had specific reserves that were allocated to the charge-offs. Further, an additional $4.2 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Dividend

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

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 April 5, 2021, the Governor of Texas further 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 while lifting restrictions on all businesses and activities in the state. On April 11, 2021, the Governor of Oklahoma further extended the executive order that declared an emergency caused by the impending threat of COVID-19 to the people of Oklahoma while lifting restrictions on all businesses and activities in the state. Prosperity Bank (the "Bank") continues to monitor 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 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.

The health and safety of the Bank's associates, customers, and communities are of utmost importance; and Prosperity 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, Prosperity 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 Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") into law. The CARES Act provides assistance for American workers, families and small businesses. The Paycheck Protection Program, 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. On December 27, 2020, the Consolidated Appropriations Act of 2021 ("CAA") was signed into law, which extended certain provisions of the CARES Act, provided additional funding and contained 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. 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. On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which added an additional $7.25 billion in PPP funding. On March 30, 2021, the PPP Extension Act of 2021 was signed into law, which extended the PPP application filing deadline from March 31, 2021 to May 31, 2021 and extended the authorization of loans to June 30, 2021.  Since the implementation of the PPP in 2020, Prosperity has obtained SBA approvals on approximately 18,500 loans totaling $1.980 billion and, as of March 31, 2021, had an outstanding balance of 9,621 loans totaling $1.139 billion after remittance.

Also, in response to the COVID-19 pandemic, Prosperity has provided relief to its loan customers through loan extensions and deferrals. Under the CARES Act and the CAA, banks may elect to deem that loan modifications do not result in troubled debt restructurings if they are (1) related to COVID-19; (2) executed on a loan that was not more than 30 days past due as of December 31, 2019; and (3) executed between March 1, 2020, and the earlier of (A) 60 days after the date of termination of the COVID-19 national emergency declaration by the President of the United States or (B) January 1, 2022. Additionally, other short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not troubled debt restructurings under Accounting Standards Codification ("ASC") Subtopic 310-40 and federal banking agencies' interagency guidance. These modifications include modifications such as principal and interest payment deferrals, temporary interest only payment terms, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. 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 March 31, 2021, Prosperity had approximately $316.7 million in outstanding loans subject to deferral and modification agreements.

Conference Call

Prosperity's management team will host a conference call on Wednesday, April 28, 2021 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's first 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 1669484.

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 March 31, 2021, Prosperity Bancshares, Inc.® is a $35.558 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 March 31, 2021, 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 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, including LegacyTexas Financial Group and LegacyTexas Bank (collectively "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, 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


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



 






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

(3)

Includes purchase accounting adjustments of $24.1 million, net of tax, primarily comprised of loan discount accretion of $28.5 million, and merger related expenses of $544 thousand for the three months ended March 31, 2020.

(4)

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.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020


Balance Sheet Data (at period end)





















Loans held for sale


$

20,991



$

46,777



$

51,694



$

39,516



$

65,035


Loans held for investment



17,345,506




17,357,788




18,013,333




18,428,474




17,348,398


Loans held for investment - Warehouse Purchase Program



2,272,389




2,842,379




2,730,614




2,557,183




1,713,762


Total loans



19,638,886




20,246,944




20,795,641




21,025,173




19,127,195























Investment securities(A)



10,088,002




8,542,820




7,431,495




7,717,586




8,295,495


Federal funds sold



8,986




553




56,469




568




676


Allowance for credit losses



(307,210)




(316,068)




(323,635)




(324,205)




(327,206)


Cash and due from banks



1,947,235




1,342,996




1,031,193




332,873




381,458


Goodwill



3,231,636




3,231,636




3,231,692




3,231,964




3,223,144


Core deposit intangibles, net



70,304




73,235




76,478




79,748




83,041


Other real estate owned



462




10,593




11,548




6,160




5,452


Fixed assets, net



326,970




323,572




325,994




324,975




327,293


Other assets



553,147




602,994




560,724




571,807




626,951


Total assets


$

35,558,418



$

34,059,275



$

33,197,599



$

32,966,649



$

31,743,499























Noninterest-bearing deposits


$

9,820,445



$

9,151,233



$

8,998,328



$

9,040,257



$

7,461,323


Interest-bearing deposits



18,942,660




18,209,259




17,460,878




17,112,431




16,365,034


Total deposits



28,763,105




27,360,492




26,459,206




26,152,688




23,826,357


Other borrowings









2,570




103,131




1,338,429


Securities sold under repurchase agreements



377,106




389,583




380,274




365,335




344,695


Subordinated notes









125,146




125,365




125,585


Allowance for credit losses on off-balance sheet credit exposures



29,947




29,947




29,947




29,947




29,947


Other liabilities



166,414




148,584




165,579




242,061




222,912


Total liabilities



29,336,572




27,928,606




27,162,722




27,018,527




25,887,925


Shareholders' equity(B)



6,221,846




6,130,669




6,034,877




5,948,122




5,855,574


Total liabilities and equity


$

35,558,418



$

34,059,275



$

33,197,599



$

32,966,649



$

31,743,499




(A) 

Includes $970, $974, $(442), $(1,767) and $(3,421) in unrealized gains (losses) on available for sale securities for the quarterly periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.

(B)

Includes $766, $770, $(349), $(1,396) and $(2,703) in after-tax unrealized gains (losses) on available for sale securities for the quarterly periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Three Months Ended




Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020


Income Statement Data





















Interest income:





















Loans


$

233,075



$

241,625



$

244,255



$

242,772



$

247,243


Securities(C)



38,677




36,721




38,033




43,776




48,282


Federal funds sold and other earning assets



351




301




144




45




713


Total interest income



272,103




278,647




282,432




286,593




296,238























Interest expense:





















Deposits



17,362




19,757




22,458




25,269




35,018


Other borrowings






33




52




533




2,932


Securities sold under repurchase agreements



159




224




309




337




757


Subordinated notes and trust preferred






999




1,500




1,499




1,500


Total interest expense



17,521




21,013




24,319




27,638




40,207


Net interest income



254,582




257,634




258,113




258,955




256,031


Provision for credit losses









10,000




10,000





Net interest income after provision for credit losses



254,582




257,634




248,113




248,955




256,031























Noninterest income:





















Nonsufficient funds (NSF) fees



6,687




8,051




7,156




5,645




9,443


Credit card, debit card and ATM card income



8,031




8,193




8,315




7,263




7,474


Service charges on deposit accounts



5,978




6,046




5,920




5,790




6,104


Trust income



2,837




2,192




2,502




2,242




2,662


Mortgage income



3,307




3,989




2,958




1,820




2,010


Brokerage income



711




642




628




584




650


Bank owned life insurance income



1,292




1,252




1,449




1,508




1,545


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



(79)




(675)




(528)




(3,945)




(385)


Other noninterest income



5,244




6,857




6,524




4,768




4,885


Total noninterest income



34,008




36,547




34,924




25,675




34,388























Noninterest expense:





















Salaries and benefits



80,037




77,809




75,068




79,109




77,282


Net occupancy and equipment



7,833




8,223




8,644




9,190




8,980


Credit and debit card, data processing and software amortization



8,233




8,442




8,776




11,690




11,421


Regulatory assessments and FDIC insurance



2,670




2,670




2,512




2,601




2,078


Core deposit intangibles amortization



2,931




3,243




3,270




3,293




3,363


Depreciation



4,540




4,261




4,605




4,598




4,768


Communications



2,899




2,931




3,027




3,324




3,195


Other real estate expense



244




279




258




40




46


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



(887)




(195)




(137)




4




(130)


Merger related expenses












7,474




544


Other noninterest expense



10,576




12,542




11,896




13,045




13,194


Total noninterest expense



119,076




120,205




117,919




134,368




124,741


Income before income taxes



169,514




173,976




165,118




140,262




165,678


Provision for income taxes



36,205




36,885




35,054




9,361




34,830


Net income available to common shareholders


$

133,309



$

137,091



$

130,064



$

130,901



$

130,848




(C)

Interest income on securities was reduced by net premium amortization of $12,844, $11,509, $10,089, $9,224 and $8,005 for the three-month periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.

 

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

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




Three Months Ended





Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Profitability






















Net income (D) (E)


$

133,309



$

137,091



$

130,064



$

130,901



$

130,848

























Basic earnings per share


$

1.44



$

1.48



$

1.40



$

1.41



$

1.39



Diluted earnings per share


$

1.44



$

1.48



$

1.40



$

1.41



$

1.39

























Return on average assets (F)



1.54

%



1.63

%



1.58

%



1.61

%

(J)


1.67

%

(J)

Return on average common equity (F)



8.60

%



8.98

%



8.64

%



8.84

%

(J)


8.86

%

(J)

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



18.43

%



19.57

%



19.19

%



19.98

%

(J)


20.16

%

(J)

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



3.41

%



3.49

%



3.57

%



3.69

%



3.81

%


Efficiency ratio (G) (I)



41.25

%



40.77

%



40.17

%



46.56

%

(K)


42.90

%

(K)























Liquidity and Capital Ratios






















Equity to assets



17.50

%



18.00

%



18.18

%



18.04

%



18.45

%


Common equity tier 1 capital



14.60

%



13.74

%



13.17

%



12.29

%



12.27

%


Tier 1 risk-based capital



14.60

%



13.74

%



13.17

%



12.29

%



12.27

%


Total risk-based capital



15.07

%



14.23

%



14.28

%



13.36

%



12.81

%


Tier 1 leverage capital



9.68

%



9.67

%



9.57

%



9.41

%



9.49

%


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



9.05

%



9.19

%



9.12

%



8.89

%



8.96

%
























Other Data






















Weighted-average shares used in computing earnings per common share






















Basic



92,854




92,559




92,656




92,658




94,371



Diluted



92,854




92,559




92,656




92,658




94,371



Period end shares outstanding



92,929




92,571




92,562




92,660




92,652



Cash dividends paid per common share


$

0.49



$

0.49



$

0.46



$

0.46



$

0.46



Book value per common share


$

66.95



$

66.23



$

65.20



$

64.19



$

63.20



Tangible book value per common share (G)


$

31.42



$

30.53



$

29.46



$

28.45



$

27.52

























Common Stock Market Price






















High


$

83.02



$

70.38



$

60.63



$

72.95



$

75.22



Low


$

66.45



$

50.43



$

48.80



$

43.68



$

42.02



Period end closing price


$

76.16



$

69.36



$

51.83



$

59.38



$

48.25



Employees – FTE (excluding overtime)



3,724




3,756




3,716




3,793




3,801



Number of banking centers



275




275




275




275




285




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



Three Months Ended


Mar 31, 2021


Dec 31, 2020


Sep 30, 2020


Jun 30, 2020


Mar 31, 2020

Loan discount accretion










ASC 310-20

$13,314


$13,514


$16,729


$17,999


$22,463

ASC 310-30

$3,027


$2,545


$5,805


$6,267


$6,019

Securities net amortization

$111


$66


$116


$203


$194

Time deposits amortization

$507


$790


$1,240


$1,793


$2,270



(E)

Using effective tax rate of 21.4%, 21.2%, 21.2%, 6.7% and 21.0% for the three-month periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 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





Mar 31, 2021



Dec 31, 2020



Mar 31, 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


$

33,327



$

238



2.90%



$

42,856



$

348



3.23%



$

66,917



$

623



3.80%



Loans held for investment



17,279,066




213,978



5.02%




17,700,756




220,357



4.95%




17,263,098




236,517



5.51%



Loans held for investment - Warehouse Purchase Program



2,369,601




18,859



3.23%




2,603,455




20,920



3.20%




1,120,324




10,094



3.62%



Total Loans



19,681,994




233,075



4.80%




20,347,067




241,625



4.72%




18,450,339




247,243



5.39%



Investment securities



9,148,841




38,677



1.71%


(M)


8,001,679




36,721



1.83%


(M)


8,434,196




48,282



2.30%


(M)

Federal funds sold and other earning assets



1,506,645




351



0.09%




1,094,487




301



0.11%




223,631




713



1.28%



Total interest-earning assets



30,337,480




272,103



3.64%




29,443,233




278,647



3.76%




27,108,166




296,238



4.40%



Allowance for credit losses



(315,590)












(322,138)












(328,005)











Noninterest-earning assets



4,522,470












4,569,811












4,577,251











Total assets


$

34,544,360











$

33,690,906











$

31,357,412

















































Interest-bearing liabilities:






































Interest-bearing demand deposits


$

6,112,469



$

5,943



0.39%



$

5,545,298



$

5,301



0.38%



$

4,990,386



$

7,096



0.57%



Savings and money market deposits



9,420,064




5,753



0.25%




9,170,179




6,985



0.30%




7,965,440




14,122



0.71%



Certificates and other time deposits



3,031,621




5,666



0.76%




3,047,475




7,471



0.98%




3,404,748




13,800



1.63%



Other borrowings












2,435




33



5.39%




832,961




2,932



1.42%



Securities sold under repurchase agreements



376,662




159



0.17%




376,779




224



0.24%




366,615




757



0.83%



Subordinated notes and trust preferred












81,570




999



4.87%




125,694




1,500



4.80%



Total interest-bearing liabilities



18,940,816




17,521



0.38%


(N)


18,223,736




21,013



0.46%


(N)


17,685,834




40,207



0.91%


(N)







































Noninterest-bearing liabilities:






































Noninterest-bearing demand deposits



9,206,791












9,103,742












7,491,798











Allowance for credit losses on off-balance sheet credit exposures



29,947












29,947












13,009











Other liabilities



169,138












224,907












262,523











Total liabilities



28,346,692












27,582,332












25,453,164











Shareholders' equity



6,197,668












6,108,574












5,904,248











Total liabilities and shareholders' equity


$

34,544,360











$

33,690,906











$

31,357,412

















































Net interest income and margin






$

254,582



3.40%







$

257,634



3.48%







$

256,031



3.80%



Non-GAAP to GAAP reconciliation:






































Tax equivalent adjustment







635












664












723







Net interest income and margin (tax equivalent basis)






$

255,217



3.41%







$

258,298



3.49%







$

256,754



3.81%





(L)

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

(M)

Yield on securities was impacted by net premium amortization of $12,844, $11,509 and $8,005 for the three-month periods ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

(N)

Total cost of funds, including noninterest bearing deposits, was 0.25%, 0.31% and 0.64% for the three-month periods ended March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020


YIELD TREND (O)








































Interest-Earning Assets:




















Loans held for sale


2.90

%



3.23

%



3.30

%



3.32

%



3.80

%

Loans held for investment


5.02

%



4.95

%



4.91

%



5.06

%



5.51

%

Loans held for investment - Warehouse Purchase Program


3.23

%



3.20

%



3.18

%



3.10

%



3.62

%

Total loans


4.80

%



4.72

%



4.72

%



4.87

%



5.39

%

Investment securities (P)


1.71

%



1.83

%



1.99

%



2.19

%



2.30

%

Federal funds sold and other earning assets


0.09

%



0.11

%



0.09

%



0.10

%



1.28

%

Total interest-earning assets


3.64

%



3.76

%



3.90

%



4.08

%



4.40

%





















Interest-Bearing Liabilities:




















Interest-bearing demand deposits


0.39

%



0.38

%



0.38

%



0.38

%



0.57

%

Savings and money market deposits


0.25

%



0.30

%



0.35

%



0.41

%



0.71

%

Certificates and other time deposits


0.76

%



0.98

%



1.23

%



1.48

%



1.63

%

Other borrowings





5.39

%



1.49

%



0.45

%



1.42

%

Securities sold under repurchase agreements


0.17

%



0.24

%



0.32

%



0.37

%



0.83

%

Subordinated notes and trust preferred





4.87

%



4.76

%



4.80

%



4.80

%

Total interest-bearing liabilities


0.38

%



0.46

%



0.54

%



0.63

%



0.91

%





















Net Interest Margin


3.40

%



3.48

%



3.56

%



3.68

%



3.80

%

Net Interest Margin (tax equivalent)


3.41

%



3.49

%



3.57

%



3.69

%



3.81

%



(O)

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

(P)

Yield on securities was impacted by net premium amortization of $12,844, $11,509, $10,089, $9,224 and $8,005 for the three-month periods ended March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020, respectively.

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Three Months Ended




Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020


Balance Sheet Averages





















Loans held for sale


$

33,327



$

42,856



$

50,606



$

63,338



$

66,917


Loans held for investment



17,279,066




17,700,756




18,267,559




18,135,226




17,263,098


Loans held for investment - Warehouse Purchase Program



2,369,601




2,603,455




2,279,461




1,843,097




1,120,324


Total Loans



19,681,994




20,347,067




20,597,626




20,041,661




18,450,339























Investment securities



9,148,841




8,001,679




7,603,762




8,054,008




8,434,196


Federal funds sold and other earning assets



1,506,645




1,094,487




618,228




172,761




223,631


Total interest-earning assets



30,337,480




29,443,233




28,819,616




28,268,430




27,108,166


Allowance for credit losses



(315,590)




(322,138)




(321,424)




(325,720)




(328,005)


Cash and due from banks



308,787




289,579




267,887




247,426




321,832


Goodwill



3,233,231




3,231,850




3,231,976




3,223,469




3,223,633


Core deposit intangibles, net



71,763




74,919




78,269




81,539




84,865


Other real estate



6,385




14,573




8,061




5,666




5,837


Fixed assets, net



326,004




325,485




325,958




327,811




325,337


Other assets



576,300




633,405




570,495




676,105




615,747


Total assets


$

34,544,360



$

33,690,906



$

32,980,838



$

32,504,726



$

31,357,412























Noninterest-bearing deposits


$

9,206,791



$

9,103,742



$

8,980,814



$

8,583,734



$

7,491,798


Interest-bearing demand deposits



6,112,469




5,545,298




5,221,722




4,949,023




4,990,376


Savings and money market deposits



9,420,064




9,170,179




8,937,751




8,537,352




7,965,440


Certificates and other time deposits



3,031,621




3,047,475




3,103,290




3,224,196




3,404,748


Total deposits



27,770,945




26,866,694




26,243,577




25,294,305




23,852,362


Other borrowings






2,435




13,898




474,867




832,961


Securities sold under repurchase agreements



376,662




376,779




378,888




365,077




366,615


Subordinated notes and trust preferred






81,570




125,256




125,475




125,694


Allowance for credit losses on off-balance sheet credit exposures



29,947




29,947




29,947




29,947




13,009


Other liabilities



169,138




224,907




167,532




289,899




262,523


Shareholders' equity



6,197,668




6,108,574




6,021,740




5,925,156




5,904,248


Total liabilities and equity


$

34,544,360



$

33,690,906



$

32,980,838



$

32,504,726



$

31,357,412


 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020


Period End Balances








































































Loan Portfolio




































Commercial and industrial


$

2,104,116



10.7

%


$

2,210,003



10.9

%


$

2,171,302



10.5

%


$

2,214,742



10.5

%


$

2,500,110



13.1

%

Warehouse purchase program



2,272,389



11.6

%



2,842,379



14.0

%



2,730,614



13.1

%



2,557,183



12.2

%



1,713,762



9.0

%

Construction, land development and other land loans



2,031,355



10.4

%



1,956,960



9.7

%



2,081,762



10.0

%



2,033,037



9.7

%



2,051,021



10.7

%

1-4 family residential



4,310,437



21.9

%



4,253,331



21.0

%



4,189,852



20.1

%



4,184,972



19.9

%



3,993,138



20.9

%

Home equity



554,278



2.8

%



504,207



2.5

%



477,552



2.3

%



437,098



2.1

%



516,003



2.6

%

Commercial real estate (includes multi-family residential)



5,858,475



29.8

%



6,078,764



30.0

%



6,179,901



29.7

%



6,550,086



31.2

%



6,576,213



34.4

%

Agriculture (includes farmland)



571,783



2.9

%



581,352



2.9

%



598,972



2.9

%



612,694



2.9

%



635,295



3.3

%

Consumer and other



293,023



1.5

%



344,028



1.7

%



367,231



1.8

%



403,462



1.9

%



423,000



2.2

%

Energy



503,947



2.6

%



512,735



2.5

%



604,698



2.9

%



639,402



3.0

%



718,653



3.8

%

Paycheck Protection Program



1,139,083



5.8

%



963,185



4.8

%



1,393,757



6.7

%



1,392,497



6.6

%






Total loans


$

19,638,886






$

20,246,944






$

20,795,641






$

21,025,173






$

19,127,195









































Deposit Types




































Noninterest-bearing DDA


$

9,820,445



34.1

%


$

9,151,233



33.4

%


$

8,998,328



34.0

%


$

9,040,257



34.6

%


$

7,461,323



31.3

%

Interest-bearing DDA



6,158,641



21.4

%



5,899,051



21.6

%



5,297,802



20.0

%



5,130,495



19.6

%



4,980,090



20.9

%

Money market



6,714,889



23.4

%



6,381,014



23.3

%



6,324,127



23.9

%



6,148,206



23.5

%



5,341,525



22.4

%

Savings



3,083,447



10.7

%



2,863,086



10.5

%



2,772,492



10.5

%



2,722,718



10.4

%



2,716,247



11.4

%

Certificates and other time deposits



2,985,683



10.4

%



3,066,108



11.2

%



3,066,457



11.6

%



3,111,012



11.9

%



3,327,172



14.0

%

Total deposits


$

28,763,105






$

27,360,492






$

26,459,206






$

26,152,688






$

23,826,357









































Loan to Deposit Ratio



68.3

%






74.0

%






78.6

%






80.4

%






80.3

%




 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


Construction Loans



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020






































Single family residential construction


$

590,223



29.1

%


$

579,761



29.6

%


$

654,933



31.5

%


$

710,401



34.9

%


$

655,191



31.9

%

Land development



97,267



4.8

%



103,307



5.3

%



114,937



5.5

%



114,748



5.6

%



110,853



5.4

%

Raw land



243,394



12.0

%



247,628



12.7

%



240,154



11.5

%



274,159



13.5

%



265,943



12.9

%

Residential lots



176,884



8.6

%



158,441



8.1

%



137,615



6.6

%



144,765



7.1

%



136,861



6.7

%

Commercial lots



137,512



6.8

%



114,427



5.8

%



109,569



5.3

%



103,267



5.1

%



106,036



5.2

%

Commercial construction and other



786,192



38.7

%



753,587



38.5

%



825,053



39.6

%



687,618



33.8

%



778,731



37.9

%

Net unaccreted discount



(117)







(191)







(499)







(1,921)







(2,594)





Total construction loans


$

2,031,355






$

1,956,960






$

2,081,762






$

2,033,037






$

2,051,021





 

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of March 31, 2021



Houston



Dallas



Austin



OK City



Tulsa



Other (Q)



Total



Collateral Type





























Shopping center/retail

$

379,908



$

300,615



$

52,933



$

20,114



$

31,387



$

292,494



$

1,077,451



Commercial and industrial buildings


163,816




91,356




19,499




20,448




18,256




174,502




487,877



Office buildings


166,801




496,162




35,465




74,682




5,000




77,391




855,501



Medical buildings


36,347




29,333




2,660




24,011




24,004




58,362




174,717



Apartment buildings


330,576




357,804




24,347




14,388




8,835




169,704




905,654



Hotel


69,280




72,206




43,581




28,996







132,810




346,873



Other


80,641




58,865




27,713




8,154




3,865




62,117




241,355



Total

$

1,227,369



$

1,406,341



$

206,198



$

190,793



$

91,347



$

967,380



$

4,089,428


(R)

 

Acquired Loans




Non-PCD Loans



PCD Loans



Total Acquired Loans




Balance at

Acquisition

Date



Balance at

Dec 31, 2020



Balance at

Mar 31, 2021



Balance at

Acquisition

Date



Balance at

Dec 31, 2020



Balance at

Mar 31, 2021



Balance at

Acquisition

Date



Balance at

Dec 31, 2020



Balance at

Mar 31, 2021


Loan marks:





































Acquired banks (S)


$

229,080



$

5,973



$

5,225



$

142,128



$



$



$

371,208



$

5,973



$

5,225


LegacyTexas merger(T)



116,519




33,614




21,060




177,924




14,216




11,157




294,443




47,830




32,217


Total



345,599




39,587




26,285




320,052




14,216


(V)


11,157




665,651




53,803




37,442







































Acquired portfolio loan balances:





































Acquired banks (S)



5,690,998




266,036




229,040




275,221




3,523




3,306




5,966,219




269,559




232,346


LegacyTexas merger(T)



6,595,161




3,603,169




3,110,630




414,352




192,108




159,885




7,009,513




3,795,277




3,270,515


Total



12,286,159




3,869,205




3,339,670




689,573




195,631




163,191




12,975,732


(U)


4,064,836




3,502,861







































Acquired portfolio loan balances less loan marks


$

11,940,560



$

3,829,618



$

3,313,385



$

369,521



$

181,415



$

152,034



$

12,310,081



$

4,011,033



$

3,465,419




(Q)

Includes other MSA and non-MSA regions.

(R)

Represents a portion of total commercial real estate loans of $5.858 billion as of March 31, 2021.

(S) 

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 and Tradition Bank.

(T) 

The merger of LegacyTexas Financial Group, Inc. ("LegacyTexas") into Prosperity Bancshares, Inc. and LegacyTexas Bank into Prosperity Bank 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.

(U)

Actual principal balances acquired.

(V)

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

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)  



Three Months Ended



Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020


Asset Quality




















Nonaccrual loans

$

43,025



$

47,185



$

57,412



$

62,904



$

58,194


Accruing loans 90 or more days past due


313




1,699




462




8,691




3,255


Total nonperforming loans


43,338




48,884




57,874




71,595




61,449


Repossessed assets


362




93




120




187




278


Other real estate


462




10,593




11,548




6,160




5,452


Total nonperforming assets

$

44,162



$

59,570



$

69,542



$

77,942



$

67,179






















Nonperforming assets:




















Commercial and industrial (includes energy)

$

11,290



$

16,176



$

17,273



$

15,238



$

15,987


Construction, land development and other land loans


1,692




1,566




2,633




10,530




1,125


1-4 family residential (includes home equity)


11,920




25,830




29,953




29,812




28,996


Commercial real estate (includes multi-family residential)


16,896




12,315




16,069




20,748




20,155


Agriculture (includes farmland)


803




2,075




1,931




1,501




896


Consumer and other


1,561




1,608




1,683




113




20


Total

$

44,162



$

59,570



$

69,542



$

77,942



$

67,179


Number of loans/properties


167




208




198




213




198


Allowance for credit losses at end of period

$

307,210



$

316,068



$

323,635



$

324,205



$

327,206






















Net charge-offs (recoveries):




















Commercial and industrial (includes energy)

$

1,584



$

4,085



$

8,344



$

12,206



$

(28)


Construction, land development and other land loans


(5)




(110)




478




(6)




(12)


1-4 family residential (includes home equity)


47




1,982




252




51




5


Commercial real estate (includes multi-family residential)


6,589




626




676







(81)


Agriculture (includes farmland)


33




(4)




(17)




(3)




(1)


Consumer and other


610




988




837




753




918


Total

$

8,858



$

7,567



$

10,570



$

13,001



$

801






















Asset Quality Ratios




















Nonperforming assets to average interest-earning assets


0.15

%



0.20

%



0.24

%



0.28

%



0.25

%

Nonperforming assets to loans and other real estate


0.22

%



0.29

%



0.33

%



0.37

%



0.35

%

Net charge-offs to average loans (annualized)


0.18

%



0.15

%



0.21

%



0.26

%



0.02

%

Allowance for credit losses to total loans


1.56

%



1.56

%



1.56

%



1.54

%



1.71

%

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


1.89

%



1.92

%



1.94

%



1.90

%



1.88

%

 

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




Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 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


$

133,309



$

137,091



$

130,064



$

130,901



$

130,848


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












5,904




430


Less: NOL tax benefit (X)












(20,145)





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


$

133,309



$

137,091



$

130,064



$

116,660



$

131,278























Weighted average diluted shares outstanding



92,854




92,559




92,656




92,658




94,371


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


$



$



$



$

0.06



$


NOL tax benefit per diluted share (W)


$



$



$



$

(0.22)



$


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


$

1.44



$

1.48



$

1.40



$

1.25



$

1.39























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 (W) (X)


$

133,309



$

137,091



$

130,064



$

116,660



$

131,278


Average total assets


$

34,544,360



$

33,690,906



$

32,980,838



$

32,504,726



$

31,357,412


Return on average assets excluding merger related expenses, net of tax,
     and NOL tax benefit (F) (W) (X)



1.54

%



1.63

%



1.58

%



1.44

%



1.67

%






















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 (W) (X)


$

133,309



$

137,091



$

130,064



$

116,660



$

131,278


Average shareholders' equity


$

6,197,668



$

6,108,574



$

6,021,740



$

5,925,156



$

5,904,248


Return on average common equity excluding merger related expenses,
     net of tax, and NOL tax benefit (F) (W) (X)



8.60

%



8.98

%



8.64

%



7.88

%



8.89

%






















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





















Net income


$

133,309



$

137,091



$

130,064



$

130,901



$

130,848


Average shareholders' equity


$

6,197,668



$

6,108,574



$

6,021,740



$

5,925,156



$

5,904,248


Less: Average goodwill and other intangible assets



(3,304,994)




(3,306,769)




(3,310,245)




(3,305,008)




(3,308,498)


Average tangible shareholders' equity


$

2,892,674



$

2,801,805



$

2,711,495



$

2,620,148



$

2,595,750


Return on average tangible common equity (F)



18.43

%



19.57

%



19.19

%



19.98

%



20.16

%


(W)

 Calculated assuming a federal tax rate of 21.0%.

(X)

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

 



Three Months Ended




Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 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 (W) (X)


$

133,309



$

137,091



$

130,064



$

116,660



$

131,278


Average shareholders' equity


$

6,197,668



$

6,108,574



$

6,021,740



$

5,925,156



$

5,904,248


Less: Average goodwill and other intangible assets



(3,304,994)




(3,306,769)




(3,310,245)




(3,305,008)




(3,308,498)


Average tangible shareholders' equity


$

2,892,674



$

2,801,805



$

2,711,495



$

2,620,148



$

2,595,750


Return on average tangible common equity excluding merger related
     expenses, net of tax, and NOL tax benefit (F) (W) (X)



18.43

%



19.57

%



19.19

%



17.81

%



20.23

%











































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





















Shareholders' equity


$

6,221,846



$

6,130,669



$

6,034,877



$

5,948,122



$

5,855,574


Less: Goodwill and other intangible assets



(3,301,940)




(3,304,871)




(3,308,170)




(3,311,712)




(3,306,185)


Tangible shareholders' equity


$

2,919,906



$

2,825,798



$

2,726,707



$

2,636,410



$

2,549,389























Period end shares outstanding



92,929




92,571




92,562




92,660




92,652


Tangible book value per share


$

31.42



$

30.53



$

29.46



$

28.45



$

27.52























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





















Tangible shareholders' equity


$

2,919,906



$

2,825,798



$

2,726,707



$

2,636,410



$

2,549,389


Total assets


$

35,558,418



$

34,059,275



$

33,197,599



$

32,966,649



$

31,743,499


Less: Goodwill and other intangible assets



(3,301,940)




(3,304,871)




(3,308,170)




(3,311,712)




(3,306,185)


Tangible assets


$

32,256,478



$

30,754,404



$

29,889,429



$

29,654,937



$

28,437,314


Period end tangible equity to period end tangible assets ratio



9.05

%



9.19

%



9.12

%



8.89

%



8.96

%






















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


$

307,210



$

316,068



$

323,635



$

324,205



$

327,206


Total loans


$

19,638,886



$

20,246,944



$

20,795,641



$

21,025,173



$

19,127,195


Less: Warehouse Purchase Program loans



(2,272,389)




(2,842,379)




(2,730,614)




(2,557,183)




(1,713,762)


Less: Paycheck Protection Program loans



(1,139,083)




(963,185)




(1,393,757)




(1,392,497)





Total loans less Warehouse Purchase Program and Paycheck
     Protection Program loans


$

16,227,414



$

16,441,380



$

16,671,270



$

17,075,493



$

17,413,433


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



1.89

%



1.92

%



1.94

%



1.90

%



1.88

%






















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





















Noninterest expense


$

119,076



$

120,205



$

117,919



$

134,368



$

124,741























Net interest income


$

254,582



$

257,634



$

258,113



$

258,955



$

256,031


Noninterest income



34,008




36,547




34,924




25,675




34,388


Less: net loss on sale or write down of assets



(79)




(675)




(528)




(3,945)




(385)


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



34,087




37,222




35,452




29,620




34,773


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


$

288,669



$

294,856



$

293,565



$

288,575



$

290,804


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



41.25

%



40.77

%



40.17

%



46.56

%



42.90

%

 



Three Months Ended




Mar 31, 2021



Dec 31, 2020



Sep 30, 2020



Jun 30, 2020



Mar 31, 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


$

119,076



$

120,205



$

117,919



$

134,368



$

124,741


Less: merger related expenses












7,474




544


Noninterest expense excluding merger related expenses


$

119,076



$

120,205



$

117,919



$

126,894



$

124,197























Net interest income


$

254,582



$

257,634



$

258,113



$

258,955



$

256,031


Noninterest income



34,008




36,547




34,924




25,675




34,388


Less: net loss on sale or write down of assets



(79)




(675)




(528)




(3,945)




(385)


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



34,087




37,222




35,452




29,620




34,773


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


$

288,669



$

294,856



$

293,565



$

288,575



$

290,804


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



41.25

%



40.77

%



40.17

%



43.97

%



42.71

%

 

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SOURCE Prosperity Bancshares, Inc.

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