Financial Data and Key Metrics Changes - For Q2 2024, net income was $111 million or $1.17 per diluted share, slightly down from $110 million or $1.18 per diluted share in Q1 2024, impacted by merger-related expenses and provisions [11][12] - Net interest income before provision for credit losses increased to $258 million, up $20.5 million or 8.6% from $238 million in Q1 2024 [12][21] - The net interest margin on a tax-equivalent basis improved to 2.94% from 2.79% in Q1 2024 [12][22] Business Line Data and Key Metrics Changes - Loans totaled $22.3 billion at June 30, 2024, an increase of $666 million or 3.1% year-over-year, primarily due to the Lone Star merger [13][14] - Deposits reached $27.9 billion, up $552 million or 2% compared to the previous year, with linked core deposits increasing by $757 million or 2.8% from Q1 2024 [15][16] - Non-interest income was $46 million, up from $38.9 million in Q1 2024, driven by a net gain of $10.7 million from Visa stock conversion [23][24] Market Data and Key Metrics Changes - Non-performing assets totaled $89 million, representing 25 basis points of quarterly average interest-earning assets, an increase from $83 million or 24 basis points in Q1 2024 [16][26] - The allowance for credit losses on loans was $359 million, which is 4.02 times the amount of non-performing assets [17] Company Strategy and Development Direction - The company aims to grow both organically and through mergers and acquisitions, focusing on building core customer relationships and maintaining sound asset quality [18][20] - Management is optimistic about future growth, citing Texas's business-friendly environment as a key factor for expansion [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to create long-term shareholder value, having returned $284 million to shareholders over the past year [19] - The company anticipates continued improvement in net interest margin and overall financial performance, despite potential economic fluctuations [19][20] Other Important Information - The efficiency ratio for Q2 2024 was 51.8%, compared to 49.1% in Q1 2024, influenced by merger-related expenses [25] - The company has not purchased broker deposits to offset deposit losses, focusing instead on building core deposits [16] Q&A Session Summary Question: Update on NIM outlook for Q4 - Management expects net interest margin to improve slightly, with an exit margin around 3% [35][41] Question: Thoughts on provisioning - Provisioning was primarily related to the CECL calculation and the merger, with sufficient reserves in place [59][65] Question: Expense guidance for Q3 - Non-interest expense is expected to be between $141 million and $143 million, including costs from the Lone Star acquisition [66] Question: Loan growth strategy - The company plans to be more opportunistic in the secondary markets for residential loans, maintaining a balance in their portfolio [77] Question: Overall health of non-owner occupied commercial real estate - The commercial real estate book remains strong and competitive, with healthy lending practices [103]

The reported revenue represents a surprise of +5.08% over the Zacks Consensus Estimate of $290.06 million. With the consensus EPS estimate being $1.20, the EPS surprise was +1.67%. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Prosperity Bancshares performed in the just reported quarter in terms of the metrics most wide ...

This quarterly report represents an earnings surprise of 1.67%. A quarter ago, it was expected that this financial holding company would post earnings of $1.15 per share when it actually produced earnings of $1.18, delivering a surprise of 2.61%. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. While Prosperity Bancshares has underperformed the market so far t ...

Financial Performance - Prosperity Bancshares reported net income of $111.6 million for Q2 2024, up from $86.9 million in Q2 2023, with diluted earnings per share increasing to $1.17 from $0.94[2] - Excluding merger-related provisions and expenses, net income was $116.6 million, or $1.22 per diluted common share for Q2 2024[4] - For the six months ended June 30, 2024, net income was $222.0 million, or $2.34 per diluted common share, compared to $211.6 million, or $2.30 per diluted common share for the same period in 2023[19] - Net income for Q2 2024 reached $111,602 million, up from $110,426 million in Q1 2024 and $95,476 million in Q2 2023, indicating a year-over-year growth of 16.8%[96] - Net income excluding merger-related provisions for credit losses is $116,560 million for Q2 2024, up from $110,191 million in Q1 2024 and $111,432 million in Q2 2023[97] Loan and Deposit Growth - Loans increased by $1.06 billion, or 5.0%, during Q2 2024, with loans excluding Warehouse Purchase Program loans rising by $839.1 million, or 4.1%[4] - Loans increased to $22.321 billion at June 30, 2024, up $666.9 million or 3.1% year-over-year, and up $1.056 billion or 5.0% from the previous quarter[26] - Deposits increased by $757.6 million, or 2.8%, during Q2 2024, with noninterest-bearing deposits totaling $9.7 billion, representing 34.7% of total deposits[4] - Total deposits reached $27.933 billion at June 30, 2024, an increase of $552.2 million or 2.0% compared to $27.381 billion at June 30, 2023, and up $757.6 million or 2.8% from $27.176 billion at March 31, 2024[27] - Total loans increased to $22.32 billion as of June 30, 2024, up from $21.27 billion in the previous quarter, representing a growth of 4.95%[83] Interest Income and Expenses - Net interest income before provision for credit losses was $258.8 million for Q2 2024, an increase of $20.5 million, or 8.6%, from Q1 2024[6] - Total interest income for Q2 2024 was $412.951 million, an increase of 8.5% from $381.914 million in Q1 2024[62] - Interest expense on deposits increased to $106.124 million in Q2 2024, up 14.5% from $92.692 million in Q1 2024[62] - Net interest income after provision for credit losses was $249.720 million for Q2 2024, compared to $238.244 million in Q1 2024, reflecting a growth of 4.1%[62] - The average yield on loans held for investment was 6.02%, with total loans reaching $22,254,296[70] Noninterest Income and Expenses - Noninterest income for Q2 2024 was $46.0 million, an increase of $7.1 million, or 18.4%, compared to Q1 2024[17] - Noninterest expense was $152.8 million for Q2 2024, an increase of $17.0 million, or 12.5%, primarily due to merger-related expenses and a FDIC special assessment[18] - Total noninterest income increased to $46.003 million in Q2 2024, up 18.1% from $38.870 million in Q1 2024[62] - Noninterest expense for the quarter was $152,842, an increase from $135,848 in the previous quarter, representing a rise of 12.9%[98] Asset Management - Total assets as of June 30, 2024, were $39.762 billion, a decrease of $142.8 million or 0.4% from $39.905 billion at June 30, 2023, but an increase of $1.006 billion or 2.6% from $38.757 billion at March 31, 2024[25] - The company reported a decrease in investment securities to $11.702 billion from $12.804 billion, reflecting a strategic adjustment in asset allocation[58] - The allowance for credit losses on loans was $397.5 million at June 30, 2024, compared to $381.7 million at June 30, 2023, with a provision for credit losses of $9.1 million for the first half of 2024[32] Mergers and Acquisitions - Prosperity completed the merger with Lone Star Bank on April 1, 2024, issuing 2,376,182 shares of common stock and approximately $64.1 million in cash, resulting in goodwill of $107.7 million[41] - The merger with First Bancshares was completed on May 1, 2023, with Prosperity issuing 3,583,370 shares and approximately $91.5 million in cash, resulting in goodwill of $164.8 million[43] - The bank completed the FB Merger on May 1, 2023, adding $1.65 billion in loans, and the LSSB Merger on April 1, 2024, adding $1.08 billion in loans[90] Shareholder Returns - Prosperity declared a cash dividend of $0.56 per share for the third quarter of 2024, payable on October 1, 2024[38] - Cash dividends paid per common share remained at $0.56 for Q2 2024, consistent with previous quarters[64] - Prosperity repurchased approximately 671 thousand shares at an average price of $58.86 per share during the three months ended June 30, 2024[39] Credit Quality - Nonperforming assets totaled $89.6 million or 0.25% of quarterly average interest-earning assets at June 30, 2024, compared to $62.7 million or 0.18% a year earlier[31] - The allowance for credit losses on loans rose to $359.852 million, up from $330.219 million in the previous quarter, indicating a proactive approach to managing credit risk[58] - Net charge-offs for the quarter totaled $4,368 thousand, significantly higher than $2,143 thousand in the previous quarter, an increase of 104.0%[93] - Nonperforming assets to average interest-earning assets ratio was 0.25%, slightly up from 0.24% in the previous quarter[93] Operational Efficiency - The efficiency ratio for the six months ended June 30, 2024, was 50.49%, excluding net gains and losses on asset sales, and 49.10% when excluding merger-related expenses and FDIC special assessments[20] - Efficiency ratio for Q2 2024 was 51.82%, up from 49.07% in Q1 2024 and down from 53.21% in Q2 2023[64] - The efficiency ratio, including merger-related expenses and FDIC special assessment, was 49.13%, compared to 49.07% in the previous quarter, showing stability[98]

Core Viewpoint - Prosperity Bancshares, Inc. reported strong financial results for the second quarter of 2024, driven by the recent merger with Lone Star State Bancshares, Inc. and an increase in net interest income, despite incurring merger-related expenses and provisions for credit losses. Financial Performance - Net income for the second quarter of 2024 was $111.6 million, up from $86.9 million in the same period of 2023, with diluted earnings per share increasing to $1.17 from $0.94 [1][2] - Excluding merger-related provisions and expenses, net income was $116.6 million, or $1.22 per diluted share [1][2] - Net interest income before provision for credit losses was $258.8 million, an increase of $20.5 million or 8.6% from the previous quarter [1][2] - The net interest margin increased to 2.94% from 2.79% in the previous quarter and 2.73% in the same period last year [1][2] Loan and Deposit Growth - Total loans increased by $1.06 billion, or 5.0%, during the second quarter of 2024, with loans excluding Warehouse Purchase Program loans rising by $839.1 million, or 4.1% [1][2] - Total deposits increased by $757.6 million, or 2.8%, with noninterest-bearing deposits comprising 34.7% of total deposits [1][2] Asset Quality - The allowance for credit losses on loans was $397.5 million, representing 1.69% of total loans, with nonperforming assets remaining low at 0.25% of average interest-earning assets [1][3] - Net charge-offs for the first half of 2024 were $6.5 million, down from $15.5 million in the same period of 2023 [5] Merger Impact - The merger with Lone Star State Bancshares was completed on April 1, 2024, resulting in the issuance of 2,376,182 shares of Prosperity common stock and approximately $64.1 million in cash [1][8] - Goodwill from the merger was recorded at $107.7 million, with core deposit intangibles recognized at $17.7 million as of June 30, 2024 [1][8] Shareholder Returns - The company returned $284.6 million to shareholders over the past twelve months, including $74.8 million through share repurchases and $209.8 million through cash dividends [1][2] - A cash dividend of $0.56 per share was declared for the third quarter of 2024, payable on October 1, 2024 [7] Market Position - Prosperity Bancshares operates 288 full-service banking locations across Texas and Oklahoma, focusing on community banking and providing a range of financial services [10]

Core Insights - Prosperity Bancshares (PB) has consistently beaten earnings estimates, with an average surprise of 1.73% over the last two quarters [1][2] - The company reported earnings of $1.18 per share for the most recent quarter, exceeding the expected $1.15, resulting in a surprise of 2.61% [2] - The previous quarter also saw a positive surprise, with actual earnings of $1.19 per share against an estimate of $1.18, yielding a surprise of 0.85% [2] Earnings Expectations - The Zacks Earnings ESP for Prosperity Bancshares is currently +1.04%, indicating a bullish sentiment among analysts regarding the company's earnings prospects [8] - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a strong likelihood of another earnings beat in the upcoming report [7][8] - The next earnings report for Prosperity Bancshares is anticipated to be released on July 24, 2024 [8] Market Analysis - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of beating consensus estimates [3] - The Earnings ESP metric is crucial for investors to assess the likelihood of a company beating earnings estimates prior to quarterly releases [10]

HOUSTON, July 17, 2024 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB) today announced that its Board of Directors declared a quarterly common stock dividend of $0.56 per share for the third quarter of 2024, payable October 1, 2024, to shareholders of record as of September 13, 2024. Prosperity Bancshares, Inc.® As of March 31, 2024, Prosperity Bancshares, Inc.® is a $38.757 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consume ...

Core Viewpoint - The upcoming earnings report for Prosperity Bancshares, scheduled for July 24, 2024, is critical for stock movement, with expectations of revenue growth and potential earnings surprises influencing investor sentiment [1][9]. Financial Estimates - Revenues for Prosperity Bancshares are projected at $290.55 million, reflecting a year-over-year increase of 5.2% [2]. - The consensus EPS estimate for the quarter has been revised down by 0.45% over the last 30 days, indicating a reassessment by analysts [2]. - The expected quarterly earnings per share (EPS) is $1.20, representing a year-over-year decline of 0.8% [11]. Earnings Surprise Potential - The Zacks Earnings ESP for Prosperity Bancshares is +0.56%, suggesting a likelihood of beating the consensus EPS estimate [15][16]. - Historically, the company has beaten consensus EPS estimates in the last four quarters, indicating a strong track record of positive surprises [18]. Analyst Sentiment - The Zacks Rank for Prosperity Bancshares is currently 3 (Hold), which may influence the stock's performance [5]. - Analysts have recently become more optimistic about the company's earnings prospects, as indicated by the positive Earnings ESP [15]. Industry Context - In comparison, Banc of California is expected to report a significant year-over-year decline in earnings of 40.6%, with revenues projected at $271.42 million, up 258.7% from the previous year [20].

Core Viewpoint - Prosperity Bancshares is focused on organic growth despite recent revenue dips, with a compound annual growth rate (CAGR) of 7.9% over the past four years driven by loan balances, strategic acquisitions, and modest fee income growth [1][5]. Group 1: Financial Performance - The company's net revenues decreased in 2023 and the first quarter of 2024, but it has a strong growth trajectory due to solid loan balances and strategic acquisitions [1][5]. - The net interest margin (NIM) contracted to 2.78% in 2023 from 3% in 2022, with expectations of marginal improvement to 2.92% in 2024 amid rising funding costs [7]. - Shares of Prosperity Bancshares have declined by 10.5% over the past six months, compared to a 2.4% decline in the industry [8]. Group 2: Strategic Acquisitions - The company has completed over 30 acquisitions since 1998, including recent purchases of Lone Star State Bancshares and First Bancshares of Texas, which are expected to be accretive to earnings [6]. - Acquisitions have significantly contributed to revenue growth, allowing the company to expand its operations and enter new markets [6]. Group 3: Market Position and Outlook - As of March 31, 2024, approximately 35.1% of total deposits were non-interest-bearing, indicating an improved deposit mix [10]. - The company anticipates total revenues to grow at a CAGR of 9.2% by 2026, with total loans projected to rise by 3.5% in 2024 [10]. - The mortgage banking business remains a concern due to subdued origination volumes and refinancing activities, although mortgage income is expected to rise by 34.2% to $3.1 million this year [12].

Core Viewpoint - Prosperity Bancshares is positioned as a compelling investment opportunity due to its solid earnings growth and attractive dividend yield, despite a recent decline in stock price [2][8]. Earnings Growth - The Zacks Consensus Estimate for Prosperity Bancshares for 2024 is $5 per share, indicating a year-over-year earnings growth rate of 0.60% [2]. Dividend Information - The current annualized dividend is $2.24, reflecting a 1.4% increase from the previous year. Over the past five years, the company has raised its dividend five times, averaging an annual increase of 6.44% [4]. - The payout ratio stands at 47%, meaning the company distributes 47% of its trailing 12-month earnings per share as dividends [4]. - The current dividend yield is 3.9%, significantly higher than the Banks - Southwest industry's yield of 0.75% and the S&P 500's yield of 1.59% [7]. Stock Performance - Prosperity Bancshares shares have experienced a price change of -15.1% this year [7]. Investment Appeal - The company is considered a strong dividend play, appealing to income investors, especially in a market where high-yielding stocks may face challenges during rising interest rates [8].