Prosperity Bancshares(PB) - 2024 Q2 - Quarterly Results

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]