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Prosperity Bancshares, Inc.® Reports Third Quarter 2020 Earnings

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HOUSTON, Oct. 28, 2020 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income for the quarter ended September 30, 2020 of  $130.1 million compared with $81.8 million for the same period in 2019. Net income per diluted common share was $1.40 compared with $1.19 for the same period in 2019. Additionally, deposits increased $306.5 million or 1.2% (4.7% annualized) during the third quarter 2020 and nonperforming assets remain low at 0.24% of third quarter average interest-earning assets with an annualized return on third quarter average assets of 1.58%. On November 1, 2019, LegacyTexas Financial Group, Inc. ("LegacyTexas") merged with Prosperity Bancshares and LegacyTexas Bank merged with Prosperity Bank (collectively, the "Merger").

"We are pleased with our third quarter 2020 results of $1.40 in earnings per share and annualized returns on average tangible equity of 19.19% and on average assets of 1.58%. Because of these metrics, our strong capital position and confidence in our business, Prosperity Bancshares' Board has approved a 6.5% increase in the fourth quarter dividend to $0.49 per share," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"Our asset quality remains sound, with nonperforming assets at $69.5 million or 0.24% of average interest earning assets for the third quarter, a decrease of $8.4 million compared with the second quarter 2020. Loans on forbearance decreased from 17.2% of total loans as of June 30, 2020 to 1.1% as of October 26, 2020. Our allowance for credit losses as a percent of total loans is higher than at any time in my banking career and equates to a coverage ratio of 5.6 times our nonperforming loans," continued Zalman.

"Linked quarter deposits increased $306.5 million or 1.2% (4.7% annualized) from $26.153 billion at June 30, 2020. Based on our experience, people are spending more money and generating more account activity than earlier this year. Mortgage production continues to be robust, with consumers taking advantage of the historically low interest rates," stated Zalman.

"We are starting to see green shoots in the economy, with consumers and businesses feeling more confident. The unemployment numbers are better than predicted and we believe third quarter GDP will also be higher than predicted," concluded Zalman.

Results of Operations for the Three Months Ended September 30, 2020

Net income was $130.1 million(2) for the three months ended September 30, 2020 compared with $81.8 million(3) for the same period in 2019, an increase of $48.3 million or 59.1%, primarily due to the Merger. Net income per diluted common share was $1.40 for the three months ended September 30, 2020 compared with $1.19 for the same period in 2019, an increase of 17.6%. Net income was $130.1 million(2) for the three months ended September 30, 2020 compared with $130.9 million(4) for the three months ended June 30, 2020, a decrease of $837 thousand or 0.6%. Net income per diluted common share was $1.40 for the three months ended September 30, 2020 compared with $1.41 for the three months ended June 30, 2020, a decrease of 0.7%. Net income for the second quarter of 2020 included a tax benefit for net operating losses ("NOL") of $20.1 million and merger related expenses of $7.5 million. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended September 30, 2020 were 1.58%, 8.64% and 19.19%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 40.17%(1) for the three months ended September 30, 2020.

Net interest income before provision for credit losses for the three months ended September 30, 2020 was $258.1 million compared with $154.0 million for the same period in 2019, an increase of $104.1 million or 67.6%. The increase was primarily due to the Merger and the increase in loan discount accretion of $21.3 million. On a linked quarter basis, net interest income before provision for credit losses was $258.1 million compared with $259.0 million for the three months ended June 30, 2020, a decrease of $842 thousand or 0.3%. The decrease was primarily due to a decrease in loan discount accretion of $1.7 million and interest income on securities partially offset by decrease in interest expense.

The net interest margin on a tax equivalent basis was 3.57% for the three months ended September 30, 2020 compared with 3.16% for the same period in 2019. The change was primarily due to increased interest-earning assets related to the Merger and a $21.3 million increase in loan discount accretion. On a linked quarter basis, the net interest margin on a tax equivalent basis was 3.57% for the three months ended September 30, 2020 compared with 3.69% for the three months ended June 30, 2020. This change was primarily due to a $1.7 million decrease in loan discount accretion, higher net premium amortization on securities and higher cash balances due to excess liquidity.

Noninterest income was $34.9 million for the three months ended September 30, 2020 compared with $30.7 million for the same period in 2019, an increase of $4.3 million or 13.9%. This increase was primarily due to increases in mortgage income, which was primarily due to the Merger and increased activity, credit card, debit card and ATM card income and other noninterest income primarily due to the Merger, that was partially offset by a decrease in nonsufficient funds ("NSF") fees. On a linked quarter basis, noninterest income increased $9.2 million or 36.0% to $34.9 million compared with $25.7 million for the three months ended June 30, 2020. This increase was primarily due to a lower loss on write-down of assets and increases in NSF fees, other noninterest income, mortgage income and credit card, debit card and ATM income.

Noninterest expense was $117.9 million for the three months ended September 30, 2020 compared with $80.7 million for the same period in 2019, an increase of $37.2 million or 46.1%, primarily due to the Merger. On a linked quarter basis, noninterest expense decreased $16.4 million or 12.2% to $117.9 million compared with $134.4 million for the three months ended June 30, 2020. The decrease was primarily due to no merger related expenses in the third quarter and decreases in salaries and benefits, credit and debit card, data processing and software amortization and other noninterest expense due to efficiencies gained following the LegacyTexas system conversion.

Results of Operations for the Nine Months Ended September 30, 2020

Net income was $391.8 million(5) for the nine months ended September 30, 2020 compared with $246.4 million(6) for the same period in 2019, an increase of $145.4 million or 59.0%. Net income per diluted common share was $4.20 for the nine months ended September 30, 2020 compared with $3.55 for the same period in 2019, an increase of 18.3%. The increase in net income and earnings per diluted common share for the nine months ended September 30, 2020 was primarily due to the Merger and a tax benefit for NOLs of $20.1 million, partially offset by merger related expenses of $8.0 million. Annualized returns on average assets, average common equity and average tangible common equity for the nine months ended September 30, 2020 were 1.62%, 8.78% and 19.77%(1), respectively. Excluding merger related expenses, net of tax, and the NOL tax benefit, annualized returns on average assets, average common equity and average tangible common equity for the nine months ended September 30, 2020 were 1.56%(1), 8.47%(1) and 19.07%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale of assets and taxes) was 43.19%(1) for the nine months ended September 30, 2020. Excluding merger related expenses, the efficiency ratio was 42.27%(1) for the nine months ended September 30, 2020.

Net interest income before provision for credit losses for the nine months ended September 30, 2020 was $773.1 million compared with $463.7 million for the same period in 2019, an increase of $309.4 million or 66.7%. This change was primarily due to the Merger and the increase in loan discount accretion of $71.0 million. 

The net interest margin on a tax equivalent basis for the nine months ended September 30, 2020 was 3.69% compared with 3.17% for the same period in 2019. This change was primarily due to increased interest-earning assets related to the Merger and the increase in loan discount accretion of $71.0 million.

Noninterest income was $95.0 million for the nine months ended September 30, 2020 compared with $88.8 million for the same period in 2019, an increase of $6.2 million or 7.0%. This increase was primarily due to increases in mortgage income, which was primarily due to the Merger and increased activity, credit card, debit card and ATM card income, other noninterest income and service charges on deposit accounts due to the Merger, partially offset by a net loss on write-down of assets of $4.9 million and decrease in NSF fees.

Noninterest expense was $377.0 million for the nine months ended September 30, 2020 compared with $240.1 million for the same period in 2019, an increase of $136.9 million or 57.0%. The change was primarily due to the increase in salaries and benefits, credit and debit card, data processing and software amortization, net occupancy and equipment and other noninterest expense due to the Merger and $8.0 million of merger related expenses.

Balance Sheet Information

At September 30, 2020, Prosperity had $33.198 billion in total assets, an increase of $11.105 billion or 50.3% compared with $22.093 billion at September 30, 2019.

Loans at September 30, 2020 were $20.796 billion, an increase of $10.122 billion or 94.8%, compared with $10.673 billion at September 30, 2019. Linked quarter loans decreased $229.5 million or 1.1% from $21.025 billion at June 30, 2020. At September 30, 2020, the Company had $1.394 billion of Paycheck Protection Program ("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 September 30, 2020, oil and gas loans totaled $604.7 million (net of discount and excluding PPP loans totaling $115.3 million) or 2.9% of total loans, of which $359.6 million were production loans and $245.1 million were servicing loans, compared with total oil and gas loans of $339.5 million (net of discount) or 3.2% of total loans at September 30, 2019, of which $82.4 million were production loans and $257.1 million were servicing loans. In addition, as of September 30, 2020, Prosperity had total unfunded commitments to oil and gas companies of $258.1 million compared with total unfunded commitments to oil and gas companies of $248.9 million as of September 30, 2019. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Additionally, Prosperity extends credit to hotels and restaurants. At September 30, 2020, loans to hotels totaled $386.3 million (excluding PPP loans totaling $8.8 million) or 1.9% of total loans and loans to restaurants totaled $215.1 million (excluding PPP loans totaling $110.9 million) or 1.0% of total loans.

Deposits at September 30, 2020 were $26.459 billion, an increase of $9.529 billion or 56.3%, compared with $16.930 billion at September 30, 2019. Linked quarter deposits increased $306.5 million or 1.2% from $26.153 billion at June 30, 2020.

The table below provides detail on the impact of loans acquired and deposits assumed in the Merger:

Balance Sheet Data (at period end)





















(In thousands)























Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Sep 30, 2019




(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)



(Unaudited)


Loans acquired (including new production since
   acquisition date):





















LegacyTexas:





















Loans held for sale (1)


$

—



$

15,725



$

54,229



$

66,745



$

—


Loans held for investment



6,349,251




6,601,006




6,713,337




6,636,855




—


Loans held for investment - Warehouse
   Purchase Program



2,730,614




2,557,183




1,713,762




1,552,762




—


All other loans



11,715,776




11,851,259




10,645,867




10,588,984




10,673,345


Total loans


$

20,795,641



$

21,025,173



$

19,127,195



$

18,845,346



$

10,673,345























Deposits assumed (including new deposits since
   acquisition date):





















LegacyTexas


$

5,977,357



$

5,997,395



$

5,605,986



$

6,141,546



$

—


All other deposits



20,481,849




20,155,293




18,220,371




18,058,186




16,929,920


Total deposits


$

26,459,206



$

26,152,688



$

23,826,357



$

24,199,732



$

16,929,920


_______________

(1)

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

Excluding loans acquired in the Merger and new production by the acquired lending operations since November 1, 2019, loans at September 30, 2020 grew $1.042 billion or 9.8% compared with September 30, 2019 and decreased $135.5 million or 1.1% compared with June 30, 2020.

Excluding deposits assumed in the Merger and new deposits generated at the acquired banking centers since November 1, 2019, deposits at September 30, 2020 grew $3.552 billion or 21.0% compared with September 30, 2019 and grew $326.6 million or 1.6% compared with June 30, 2020.

Asset Quality

Nonperforming assets totaled $69.5 million or 0.24% of quarterly average interest-earning assets at September 30, 2020, compared with $51.2 million or 0.26% of quarterly average interest-earning assets at September 30, 2019, and $77.9 million or 0.28% of quarterly average interest-earning assets at June 30, 2020.

The allowance for credit losses on loans was $323.6 million or 1.56% of total loans at September 30, 2020 compared to $324.2 million or 1.54% of total loans at June 30, 2020 and $87.1 million or 0.82% of total loans at September 30, 2019. The allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and PPP loans, was 1.94%(1) at September 30, 2020 compared with 1.90%(1) at June 30, 2020 and 0.82%(1) at September 30, 2019. On January 1, 2020, Prosperity adopted the measurement of current expected credit losses ("CECL"). Upon adoption of CECL, Prosperity recognized an increase in allowance for credit losses on loans of $108.7 million, of which $102.5 million was related to LegacyTexas and an increase in allowance for credit losses on off-balance sheet credit exposures of $24.4 million, of which $6.3 million was related to LegacyTexas, with a corresponding decrease in retained earnings (pre-tax). Additionally, Prosperity recognized an increase in the allowance for credit losses on loans of $131.8 million, of which $130.3 million was related to LegacyTexas, due to the reclass of purchased credit deteriorated ("PCD") discounts as a result of adopting CECL.  

The provision for credit losses was $10.0 million for the three months ended September 30, 2020 compared with $1.1 million for the three months ended September 30, 2019 and $10.0 million for the three months ended June 30, 2020.  The provision for credit losses was $20.0 million for the nine months ended September 30, 2020 compared with $2.6 million for the nine months ended September 30, 2019.

Net charge-offs were $10.6 million for the three months ended September 30, 2020 compared with net charge-offs of $1.0 million for the three months ended September 30, 2019 and net charge-offs of $13.0 million for the three months ended June 30, 2020. Net charge-offs for the third quarter of 2020 included $8.6 million related to resolved PCD loans. These PCD loans had specific reserves of $15.7 million, of which $8.6 million was allocated to the charge-offs and $7.1 million was moved to the general reserve. Additionally, $6.1 million of specific reserves on resolved PCD loans was released to the general reserve without taking any charge-off. Net charge-offs were $24.4 million for the nine months ended September 30, 2020 compared with $2.0 million for the nine months ended September 30, 2019. Net charge-offs for the nine months ended September 30, 2020 included $21.0 million related to resolved PCD loans. These PCD loans had specific reserves of $44.2 million, of which $21.0 million was allocated to the charge-offs and $23.2 million was moved to the general reserve.

Dividend

Prosperity Bancshares declared a fourth quarter cash dividend of $0.49 per share to be paid on January 4, 2021 to all shareholders of record as of December 15, 2020.

Stock Repurchase Program

On January 29, 2020, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 4.7 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 28, 2021, at the discretion of management. Prosperity Bancshares repurchased 98.0 thousand shares of its common stock at an average weighted price of $49.99 during the three months ended September 30, 2020 and 2.2 million shares of its common stock at an average weighted price of $52.47 per share during the nine months ended September 30, 2020.

Planned Redemption of Outstanding Subordinated Notes

In September 2020, Prosperity Bancshares notified the Trustee of its intent to redeem $125.0 million in subordinated notes assumed in the Merger. The redemption will occur on December 1, 2020 and will be funded by dividends from Prosperity Bank.

COVID-19 Pandemic

In December 2019, a novel strain of coronavirus disease ("COVID-19") was first reported in Wuhan, Hubei Province, China. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. On March 13, 2020, the U.S. President announced a national emergency relating to the pandemic, which has since been extended. On August 8, 2020, the Governor of Texas extended the proclamation certifying that COVID-19 poses an imminent threat of disaster in the state and declaring a state of disaster for all counties in Texas and on September 17, 2020, signed an Executive Order that detailed the ongoing plan to open businesses and activities in Texas. On September 25, 2020, the Governor of Oklahoma extended the executive order that declared an emergency caused by the impending threat of COVID-19 to the people of Oklahoma. The Bank is considered an essential business and is closely monitoring the latest developments regarding COVID-19. The COVID-19 pandemic has resulted in significant economic uncertainties that have had, and could continue to have, an adverse impact on the Company's operating income, financial condition and cash flows. The extent to which the COVID-19 pandemic will impact the Company's operations and financial results during the remainder of 2020 cannot be reasonably or reliably estimated at this time.

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

In response to the COVID-19 pandemic, on March 27, 2020 the President of the United States signed the CARES Act into law. The CARES Act provides assistance for American workers, families and small businesses. The Paycheck Protection Program ("PPP"), established by the CARES Act and implemented by the Small Business Administration ("SBA") with support from the Department of the Treasury, provides small businesses with funds to pay payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities. 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 five year term. The loans are eligible for early forgiveness by the SBA as provided by the CARES Act and the PPP Flexibility Act and related regulations and guidance. 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. The PPP application period expired on August 8, 2020.  As of September 30, 2020, the Company has obtained SBA approvals on approximately 11,948 loans totaling $1.394 billion. The Company has also provided relief to its loan customers through loan extensions and deferrals.

Merger with LegacyTexas Financial Group, Inc.

On November 1, 2019, Prosperity completed the merger with LegacyTexas and its wholly-owned subsidiary LegacyTexas Bank headquartered in Plano, Texas. LegacyTexas Bank operated 42 locations in 19 North Texas cities in and around the Dallas-Fort Worth area. 

Pursuant to the terms of the merger agreement, Prosperity issued 26,228,148 shares of Prosperity common stock with a closing price of $69.02 per share plus $318.0 million in cash, made up of $308.6 million in cash and $9.4 million in cash for taxes withheld, for all outstanding shares of LegacyTexas. This resulted in goodwill of $1.331 billion as of September 30, 2020, which was subject to subsequent fair value adjustments. During the second quarter of 2020, Prosperity completed the operational conversion of LegacyTexas Bank.

Conference Call

Prosperity's management team will host a conference call on Wednesday, October 28, 2020 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's third quarter 2020 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The participant elite entry number is 6937658.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at www.prosperitybankusa.com. The webcast may be accessed from Prosperity's home page by selecting "Presentations, Webcast & Calls" from the menu on the Investor Relations link and following the instructions.

Non-GAAP Financial Measures

Prosperity's management uses certain non-GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews diluted earnings per share excluding merger related expenses, net of tax, and NOL carryback; return on average assets excluding merger related expenses, net of tax, and NOL carryback; return on average common equity excluding merger related expenses, net of tax, and NOL carryback; return on average tangible common equity; return on average tangible common equity excluding merger related expenses, net of tax, and NOL carryback; 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 September 30, 2020, Prosperity Bancshares, Inc.® is a $33.198 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 cash management.

As of September 30, 2020, Prosperity operated 275 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 65 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area; 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area.

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

Cautionary Notes on Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may," or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity's possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity's future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity's loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity's operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement, as well as expectations regarding the effects of the COVID-19 pandemic on the Bank's operating income, financial condition and cash flows.  These forward–looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements.  These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks, including LegacyTexas; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives.  Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); the possibility that the anticipated benefits of an acquisition transaction, including the LegacyTexas transaction, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of two companies or as a result of the strength of the economy and competitive factors generally; a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate, interest rate and commodity price fluctuations; the effect, impact potential duration or other implications of the COVID-19 pandemic; and weather.  These and various other factors are discussed in Prosperity Bancshares' Annual Report on Form 10-K for the year ended December 31, 2019, Quarterly Report on Form 10-Q for the period ended June 30, 2020, and other reports and statements Prosperity Bancshares has filed with the Securities and Exchange Commission ("SEC"). Copies of the SEC filings for Prosperity Bancshares may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

_______________

(1)

Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

(2)

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

(3)

Includes purchase accounting adjustments of $895 thousand, net of tax, primarily comprised of loan discount accretion of $1.3 million for the three months ended September 30, 2019.

(4)

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

(5)

Includes purchase accounting adjustments of $63.3 million, net of tax, primarily comprised of loan discount accretion of $75.3 million, and merger related expenses of $8.0 million for the nine months ended September 30, 2020.

(6)

Includes purchase accounting adjustments of $2.9 million, net of tax, primarily comprised of loan discount accretion of $4.3 million for the nine months ended September 30, 2019.

 

Bryan/College Station Area


Frisco-West


Kerens


Hempstead


98th Street

Bryan


Garland


Longview


Hitchcock


Avenue Q

Bryan-29th Street


Grapevine


Mount Vernon


Liberty


North University

Bryan-East


Grapevine Main


Palestine


Magnolia


Texas Tech Student Union

Bryan-North


Kiest


Rusk


Magnolia Parkway



Caldwell


Lake Highlands


Seven Points


Mont Belvieu


Midland

College Station


McKinney


Teague


Nederland


Wadley

Crescent Point


McKinney Eldorado


Tyler-Beckham


Needville


Wall Street

Hearne


McKinney Redbud


Tyler-South Broadway


Rosenberg



Huntsville


North Carrolton


Tyler-University


Shadow Creek


Odessa

Madisonville


Oak Cliff


Winnsboro


Spring


Grandview

Navasota


Park Cities




Tomball


Grant

New Waverly


Plano


Houston Area


Waller


Kermit Highway

Rock Prairie


Plano-West


Houston


West Columbia


Parkway

Southwest Parkway


Preston Forest


Aldine


Wharton



Tower Point


Preston Parker


Alief


Winnie


Other West Texas Area

Wellborn Road


Preston Royal


Bellaire


Wirt


Locations



Red Oak


Beltway




Big Spring

Central Texas Area


Richardson


Clear Lake


South Texas Area -


Brownfield

Austin


Richardson-West


Copperfield


Corpus Christi


Brownwood

Allandale


Rosewood Court


Cypress


Calallen


Cisco

Cedar Park


The Colony


Downtown


Carmel


Comanche

Congress


Tollroad


Eastex


Northwest


Early

Lakeway


Trinity Mills


Fairfield


Saratoga


Floydada

Liberty Hill


Turtle Creek


First Colony


Timbergate


Gorman

Northland


West 15th Plano


Fry Road


Water Street


Levelland

Oak Hill


West Allen


Gessner




Littlefield

Research Blvd


Westmoreland


Gladebrook


Victoria


Merkel

Westlake


Wylie


Grand Parkway


Victoria Main


Plainview





Heights


Victoria-Navarro


San Angelo

Other Central Texas Area


Fort Worth


Highway 6 West


Victoria-North


Slaton

Locations


Haltom City


Little York


Victoria Salem


Snyder

Bastrop


Hulen


Medical Center





Canyon Lake


Keller


Memorial Drive


Other South Texas Area


Oklahoma

Dime Box


Museum Place


Northside


 Locations


Central Oklahoma Area

Dripping Springs


Renaissance Square


Pasadena


Alice


Oklahoma City

Elgin


Roanoke


Pecan Grove


Aransas Pass


23rd Street

Flatonia


Stockyards


Pin Oak


Beeville


Expressway

Georgetown




River Oaks


Colony Creek


I-240

Gruene


Other Dallas/Fort Worth Area


Sugar Land


Cuero


Memorial

Kingsland


Locations


SW Medical Center


Edna



La Grange


Arlington


Tanglewood


Goliad


Other Central Oklahoma Area

Lexington


Azle


The Plaza


Gonzales


 Locations

New Braunfels


Ennis


Uptown


Hallettsville


Edmond

Pleasanton


Flower Mound


Waugh Drive


Kingsville


Norman

Round Rock


Gainesville


Westheimer


Mathis



San Antonio


Glen Rose


West University


Padre Island


Tulsa Area

Schulenburg


Granbury


Woodcreek


Palacios


Tulsa

Seguin


Grand Prairie




Port Lavaca


Garnett

Smithville


Jacksboro


Katy


Portland


Harvard

Thorndale


Mesquite


Cinco Ranch


Rockport


Memorial

Weimar


Muenster


Katy-Spring Green


Sinton


Sheridan



Runaway Bay




Taft


S. Harvard

Dallas/Fort Worth Area


Sanger


The Woodlands


Yoakum


Utica Tower

Dallas


Waxahachie


The Woodlands-College Park


Yorktown


Yale

14th Street Plano


Weatherford


The Woodlands-I-45





Abrams Centre




The Woodlands-Research Forest


West Texas Area


Other Tulsa Area Locations

Addison


East Texas Area




Abilene


Owasso

Allen


Athens


Other Houston Area


Antilley Road



Balch Springs


Blooming Grove


Locations


Barrow Street



Camp Wisdom


Canton


Angleton


Cypress Street



Carrollton


Carthage


Bay City


Judge Ely



Cedar Hill


Corsicana


Beaumont


Mockingbird



Coppell


Crockett


Cleveland





East Plano


Eustace


East Bernard


Lubbock



Euless


Gilmer


El Campo


4th Street



Frisco


Grapeland


Dayton


66th Street



Frisco Gaylord


Gun Barrel City


Galveston


82nd Street



Frisco Warren


Jacksonville


Groves


86th Street



 - - -

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Sep 30, 2019


Balance Sheet Data (at period end)





















Loans held for sale


$

51,694



$

39,516



$

65,035



$

80,959



$

20,284


Loans held for investment



18,013,333




18,428,474




17,348,398




17,211,625




10,653,061


Loans held for investment - Warehouse Purchase
   Program



2,730,614




2,557,183




1,713,762




1,552,762




—


Total loans



20,795,641




21,025,173




19,127,195




18,845,346




10,673,345























Investment securities(A)



7,431,495




7,717,586




8,295,495




8,570,056




8,495,206


Federal funds sold



56,469




568




676




519




521


Allowance for credit losses(B)



(323,635)




(324,205)




(327,206)




(87,469)




(87,061)


Cash and due from banks



1,031,193




332,873




381,458




573,589




420,359


Goodwill



3,231,692




3,231,964




3,223,144




3,223,671




1,900,845


Core deposit intangibles, net



76,478




79,748




83,041




86,404




29,051


Other real estate owned



11,548




6,160




5,452




6,936




815


Fixed assets, net



325,994




324,975




327,293




326,832




263,703


Other assets



560,724




571,807




626,951




639,824




396,033


Total assets


$

33,197,599



$

32,966,649



$

31,743,499



$

32,185,708



$

22,092,817























Noninterest-bearing deposits


$

8,998,328



$

9,040,257



$

7,461,323



$

7,763,894



$

5,784,002


Interest-bearing deposits



17,460,878




17,112,431




16,365,034




16,435,838




11,145,918


Total deposits



26,459,206




26,152,688




23,826,357




24,199,732




16,929,920


Other borrowings



2,570




103,131




1,338,429




1,303,730




600,795


Securities sold under repurchase agreements



380,274




365,335




344,695




377,294




311,404


Subordinated notes



125,146




125,365




125,585




125,804




—


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



29,947




29,947




29,947




5,599




—


Other liabilities



165,579




242,061




222,912




202,714




123,892


Total liabilities



27,162,722




27,018,527




25,887,925




26,214,873




17,966,011


Shareholders' equity(C)



6,034,877




5,948,122




5,855,574




5,970,835




4,126,806


Total liabilities and equity


$

33,197,599



$

32,966,649



$

31,743,499



$

32,185,708



$

22,092,817




(A)

Includes $(442), $(1,767), $(3,421), $763 and $49 in unrealized (losses) gains on available for sale securities for the quarterly periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively.

(B)

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

(C)

Includes $(349), $(1,396), $(2,703), $602 and $38 in after-tax unrealized (losses) gains on available for sale securities for the quarterly periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Three Months Ended



Year-to-Date




Sep 30,

2020



Jun 30,
2020



Mar 31,

2020



Dec 31,
2019



Sep 30,

2019



Sep 30,
2020



Sep 30,
2019


Income Statement Data





























Interest income:





























Loans


$

244,255



$

242,772



$

247,243



$

222,910



$

134,943



$

734,270



$

398,533


Securities(D)



38,033




43,776




48,282




49,348




50,872




130,091




160,464


Federal funds sold and other earning assets



144




45




713




600




363




902




1,083


Total interest income



282,432




286,593




296,238




272,858




186,178




865,263




560,080































Interest expense:





























Deposits



22,458




25,269




35,018




32,759




26,939




82,745




78,629


Other borrowings



52




533




2,932




6,115




4,335




3,517




15,208


Securities sold under repurchase agreements



309




337




757




879




914




1,403




2,504


Subordinated notes and trust preferred



1,500




1,499




1,500




1,075




—




4,499




—


Total interest expense



24,319




27,638




40,207




40,828




32,188




92,164




96,341


Net interest income



258,113




258,955




256,031




232,030




153,990




773,099




463,739


Provision for credit losses



10,000




10,000




-




1,700




1,100




20,000




2,600


Net interest income after provision for credit losses



248,113




248,955




256,031




230,330




152,890




753,099




461,139































Noninterest income:





























Nonsufficient funds (NSF) fees



7,156




5,645




9,443




9,990




8,835




22,244




24,624


Credit card, debit card and ATM card income



8,315




7,263




7,474




7,728




6,688




23,052




19,139


Service charges on deposit accounts



5,920




5,790




6,104




5,597




5,020




17,814




15,007


Trust income



2,502




2,242




2,662




2,582




2,492




7,406




7,645


Mortgage income



2,958




1,820




2,010




2,455




839




6,788




2,551


Brokerage income



628




584




650




625




522




1,862




1,736


Bank owned life insurance income



1,449




1,508




1,545




1,502




1,314




4,502




3,924


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



(528)




(3,945)




(385)




(1,870)




(3)




(4,858)




57


Other noninterest income



6,524




4,768




4,885




6,897




4,966




16,177




14,092


Total noninterest income



34,924




25,675




34,388




35,506




30,673




94,987




88,775































Noninterest expense:





























Salaries and benefits



75,068




79,109




77,282




69,356




52,978




231,459




156,992


Net occupancy and equipment



8,644




9,190




8,980




7,420




5,607




26,814




16,565


Credit and debit card, data processing and
   software amortization



8,776




11,690




11,421




9,158




4,989




31,887




14,466


Regulatory assessments and FDIC insurance



2,512




2,601




2,078




2,095




1,814




7,191




6,513


Core deposit intangibles amortization



3,270




3,293




3,363




2,705




1,248




9,926




3,832


Depreciation



4,605




4,598




4,768




4,212




3,286




13,971




9,501


Communications



3,027




3,324




3,195




3,012




2,214




9,546




6,667


Other real estate expense



258




40




46




57




68




344




271


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



(137)




4




(130)




(49)




(115)




(263)




(346)


Merger related expenses



—




7,474




544




46,402




—




8,018




—


Other noninterest expense



11,896




13,045




13,194




12,083




8,610




38,135




25,630


Total noninterest expense



117,919




134,368




124,741




156,451




80,699




377,028




240,091


Income before income taxes



165,118




140,262




165,678




109,385




102,864




471,058




309,823


Provision for income taxes



35,054




9,361




34,830




23,251




21,106




79,245




63,405


Net income available to common shareholders


$

130,064



$

130,901



$

130,848



$

86,134



$

81,758



$

391,813



$

246,418




(D)

Interest income on securities was reduced by net premium amortization of $10,089, $9,224, $8,005, $8,556 and $8,027 for the three-month periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively, and $27,318 and $22,223 for the nine-month periods ended September 30, 2020 and September 30, 2019, respectively.

 

 

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

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




Three Months Ended



Year-to-Date




Sep 30,

2020



Jun 30,
2020



Mar 31,

2020



Dec 31,
2019



Sep 30,

2019



Sep 30,

2020



Sep 30,
2019


Profitability





























Net income (E) (F)


$

130,064



$

130,901



$

130,848



$

86,134



$

81,758



$

391,813



$

246,418































Basic earnings per share


$

1.40



$

1.41



$

1.39



$

1.01



$

1.19



$

4.20



$

3.55


Diluted earnings per share


$

1.40



$

1.41



$

1.39



$

1.01



$

1.19



$

4.20



$

3.55































Return on average assets (G)



1.58

%



1.61

%

(K)


1.67

%

(K)


1.19

%

(K)


1.47

%



1.62

%

(K)


1.47

%

Return on average common equity (G)



8.64

%



8.84

%

(K)


8.86

%

(K)


6.33

%

(K)


7.89

%



8.78

%

(K)


7.95

%

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



19.19

%



19.98

%

(K)


20.16

%

(K)


12.50

%

(K)


14.77

%



19.77

%

(K)


14.94

%

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



3.57

%



3.69

%



3.81

%



3.66

%



3.16

%



3.69

%



3.17

%

Efficiency ratio (H) (J)



40.17

%



46.56

%

(L)


42.90

%

(L)


58.07

%

(L)


43.70

%



43.19

%

(L)


43.46

%






























Liquidity and Capital Ratios





























Equity to assets



18.18

%



18.04

%



18.45

%



18.55

%



18.68

%



18.18

%



18.68

%

Common equity tier 1 capital



13.17

%



12.29

%



12.27

%



12.30

%



16.68

%



13.17

%



16.68

%

Tier 1 risk-based capital



13.17

%



12.29

%



12.27

%



12.30

%



16.68

%



13.17

%



16.68

%

Total risk-based capital



14.28

%



13.36

%



12.81

%



12.70

%



17.34

%



14.28

%



17.34

%

Tier 1 leverage capital



9.57

%



9.41

%



9.49

%



10.42

%



10.86

%



9.57

%



10.86

%

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



9.12

%



8.89

%



8.96

%



9.21

%



10.90

%



9.12

%



10.90

%






























Other Data





























Weighted-average shares used in computing
   earnings per common share





























Basic



92,656




92,658




94,371




85,573




68,738




93,226




69,463


Diluted



92,656




92,658




94,371




85,573




68,738




93,226




69,463


Period end shares outstanding



92,562




92,660




92,652




94,746




68,397




92,562




68,397


Cash dividends paid per common share


$

0.46



$

0.46



$

0.46



$

0.46



$

0.41



$

1.38



$

1.23


Book value per common share


$

65.20



$

64.19



$

63.20



$

63.02



$

60.34



$

65.20



$

60.34


Tangible book value per common share (H)


$

29.46



$

28.45



$

27.52



$

28.08



$

32.12



$

29.46



$

32.12































Common Stock Market Price





























High


$

60.63



$

72.95



$

75.22



$

74.35



$

71.86



$

75.22



$

75.36


Low


$

48.80



$

43.68



$

42.02



$

66.60



$

62.17



$

42.02



$

61.65


Period end closing price


$

51.83



$

59.38



$

48.25



$

71.89



$

70.63



$

51.83



$

70.63


Employees – FTE (excluding overtime)



3,716




3,793




3,801




3,867




3,019




3,716




3,044


Number of banking centers



275




275




285




285




243




275




243


 

(E)

Includes purchase accounting adjustments for the periods presented as follows:

 


Three Months Ended


Year-to-Date



Sep 30, 2020


Jun 30, 2020


Mar 31, 2020


Dec 31, 2019


Sep 30, 2019


Sep 30, 2020


Sep 30, 2019

Loan discount accretion














ASC 310-20

$16,729


$17,999


$22,463


$17,834


$1,006


$57,191


$3,360

ASC 310-30

$5,805


$6,267


$6,019


$5,908


$277


$18,091


$943

Securities net amortization

$116


$203


$194


$201


$157


$513


$646

Time deposits amortization

$1,240


$1,793


$2,270


$1,709


—


$5,303


—


















 

(F)

Using effective tax rate of 21.2%, 6.7%, 21.0%, 21.3% and 20.5% for the three-month periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively, and 16.8% and 20.5% for the nine-month periods ended September 30, 2020 and September 30, 2019, respectively.  Net income for the second quarter of 2020 includes a tax benefit for NOLs due to the CARES Act.

(G)

Interim periods annualized.

(H)

Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

(I)

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

(J)

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

(K)

For calculations of the annualized returns on average assets, average common equity and average tangible common equity excluding merger related expenses, net of tax, and NOL carryback, refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

(L)

For calculations of the efficiency ratio excluding merger related expenses, net of tax,  refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


YIELD ANALYSIS


Three Months Ended





Sep 30, 2020



Jun 30, 2020



Sep 30, 2019





Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(M)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(M)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(M)

Interest-earning assets:






































Loans held for sale


$

50,606



$

420



3.30%



$

63,338



$

523



3.32%



$

21,077



$

266



5.01%



Loans held for investment



18,267,559




225,596



4.91%




18,135,226




228,062



5.06%




10,589,272




134,677



5.05%



Loans held for investment - Warehouse
   Purchase Program



2,279,461




18,239



3.18%




1,843,097




14,187



3.10%




—




—




—



Total Loans



20,597,626




244,255



4.72%




20,041,661




242,772



4.87%




10,610,349




134,943



5.05%



Investment securities



7,603,762




38,033



1.99%


(N)


8,054,008




43,776



2.19%


(N)


8,758,056




50,872



2.30%


(N)

Federal funds sold and other earning assets



618,228




144



0.09%




172,761




45



0.10%




74,751




363



1.93%



Total interest-earning assets



28,819,616




282,432



3.90%




28,268,430




286,593



4.08%




19,443,156




186,178



3.80%



Allowance for credit losses(B)



(321,424)












(325,720)












(86,996)











Noninterest-earning assets



4,482,646












4,562,016












2,849,936











Total assets


$

32,980,838











$

32,504,726











$

22,206,096

















































Interest-bearing liabilities:






































Interest-bearing demand deposits


$

5,221,722



$

5,028



0.38%



$

4,949,023



$

4,621



0.38%



$

3,575,249



$

5,602



0.62%



Savings and money market deposits



8,937,751




7,833



0.35%




8,537,352




8,745



0.41%




5,524,277




12,588



0.90%



Certificates and other time deposits



3,103,290




9,597



1.23%




3,224,196




11,903



1.48%




2,083,803




8,749



1.67%



Other borrowings



13,898




52



1.49%




474,867




533



0.45%




749,814




4,335



2.29%



Securities sold under repurchase agreements



378,888




309



0.32%




365,077




337



0.37%




315,277




914



1.15%



Subordinated notes and trust preferred



125,256




1,500



4.76%




125,475




1,499



4.80%




—




—




—



Total interest-bearing liabilities



17,780,805




24,319



0.54%


(O)


17,675,990




27,638



0.63%


(O)


12,248,420




32,188



1.04%


(O)







































Noninterest-bearing liabilities:






































Noninterest-bearing demand deposits



8,980,814












8,583,734












5,701,419











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



29,947












29,947












—











Other liabilities



167,532












289,899












111,526











Total liabilities



26,959,098












26,579,570












18,061,365











Shareholders' equity



6,021,740












5,925,156












4,144,731











Total liabilities and shareholders' equity


$

32,980,838











$

32,504,726











$

22,206,096

















































Net interest income and margin






$

258,113



3.56%







$

258,955



3.68%







$

153,990



3.14%



Non-GAAP to GAAP reconciliation:






































Tax equivalent adjustment







658












690












791







Net interest income and margin (tax
   equivalent basis)






$

258,771



3.57%







$

259,645



3.69%







$

154,781



3.16%



 

(M)

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

(N)

Yield on securities was impacted by net premium amortization of $10,089, $9,224 and $8,027 for the three-month periods ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

(O)

Total cost of funds, including noninterest bearing deposits, was 0.36%, 0.42% and 0.71% for the three-month periods ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

 

 

 Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


YIELD ANALYSIS


Year-to-Date





Sep 30, 2020



Sep 30, 2019





Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(P)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(P)

Interest-earning assets:


























Loans held for sale


$

60,256



$

1,575



3.49%



$

23,605



$

887



5.02%



Loans held for investment



17,890,010




690,175



5.15%




10,484,864




397,646



5.07%



Loans held for investment - Warehouse
   Purchase Program



1,749,568




42,520



3.25%




—




—




—



Total loans



19,699,834




734,270



4.98%




10,508,469




398,533



5.07%



Investment securities



8,029,097




130,091



2.16%


(Q)


9,079,314




160,464



2.36%


(Q)

Federal funds sold and other earning assets



339,229




902



0.36%




70,320




1,083



2.06%



Total interest-earning assets



28,068,160




865,263



4.12%




19,658,103




560,080



3.81%



Allowance for credit losses(B)



(325,036)












(86,556)











Noninterest-earning assets



4,540,440












2,852,098











Total assets


$

32,283,564











$

22,423,645





































Interest-bearing liabilities:


























Interest-bearing demand deposits


$

5,054,320



$

16,745



0.44%



$

3,810,765



$

18,227



0.64%



Savings and money market deposits



8,481,852




30,700



0.48%




5,548,375




36,494



0.88%



Certificates and other time deposits



3,243,564




35,300



1.45%




2,067,940




23,908



1.55%



Other borrowings



439,018




3,517



1.07%




825,733




15,208



2.46%



Securities sold under repurchase agreements



370,225




1,403



0.51%




292,347




2,504



1.15%



Subordinated notes and trust preferred



125,475




4,499



4.79%




—




—




—



Total interest-bearing liabilities



17,714,454




92,164



0.69%


(R)


12,545,160




96,341



1.03%


(R)



























Noninterest-bearing liabilities:


























Noninterest-bearing demand deposits



8,354,410












5,645,145











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



24,321












—











Other liabilities



239,747












102,299











Total liabilities



26,332,932












18,292,604











Shareholders' equity



5,950,632












4,131,041











Total liabilities and shareholders' equity



32,283,564











$

22,423,645





































Net interest income and margin






$

773,099



3.68%







$

463,739



3.15%



Non-GAAP to GAAP reconciliation:


























Tax equivalent adjustment







2,071












2,481







Net interest income and margin (tax
   equivalent basis)






$

775,170



3.69%







$

466,220



3.17%



 

(P)

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

(Q)

Yield on securities was impacted by net premium amortization of $27,318 and $22,223 for the nine-month periods ended September 30, 2020 and 2019, respectively.

(R)

Total cost of funds, including noninterest bearing deposits, was 0.47% and 0.71% for the nine-month periods ended September 30, 2020 and 2019, respectively.

 

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Sep 30, 2019


YIELD TREND (S)








































Interest-Earning Assets:




















Loans held for sale


3.30

%



3.32

%



3.80

%



3.96

%



5.01

%

Loans held for investment


4.91

%



5.06

%



5.51

%



5.52

%



5.05

%

Loans held for investment - Warehouse
   Purchase Program


3.18

%



3.10

%



3.62

%



3.93

%



—


Total loans


4.72

%



4.87

%



5.39

%



5.42

%



5.05

%

Investment securities (T)


1.99

%



2.19

%



2.30

%



2.28

%



2.30

%

Federal funds sold and other earning assets


0.09

%



0.10

%



1.28

%



0.78

%



1.93

%

Total interest-earning assets


3.90

%



4.08

%



4.40

%



4.29

%



3.80

%





















Interest-Bearing Liabilities:




















Interest-bearing demand deposits


0.38

%



0.38

%



0.57

%



0.54

%



0.62

%

Savings and money market deposits


0.35

%



0.41

%



0.71

%



0.79

%



0.90

%

Certificates and other time deposits


1.23

%



1.48

%



1.63

%



1.67

%



1.67

%

Other borrowings


1.49

%



0.45

%



1.42

%



1.73

%



2.29

%

Securities sold under repurchase agreements


0.32

%



0.37

%



0.83

%



0.99

%



1.15

%

Subordinated notes and trust preferred


4.76

%



4.80

%



4.80

%



4.85

%



—


Total interest-bearing liabilities


0.54

%



0.63

%



0.91

%



1.00

%



1.04

%





















Net Interest Margin


3.56

%



3.68

%



3.80

%



3.65

%



3.14

%

Net Interest Margin (tax equivalent)


3.57

%



3.69

%



3.81

%



3.66

%



3.16

%

 

(S)

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

(T)

Yield on securities was impacted by net premium amortization of $10,089, $9,224, $8,005, $8,556 and $8,027 for the three-month periods ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively.

 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Three Months Ended




Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Sep 30, 2019


Balance Sheet Averages





















Loans held for sale


$

50,606



$

63,338



$

66,917



$

57,171



$

21,077


Loans held for investment



18,267,559




18,135,226




17,263,098




15,261,163




10,589,272


Loans held for investment - Warehouse
   Purchase Program



2,279,461




1,843,097




1,120,324




996,903




—


Total Loans



20,597,626




20,041,661




18,450,339




16,315,237




10,610,349























Investment securities



7,603,762




8,054,008




8,434,196




8,598,736




8,758,056


Federal funds sold and other earning assets



618,228




172,761




223,631




305,596




74,751


Total interest-earning assets



28,819,616




28,268,430




27,108,166




25,219,569




19,443,156


Allowance for credit losses(B)



(321,424)




(325,720)




(328,005)




(86,795)




(86,996)


Cash and due from banks



267,887




247,426




321,832




275,072




230,986


Goodwill



3,231,976




3,223,469




3,223,633




2,658,133




1,900,845


Core deposit intangibles, net



78,269




81,539




84,865




28,912




29,682


Other real estate



8,061




5,666




5,837




4,864




997


Fixed assets, net



325,958




327,811




325,337




308,692




263,495


Other assets



570,495




676,105




615,747




654,978




423,931


Total assets


$

32,980,838



$

32,504,726



$

31,357,412



$

29,063,425



$

22,206,096























Noninterest-bearing deposits


$

8,980,814



$

8,583,734



$

7,491,798



$

7,066,878



$

5,701,419


Interest-bearing demand deposits



5,221,722




4,949,023




4,990,376




4,233,880




3,575,249


Savings and money market deposits



8,937,751




8,537,352




7,965,440




7,109,754




5,524,277


Certificates and other time deposits



3,103,290




3,224,196




3,404,748




3,044,843




2,083,803


Total deposits



26,243,577




25,294,305




23,852,362




21,455,355




16,884,748


Other borrowings



13,898




474,867




832,961




1,403,686




749,814


Securities sold under repurchase agreements



378,888




365,077




366,615




351,580




315,277


Subordinated notes and trust preferred



125,256




125,475




125,694




87,963




—


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



29,947




29,947




13,009




5,673




—


Other liabilities



167,532




289,899




262,523




320,855




111,526


Shareholders' equity



6,021,740




5,925,156




5,904,248




5,443,986




4,144,731


Total liabilities and equity


$

32,980,838



$

32,504,726



$

31,357,412



$

29,063,425



$

22,206,096


 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Sep 30, 2019


Period End Balances








































































Loan Portfolio




































Commercial and industrial


$

2,171,302



10.5

%


$

2,214,742



10.5

%


$

2,500,110



13.1

%


$

2,507,318



13.3

%


$

1,120,913



10.5

%

Warehouse purchase program



2,730,614



13.1

%



2,557,183



12.2

%



1,713,762



9.0

%



1,552,762



8.2

%



—



—


Construction, land development and
   other land loans



2,081,762



10.0

%



2,033,037



9.7

%



2,051,021



10.7

%



2,064,167



11.0

%



1,764,648



16.5

%

1-4 family residential



4,189,852



20.1

%



4,184,972



19.9

%



3,993,138



20.9

%



3,880,382



20.6

%



2,472,907



23.2

%

Home equity



477,552



2.3

%



437,098



2.1

%



516,003



2.6

%



507,029



2.6

%



250,775



2.3

%

Commercial real estate (includes
   multi-family residential)



6,179,901



29.7

%



6,550,086



31.2

%



6,576,213



34.4

%



6,556,285



34.9

%



3,652,176



34.3

%

Agriculture (includes farmland)



598,972



2.9

%



612,694



2.9

%



635,295



3.3

%



680,855



3.6

%



729,585



6.8

%

Consumer and other



367,231



1.8

%



403,462



1.9

%



423,000



2.2

%



398,271



2.1

%



342,839



3.2

%

Energy



604,698



2.9

%



639,402



3.0

%



718,653



3.8

%



698,277



3.7

%



339,502



3.2

%

Paycheck Protection Program



1,393,757



6.7

%



1,392,497



6.6

%



—



—




—



—




—



—


Total loans


$

20,795,641






$

21,025,173






$

19,127,195






$

18,845,346






$

10,673,345









































Deposit Types




































Noninterest-bearing DDA


$

8,998,328



34.0

%


$

9,040,257



34.6

%


$

7,461,323



31.3

%


$

7,763,894



32.1

%


$

5,784,002



34.2

%

Interest-bearing DDA



5,297,802



20.0

%



5,130,495



19.6

%



4,980,090



20.9

%



5,100,938



21.1

%



3,564,419



21.0

%

Money market



6,324,127



23.9

%



6,148,206



23.5

%



5,341,525



22.4

%



5,099,024



21.1

%



3,457,728



20.4

%

Savings



2,772,492



10.5

%



2,722,718



10.4

%



2,716,247



11.4

%



2,756,297



11.3

%



2,027,621



12.0

%

Certificates and other time deposits



3,066,457



11.6

%



3,111,012



11.9

%



3,327,172



14.0

%



3,479,579



14.4

%



2,096,150



12.4

%

Total deposits


$

26,459,206






$

26,152,688






$

23,826,357






$

24,199,732






$

16,929,920









































Loan to Deposit Ratio



78.6

%






80.4

%






80.3

%






77.9

%






63.0

%




 

 

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


Construction Loans




Sep 30, 2020



Jun 30, 2020



Mar 31, 2020



Dec 31, 2019



Sep 30, 2019






































Single family residential construction


$

654,933



31.5

%


$

710,401



34.9

%


$

655,191



31.9

%


$

614,647



29.7

%


$

462,714



26.2

%

Land development



114,937



5.5

%



114,748



5.6

%



110,853



5.4

%



88,529



4.3

%



80,711



4.6

%

Raw land



240,154



11.5

%



274,159



13.5

%



265,943



12.9

%



233,559



11.3

%



171,609



9.7

%

Residential lots



137,615



6.6

%



144,765



7.1

%



136,861



6.7

%



138,961



6.7

%



123,265



7.0

%

Commercial lots



109,569



5.3

%



103,267



5.1

%



106,036



5.2

%



101,960



4.9

%



102,084



5.8

%

Commercial construction and other



825,053



39.6

%



687,618



33.8

%



778,731



37.9

%



890,597



43.1

%



825,001



46.7

%

Net unaccreted discount



(499)







(1,921)







(2,594)







(4,086)







(736)





Total construction loans


$

2,081,762






$

2,033,037






$

2,051,021






$

2,064,167






$

1,764,648





 

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of September 30, 2020



Houston



Dallas



Austin



OK City



Tulsa



Other (U)



Total



Collateral Type





























Shopping center/retail

$

376,417



$

284,715



$

50,127



$

16,920



$

31,641



$

272,171



$

1,031,991



Commercial and industrial buildings


147,107




156,806




19,927




14,835




19,419




164,408




522,502



Office buildings


190,334




542,135




31,465




74,651




5,218




82,444




926,247



Medical buildings


37,367




40,855




14,234




25,179




25,107




57,283




200,025



Apartment buildings


404,936




512,803




22,666




15,619




19,070




177,745




1,152,839



Hotel


63,380




73,942




43,343




28,996




—




138,579




348,240



Other


57,229




55,436




23,033




11,522




2,486




82,171




231,877



Total

$

1,276,770



$

1,666,692



$

204,795



$

187,722



$

102,941



$

974,801



$

4,413,721


(V)

 

Acquired Loans




Non-PCD Loans



PCD Loans



Total Acquired Loans




Balance at

Acquisition

Date



Balance at

Jun 30, 2020



Balance at

Sep 30, 2020



Balance at

Acquisition

Date



Balance at

Jun 30, 2020



Balance at

Sep 30, 2020



Balance at

Acquisition

Date



Balance at

Jun 30, 2020



Balance at

Sep 30, 2020


Loan marks:





































Acquired banks (W)


$

229,080



$

7,436



$

6,622



$

142,128



$

—



$

—



$

371,208



$

7,436



$

6,622


LegacyTexas merger(X)



116,519




62,424




46,493




177,924




22,565




16,760




294,443




84,989




63,253


Total



345,599




69,860




53,115




320,052




22,565


(Z)


16,760




665,651




92,425




69,875







































Acquired portfolio loan balances:





































Acquired banks (W)



5,690,998




308,692




281,766




275,221




6,952




4,061




5,966,219




315,644




285,827


LegacyTexas merger(X)



6,595,161




4,808,987




4,187,077




414,352




283,237




222,019




7,009,513




5,092,224




4,409,096


Total



12,286,159




5,117,679




4,468,843




689,573




290,189




226,080




12,975,732


(Y)


5,407,868




4,694,923







































Acquired portfolio loan balances less loan
   marks


$

11,940,560



$

5,047,819



$

4,415,728



$

369,521



$

267,624



$

209,320



$

12,310,081



$

5,315,443



$

4,625,048


 

(U)

Includes other MSA and non-MSA regions.

(V)

Represents a portion of total commercial real estate loans of $6.180 billion as of September 30, 2020.

(W)

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

(X)

The LegacyTexas merger was completed on November 1, 2019.  During the fourth quarter of 2019, LegacyTexas added $7.010 billion in loans with related purchase accounting adjustments of $294.4 million at acquisition date.

(Y)

Actual principal balances acquired.

(Z)

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

 

  

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


Three Months Ended



Year-to-Date



Sep 30,

2020



Jun 30,
2020



Mar 31,

2020



Dec 31,
2019



Sep 30,

2019



Sep 30,
2020



Sep 30,
2019


Asset Quality




























Nonaccrual loans

$

57,412



$

62,904



$

58,194



$

55,243



$

49,973



$

57,412



$

49,973


Accruing loans 90 or more days past due


462




8,691




3,255




441




341




462




341


Total nonperforming loans


57,874




71,595




61,449




55,684




50,314




57,874




50,314


Repossessed assets


120




187




278




324




28




120




28


Other real estate


11,548




6,160




5,452




6,935




815




11,548




815


Total nonperforming assets

$

69,542



$

77,942



$

67,179



$

62,943



$

51,157



$

69,542



$

51,157






























Nonperforming assets:




























Commercial and industrial (includes energy)

$

17,273



$

15,238



$

15,987



$

17,086



$

15,974



$

17,273



$

15,974


Construction, land development and other land
   loans


2,633




10,530




1,125




1,177




874




2,633




874


1-4 family residential (includes home equity)


29,953




29,812




28,996




26,453




19,600




29,953




19,600


Commercial real estate (includes multi-family
   residential)


16,069




20,748




20,155




18,031




14,384




16,069




14,384


Agriculture (includes farmland)


1,931




1,501




896




101




285




1,931




285


Consumer and other


1,683




113




20




95




40




1,683




40


Total

$

69,542



$

77,942



$

67,179



$

62,943



$

51,157



$

69,542



$

51,157


Number of loans/properties


198




213




198




236




89




198




89


Allowance for credit losses at end of period

$

323,635



$

324,205



$

327,206



$

87,469



$

87,061



$

323,635



$

87,061






























Net charge-offs (recoveries):




























Commercial and industrial (includes energy)

$

8,344



$

12,206



$

(28)



$

76



$

(83)



$

20,522



$

808


Construction, land development and other land
loans


478




(6)




(12)




(6)




(6)




460




1


1-4 family residential (includes home equity)


252




51




5




20




(9)




308




(1)


Commercial real estate (includes multi-family
   residential)


676




—




(81)




254




(1)




595




(3)


Agriculture (includes farmland)


(17)




(3)




(1)




(18)




278




(21)




(954)


Consumer and other


837




753




918




965




867




2,508




2,129


Total

$

10,570



$

13,001



$

801



$

1,291



$

1,046



$

24,372



$

1,980






























Asset Quality Ratios




























Nonperforming assets to average interest-earning
   assets


0.24

%



0.28

%



0.25

%



0.25

%



0.26

%



0.25

%



0.26

%

Nonperforming assets to loans and other real estate


0.33

%



0.37

%



0.35

%



0.33

%



0.48

%



0.33

%



0.48

%

Net charge-offs to average loans (annualized)


0.21

%



0.26

%



0.02

%



0.03

%



0.04

%



0.17

%



0.03

%

Allowance for credit losses to total loans(AA)


1.56

%



1.54

%



1.71

%



0.46

%



0.82

%



1.56

%



0.82

%

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


1.94

%



1.90

%



1.88

%



0.51

%



0.82

%



1.94

%



0.82

%


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

 

 

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

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


NOTES TO SELECTED FINANCIAL DATA

Prosperity's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews diluted earnings per share excluding merger related expenses, net of tax, and NOL carryback; return on average assets excluding merger related expenses, net of tax, and NOL carryback; return on average common equity excluding merger related expenses, net of tax, and NOL carryback; return on average tangible common equity; return on average tangible common equity excluding merger related expenses, net of tax, and NOL carryback; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program and PPP loans; the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities and merger related expenses, for internal planning and forecasting purposes. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP financial measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding Warehouse Purchase Program loans and PPP loans). Prosperity has included information below relating to these non-GAAP financial measures for the applicable periods presented.




Three Months Ended



Year-to-Date




Sep 30,

2020



Jun 30,
2020



Mar 31,

2020



Dec 31,
2019



Sep 30,
2019



Sep 30,

2020



Sep 30,
2019


Reconciliation of diluted earnings per share to diluted earnings per share, excluding merger related expenses, net of tax, and net operating losses carryback:





























Net income


$

130,064



$

130,901



$

130,848



$

86,134



$

81,758



$

391,813



$

246,418


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



—




5,904




430




36,658




—




6,334




—


Less: net operating losses carryback (AC)



—




(20,145)




—




—




—




(20,145)




—


Net income, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)


$

130,064



$

116,660



$

131,278



$

122,792



$

81,758



$

378,002



$

246,418































Weighted average diluted shares outstanding



92,656




92,658




94,371




85,573




68,738




93,226




68,397


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


$

—



$

0.06



$

—



$

0.43



$

—



$

0.07




—


Net operating losses carryback per diluted share (AB)


$

—



$

(0.22)



$

—



$

—



$

—



$

(0.22)



$

—


Diluted earnings per share, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)


$

1.40



$

1.25



$

1.39



$

1.44



$

1.19



$

4.05



$

3.60































Reconciliation of return on average assets to return on average assets excluding merger related expenses, net of tax, and net operating losses carryback:





























Net income, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)


$

130,064



$

116,660



$

131,278



$

122,792



$

81,758



$

378,002



$

246,418


Average total assets


$

32,980,838



$

32,504,726



$

31,357,412



$

29,063,425



$

22,206,096



$

32,283,564



$

22,206,096


Return on average assets excluding merger related expenses, net of tax, and net operating losses carryback (G) (AB) (AC)



1.58

%



1.44

%



1.67

%



1.69

%



1.47

%



1.56

%



1.48

%






























Reconciliation of return on average common equity to return on average common equity excluding merger related expenses, net of tax, and net operating losses carryback:





























Net income, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)


$

130,064



$

116,660



$

131,278



$

122,792



$

81,758



$

378,002



$

246,418


Average shareholders' equity


$

6,021,740



$

5,925,156



$

5,904,248



$

5,443,986



$

4,144,731



$

5,950,632



$

4,131,041


Return on average common equity excluding merger related expenses, net of tax, and net operating losses carryback (G) (AB) (AC)



8.64

%



7.88

%



8.89

%



9.02

%



7.89

%



8.47

%



7.95

%






























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





























Net income


$

130,064



$

130,901



$

130,848



$

86,134



$

81,758



$

391,813



$

246,418


Average shareholders' equity


$

6,021,740



$

5,925,156



$

5,904,248



$

5,443,986



$

4,144,731



$

5,950,632



$

4,131,041


Less: Average goodwill and other intangible assets



(3,310,245)




(3,305,008)




(3,308,498)




(2,687,045)




(1,930,527)




(3,307,925)




(1,931,788)


Average tangible shareholders' equity


$

2,711,495



$

2,620,148



$

2,595,750



$

2,756,941



$

2,214,204



$

2,642,707



$

2,199,253


Return on average tangible common equity (G)



19.19

%



19.98

%



20.16

%



12.50

%



14.77

%



19.77

%



14.94

%


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

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





Three Months Ended



Year-to-Date




Sep 30,

2020



Jun 30,
2020



Mar 31,

2020



Dec 31,
2019



Sep 30,
2019



Sep 30,
2020



Sep 30,
2019































Reconciliation of return on average common equity to return on average tangible common equity excluding merger related expenses, net of tax, and net operating losses carryback:





























Net income, excluding merger related expenses, net of tax, and net operating losses carryback (AB) (AC)


$

130,064



$

116,660



$

131,278



$

122,792



$

81,758



$

378,002



$

246,418


Average shareholders' equity


$

6,021,740



$

5,925,156



$

5,904,248



$

5,443,986



$

4,144,731



$

5,950,632



$

4,131,041


Less: Average goodwill and other intangible assets



(3,310,245)




(3,305,008)




(3,308,498)




(2,687,045)




(1,930,527)




(3,307,925)




(1,931,788)


Average tangible shareholders' equity


$

2,711,495



$

2,620,148



$

2,595,750



$

2,756,941



$

2,214,204



$

2,642,707



$

2,199,253


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



19.19

%



17.81

%



20.23

%



17.82

%



14.77

%



19.07

%



14.94

%



























































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





























Shareholders' equity


$

6,034,877



$

5,948,122



$

5,855,574



$

5,970,835



$

4,126,806



$

6,034,877



$

4,126,806


Less: Goodwill and other intangible assets



(3,308,170)




(3,311,712)




(3,306,185)




(3,310,075)




(1,929,896)




(3,308,170)




(1,929,896)


Tangible shareholders' equity


$

2,726,707



$

2,636,410



$

2,549,389



$

2,660,760



$

2,196,910



$

2,726,707



$

2,196,910































Period end shares outstanding



92,562




92,660




92,652




94,746




68,397




92,562




68,397


Tangible book value per share:


$

29.46



$

28.45



$

27.52



$

28.08



$

32.12



$

29.46




32.12































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





























Tangible shareholders' equity


$

2,726,707



$

2,636,410



$

2,549,389



$

2,660,760



$

2,196,910



$

2,726,707



$

2,196,910


Total assets


$

33,197,599



$

32,966,649



$

31,743,499



$

32,185,708



$

22,092,817



$

33,197,599



$

22,092,817


Less: Goodwill and other intangible assets



(3,308,170)




(3,311,712)




(3,306,185)




(3,310,075)




(1,929,896)




(3,308,170)




(1,929,896)


Tangible assets


$

29,889,429



$

29,654,937



$

28,437,314



$

28,875,633



$

20,162,921



$

29,889,429



$

20,162,921


Period end tangible equity to period end tangible assets ratio:



9.12

%



8.89

%



8.96

%



9.21

%



10.90

%



9.12

%



10.90

%






























Reconciliation of allowance for credit losses to total loans to allowance for credit losses to total loans, excluding Warehouse Purchase Program and Paycheck Protection Program loans:





























Allowance for credit losses (AA)


$

323,635



$

324,205



$

327,206



$

87,469



$

87,061



$

323,635



$

87,061


Total loans


$

20,795,641



$

21,025,173



$

19,127,195



$

18,845,346



$

10,673,345



$

20,795,641



$

10,673,345


Less: Warehouse Purchase Program loans



(2,730,614)




(2,557,183)




(1,713,762)




(1,552,762)




—




(2,730,614)




—


Less: Paycheck Protection Program loans



(1,393,757)




(1,392,497)




—




—




—




(1,393,757)




—


Total loans less Warehouse Purchase Program and Paycheck Protection Program loans


$

16,671,270



$

17,075,493



$

17,413,433



$

17,292,584



$

10,673,345



$

16,671,270



$

10,673,345


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



1.94

%



1.90

%



1.88

%



0.51

%



0.82

%



1.94

%



0.82

%






























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





























Noninterest expense


$

117,919



$

134,368



$

124,741



$

156,451



$

80,699



$

377,028



$

240,091































Net interest income


$

258,113



$

258,955



$

256,031



$

232,030



$

153,990



$

773,099



$

463,739


Noninterest income



34,924




25,675




34,388




35,506




30,673




94,987




88,775


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



(528)




(3,945)




(385)




(1,870)




(3)




(4,858)




57


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



35,452




29,620




34,773




37,376




30,676




99,845




88,718


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


$

293,565



$

288,575



$

290,804



$

269,406



$

184,666



$

872,944



$

552,457


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



40.17

%



46.56

%



42.90

%



58.07

%



43.70

%



43.19

%



43.46

%





Three Months Ended



Year-to-Date




Sep 30,

2020



Jun 30,
2020



Mar 31,

2020



Dec 31,

2019



Sep 30,
2019



Sep 30,

2020



Sep 30,

2019































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





























Noninterest expense


$

117,919



$

134,368



$

124,741



$

156,451



$

80,699



$

377,028



$

240,091


Less: merger related expenses



—




7,474




544




46,402




—




8,018




—


Noninterest expense excluding merger related expenses


$

117,919



$

126,894



$

124,197



$

110,049



$

80,699



$

369,010



$

240,091































Net interest income


$

258,113



$

258,955



$

256,031



$

232,030



$

153,990



$

773,099



$

463,739


Noninterest income



34,924




25,675




34,388




35,506




30,673




94,987




88,775


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



(528)




(3,945)




(385)




(1,870)




(3)




(4,858)




57


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



35,452




29,620




34,773




37,376




30,676




99,845




88,718


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


$

293,565



$

288,575



$

290,804



$

269,406



$

184,666



$

872,944



$

552,457


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



40.17

%



43.97

%



42.71

%



40.85

%



43.70

%



42.27

%



43.46

%

 

 

 

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SOURCE Prosperity Bancshares, Inc.

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prosperity bank and trust co is a banking company located in p.o. box 2789, springfield, virginia, united states.