PROSPERITY BANCSHARES, INC.® REPORTS FOURTH QUARTER 2021 EARNINGS

- Fourth quarter net income of $126.8 million and earnings per share (diluted) of $1.38
Published: Jan. 26, 2022 at 2:30 AM AKST

HOUSTON, Jan. 26, 2022 /PRNewswire/ --  Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income of  $126.8 million for the quarter ended December 31, 2021 compared with $137.1 million for the same period in 2020. Net income per diluted common share was $1.38 for the quarter ended December 31, 2021, compared with $1.48 for the same period in 2020, and the annualized return on fourth quarter average assets was 1.37%. Additionally, loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program ("PPP") loans, increased $76.7 million or 0.5% (1.8% annualized) and deposits increased $1.320 billion or 4.5% (17.9% annualized) during the fourth quarter of 2021. Nonperforming assets remain low at 0.09% of fourth quarter average interest-earning assets.

"We believe that Texas and Oklahoma will have a higher growth rate and outperform other states over the next several years.  Companies and individuals continue to move to Texas and Oklahoma because of lower tax rates and a business-friendly political environment, and we believe that will continue, which should benefit our bank. We expect that companies will need more infrastructure and buildings, people will need more housing and consumer staples, and both will need banks to finance the growth," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"Our bank continues to show strong deposit growth, with over $3.4 billion added in 2021, and a strong return on assets of 1.37% and return on average tangible equity of 16.26%. Our asset quality continues to be one of the best in the industry. We predict loans will grow given the vibrant economy and the bank's net interest margin should improve going forward with potential rate hikes forecasted by the Federal Reserve. I would like to thank all our customers, associates, and directors for helping us build such a successful bank," concluded Zalman.

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

Net income was $126.8 million(2) for the three months ended December 31, 2021 compared with $137.1 million(3) for the same period in 2020, a decrease of $10.3 million or 7.5%. The change was primarily due to a decrease in loan interest income and loan discount accretion of $10.7 million, partially offset by an increase in securities interest income and a decrease in interest expense. Net income per diluted common share was $1.38 for the three months ended December 31, 2021 compared with $1.48 for the same period in 2020, a decrease of 6.8%. On a linked quarter basis, net income was $126.8 million(2) for the three months ended December 31, 2021 compared with $128.6 million(4) for the three months ended September 30, 2021. Net income per diluted common share was $1.38 for the three months ended December 31, 2021 compared with $1.39 for the three months ended September 30, 2021. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended December 31, 2021 were 1.37%, 7.91% and 16.26%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 42.79%(1) for the three months ended December 31, 2021.

Net interest income before provision for credit losses for the three months ended December 31, 2021 was $244.8 million compared with $257.6 million for the same period in 2020, a decrease of $12.9 million or 5.0%. The change was primarily due to a decrease in the average balance and average rate on loans and a decrease in loan discount accretion of $10.7 million, partially offset by an increase in the average investment securities balance and a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, net interest income before provision for credit losses was $244.8 million compared with $248.6 million for the three months ended September 30, 2021.

The net interest margin on a tax equivalent basis was 2.97% for the three months ended December 31, 2021 compared with 3.49% for the same period in 2020. The change was primarily due to lower average rates on loans and investment securities and a decrease in loan discount accretion of $10.7 million, partially offset by a decrease in the average rate on interest-bearing liabilities. On a linked quarter basis, the net interest margin on a tax equivalent basis was 2.97% for the three months ended December 31, 2021 compared with 3.10% for the three months ended September 30, 2021. The change was primarily due to lower average rates on loans and investment securities, and higher cash balances due to excess liquidity, partially offset by a decrease in the average rate on interest-bearing liabilities.

Noninterest income was $35.8 million for the three months ended December 31, 2021 compared with $36.5 million for the same period in 2020, a decrease of $790 thousand or 2.2%. This change was primarily due to a decrease in mortgage income and a decrease in other noninterest income, partially offset by the net gain on sale of assets compared to prior year's net loss on write-down of assets. On a linked quarter basis, noninterest income increased $1.1 million or 3.2% to $35.8 million compared with $34.6 million for the three months ended September 30, 2021. This change was primarily due to an increase in net gain on sale of assets and an increase in nonsufficient funds ("NSF") fees, partially offset by a decrease in mortgage income.

Noninterest expense was $119.5 million for the three months ended December 31, 2021 compared with $120.2 million for the same period in 2020 and $119.8 million for the three months ended September 30, 2021.

Results of Operations for the Year Ended December 31, 2021

Net income was $519.3 million(5) for the year ended December 31, 2021 compared with $528.9 million(6) for the same period in 2020, a decrease of $9.6 million or 1.8%. Net income per diluted common share was $5.60 for the year ended December 31, 2021 compared with $5.68 for the same period in 2020, a decrease of 1.4%. Returns on average assets, average common equity and average tangible common equity for the year ended December 31, 2021 were 1.44%, 8.21% and 17.18%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and taxes) was 41.83%(1) for the year ended December 31, 2021.

Net interest income before provision for credit losses for the year ended December 31, 2021 was $993.3 million compared with $1.031 billion for the same period in 2020, a decrease of $37.4 million or 3.6%. The change was primarily due to lower average rates on loans and a decrease in loan discount accretion of $52.1 million, partially offset by an increase in the average investment securities balance and a decrease in the average rate on interest-bearing liabilities.

The net interest margin on a tax equivalent basis for the year ended December 31, 2021 was 3.14% compared with 3.64% for the same period in 2020. The change was primarily due to lower average rates on loans and investment securities, a decrease in loan discount accretion of $52.1 million, and higher cash balances due to excess liquidity, partially offset by a decrease in the average rate on interest-bearing liabilities.

Noninterest income was $140.0 million for the year ended December 31, 2021 compared with $131.5 million for the same period in 2020, an increase of $8.4 million or 6.4%. This increase was primarily due to the net gain on sale of assets compared to prior year's net loss on write-down of assets and an increase in credit card, debit card and ATM card income, partially offset by a decrease in mortgage income.

Noninterest expense was $473.6 million for the year ended December 31, 2021 compared with $497.2 million for the same period in 2020, a decrease of $23.6 million or 4.7%. The change was primarily due to decreases in merger related expenses, data processing, net occupancy and equipment and other noninterest expense as a result of efficiencies gained following the LegacyTexas Bank system conversion during the second quarter of 2020 and net gains on sale of other real estate of $2.7 million.

Balance Sheet Information

At December 31, 2021, Prosperity had $37.834 billion in total assets, an increase of $3.775 billion or 11.1% compared with $34.059 billion at December 31, 2020.

Loans at December 31, 2021 were $18.616 billion, a decrease of $1.631 billion or 8.1%, compared with $20.247 billion at December 31, 2020, primarily due to a decrease in Warehouse Purchase Program, commercial real estate and PPP loans, partially offset by an increase in 1-4 family residential loans. Linked quarter loans decreased $341.6 million or 1.8% from $18.958 billion at September 30, 2021. At December 31, 2021, the Company had $169.9 million of PPP loans compared to $963.2 million of PPP loans at December 31, 2020 and $365.8 million of PPP loans at September 30, 2021. Excluding Warehouse Purchase Program and PPP loans, loans at December 31, 2021 were $16.671 billion compared to $16.441 billion at December 31, 2020, an increase of $229.2 million or 1.4%. Linked quarter loans, excluding Warehouse Purchase Program and PPP loans, increased $76.7 million or 0.5% (1.8% annualized) from $16.594 billion at September 30, 2021.

As part of its lending activities, Prosperity extends credit to oil and gas production and servicing companies. Oil and gas production loans are loans to companies directly involved in the exploration and/or production of oil and gas. Oil and gas servicing loans are loans to companies that provide services for oil and gas production and exploration. At December 31, 2021, oil and gas loans totaled $491.3 million (net of discount and excluding PPP loans totaling $27.9 million) or 2.6% of total loans, of which $294.1 million were production loans and $197.2 million were servicing loans, compared with total oil and gas loans of $512.7 million (net of discount and excluding PPP loans totaling $88.7 million) or 2.5% of total loans at December 31, 2020, of which $285.8 million were production loans and $226.9 million were servicing loans. In addition, as of December 31, 2021, Prosperity had total unfunded commitments to oil and gas companies of $419.0 million compared with total unfunded commitments to oil and gas companies of $243.2 million as of December 31, 2020. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Additionally, Prosperity extends credit to hotels and restaurants. At December 31, 2021, loans to hotels totaled $386.4 million (excluding PPP loans totaling $920 thousand) or 2.1% of total loans, a decrease of $7.4 million or 1.9%, compared with $393.8 million (excluding PPP loans totaling $6.5 million) at December 31, 2020.  At December 31, 2021, loans to restaurants totaled $201.7 million (excluding PPP loans totaling $29.3 million) or 1.1% of total loans, a decrease of $13.0 million or 6.1%, compared with $214.7 million (excluding PPP loans totaling $83.6 million) at December 31, 2020.

Deposits at December 31, 2021 were $30.772 billion, an increase of $3.411 billion or 12.5%, compared with $27.360 billion at December 31, 2020. Linked quarter deposits increased $1.320 billion or 4.5% (17.9% annualized) from $29.452 billion at September 30, 2021.

Asset Quality

Nonperforming assets totaled $28.1 million or 0.09% of quarterly average interest-earning assets at December 31, 2021, compared with $59.6 million or 0.20% of quarterly average interest-earning assets at December 31, 2020 and $36.5 million or 0.11% of quarterly average interest-earning assets at September 30, 2021.

The allowance for credit losses on loans and off-balance sheet credit exposures was $316.3 million at December 31, 2021 compared with $346.0 million at December 31, 2020 and with $317.1 million at September 30, 2021.

The allowance for credit losses on loans was $286.4 million or 1.54% of total loans at December 31, 2021 compared with $316.1 million or 1.56% of total loans at December 31, 2020 and with $287.2 million or 1.51% of total loans at September 30, 2021. Excluding Warehouse Purchase Program and PPP loans, the allowance for credit losses on loans to total loans was 1.72%(1) at December 31, 2021 compared with 1.92%(1) at December 31, 2020 and 1.73%(1)

There was no provision for credit losses for the three month periods ended December 31, 2021, December 31, 2020 and September 30, 2021. There was no provision for credit losses for the year ended December 31, 2021 compared with $20.0 million for the year ended December 31, 2020.

Net charge-offs were $807 thousand for the three months ended December 31, 2021 compared with net charge-offs of $7.6 million for the three months ended December 31, 2020 and net charge-offs of $15.7 million for the three months ended September 30, 2021. Net charge-offs for the fourth quarter of 2021 did not include any purchased credit deteriorated ("PCD") loans and $1.7 million of specific reserves on resolved PCD loans was released to the general reserve.

Net charge-offs were $29.7 million for the year ended December 31, 2021 compared with $31.9 million for the year ended December 31, 2020. Net charge-offs for the year ended December 31, 2021 included $12.7 million related to resolved PCD loans and $10.8 million related to the partial charge-off of one commercial real estate loan obtained through acquisition. The PCD loans had specific reserves of $12.9 million, of which $9.9 million was allocated to the charge-offs and $3.0 million was moved to the general reserve. Further, an additional $21.6 million of specific reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Dividend

Prosperity Bancshares declared a first quarter cash dividend of $0.52 per share to be paid on April 1, 2022 to all shareholders of record as of March 15, 2022.

Stock Repurchase Program

On January 18, 2022, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 4.6 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 18, 2023, at the discretion of management. Under its 2021 stock repurchase program, Prosperity Bancshares repurchased zero shares of its common stock during the three months ended December 31, 2021 and 767,134 shares of its common stock at an average weighted price of $67.87 per share during the year ended December 31, 2021.

COVID-19 Pandemic

Prosperity continues to monitor the latest developments regarding COVID-19. As of December 31, 2021, pandemic-related restrictions on all business and activities in the states of Texas and Oklahoma remained lifted. The COVID-19 pandemic has resulted in significant economic uncertainties that have had, and could continue to have, an adverse impact on Prosperity's operating income, financial condition and cash flows.

Since the implementation of the Paycheck Protection Program in 2020, Prosperity has obtained SBA approvals on approximately 18,700 loans totaling $2.036 billion and, as of December 31, 2021, had an outstanding balance of 1,512 loans totaling $169.9 million.

Also, in response to the COVID-19 pandemic, Prosperity has provided relief to its loan customers through loan extensions and deferrals. Prosperity's troubled debt restructurings do not include loan modifications related to COVID-19. Beginning in mid-March of 2020, Prosperity began offering deferral and modification of principal and/or interest payments to selected borrowers on a case-by-case basis. As of December 31, 2021, Prosperity had approximately $29.5 million in outstanding loans subject to deferral and modification agreements.

Conference Call

Prosperity's management team will host a conference call on Wednesday, January 26, 2022 at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's fourth quarter 2021 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The participant elite entry number is 0033886.

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, Webcasts & Calls" from the menu on the Investor Relations link and following the instructions.

Non-GAAP Financial Measures

Prosperity's management uses certain non-GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews diluted earnings per share excluding merger related expenses net of tax, and net operating loss ("NOL") tax benefit; return on average assets excluding merger related expenses net of tax, and NOL tax benefit; return on average common equity excluding merger related expenses net of tax, and NOL tax benefit; return on average tangible common equity; return on average tangible common equity excluding merger related expenses net of tax, and NOL tax benefit; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses on loans to total loans excluding Warehouse Purchase Program and PPP loans; the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities and merger related expenses, for internal planning and forecasting purposes. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and their presentation, together with the accompanying reconciliations, provides a more complete understanding of factors and trends affecting Prosperity's business and allows investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP financial measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP financial measures should not be considered a substitute for, nor of greater importance than, GAAP basis financial measures and results; Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. Please refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures to the nearest respective GAAP financial measures.

Prosperity Bancshares, Inc. ®

As of December 31, 2021, Prosperity Bancshares, Inc.® is a $37.834 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma.  Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

Prosperity currently operates 273 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 63 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; and 8 in the Tulsa, Oklahoma area.

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

Cautionary Notes on Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may," or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity's possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity's future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity's loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity's operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement, as well as expectations regarding the effects of the COVID-19 pandemic on Prosperity's operating income, financial condition and cash flows.  These forward–looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements.  These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; 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, are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of two companies or as a result of the strength of the economy and competitive factors generally; a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate, interest rate and commodity price fluctuations; the effect, impact, potential duration or other implications of the COVID-19 pandemic; and weather.  These and various other factors are discussed in Prosperity Bancshares' Annual Report on Form 10-K for the year ended December 31, 2020, Quarterly Report on Form 10-Q for the period ended September 30, 2021 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 $4.2 million, net of tax, primarily comprised of loan discount accretion of $5.4 million for the three months ended December 31, 2021.

(3)

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

(4)

Includes purchase accounting adjustments of $4.3 million, net of tax, primarily comprised of loan discount accretion of $5.4 million for the three months ended September 30, 2021.

(5)

Includes purchase accounting adjustments of $31.5 million, net of tax, primarily comprised of loan discount accretion of $39.3 million for the year ended December 31, 2021.

(6)

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

Bryan/College Station Area


Garland


Mount Vernon


Liberty


North University

Bryan


Grapevine


Palestine


Magnolia


Texas Tech Student Union

Bryan-29th Street


Grapevine Main


Rusk


Magnolia Parkway



Bryan-East


Kiest


Seven Points


Mont Belvieu


Midland

Bryan-North


Lake Highlands


Teague


Nederland


Wadley

Caldwell


McKinney


Tyler-Beckham


Needville


Wall Street

College Station


McKinney Eldorado


Tyler-South Broadway


Rosenberg



Crescent Point


McKinney Redbud


Tyler-University


Shadow Creek


Odessa

Hearne


North Carrolton


Winnsboro


Spring


Grandview

Huntsville


Oak Cliff




Tomball


Grant

Madisonville


Park Cities


Houston Area


Waller


Kermit Highway

Navasota


Plano


Houston


West Columbia


Parkway

New Waverly


Plano-West


Aldine


Wharton



Rock Prairie


Preston Forest


Alief


Winnie


Other West Texas Area

Southwest Parkway


Preston Parker


Bellaire


Wirt


Locations

Tower Point


Preston Royal


Beltway




Big Spring

Wellborn Road


Red Oak


Clear Lake


South Texas Area -


Brownfield



Richardson


Copperfield


Corpus Christi


Brownwood

Central Texas Area


Richardson-West


Cypress


Calallen


Cisco

Austin


Rosewood Court


Downtown


Carmel


Comanche

Allandale


The Colony


Eastex


Northwest


Early

Cedar Park


Tollroad


Fairfield


Saratoga


Floydada

Congress


Trinity Mills


First Colony


Timbergate


Gorman

Lakeway


Turtle Creek


Fry Road


Water Street


Levelland

Liberty Hill


West 15th Plano


Gessner




Littlefield

Northland


West Allen


Gladebrook


Victoria


Merkel

Oak Hill


Westmoreland


Grand Parkway


Victoria Main


Plainview

Research Blvd


Wylie


Heights


Victoria-Navarro


San Angelo

Westlake




Highway 6 West


Victoria-North


Slaton



Fort Worth


Little York


Victoria Salem


Snyder

Other Central Texas Area


Haltom City


Medical Center





Locations


Hulen


Memorial Drive


Other South Texas Area


Oklahoma

Bastrop


Keller


Northside


 Locations


Central Oklahoma Area

Canyon Lake


Museum Place


Pasadena


Alice


Oklahoma City

Dime Box


Renaissance Square


Pecan Grove


Aransas Pass


23rd Street

Dripping Springs


Roanoke


Pin Oak


Beeville


Expressway

Elgin


Stockyards


River Oaks


Colony Creek


I-240

Flatonia




Sugar Land


Cuero


Memorial

Georgetown


Other Dallas/Fort Worth Area


SW Medical Center


Edna



Gruene


Locations


Tanglewood


Goliad


Other Central Oklahoma Area

Kingsland


Arlington


The Plaza


Gonzales


 Locations

La Grange


Azle


Uptown


Hallettsville


Edmond

Lexington


Ennis


Waugh Drive


Kingsville


Norman

New Braunfels


Gainesville


Westheimer


Mathis



Pleasanton


Glen Rose


West University


Padre Island


Tulsa Area

Round Rock


Granbury


Woodcreek


Palacios


Tulsa

San Antonio


Grand Prairie




Port Lavaca


Garnett

Schulenburg


Jacksboro


Katy


Portland


Harvard

Seguin


Mesquite


Cinco Ranch


Rockport


Memorial

Smithville


Muenster


Katy-Spring Green


Sinton


Sheridan

Thorndale


Runaway Bay




Taft


S. Harvard

Weimar


Sanger


The Woodlands


Yoakum


Utica Tower



Waxahachie


The Woodlands-College Park


Yorktown


Yale

Dallas/Fort Worth Area


Weatherford


The Woodlands-I-45





Dallas




The Woodlands-Research Forest


West Texas Area


Other Tulsa Area Locations

14th Street Plano


East Texas Area




Abilene


Owasso

Abrams Centre


Athens


Other Houston Area


Antilley Road



Addison


Blooming Grove


Locations


Barrow Street



Allen


Canton


Angleton


Cypress Street



Balch Springs


Carthage


Bay City


Judge Ely



Camp Wisdom


Corsicana


Beaumont


Mockingbird



Carrollton


Crockett


Cleveland





Cedar Hill


Eustace


East Bernard


Lubbock



Coppell


Gilmer


El Campo


4th Street



East Plano


Grapeland


Dayton


66th Street



Euless


Gun Barrel City


Galveston


82nd Street



Frisco


Jacksonville


Groves


86th Street



Frisco Warren


Kerens


Hempstead


98th Street



Frisco-West


Longview


Hitchcock


Avenue Q



Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020


Balance Sheet Data (at period end)





















Loans held for sale


$

7,274



$

10,197



$

9,080



$

20,991



$

46,777


Loans held for investment



16,833,171




16,949,486




17,147,146




17,345,506




17,357,788


Loans held for investment - Warehouse Purchase Program



1,775,699




1,998,049




2,095,559




2,272,389




2,842,379


Total loans



18,616,144




18,957,732




19,251,785




19,638,886




20,246,944























Investment securities(A)



12,818,901




12,629,368




11,918,691




10,088,002




8,542,820


Federal funds sold



241




237




281




8,986




553


Allowance for credit losses on loans



(286,380)




(287,187)




(302,884)




(307,210)




(316,068)


Cash and due from banks



2,547,739




1,055,386




1,059,879




1,947,235




1,342,996


Goodwill



3,231,636




3,231,636




3,231,636




3,231,636




3,231,636


Core deposit intangibles, net



61,684




64,539




67,417




70,304




73,235


Other real estate owned



622




150




144




462




10,593


Fixed assets, net



319,799




322,799




324,502




326,970




323,572


Other assets



523,584




537,459




548,473




553,147




602,994


Total assets


$

37,833,970



$

36,512,119



$

36,099,924



$

35,558,418



$

34,059,275























Noninterest-bearing deposits


$

10,750,034



$

10,326,489



$

10,099,149



$

9,820,445



$

9,151,233


Interest-bearing deposits



20,021,728




19,125,163




19,011,092




18,942,660




18,209,259


Total deposits



30,771,762




29,451,652




29,110,241




28,763,105




27,360,492


Other borrowings
















Securities sold under repurchase agreements



448,099




440,969




433,069




377,106




389,583


Subordinated notes
















Allowance for credit losses on off-balance sheet credit exposures



29,947




29,947




29,947




29,947




29,947


Other liabilities



156,926




244,110




216,330




166,414




148,584


Total liabilities



31,406,734




30,166,678




29,789,587




29,336,572




27,928,606


Shareholders' equity(B)



6,427,236




6,345,441




6,310,337




6,221,846




6,130,669


Total liabilities and equity


$

37,833,970



$

36,512,119



$

36,099,924



$

35,558,418



$

34,059,275




(A)

Includes $2,290, $2,483, $1,394, $970 and $974 in unrealized gains on available for sale securities for the quarterly periods ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

(B)

Includes $1,809, $1,961, $1,101, $766 and $769 in after-tax unrealized gains on available for sale securities for the quarterly periods ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)




Three Months Ended



Year-to-Date




Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Dec 31, 2021



Dec 31, 2020


Income Statement Data





























Interest income:





























Loans


$

206,209



$

213,821



$

216,803



$

233,075



$

241,625



$

869,908



$

975,895


Securities(C)



46,857




46,217




43,708




38,677




36,721




175,459




166,812


Federal funds sold and other earning assets



563




302




340




351




301




1,556




1,203


Total interest income



253,629




260,340




260,851




272,103




278,647




1,046,923




1,143,910































Interest expense:





























Deposits



8,685




11,578




15,288




17,362




19,757




52,913




102,502


Other borrowings















33







3,550


Securities sold under repurchase agreements



184




195




164




159




224




702




1,627


Subordinated notes and trust preferred















999







5,498


Total interest expense



8,869




11,773




15,452




17,521




21,013




53,615




113,177


Net interest income



244,760




248,567




245,399




254,582




257,634




993,308




1,030,733


Provision for credit losses





















20,000


Net interest income after provision for credit losses



244,760




248,567




245,399




254,582




257,634




993,308




1,010,733































Noninterest income:





























Nonsufficient funds (NSF) fees



8,401




7,962




6,560




6,687




8,051




29,610




30,295


Credit card, debit card and ATM card income



8,894




8,837




8,918




8,031




8,193




34,680




31,245


Service charges on deposit accounts



6,237




6,115




6,062




5,978




6,046




24,392




23,860


Trust income



2,698




2,467




2,276




2,837




2,192




10,278




9,598


Mortgage income



685




1,396




2,914




3,307




3,989




8,302




10,777


Brokerage income



953




861




795




711




642




3,320




2,504


Bank owned life insurance income



1,317




1,325




1,294




1,292




1,252




5,228




5,754


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



1,165




255




(244)




(79)




(675)




1,097




(5,533)


Other noninterest income



5,407




5,427




6,981




5,244




6,857




23,059




23,034


Total noninterest income



35,757




34,645




35,556




34,008




36,547




139,966




131,534































Noninterest expense:





























Salaries and benefits



76,496




78,412




75,611




80,037




77,809




310,556




309,268


Net occupancy and equipment



8,140




8,165




8,046




7,833




8,223




32,184




35,037


Credit and debit card, data processing and software amortization



9,050




9,103




8,718




8,233




8,442




35,104




40,329


Regulatory assessments and FDIC insurance



2,801




2,497




2,670




2,670




2,670




10,638




9,861


Core deposit intangibles amortization



2,855




2,878




2,887




2,931




3,243




11,551




13,169


Depreciation



4,518




4,524




4,513




4,540




4,261




18,095




18,232


Communications



3,134




3,013




2,982




2,899




2,931




12,028




12,477


Other real estate expense



24




30




198




244




279




496




623


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



2




4




(1,839)




(887)




(195)




(2,720)




(458)


Merger related expenses





















8,018


Other noninterest expense



12,518




11,189




11,405




10,576




12,542




45,688




50,677


Total noninterest expense



119,538




119,815




115,191




119,076




120,205




473,620




497,233


Income before income taxes



160,979




163,397




165,764




169,514




173,976




659,654




645,034


Provision for income taxes



34,192




34,807




35,153




36,205




36,885




140,357




116,130


Net income available to common shareholders


$

126,787



$

128,590



$

130,611



$

133,309



$

137,091



$

519,297



$

528,904




(C)

Interest income on securities was reduced by net premium amortization of $16,006, $15,141, $14,436, $12,844 and $11,509 for the three months ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively, and $58,427 and $38,827 for the years ended December 31, 2021 and December 31, 2020, respectively.

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

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




Three Months Ended



Year-to-Date





Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Dec 31, 2021



Dec 31, 2020

































Profitability






























Net income (D) (E)


$

126,787



$

128,590



$

130,611



$

133,309



$

137,091



$

519,297



$

528,904

































Basic earnings per share


$

1.38



$

1.39



$

1.41



$

1.44



$

1.48



$

5.60



$

5.68



Diluted earnings per share


$

1.38



$

1.39



$

1.41



$

1.44



$

1.48



$

5.60



$

5.68

































Return on average assets (F)



1.37

%



1.42

%



1.45

%



1.54

%



1.63

%



1.44

%



1.62

%

(J)

Return on average common equity (F)



7.91

%



8.07

%



8.31

%



8.60

%



8.98

%



8.21

%



8.85

%

(J)

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



16.26

%



16.72

%



17.49

%



18.43

%



19.57

%



17.18

%



19.83

%

(J)

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



2.97

%



3.10

%



3.11

%



3.41

%



3.49

%



3.14

%



3.64

%


Efficiency ratio (G) (I)



42.79

%



42.34

%



40.96

%



41.25

%



40.77

%



41.83

%



42.58

%

(K)































Liquidity and Capital Ratios






























Equity to assets



16.99

%



17.38

%



17.48

%



17.50

%



18.00

%



16.99

%



18.00

%


Common equity tier 1 capital



15.10

%



14.84

%



15.26

%



14.60

%



13.74

%



15.10

%



13.74

%


Tier 1 risk-based capital



15.10

%



14.84

%



15.26

%



14.60

%



13.74

%



15.10

%



13.74

%


Total risk-based capital



15.45

%



15.20

%



15.71

%



15.07

%



14.23

%



15.45

%



14.23

%


Tier 1 leverage capital



9.62

%



9.55

%



9.50

%



9.68

%



9.67

%



9.62

%



9.67

%


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



9.07

%



9.18

%



9.18

%



9.05

%



9.19

%



9.07

%



9.19

%
































Other Data






























Weighted-average shares used in computing earnings per common share






























Basic



92,162




92,683




92,935




92,854




92,559




92,657




93,058



Diluted



92,162




92,683




92,935




92,854




92,559




92,657




93,058



Period end shares outstanding



92,170




92,160




92,935




92,929




92,571




92,170




92,571



Cash dividends paid per common share


$

0.52



$

0.49



$

0.49



$

0.49



$

0.49



$

1.99



$

1.87



Book value per common share


$

69.73



$

68.85



$

67.90



$

66.95



$

66.23



$

69.73



$

66.23



Tangible book value per common share (G)


$

34.00



$

33.09



$

32.40



$

31.42



$

30.53



$

34.00



$

30.53

































Common Stock Market Price






























High


$

78.67



$

72.97



$

78.06



$

83.02



$

70.38



$

83.02



$

75.22



Low


$

68.53



$

64.40



$

69.83



$

66.45



$

50.43



$

64.40



$

42.02



Period end closing price


$

72.35



$

71.13



$

71.80



$

76.16



$

69.36



$

72.35



$

69.36



Employees – FTE (excluding overtime)



3,704




3,625




3,724




3,724




3,756




3,704




3,756



Number of banking centers



273




273




274




275




275




273




275



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



Three Months Ended


Year-to-Date


Dec 31, 2021


Sep 30, 2021


Jun 30, 2021


Mar 31, 2021


Dec 31, 2020


Dec 31, 2021


Dec 31, 2020

Loan discount accretion














ASC 310-20

$4,635


$3,761


$9,731


$13,313


$13,514


$31,440


$70,705

ASC 310-30

$731


$1,618


$2,462


$3,027


$2,545


$7,838


$20,636

Securities net amortization

$139


$136


$171


$111


$66


$557


$579

Time deposits amortization

$127


$201


$327


$507


$790


$1,162


$6,093



(E)

Using effective tax rate of 21.2%, 21.3%, 21.2%, 21.4% and 21.2% for the three months ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively, and 21.3% and 18.0% for the years ended December 31, 2021 and December 31, 2020, respectively. Net income for the second quarter of 2020 includes a tax benefit for NOL related to the CARES Act.

(F)

Interim periods annualized.

(G)

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

(H)

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

(I)

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

(J) 

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

(K) 

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

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


YIELD ANALYSIS


Three Months Ended





Dec 31, 2021



Sep 30, 2021



Dec 31, 2020





Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(L)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(L)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(L)

Interest-earning assets:






































Loans held for sale


$

8,794



$

71



3.20%



$

11,714



$

91



3.08%



$

42,856



$

348



3.23%



Loans held for investment



16,830,163




192,200



4.53%




17,102,998




199,019



4.62%




17,700,756




220,357



4.95%



Loans held for investment - Warehouse Purchase Program



1,772,971




13,938



3.12%




1,836,252




14,711



3.18%




2,603,455




20,920



3.20%



Total Loans



18,611,928




206,209



4.40%




18,950,964




213,821



4.48%




20,347,067




241,625



4.72%



Investment securities



12,751,857




46,857



1.46%


(M)


12,184,964




46,217



1.50%


(M)


8,001,679




36,721



1.83%


(M)

Federal funds sold and other earning assets



1,393,859




563



0.16%




734,787




302



0.16%




1,094,487




301



0.11%



Total interest-earning assets



32,757,644




253,629



3.07%




31,870,715




260,340



3.24%




29,443,233




278,647



3.76%



Allowance for credit losses on loans



(287,191)












(301,011)












(322,138)











Noninterest-earning assets



4,476,582












4,728,965












4,569,811











Total assets


$

36,947,035











$

36,298,669











$

33,690,906

















































Interest-bearing liabilities:






































Interest-bearing demand deposits


$

6,196,283



$

2,187



0.14%



$

6,089,678



$

3,614



0.24%



$

5,545,298



$

5,301



0.38%



Savings and money market deposits



10,286,650




3,817



0.15%




9,944,664




4,522



0.18%




9,170,179




6,985



0.30%



Certificates and other time deposits



2,766,123




2,681



0.38%




2,897,123




3,442



0.47%




3,047,475




7,471



0.98%



Other borrowings





















2,435




33



5.39%



Securities sold under repurchase agreements



432,981




184



0.17%




448,338




195



0.17%




376,779




224



0.24%



Subordinated notes





















81,570




999



4.87%



Total interest-bearing liabilities



19,682,037




8,869



0.18%


(N)


19,379,803




11,773



0.24%


(N)


18,223,736




21,013



0.46%


(N)







































Noninterest-bearing liabilities:






































Noninterest-bearing demand deposits



10,587,441












10,286,062












9,103,742











Allowance for credit losses on off-balance sheet credit exposures



29,947












29,947












29,947











Other liabilities



234,746












229,502












224,907











Total liabilities



30,534,171












29,925,314












27,582,332











Shareholders' equity



6,412,864












6,373,355












6,108,574











Total liabilities and shareholders' equity


$

36,947,035











$

36,298,669











$

33,690,906

















































Net interest income and margin






$

244,760



2.96%







$

248,567



3.09%







$

257,634



3.48%



Non-GAAP to GAAP reconciliation:






































Tax equivalent adjustment







457












551












664







Net interest income and margin (tax equivalent basis)






$

245,217



2.97%







$

249,118



3.10%







$

258,298



3.49%





(L) 

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

(M) 

Yield on securities was impacted by net premium amortization of $16,006, $15,141, and $11,509 for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

(N) 

Total cost of funds, including noninterest bearing deposits, was 0.12%, 0.16%, and 0.31% for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


YIELD ANALYSIS


Year-to-Date





Dec 31, 2021



Dec 31, 2020





Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(O)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(O)

Interest-earning assets:


























Loans held for sale


$

16,807



$

510



3.03%



$

55,883



$

1,923



3.44%



Loans held for investment



17,128,069




806,012



4.71%




17,842,438




910,532



5.10%



Loans held for investment - Warehouse Purchase Program



1,988,724




63,386



3.19%




1,964,206




63,440



3.23%



Total loans



19,133,600




869,908



4.55%




19,862,527




975,895



4.91%



Investment securities



11,328,903




175,459



1.55%


(P)


8,022,205




166,812



2.08%


(P)

Federal funds sold and other earning assets



1,212,698




1,556



0.13%




529,075




1,203



0.23%



Total interest-earning assets



31,675,201




1,046,923



3.31%




28,413,807




1,143,910



4.03%



Allowance for credit losses on loans



(302,381)












(324,308)











Noninterest-earning assets



4,602,458












4,555,851











Total assets


$

35,975,278











$

32,645,350





































Interest-bearing liabilities:


























Interest-bearing demand deposits


$

6,169,864



$

17,215



0.28%



$

5,177,736



$

22,046



0.43%



Savings and money market deposits



9,883,549




19,582



0.20%




8,654,874




37,685



0.44%



Certificates and other time deposits



2,917,976




16,116



0.55%




3,194,274




42,771



1.34%



Other borrowings












329,276




3,550



1.08%



Securities sold under repurchase agreements



410,747




702



0.17%




371,872




1,627



0.44%



Subordinated notes












114,499




5,498



4.80%



Total interest-bearing liabilities



19,382,136




53,615



0.28%


(Q)


17,842,531




113,177



0.63%


(Q)



























Noninterest-bearing liabilities:


























Noninterest-bearing demand deposits



10,036,519












8,558,385











Allowance for credit losses on off-balance sheet credit exposures



29,947












25,735











Other liabilities



204,522












244,047











Total liabilities



29,653,124












26,670,698











Shareholders' equity



6,322,154












5,974,652











Total liabilities and shareholders' equity



35,975,278











$

32,645,350





































Net interest income and margin






$

993,308



3.14%







$

1,030,733



3.63%



Non-GAAP to GAAP reconciliation:


























Tax equivalent adjustment







2,229












2,735







Net interest income and margin (tax equivalent basis)






$

995,537



3.14%







$

1,033,468



3.64%





(O)

Based on an actual 365-day or 366-day basis.

(P)

Yield on securities was impacted by net premium amortization of $58,427 and $38,827 for the years ended December 31, 2021 and 2020, respectively.

(Q)

Total cost of funds, including noninterest bearing deposits, was 0.18% and 0.43% for the years ended December 31, 2021 and 2020, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020


YIELD TREND (R)








































Interest-Earning Assets:




















Loans held for sale


3.20

%



3.08

%



3.19

%



2.90

%



3.23

%

Loans held for investment


4.53

%



4.62

%



4.65

%



5.02

%



4.95

%

Loans held for investment - Warehouse Purchase Program


3.12

%



3.18

%



3.21

%



3.23

%



3.20

%

Total loans


4.40

%



4.48

%



4.50

%



4.80

%



4.72

%

Investment securities (S)


1.46

%



1.50

%



1.57

%



1.71

%



1.83

%

Federal funds sold and other earning assets


0.16

%



0.16

%



0.11

%



0.09

%



0.11

%

Total interest-earning assets


3.07

%



3.24

%



3.30

%



3.64

%



3.76

%





















Interest-Bearing Liabilities:




















Interest-bearing demand deposits


0.14

%



0.24

%



0.35

%



0.39

%



0.38

%

Savings and money market deposits


0.15

%



0.18

%



0.22

%



0.25

%



0.30

%

Certificates and other time deposits


0.38

%



0.47

%



0.58

%



0.76

%



0.98

%

Other borrowings














5.39

%

Securities sold under repurchase agreements


0.17

%



0.17

%



0.17

%



0.17

%



0.24

%

Subordinated notes














4.87

%

Total interest-bearing liabilities


0.18

%



0.24

%



0.32

%



0.38

%



0.46

%





















Net Interest Margin


2.96

%



3.09

%



3.10

%



3.40

%



3.48

%

Net Interest Margin (tax equivalent)


2.97

%



3.10

%



3.11

%



3.41

%



3.49

%



(R) 

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

(S) 

Yield on securities was impacted by net premium amortization of $16,006, $15,141, $14,436, $12,844 and $11,509 for the three months ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Three Months Ended




Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020


Balance Sheet Averages





















Loans held for sale


$

8,794



$

11,714



$

13,716



$

33,327



$

42,856


Loans held for investment



16,830,163




17,102,998




17,305,259




17,279,066




17,700,756


Loans held for investment - Warehouse Purchase Program



1,772,971




1,836,252




1,984,305




2,369,601




2,603,455


Total Loans



18,611,928




18,950,964




19,303,280




19,681,994




20,347,067























Investment securities



12,751,857




12,184,964




11,180,948




9,148,841




8,001,679


Federal funds sold and other earning assets



1,393,859




734,787




1,221,993




1,506,645




1,094,487


Total interest-earning assets



32,757,644




31,870,715




31,706,221




30,337,480




29,443,233


Allowance for credit losses on loans



(287,191)




(301,011)




(306,059)




(315,590)




(322,138)


Cash and due from banks



329,406




570,765




521,737




308,787




289,579


Goodwill



3,231,637




3,231,637




3,231,637




3,233,231




3,231,850


Core deposit intangibles, net



63,091




65,955




68,830




71,763




74,919


Other real estate



321




279




3,001




6,385




14,573


Fixed assets, net



321,524




323,584




326,570




326,004




325,485


Other assets



530,603




536,745




544,085




576,300




633,405


Total assets


$

36,947,035



$

36,298,669



$

36,096,022



$

34,544,360



$

33,690,906























Noninterest-bearing deposits


$

10,587,441



$

10,286,062



$

10,062,085



$

9,206,791



$

9,103,742


Interest-bearing demand deposits



6,196,283




6,089,678




6,281,068




6,112,469




5,545,298


Savings and money market deposits



10,286,650




9,944,664




9,872,624




9,420,064




9,170,179


Certificates and other time deposits



2,766,123




2,897,123




2,980,186




3,031,621




3,047,475


Total deposits



29,836,497




29,217,527




29,195,963




27,770,945




26,866,694


Other borrowings















2,435


Securities sold under repurchase agreements



432,981




448,338




383,975




376,662




376,779


Subordinated notes















81,570


Allowance for credit losses on off-balance sheet credit exposures



29,947




29,947




29,947




29,947




29,947


Other liabilities



234,746




229,502




198,748




169,138




224,907


Shareholders' equity



6,412,864




6,373,355




6,287,389




6,197,668




6,108,574


Total liabilities and equity


$

36,947,035



$

36,298,669



$

36,096,022



$

34,544,360



$

33,690,906


Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020


Period End Balances








































































Loan Portfolio




































Commercial and industrial


$

2,050,631



11.0

%


$

1,841,899



9.7

%


$

2,021,951



10.5

%


$

2,104,116



10.7

%


$

2,210,003



10.9

%

Warehouse purchase program



1,775,699



9.5

%



1,998,049



10.6

%



2,095,559



10.9

%



2,272,389



11.6

%



2,842,379



14.0

%

Construction, land development and other land loans



2,299,715



12.4

%



2,269,417



12.0

%



2,147,474



11.2

%



2,031,355



10.4

%



1,956,960



9.7

%

1-4 family residential



4,860,419



26.1

%



4,709,468



24.8

%



4,531,589



23.5

%



4,310,437



21.9

%



4,253,331



21.0

%

Home equity



808,289



4.4

%



746,426



3.9

%



637,431



3.3

%



554,278



2.8

%



504,207



2.5

%

Commercial real estate (includes multi-family residential)



5,251,368



28.2

%



5,550,841



29.3

%



5,681,184



29.5

%



5,858,475



29.8

%



6,078,764



30.0

%

Agriculture (includes farmland)



620,338



3.3

%



631,497



3.3

%



590,135



3.1

%



571,783



2.9

%



581,352



2.9

%

Consumer and other



288,496



1.6

%



274,980



1.5

%



264,652



1.4

%



293,023



1.5

%



344,028



1.7

%

Energy



491,305



2.6

%



569,314



3.0

%



501,821



2.6

%



503,947



2.6

%



512,735



2.5

%

Paycheck Protection Program



169,884



0.9

%



365,841



1.9

%



779,989



4.0

%



1,139,083



5.8

%



963,185



4.8

%

Total loans


$

18,616,144






$

18,957,732






$

19,251,785






$

19,638,886






$

20,246,944









































Deposit Types




































Noninterest-bearing DDA


$

10,750,034



34.9

%


$

10,326,489



35.0

%


$

10,099,149



34.7

%


$

9,820,445



34.1

%


$

9,151,233



33.4

%

Interest-bearing DDA



6,741,092



21.9

%



6,088,923



20.7

%



6,185,115



21.2

%



6,158,641



21.4

%



5,899,051



21.6

%

Money market



7,178,904



23.3

%



6,864,664



23.3

%



6,706,252



23.0

%



6,714,889



23.4

%



6,381,014



23.3

%

Savings



3,401,727



11.1

%



3,293,850



11.2

%



3,160,606



10.9

%



3,083,447



10.7

%



2,863,086



10.5

%

Certificates and other time deposits



2,700,005



8.8

%



2,877,726



9.8

%



2,959,119



10.2

%



2,985,683



10.4

%



3,066,108



11.2

%

Total deposits


$

30,771,762






$

29,451,652






$

29,110,241






$

28,763,105






$

27,360,492









































Loan to Deposit Ratio



60.5

%






64.4

%






66.1

%






68.3

%






74.0

%




Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


Construction Loans




Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020






































Single family residential construction


$

728,393



31.7

%


$

659,248



29.0

%


$

624,954



29.1

%


$

590,223



29.1

%


$

579,761



29.6

%

Land development



99,099



4.3

%



92,623



4.1

%



97,709



4.6

%



97,267



4.8

%



103,307



5.3

%

Raw land



322,673



14.0

%



315,803



13.9

%



245,484



11.4

%



243,394



12.0

%



247,628



12.7

%

Residential lots



206,978



9.0

%



195,201



8.6

%



165,645



7.7

%



176,884



8.6

%



158,441



8.1

%

Commercial lots



184,901



8.0

%



169,189



7.5

%



153,714



7.2

%



137,512



6.8

%



114,427



5.8

%

Commercial construction and other



757,687



33.0

%



837,436



36.9

%



860,069



40.0

%



786,192



38.7

%



753,587



38.5

%

Net unaccreted discount



(16)







(83)







(101)







(117)







(191)





Total construction loans


$

2,299,715






$

2,269,417






$

2,147,474






$

2,031,355






$

1,956,960









































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



Houston



Dallas



Austin



OK City



Tulsa



Other (T)



Total



Collateral Type





























Shopping center/retail

$

338,333



$

295,795



$

43,084



$

17,404



$

28,424



$

285,351



$

1,008,391



Commercial and industrial buildings


156,430




75,850




17,850




22,957




17,848




158,717




449,652



Office buildings


110,424




423,035




23,515




70,651




4,761




77,452




709,838



Medical buildings


96,724




21,552




2,594




22,871




43,311




65,361




252,413



Apartment buildings


120,376




199,421




12,842




15,669




34,737




139,622




522,667



Hotel


86,187




68,438




41,308




28,958







140,210




365,101



Other


74,949




68,338




28,468




7,932




3,735




72,608




256,030



Total

$

983,423



$

1,152,429



$

169,661



$

186,442



$

132,816



$

939,321



$

3,564,092


(U)

Acquired Loans




Non-PCD Loans



PCD Loans



Total Acquired Loans




Balance at

Acquisition

Date



Balance at

Sep 30, 2021



Balance at

Dec 31, 2021



Balance at

Acquisition

Date



Balance at

Sep 30, 2021



Balance at

Dec 31, 2021



Balance at

Acquisition

Date



Balance at

Sep 30, 2021



Balance at

Dec 31, 2021


Loan marks:





































Acquired banks (V)


$

345,599



$

12,774



$

8,143



$

320,052



$

5,569



$

4,838



$

665,651



$

18,343



$

12,981







































Acquired portfolio loan balances:





































Acquired banks (V)



12,286,159




2,585,926




2,094,039




689,573




89,833




83,909




12,975,732


(W)


2,675,759




2,177,948







































Acquired portfolio loan balances less loan marks


$

11,940,560



$

2,573,152



$

2,085,896



$

369,521



$

84,264



$

79,071



$

12,310,081



$

2,657,416



$

2,164,967




(T)

Includes other MSA and non-MSA regions.

(U) 

Represents a portion of total commercial real estate loans of $5.251 billion as of December 31, 2021.

(V)

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

(W) 

Actual principal balances acquired.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Year-to-Date



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Dec 31, 2021



Dec 31, 2020


Asset Quality




























Nonaccrual loans

$

26,269



$

35,035



$

32,880



$

43,025



$

47,185



$

26,269



$

47,185


Accruing loans 90 or more days past due


887




1,038




330




313




1,699




887




1,699


Total nonperforming loans


27,156




36,073




33,210




43,338




48,884




27,156




48,884


Repossessed assets


310




326




310




362




93




310




93


Other real estate


622




150




144




462




10,593




622




10,593


Total nonperforming assets

$

28,088



$

36,549



$

33,664



$

44,162



$

59,570



$

28,088



$

59,570






























Nonperforming assets:




























Commercial and industrial (includes energy)

$

6,150



$

8,199



$

8,613



$

11,290



$

16,176



$

6,150



$

16,176


Construction, land development and other land loans


1,841




803




1,423




1,692




1,566




1,841




1,566


1-4 family residential (includes home equity)


11,990




11,117




11,681




11,920




25,830




11,990




25,830


Commercial real estate (includes multi-family residential)


7,276




15,691




11,266




16,896




12,315




7,276




12,315


Agriculture (includes farmland)


816




643




661




803




2,075




816




2,075


Consumer and other


15




96




20




1,561




1,608




15




1,608


Total

$

28,088



$

36,549



$

33,664



$

44,162



$

59,570



$

28,088



$

59,570


Number of loans/properties


157




155




152




167




208




157




208


Allowance for credit losses on loans

$

286,380



$

287,187



$

302,884



$

307,210



$

316,068



$

286,380



$

316,068






























Net charge-offs (recoveries):




























Commercial and industrial (includes energy)

$

177



$

3,763



$

3,529



$

1,584



$

4,085



$

9,053



$

24,607


Construction, land development and other land loans


(162)




(4)




(105)




(5)




(110)




(276)




350


1-4 family residential (includes home equity)


(72)




66




(6)




47




1,982




35




2,290


Commercial real estate (includes multi-family residential)


(10)




11,180




517




6,589




626




18,276




1,221


Agriculture (includes farmland)


(102)




(63)




(9)




33




(4)




(141)




(25)


Consumer and other


976




755




400




610




988




2,741




3,496


Total

$

807



$

15,697



$

4,326



$

8,858



$

7,567



$

29,688



$

31,939






























Asset Quality Ratios




























Nonperforming assets to average interest-earning assets


0.09

%



0.11

%



0.11

%



0.15

%



0.20

%



0.09

%



0.21

%

Nonperforming assets to loans and other real estate


0.15

%



0.19

%



0.17

%



0.22

%



0.29

%



0.15

%



0.29

%

Net charge-offs to average loans (annualized)


0.02

%



0.33

%



0.09

%



0.18

%



0.15

%



0.16

%



0.16

%

Allowance for credit losses on loans to total loans


1.54

%



1.51

%



1.57

%



1.56

%



1.56

%



1.54

%



1.56

%

Allowance for credit losses on loans to total loans, excluding

Warehouse Purchase Program loans and
Paycheck Protection Program loans (G)


1.72

%



1.73

%



1.85

%



1.89

%



1.92

%



1.72

%



1.92

%

Prosperity Bancshares, Inc.®

Notes to Selected Financial Data (Unaudited)

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


NOTES TO SELECTED FINANCIAL DATA


Prosperity's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, Prosperity reviews diluted earnings per share excluding merger related expenses net of tax, and NOL tax benefit; return on average assets excluding merger related expenses net of tax, and NOL tax benefit; return on average common equity excluding merger related expenses net of tax, and NOL tax benefit; return on average tangible common equity; return on average tangible common equity excluding merger related expenses net of tax, and NOL tax benefit; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses on loans 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 on loans to total loans (excluding Warehouse Purchase Program loans and PPP loans). Prosperity has included information below relating to these non-GAAP financial measures for the applicable periods presented.



Three Months Ended



Year-to-Date




Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Dec 31, 2021



Dec 31, 2020


Reconciliation of diluted earnings per share to diluted

earnings per share, excluding merger related

expenses net of tax, and NOL tax benefit:





























Net income


$

126,787



$

128,590



$

130,611



$

133,309



$

137,091



$

519,297



$

528,904


Add: merger related expenses net of tax(X)





















6,334


Less: NOL tax benefit (Y)





















(20,145)


Net income, excluding merger related expenses net of tax,

and NOL tax benefit (X) (Y)


$

126,787



$

128,590



$

130,611



$

133,309



$

137,091



$

519,297



$

515,093































Weighted average diluted shares outstanding



92,162




92,683




92,935




92,854




92,559




92,657




93,058


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


$



$



$



$



$



$



$

0.07


NOL tax benefit per diluted share (X)


$



$



$



$



$



$



$

(0.22)


Diluted earnings per share, excluding merger related

expenses net of tax, and NOL tax benefit (X) (Y)


$

1.38



$

1.39



$

1.41



$

1.44



$

1.48



$

5.60



$

5.54































Reconciliation of return on average assets to return on
average assets excluding merger related expenses
net of tax, and NOL tax benefit:





























Net income, excluding merger related expenses net of tax,

and NOL tax benefit (X) (Y)


$

126,787



$

128,590



$

130,611



$

133,309



$

137,091



$

519,297



$

515,093


Average total assets


$

36,947,035



$

36,298,669



$

36,096,022



$

34,544,360



$

33,690,906



$

35,975,278



$

32,645,350


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



1.37

%



1.42

%



1.45

%



1.54

%



1.63

%



1.44

%



1.58

%






























Reconciliation of return on average common equity to

return on average common equity excluding
merger related expenses net of tax, and NOL tax benefit:





























Net income, excluding merger related expenses net of tax,

and NOL tax benefit (X) (Y)


$

126,787



$

128,590



$

130,611



$

133,309



$

137,091



$

519,297



$

515,903


Average shareholders' equity


$

6,412,864



$

6,373,355



$

6,287,389



$

6,197,668



$

6,108,574



$

6,322,154



$

5,974,652


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



7.91

%



8.07

%



8.31

%



8.60

%



8.98

%



8.21

%



8.62

%






























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





























Net income


$

126,787



$

128,590



$

130,611



$

133,309



$

137,091



$

519,297



$

528,904


Average shareholders' equity


$

6,412,864



$

6,373,355



$

6,287,389



$

6,197,668



$

6,108,574



$

6,322,154



$

5,974,652


Less: Average goodwill and other intangible assets



(3,294,728)




(3,297,592)




(3,300,467)




(3,304,994)




(3,306,769)




(3,299,412)




(3,307,639)


Average tangible shareholders' equity


$

3,118,136



$

3,075,763



$

2,986,922



$

2,892,674



$

2,801,805



$

3,022,742



$

2,667,013


Return on average tangible common equity (F)



16.26

%



16.72

%



17.49

%



18.43

%



19.57

%



17.18

%



19.83

%



(X)

Calculated assuming a federal tax rate of 21.0%.

(Y) 

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



Three Months Ended



Year-to-Date




Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Dec 31, 2021



Dec 31, 2020































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

excluding merger related expenses net of tax, and

NOL tax benefit:





























Net income, excluding merger related expenses net of tax,

and NOL tax benefit (X) (Y)


$

126,787



$

128,590



$

130,611



$

133,309



$

137,091



$

519,297



$

515,093


Average shareholders' equity


$

6,412,864



$

6,373,355



$

6,287,389



$

6,197,668



$

6,108,574



$

6,322,154



$

5,974,652


Less: Average goodwill and other intangible assets



(3,294,728)




(3,297,592)




(3,300,467)




(3,304,994)




(3,306,769)




(3,299,412)




(3,307,639)


Average tangible shareholders' equity


$

3,118,136



$

3,075,763



$

2,986,922



$

2,892,674



$

2,801,805



$

3,022,742



$

2,667,013


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



16.26

%



16.72

%



17.49

%



18.43

%



19.57

%



17.18

%



19.31

%



























































Reconciliation of book value per share to tangible book

value per share:





























Shareholders' equity


$

6,427,236



$

6,345,441



$

6,310,337



$

6,221,846



$

6,130,669



$

6,427,236



$

6,130,669


Less: Goodwill and other intangible assets



(3,293,320)




(3,296,175)




(3,299,053)




(3,301,940)




(3,304,871)




(3,293,320)




(3,304,871)


Tangible shareholders' equity


$

3,133,916



$

3,049,266



$

3,011,284



$

2,919,906



$

2,825,798



$

3,133,916



$

2,825,798































Period end shares outstanding



92,170




92,160




92,935




92,929




92,571




92,170




92,571


Tangible book value per share


$

34.00



$

33.09



$

32.40



$

31.42



$

30.53



$

34.00




30.53































Reconciliation of equity to assets ratio to period end

tangible equity to period end tangible assets ratio:





























Tangible shareholders' equity


$

3,133,916



$

3,049,266



$

3,011,284



$

2,919,906



$

2,825,798



$

3,133,916



$

2,825,798


Total assets


$

37,833,970



$

36,512,119



$

36,099,924



$

35,558,418



$

34,059,275



$

37,833,970



$

34,059,275


Less: Goodwill and other intangible assets



(3,293,320)




(3,296,175)




(3,299,053)




(3,301,940)




(3,304,871)




(3,293,320)




(3,304,871)


Tangible assets


$

34,540,650



$

33,215,944



$

32,800,871



$

32,256,478



$

30,754,404



$

34,540,650



$

30,754,404


Period end tangible equity to period end tangible assets ratio



9.07

%



9.18

%



9.18

%



9.05

%



9.19

%



9.07

%



9.19

%






























Reconciliation of allowance for credit losses on loans to total
loans to allowance for credit losses on loans to total loans

excluding Warehouse Purchase Program and

Paycheck Protection Program loans:





























Allowance for credit losses on loans


$

286,380



$

287,187



$

302,884



$

307,210



$

316,068



$

286,380



$

316,068


Total loans


$

18,616,144



$

18,957,732



$

19,251,785



$

19,638,886



$

20,246,944



$

18,616,144



$

20,246,944


Less: Warehouse Purchase Program loans



(1,775,699)




(1,998,049)




(2,095,559)




(2,272,389)




(2,842,379)




(1,775,699)




(2,842,379)


Less: Paycheck Protection Program loans



(169,884)




(365,841)




(779,989)




(1,139,083)




(963,185)




(169,884)




(963,185)


Total loans less Warehouse Purchase Program and
Paycheck Protection Program loans


$

16,670,561



$

16,593,842



$

16,376,237



$

16,227,414



$

16,441,380



$

16,670,561



$

16,441,380


Allowance for credit losses on loans to total loans excluding

Warehouse Purchase Program and Paycheck
Protection Program loans



1.72

%



1.73

%



1.85

%



1.89

%



1.92

%



1.72

%



1.92

%






























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





























Noninterest expense


$

119,538



$

119,815



$

115,191



$

119,076



$

120,205



$

473,620



$

497,233































Net interest income


$

244,760



$

248,567



$

245,399



$

254,582



$

257,634



$

993,308



$

1,030,733


Noninterest income



35,757




34,645




35,556




34,008




36,547




139,966




131,534


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



1,165




255




(244)




(79)




(675)




1,097




(5,533)


Noninterest income excluding net gains and losses on the

sale or write down of assets and securities



34,592




34,390




35,800




34,087




37,222




138,869




137,067


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


$

279,352



$

282,957



$

281,199



$

288,669



$

294,856



$

1,132,177



$

1,167,800


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



42.79

%



42.34

%



40.96

%



41.25

%



40.77

%



41.83

%



42.58

%



Three Months Ended



Year-to-Date




Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021



Dec 31, 2020



Dec 31, 2021



Dec 31, 2020































Reconciliation of efficiency ratio to efficiency ratio

excluding net gains and losses on the sale of assets,

taxes and merger related expenses:





























Noninterest expense


$

119,538



$

119,815



$

115,191



$

119,076



$

120,205



$

473,620



$

497,233


Less: merger related expenses





















8,018


Noninterest expense excluding merger related expenses


$

119,538



$

119,815



$

115,191



$

119,076



$

120,205



$

473,620



$

489,215































Net interest income


$

244,760



$

248,567



$

245,399



$

254,582



$

257,634



$

993,308



$

1,030,733


Noninterest income



35,757




34,645




35,556




34,008




36,547




139,966




131,534


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



1,165




255




(244)




(79)




(675)




1,097




(5,533)


Noninterest income excluding net gains and losses on the

sale or write down of assets and taxes



34,592




34,390




35,800




34,087




37,222




138,869




137,067


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


$

279,352



$

282,957



$

281,199



$

288,669



$

294,856



$

1,132,177



$

1,167,800


Efficiency ratio excluding net gains and losses on the

sale or write down of assets, taxes and merger related expenses



42.79

%



42.34

%



40.96

%



41.25

%



40.77

%



41.83

%



41.89

%

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SOURCE Prosperity Bancshares, Inc.

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