PROSPERITY BANCSHARES, INC.® REPORTS FIRST QUARTER 2022 EARNINGS

Published: Apr. 27, 2022 at 5:30 AM CDT

- First quarter net income of $122.3 million and earnings per share (diluted) of $1.33

- Deposits increased $296.5 million or 1.0% (3.9% annualized) during the first quarter 2022

- Allowance for credit losses on loans and on off-balance sheet credit exposure of $315.1 million

- Allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program loans, of 1.71%(1)

- Nonperforming assets remain low at 0.08% of first quarter average interest-earning assets

- Return (annualized) on first quarter average assets of 1.29%

- Returns (annualized) on first quarter average common equity of 7.54% and average tangible common equity of 15.30%(1)

- Prosperity Bancshares was ranked Number 6 in Forbes' 2022 America's Best Banks

HOUSTON, April 27, 2022 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income of  $122.3 million for the quarter ended March 31, 2022 compared with $133.3 million for the same period in 2021. Net income per diluted common share was $1.33 for the quarter ended March 31, 2022, compared with $1.44 for the same period in 2021, and the annualized return on first quarter average assets was 1.29%. Nonperforming assets remain low at 0.08% of first quarter average interest-earning assets.

"Each year, Forbes assesses the 100 largest banks in the United States on growth, credit quality and earnings, as well as other factors, for its America's Best Banks list.  Prosperity Bank has been ranked in the Top 10 since the list's inception in 2010.  We have twice been ranked number 1, were ranked number 2 in 2021 and are ranked number 6 for 2022.  It is a testament to Prosperity's performance, culture, vision and consistency and distinguishes us among most banks" said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"I wish to congratulate and thank all our customers, associates and directors for helping us achieve this great honor," added Zalman.

"On a year-over-year basis, excluding Warehouse Purchase Program and Paycheck Protection Program ("PPP") loans, loans grew $409.3 million or 2.5% and deposits were up $2.3 billion or 8.0% for the same period. On a linked quarter basis, deposits increased $296.5 million or 3.9% annualized and loans were slightly down as we continue to see significant payoffs despite strong loan production," continued Zalman.

"Companies and individuals continue to move to Texas and Oklahoma primarily because of lower tax rates and a favorable pro-business political environment.  The overall economy remains strong despite concerns around higher interest rates, inflation, supply chain issues and the war between Russia and Ukraine," stated Zalman.

"Prosperity has a talented team, deep bench, strong earnings, a solid capital position and a fortress balance sheet.  We will continue working to help our customers and associates succeed and to build shareholder value," concluded Zalman.

Results of Operations for the Three Months Ended March 31, 2022

Net income was $122.3 million(2) for the three months ended March 31, 2022 compared with $133.3 million(3) for the same period in 2021. The change was primarily due to a decrease in loan interest income (including a decrease in PPP fees) and loan discount accretion of $11.1 million, partially offset by an increase in securities interest income and a decrease in interest expense. Net income per diluted common share was $1.33 for the three months ended March 31, 2022 compared with $1.44 for the same period in 2021. On a linked quarter basis, net income was $122.3 million(2) for the three months ended March 31, 2022 compared with $126.8 million(4) for the three months ended December 31, 2021. The change was primarily due to a decrease in loan interest income (including a decrease in PPP fees), partially offset by an increase in securities interest income. Net income per diluted common share was $1.33 for the three months ended March 31, 2022 compared with $1.38 for the three months ended December 31, 2021. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2022 were 1.29%, 7.54% and 15.30%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and securities) was 43.68%(1) for the three months ended March 31, 2022.

Net interest income before provision for credit losses for the three months ended March 31, 2022 was $239.9 million compared with $254.6 million for the same period in 2021. 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 $11.1 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 $239.9 million compared with $244.8 million for the three months ended December 31, 2021.

The net interest margin on a tax equivalent basis was 2.88% for the three months ended March 31, 2022 compared with 3.41% for the same period in 2021. The change was primarily due to lower average rates on loans, a decrease in loan discount accretion of $11.1 million and an increase in the average balance on investment securities, 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 2.88% for the three months ended March 31, 2022 compared with 2.97% for the three months ended December 31, 2021. The change was primarily due to lower average rates on loans and higher cash balances due to excess liquidity, partially offset by higher average balance and rates on investment securities.

Noninterest income was $35.1 million for the three months ended March 31, 2022 compared with $34.0 million for the same period in 2021, an increase of $1.1 million or 3.3%. This change was primarily due to an increase in nonsufficient funds fees, an increase in other noninterest income and a net gain on the sale of assets, partially offset by a decrease in mortgage income. On a linked quarter basis, noninterest income was $35.1 million compared with $35.8 million for the three months ended December 31, 2021.

Noninterest expense was $119.9 million for the three months ended March 31, 2022 compared with $119.1 million for the same period in 2021 and $119.5 million for the three months ended December 31, 2021.

Balance Sheet Information

At March 31, 2022, Prosperity had $38.271 billion in total assets, an increase of $2.713 billion or 7.6% compared with $35.558 billion at March 31, 2021.

Loans at March 31, 2022 were $18.068 billion, a decrease of $1.571 billion or 8.0%, compared with $19.639 billion at March 31, 2021, primarily due to a decrease in PPP, Warehouse Purchase Program and commercial real estate loans, partially offset by an increase in 1-4 family residential loans. Linked quarter loans decreased $548.6 million or 2.9% from $18.616 billion at December 31, 2021, primarily due to Warehouse Purchase Program loans. At March 31, 2022, Prosperity had $86.3 million of PPP loans compared to $1.139 billion of PPP loans at March 31, 2021 and $169.9 million of PPP loans at December 31, 2021. Excluding Warehouse Purchase Program and PPP loans, loans at March 31, 2022 were $16.637 billion compared to $16.227 billion at March 31, 2021, an increase of $409.3 million or 2.5%. Linked quarter loans, excluding Warehouse Purchase Program and PPP loans, decreased $33.8 million from $16.671 billion at December 31, 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 March 31, 2022, oil and gas loans totaled $445.9 million (net of discount and excluding PPP loans totaling $17.0 million) or 2.5% of total loans, of which $251.5 million were production loans and $194.4 million were servicing loans, compared with total oil and gas loans of $503.9 million (net of discount and excluding PPP loans totaling $142.6 million) or 2.6% of total loans at March 31, 2021 of which $289.4 million were production loans and $214.5 million were servicing loans. In addition, as of March 31, 2022, Prosperity had total unfunded commitments to oil and gas companies of $417.0 million compared with total unfunded commitments to oil and gas companies of $248.1 million as of March 31, 2021. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Additionally, Prosperity extends credit to hotels and restaurants. At March 31, 2022, loans to hotels totaled $392.0 million (excluding PPP loans totaling $512 thousand) or 2.2% of total loans, a decrease of $9.2 million or 2.3%, compared with $401.2 million (excluding PPP loans totaling $13.1 million) or 2.0% of total loans at March 31, 2021.  At March 31, 2022, loans to restaurants totaled $193.2 million (excluding PPP loans totaling $12.3 million) or 1.1% of total loans, a decrease of $15.5 million or 7.4%, compared with $208.7 million (excluding PPP loans totaling $125.2 million) or 1.1% of total loans at March 31, 2021.

Deposits at March 31, 2022 were $31.068 billion, an increase of $2.305 billion or 8.0%, compared with $28.763 billion at March 31, 2021. Linked quarter deposits increased $296.5 million or 1.0% (3.9% annualized) from $30.772 billion at December 31, 2021.

Asset Quality

Nonperforming assets totaled $27.2 million or 0.08% of quarterly average interest-earning assets at March 31, 2022, compared with $44.2 million or 0.15% of quarterly average interest-earning assets at March 31, 2021 and $28.1 million or 0.09% of quarterly average interest-earning assets at December 31, 2021.

The allowance for credit losses on loans and off-balance sheet credit exposures was $315.1 million at March 31, 2022 compared with $337.2 million at March 31, 2021 and $316.3 million at December 31, 2021.

The allowance for credit losses on loans was $285.2 million or 1.58% of total loans at March 31, 2022 compared with $307.2 million or 1.56% of total loans at March 31, 2021 and $286.4 million or 1.54% of total loans at December 31, 2021. Excluding Warehouse Purchase Program and PPP loans, the allowance for credit losses on loans to total loans was 1.71%(1) at March 31, 2022 compared with 1.89%(1) at March 31, 2021 and 1.72%(1) at December 31, 2021.

There was no provision for credit losses for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021.

Net charge-offs were $1.2 million for the three months ended March 31, 2022, compared with net charge-offs of $8.9 million for the three months ended March 31, 2021 and net charge-offs of $807 thousand for the three months ended December 31, 2021. During the first quarter of 2022, net charge-offs did not include any purchased credit deteriorated ("PCD") loans and $553 thousand of specific reserves on resolved PCD loans was released to the general reserve.

Dividend

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

COVID-19 Pandemic

Prosperity continues to monitor the latest developments regarding COVID-19. As of March 31, 2022,  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 March 31, 2022, had an outstanding balance of 819 loans totaling $86.3 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 March 31, 2022, Prosperity had approximately $29.0 million in outstanding loans subject to deferral and modification agreements.

Conference Call

Prosperity's management team will host a conference call on Wednesday, April 27, 2022, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's first quarter 2022 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 4266827.

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

Prosperity Bancshares, Inc. ®

As of March 31, 2022, Prosperity Bancshares, Inc.® is a $38.271 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 272 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 62 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, 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 $4.1 million, net of tax, primarily comprised of loan discount accretion of $5.2 million for the three months ended March 31, 2022.

(3)

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

(4)

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.

Bryan/College Station Area


Garland


Palestine


Magnolia


Texas Tech Student Union

Bryan


Grapevine


Rusk


Magnolia Parkway



Bryan-29th Street


Grapevine Main


Seven Points


Mont Belvieu


Midland

Bryan-East


Kiest


Teague


Nederland


Wadley

Bryan-North


Lake Highlands


Tyler-Beckham


Needville


Wall Street

Caldwell


McKinney


Tyler-South Broadway


Rosenberg



College Station


McKinney Eldorado


Tyler-University


Shadow Creek


Odessa

Crescent Point


McKinney Redbud


Winnsboro


Spring


Grandview

Hearne


North Carrolton




Tomball


Grant

Huntsville


Park Cities


Houston Area


Waller


Kermit Highway

Madisonville


Plano


Houston


West Columbia


Parkway

Navasota


Plano-West


Aldine


Wharton



New Waverly


Preston Forest


Alief


Winnie


Other West Texas Area

Rock Prairie


Preston Parker


Bellaire


Wirt


Locations

Southwest Parkway


Preston Royal


Beltway




Big Spring

Tower Point


Red Oak


Clear Lake


South Texas Area -


Brownfield

Wellborn Road


Richardson


Copperfield


Corpus Christi


Brownwood



Richardson-West


Cypress


Calallen


Cisco

Central Texas Area


Rosewood Court


Downtown


Carmel


Comanche

Austin


The Colony


Eastex


Northwest


Early

Allandale


Tollroad


Fairfield


Saratoga


Floydada

Cedar Park


Trinity Mills


First Colony


Timbergate


Gorman

Congress


Turtle Creek


Fry Road


Water Street


Levelland

Lakeway


West 15th Plano


Gessner




Littlefield

Liberty Hill


West Allen


Gladebrook


Victoria


Merkel

Northland


Westmoreland


Grand Parkway


Victoria Main


Plainview

Oak Hill


Wylie


Heights


Victoria-Navarro


San Angelo

Research Blvd




Highway 6 West


Victoria-North


Slaton

Westlake


Fort Worth


Little York


Victoria Salem


Snyder



Haltom City


Medical Center





Other Central Texas Area


Hulen


Memorial Drive


Other South Texas Area


Oklahoma

Locations


Keller


Northside


 Locations


Central Oklahoma Area

Bastrop


Museum Place


Pasadena


Alice


Oklahoma City

Canyon Lake


Renaissance Square


Pecan Grove


Aransas Pass


23rd Street

Dime Box


Roanoke


Pin Oak


Beeville


Expressway

Dripping Springs


Stockyards


River Oaks


Colony Creek


I-240

Elgin




Sugar Land


Cuero


Memorial

Flatonia


Other Dallas/Fort Worth Area


SW Medical Center


Edna



Georgetown


Locations


Tanglewood


Goliad


Other Central Oklahoma Area

Gruene


Arlington


The Plaza


Gonzales


 Locations

Kingsland


Azle


Uptown


Hallettsville


Edmond

La Grange


Ennis


Waugh Drive


Kingsville


Norman

Lexington


Gainesville


Westheimer


Mathis



New Braunfels


Glen Rose


West University


Padre Island


Tulsa Area

Pleasanton


Granbury


Woodcreek


Palacios


Tulsa

Round Rock


Grand Prairie




Port Lavaca


Garnett

San Antonio


Jacksboro


Katy


Portland


Harvard

Schulenburg


Mesquite


Cinco Ranch


Rockport


Memorial

Seguin


Muenster


Katy-Spring Green


Sinton


Sheridan

Smithville


Runaway Bay




Taft


S. Harvard

Thorndale


Sanger


The Woodlands


Yoakum


Utica Tower

Weimar


Waxahachie


The Woodlands-College Park


Yorktown


Yale



Weatherford


The Woodlands-I-45





Dallas/Fort Worth Area




The Woodlands-Research Forest


West Texas Area


Other Tulsa Area Locations

Dallas


East Texas Area




Abilene


Owasso

14th Street Plano


Athens


Other Houston Area


Antilley Road



Abrams Centre


Blooming Grove


Locations


Barrow Street



Addison


Canton


Angleton


Cypress Street



Allen


Carthage


Bay City


Judge Ely



Balch Springs


Corsicana


Beaumont


Mockingbird



Camp Wisdom


Crockett


Cleveland





Carrollton


Eustace


East Bernard


Lubbock



Cedar Hill


Gilmer


El Campo


4th Street



Coppell


Grapeland


Dayton


66th Street



East Plano


Gun Barrel City


Galveston


82nd Street



Euless


Jacksonville


Groves


86th Street



Frisco


Kerens


Hempstead


98th Street



Frisco Warren


Longview


Hitchcock


Avenue Q



Frisco-West


Mount Vernon


Liberty


North University



Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)






Mar 31, 2022



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021


Balance Sheet Data (at period end)





















Loans held for sale


$

2,810



$

7,274



$

10,197



$

9,080



$

20,991


Loans held for investment



16,720,173




16,833,171




16,949,486




17,147,146




17,345,506


Loans held for investment - Warehouse Purchase
     Program



1,344,541




1,775,699




1,998,049




2,095,559




2,272,389


Total loans



18,067,524




18,616,144




18,957,732




19,251,785




19,638,886























Investment securities(A)



14,798,127




12,818,901




12,629,368




11,918,691




10,088,002


Federal funds sold



274




241




237




281




8,986


Allowance for credit losses on loans



(285,163)




(286,380)




(287,187)




(302,884)




(307,210)


Cash and due from banks



1,560,321




2,547,739




1,055,386




1,059,879




1,947,235


Goodwill



3,231,636




3,231,636




3,231,636




3,231,636




3,231,636


Core deposit intangibles, net



59,064




61,684




64,539




67,417




70,304


Other real estate owned



1,705




622




150




144




462


Fixed assets, net



336,075




319,799




322,799




324,502




326,970


Other assets



501,623




523,584




537,459




548,473




553,147


     Total assets


$

38,271,186



$

37,833,970



$

36,512,119



$

36,099,924



$

35,558,418























Noninterest-bearing deposits


$

10,776,652



$

10,750,034



$

10,326,489



$

10,099,149



$

9,820,445


Interest-bearing deposits



20,291,658




20,021,728




19,125,163




19,011,092




18,942,660


     Total deposits



31,068,310




30,771,762




29,451,652




29,110,241




28,763,105


Securities sold under repurchase agreements



440,891




448,099




440,969




433,069




377,106


Allowance for credit losses on off-balance sheet
     credit exposures



29,947




29,947




29,947




29,947




29,947


Other liabilities



227,614




156,926




244,110




216,330




166,414


     Total liabilities



31,766,762




31,406,734




30,166,678




29,789,587




29,336,572


Shareholders' equity(B)



6,504,424




6,427,236




6,345,441




6,310,337




6,221,846


     Total liabilities and equity


$

38,271,186



$

37,833,970



$

36,512,119



$

36,099,924



$

35,558,418




(A)

Includes $2,115, $2,290, $2,483, $1,394 and $970 in unrealized gains on available for sale securities for the quarterly periods ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively.

(B)

Includes $1,671, $1,809, $1,961, $1,101 and $766 in after-tax unrealized gains on available for sale securities for the quarterly periods ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)






Three Months Ended




Mar 31, 2022



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021


Income Statement Data





















Interest income:





















     Loans


$

193,025



$

206,209



$

213,821



$

216,803



$

233,075


     Securities(C)



55,011




46,857




46,217




43,708




38,677


     Federal funds sold and other earning assets



847




563




302




340




351


          Total interest income



248,883




253,629




260,340




260,851




272,103























Interest expense:





















     Deposits



8,754




8,685




11,578




15,288




17,362


     Securities sold under repurchase agreements



185




184




195




164




159


          Total interest expense



8,939




8,869




11,773




15,452




17,521


Net interest income



239,944




244,760




248,567




245,399




254,582


Provision for credit losses
















Net interest income after provision for credit losses



239,944




244,760




248,567




245,399




254,582























Noninterest income:





















     Nonsufficient funds (NSF) fees



8,124




8,401




7,962




6,560




6,687


     Credit card, debit card and ATM card income



8,179




8,894




8,837




8,918




8,031


     Service charges on deposit accounts



6,211




6,237




6,115




6,062




5,978


     Trust income



2,703




2,698




2,467




2,276




2,837


     Mortgage income



455




685




1,396




2,914




3,307


     Brokerage income



892




953




861




795




711


     Bank owned life insurance income



1,283




1,317




1,325




1,294




1,292


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



689




1,165




255




(244)




(79)


     Other noninterest income



6,586




5,407




5,427




6,981




5,244


          Total noninterest income



35,122




35,757




34,645




35,556




34,008























Noninterest expense:





















     Salaries and benefits



79,411




76,496




78,412




75,611




80,037


     Net occupancy and equipment



7,848




8,140




8,165




8,046




7,833


     Credit and debit card, data processing and software
          amortization



8,849




9,050




9,103




8,718




8,233


     Regulatory assessments and FDIC insurance



2,850




2,801




2,497




2,670




2,670


     Core deposit intangibles amortization



2,620




2,855




2,878




2,887




2,931


     Depreciation



4,547




4,518




4,524




4,513




4,540


     Communications



2,919




3,134




3,013




2,982




2,899


     Other real estate expense



214




24




30




198




244


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



(621)




2




4




(1,839)




(887)


     Other noninterest expense



11,213




12,518




11,189




11,405




10,576


          Total noninterest expense



119,850




119,538




119,815




115,191




119,076


Income before income taxes



155,216




160,979




163,397




165,764




169,514


Provision for income taxes



32,890




34,192




34,807




35,153




36,205


Net income available to common shareholders


$

122,326



$

126,787



$

128,590



$

130,611



$

133,309




(C)

Interest income on securities was reduced by net premium amortization of $12,857, $16,006, $15,141, $14,436 and $12,844 for the three months ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively.

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

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




Three Months Ended




Mar 31, 2022



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021























Profitability





















Net income (D) (E)


$

122,326



$

126,787



$

128,590



$

130,611



$

133,309























Basic earnings per share


$

1.33



$

1.38



$

1.39



$

1.41



$

1.44


Diluted earnings per share


$

1.33



$

1.38



$

1.39



$

1.41



$

1.44























Return on average assets (F)



1.29

%



1.37

%



1.42

%



1.45

%



1.54

%

Return on average common equity (F)



7.54

%



7.91

%



8.07

%



8.31

%



8.60

%

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



15.30

%



16.26

%



16.72

%



17.49

%



18.43

%

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



2.88

%



2.97

%



3.10

%



3.11

%



3.41

%

Efficiency ratio (G) (I)



43.68

%



42.79

%



42.34

%



40.96

%



41.25

%






















Liquidity and Capital Ratios





















Equity to assets



17.00

%



16.99

%



17.38

%



17.48

%



17.50

%

Common equity tier 1 capital



15.32

%

(J)


15.10

%



14.84

%



15.26

%



14.60

%

Tier 1 risk-based capital



15.32

%

(J)


15.10

%



14.84

%



15.26

%



14.60

%

Total risk-based capital



15.99

%

(J)


15.45

%



15.20

%



15.71

%



15.07

%

Tier 1 leverage capital



9.44

%

(J)


9.62

%



9.55

%



9.50

%



9.68

%

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



9.19

%



9.07

%



9.18

%



9.18

%



9.05

%






















Other Data





















Weighted-average shares used in computing earnings per
     common share





















     Basic



92,161




92,162




92,683




92,935




92,854


     Diluted



92,161




92,162




92,683




92,935




92,854


Period end shares outstanding



92,160




92,170




92,160




92,935




92,929


Cash dividends paid per common share


$

0.52



$

0.52



$

0.49



$

0.49



$

0.49


Book value per common share


$

70.58



$

69.73



$

68.85



$

67.90



$

66.95


Tangible book value per common share (G)


$

34.87



$

34.00



$

33.09



$

32.40



$

31.42























Common Stock Market Price





















     High


$

80.46



$

78.67



$

72.97



$

78.06



$

83.02


     Low


$

69.08



$

68.53



$

64.40



$

69.83



$

66.45


     Period end closing price


$

69.38



$

72.35



$

71.13



$

71.80



$

76.16


Employees – FTE (excluding overtime)



3,595




3,704




3,625




3,724




3,724


Number of banking centers



272




273




273




274




275


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


Three Months Ended


Mar 31, 2022


Dec 31, 2021


Sep 30, 2021


Jun 30, 2021


Mar 31, 2021

Loan discount accretion










     ASC 310-20

$4,674


$4,635


$3,761


$9,731


$13,313

     ASC 310-30

$521


$731


$1,618


$2,462


$3,027

Securities net amortization

$52


$139


$136


$171


$111

Time deposits amortization

$100


$127


$201


$327


$507



(E)

Using effective tax rate of 21.2%, 21.2%, 21.3%, 21.2% and 21.4% for the three months ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively.

(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 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)

Beginning on January 1, 2022, the cumulative amount of the current expected credit loss ("CECL") transition adjustments will be phased in over a three-year transition period.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


YIELD ANALYSIS


Three Months Ended





Mar 31, 2022



Dec 31, 2021



Mar 31, 2021





Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(K)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(K)

Average

Balance



Interest

Earned/

Interest

Paid



Average

Yield/

Rate


(K)

Interest-earning assets:






































Loans held for sale


$

4,611



$

40



3.52%



$

8,794



$

71



3.20%



$

33,327



$

238



2.90%



Loans held for investment



16,712,690




183,033



4.44%




16,830,163




192,200



4.53%




17,279,066




213,978



5.02%



Loans held for investment - Warehouse
     Purchase Program



1,268,715




9,952



3.18%




1,772,971




13,938



3.12%




2,369,601




18,859



3.23%



     Total Loans



17,986,016




193,025



4.35%




18,611,928




206,209



4.40%




19,681,994




233,075



4.80%



Investment securities



13,772,974




55,011



1.62%


(L)


12,751,857




46,857



1.46%


(L)


9,148,841




38,677



1.71%


(L)

Federal funds sold and other earning assets



2,135,503




847



0.16%




1,393,859




563



0.16%




1,506,645




351



0.09%



          Total interest-earning assets



33,894,493




248,883



2.98%




32,757,644




253,629



3.07%




30,337,480




272,103



3.64%



Allowance for credit losses on loans



(285,692)












(287,191)












(315,590)











Noninterest-earning assets



4,458,669












4,476,582












4,522,470











          Total assets


$

38,067,470











$

36,947,035











$

34,544,360

















































Interest-bearing liabilities:






































Interest-bearing demand deposits


$

6,775,114



$

2,452



0.15%



$

6,196,283



$

2,187



0.14%



$

6,112,469



$

5,943



0.39%



Savings and money market deposits



10,870,461




4,026



0.15%




10,286,650




3,817



0.15%




9,420,064




5,753



0.25%



Certificates and other time deposits



2,637,529




2,276



0.35%




2,766,123




2,681



0.38%




3,031,621




5,666



0.76%



Securities sold under repurchase agreements



452,054




185



0.17%




432,981




184



0.17%




376,662




159



0.17%



          Total interest-bearing liabilities



20,735,158




8,939



0.17%


(M)


19,682,037




8,869



0.18%


(M)


18,940,816




17,521



0.38%


(M)







































Noninterest-bearing liabilities:






































Noninterest-bearing demand deposits



10,636,624












10,587,441












9,206,791











Allowance for credit losses on off-balance
     sheet credit exposures



29,947












29,947












29,947











Other liabilities



176,360












234,746












169,138











          Total liabilities



31,578,089












30,534,171












28,346,692











Shareholders' equity



6,489,381












6,412,864












6,197,668











          Total liabilities and shareholders' equity


$

38,067,470











$

36,947,035











$

34,544,360

















































Net interest income and margin






$

239,944



2.87%







$

244,760



2.96%







$

254,582



3.40%



Non-GAAP to GAAP reconciliation:






































Tax equivalent adjustment







472












457












635







Net interest income and margin (tax
     equivalent basis)






$

240,416



2.88%







$

245,217



2.97%







$

255,217



3.41%





(K)

Annualized and based on an actual 365-day basis.

(L)

Yield on securities was impacted by net premium amortization of $12,857, $16,006 and $12,844 for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

(M)

Total cost of funds, including noninterest bearing deposits, was 0.12%, 0.12% and 0.25% for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Mar 31, 2022



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021


YIELD TREND (N)








































Interest-Earning Assets:




















Loans held for sale


3.52

%



3.20

%



3.08

%



3.19

%



2.90

%

Loans held for investment


4.44

%



4.53

%



4.62

%



4.65

%



5.02

%

Loans held for investment - Warehouse Purchase
     Program


3.18

%



3.12

%



3.18

%



3.21

%



3.23

%

     Total loans


4.35

%



4.40

%



4.48

%



4.50

%



4.80

%

Investment securities (O)


1.62

%



1.46

%



1.50

%



1.57

%



1.71

%

Federal funds sold and other earning assets


0.16

%



0.16

%



0.16

%



0.11

%



0.09

%

     Total interest-earning assets


2.98

%



3.07

%



3.24

%



3.30

%



3.64

%





















Interest-Bearing Liabilities:




















Interest-bearing demand deposits


0.15

%



0.14

%



0.24

%



0.35

%



0.39

%

Savings and money market deposits


0.15

%



0.15

%



0.18

%



0.22

%



0.25

%

Certificates and other time deposits


0.35

%



0.38

%



0.47

%



0.58

%



0.76

%

Securities sold under repurchase agreements


0.17

%



0.17

%



0.17

%



0.17

%



0.17

%

     Total interest-bearing liabilities


0.17

%



0.18

%



0.24

%



0.32

%



0.38

%





















Net Interest Margin


2.87

%



2.96

%



3.09

%



3.10

%



3.40

%

Net Interest Margin (tax equivalent)


2.88

%



2.97

%



3.10

%



3.11

%



3.41

%



(N)

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

(O)

Yield on securities was impacted by net premium amortization of $12,857, $16,006, $15,141, $14,436 and $12,844 for the three months ended March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)






Three Months Ended




Mar 31, 2022



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021


Balance Sheet Averages





















Loans held for sale


$

4,611



$

8,794



$

11,714



$

13,716



$

33,327


Loans held for investment



16,712,690




16,830,163




17,102,998




17,305,259




17,279,066


Loans held for investment - Warehouse Purchase
     Program



1,268,715




1,772,971




1,836,252




1,984,305




2,369,601


Total Loans



17,986,016




18,611,928




18,950,964




19,303,280




19,681,994























Investment securities



13,772,974




12,751,857




12,184,964




11,180,948




9,148,841


Federal funds sold and other earning assets



2,135,503




1,393,859




734,787




1,221,993




1,506,645


     Total interest-earning assets



33,894,493




32,757,644




31,870,715




31,706,221




30,337,480


Allowance for credit losses on loans



(285,692)




(287,191)




(301,011)




(306,059)




(315,590)


Cash and due from banks



326,552




329,406




570,765




521,737




308,787


Goodwill



3,231,637




3,231,637




3,231,637




3,231,637




3,233,231


Core deposit intangibles, net



60,346




63,091




65,955




68,830




71,763


Other real estate



1,893




321




279




3,001




6,385


Fixed assets, net



327,297




321,524




323,584




326,570




326,004


Other assets



510,944




530,603




536,745




544,085




576,300


     Total assets


$

38,067,470



$

36,947,035



$

36,298,669



$

36,096,022



$

34,544,360























Noninterest-bearing deposits


$

10,636,624



$

10,587,441



$

10,286,062



$

10,062,085



$

9,206,791


Interest-bearing demand deposits



6,775,114




6,196,283




6,089,678




6,281,068




6,112,469


Savings and money market deposits



10,870,461




10,286,650




9,944,664




9,872,624




9,420,064


Certificates and other time deposits



2,637,529




2,766,123




2,897,123




2,980,186




3,031,621


     Total deposits



30,919,728




29,836,497




29,217,527




29,195,963




27,770,945


Securities sold under repurchase agreements



452,054




432,981




448,338




383,975




376,662


Allowance for credit losses on off-balance sheet
     credit exposures



29,947




29,947




29,947




29,947




29,947


Other liabilities



176,360




234,746




229,502




198,748




169,138


Shareholders' equity



6,489,381




6,412,864




6,373,355




6,287,389




6,197,668


     Total liabilities and equity


$

38,067,470



$

36,947,035



$

36,298,669



$

36,096,022



$

34,544,360


Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)




Mar 31, 2022



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021


Period End Balances








































































Loan Portfolio




































Commercial and industrial


$

2,007,783



11.1

%


$

2,050,631



11.0

%


$

1,841,899



9.7

%


$

2,021,951



10.5

%


$

2,104,116



10.7

%

Warehouse purchase program



1,344,541



7.4

%



1,775,699



9.5

%



1,998,049



10.6

%



2,095,559



10.9

%



2,272,389



11.6

%

Construction, land development and
     other land loans



2,327,837



12.9

%



2,299,715



12.4

%



2,269,417



12.0

%



2,147,474



11.2

%



2,031,355



10.4

%

1-4 family residential



4,970,620



27.5

%



4,860,419



26.1

%



4,709,468



24.8

%



4,531,589



23.5

%



4,310,437



21.9

%

Home equity



870,130



4.8

%



808,289



4.4

%



746,426



3.9

%



637,431



3.3

%



554,278



2.8

%

Commercial real estate (includes
     multi-family residential)



5,150,555



28.5

%



5,251,368



28.2

%



5,550,841



29.3

%



5,681,184



29.5

%



5,858,475



29.8

%

Agriculture (includes farmland)



617,418



3.4

%



620,338



3.3

%



631,497



3.3

%



590,135



3.1

%



571,783



2.9

%

Consumer and other



246,433



1.4

%



288,496



1.6

%



274,980



1.5

%



264,652



1.4

%



293,023



1.5

%

Energy



445,949



2.5

%



491,305



2.6

%



569,314



3.0

%



501,821



2.6

%



503,947



2.6

%

Paycheck Protection Program



86,258



0.5

%



169,884



0.9

%



365,841



1.9

%



779,989



4.0

%



1,139,083



5.8

%

     Total loans


$

18,067,524






$

18,616,144






$

18,957,732






$

19,251,785






$

19,638,886









































Deposit Types




































Noninterest-bearing DDA


$

10,776,652



34.7

%


$

10,750,034



34.9

%


$

10,326,489



35.0

%


$

10,099,149



34.7

%


$

9,820,445



34.1

%

Interest-bearing DDA



6,603,934



21.2

%



6,741,092



21.9

%



6,088,923



20.7

%



6,185,115



21.2

%



6,158,641



21.4

%

Money market



7,603,329



24.5

%



7,178,904



23.3

%



6,864,664



23.3

%



6,706,252



23.0

%



6,714,889



23.4

%

Savings



3,543,300



11.4

%



3,401,727



11.1

%



3,293,850



11.2

%



3,160,606



10.9

%



3,083,447



10.7

%

Certificates and other time deposits



2,541,095



8.2

%



2,700,005



8.8

%



2,877,726



9.8

%



2,959,119



10.2

%



2,985,683



10.4

%

     Total deposits


$

31,068,310






$

30,771,762






$

29,451,652






$

29,110,241






$

28,763,105









































Loan to Deposit Ratio



58.2

%






60.5

%






64.4

%






66.1

%






68.3

%




Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)


Construction Loans



Mar 31, 2022



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021






































Single family residential construction


$

816,072



35.0

%


$

728,393



31.7

%


$

659,248



29.0

%


$

624,954



29.1

%


$

590,223



29.1

%

Land development



103,853



4.5

%



99,099



4.3

%



92,623



4.1

%



97,709



4.6

%



97,267



4.8

%

Raw land



310,987



13.4

%



322,673



14.0

%



315,803



13.9

%



245,484



11.4

%



243,394



12.0

%

Residential lots



212,029



9.1

%



206,978



9.0

%



195,201



8.6

%



165,645



7.7

%



176,884



8.6

%

Commercial lots



183,760



7.9

%



184,901



8.0

%



169,189



7.5

%



153,714



7.2

%



137,512



6.8

%

Commercial construction and other



701,148



30.1

%



757,687



33.0

%



837,436



36.9

%



860,069



40.0

%



786,192



38.7

%

Net unaccreted discount



(12)







(16)







(83)







(101)







(117)





     Total construction loans


$

2,327,837






$

2,299,715






$

2,269,417






$

2,147,474






$

2,031,355









































Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of March 31, 2022


Houston



Dallas



Austin



OK City



Tulsa



Other (P)



Total



Collateral Type





























Shopping center/retail

$

326,121



$

279,776



$

45,751



$

16,548



$

28,018



$

271,861



$

968,075



Commercial and industrial buildings


158,618




78,634




17,496




22,983




17,583




162,506




457,820



Office buildings


121,213




376,630




42,520




70,277




4,648




70,284




685,572



Medical buildings


108,561




18,452




2,570




19,882




41,190




69,449




260,104



Apartment buildings


153,768




88,583




10,989




14,937




35,603




173,764




477,644



Hotel


85,057




70,170




44,833




28,538







141,223




369,821



Other


77,727




69,152




26,433




7,649




2,755




71,389




255,105



     Total

$

1,031,065



$

981,397



$

190,592



$

180,814



$

129,797



$

960,476



$

3,474,141


(Q)

Acquired Loans



Non-PCD Loans



PCD Loans



Total Acquired Loans




Balance at

Acquisition

Date



Balance at

Dec 31, 2021



Balance at

Mar 31, 2022



Balance at

Acquisition

Date



Balance at

Dec 31, 2021



Balance at

Mar 31, 2022



Balance at

Acquisition

Date



Balance at

Dec 31, 2021



Balance at

Mar 31, 2022


Loan marks:





































Acquired banks (R)


$

345,599



$

8,143



$

3,469



$

320,052



$

4,838



$

4,317



$

665,651



$

12,981



$

7,786







































Acquired portfolio loan balances:





































Acquired banks (R)



12,286,159




2,094,039




1,868,511




689,573




83,909




72,992




12,975,732


(S)


2,177,948




1,941,503







































Acquired portfolio loan balances less
     loan marks


$

11,940,560



$

2,085,896



$

1,865,042



$

369,521



$

79,071



$

68,675



$

12,310,081



$

2,164,967



$

1,933,717




(P)

Includes other MSA and non-MSA regions.

(Q)

Represents a portion of total commercial real estate loans of $5.151 billion as of March 31, 2022.

(R)

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.

(S)

Actual principal balances acquired.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)



Three Months Ended



Mar 31, 2022



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021


Asset Quality




















Nonaccrual loans

$

21,765



$

26,269



$

35,035



$

32,880



$

43,025


Accruing loans 90 or more days past due


3,695




887




1,038




330




313


     Total nonperforming loans


25,460




27,156




36,073




33,210




43,338


Repossessed assets


19




310




326




310




362


Other real estate


1,705




622




150




144




462


     Total nonperforming assets

$

27,184



$

28,088



$

36,549



$

33,664



$

44,162






















Nonperforming assets:




















     Commercial and industrial (includes energy)

$

4,403



$

6,150



$

8,199



$

8,613



$

11,290


     Construction, land development and other land loans


1,761




1,841




803




1,423




1,692


     1-4 family residential (includes home equity)


11,899




11,990




11,117




11,681




11,920


     Commercial real estate (includes multi-family residential)


7,685




7,276




15,691




11,266




16,896


     Agriculture (includes farmland)


1,402




816




643




661




803


     Consumer and other


34




15




96




20




1,561


          Total

$

27,184



$

28,088



$

36,549



$

33,664



$

44,162


Number of loans/properties


147




157




155




152




167


Allowance for credit losses on loans

$

285,163



$

286,380



$

287,187



$

302,884



$

307,210






















Net charge-offs (recoveries):




















     Commercial and industrial (includes energy)

$

14



$

177



$

3,763



$

3,529



$

1,584


     Construction, land development and other land loans


430




(162)




(4)




(105)




(5)


     1-4 family residential (includes home equity)


87




(72)




66




(6)




47


     Commercial real estate (includes multi-family residential)


(366)




(10)




11,180




517




6,589


     Agriculture (includes farmland)


(103)




(102)




(63)




(9)




33


     Consumer and other


1,155




976




755




400




610


          Total

$

1,217



$

807



$

15,697



$

4,326



$

8,858






















Asset Quality Ratios




















Nonperforming assets to average interest-earning assets


0.08

%



0.09

%



0.11

%



0.11

%



0.15

%

Nonperforming assets to loans and other real estate


0.15

%



0.15

%



0.19

%



0.17

%



0.22

%

Net charge-offs to average loans (annualized)


0.03

%



0.02

%



0.33

%



0.09

%



0.18

%

Allowance for credit losses on loans to total loans


1.58

%



1.54

%



1.51

%



1.57

%



1.56

%

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


1.71

%



1.72

%



1.73

%



1.85

%



1.89

%

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 return on average tangible common equity; 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; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities, 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




Mar 31, 2022



Dec 31, 2021



Sep 30, 2021



Jun 30, 2021



Mar 31, 2021























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





















Net income


$

122,326



$

126,787



$

128,590



$

130,611



$

133,309


Average shareholders' equity


$

6,489,381



$

6,412,864



$

6,373,355



$

6,287,389



$

6,197,668


Less: Average goodwill and other intangible assets



(3,291,983)




(3,294,728)




(3,297,592)




(3,300,467)




(3,304,994)


Average tangible shareholders' equity


$

3,197,398



$

3,118,136



$

3,075,763



$

2,986,922



$

2,892,674


Return on average tangible common equity (F)



15.30

%



16.26

%



16.72

%



17.49

%



18.43

%






















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





















Shareholders' equity


$

6,504,424



$

6,427,236



$

6,345,441



$

6,310,337



$

6,221,846


Less: Goodwill and other intangible assets



(3,290,700)




(3,293,320)




(3,296,175)




(3,299,053)




(3,301,940)


Tangible shareholders' equity


$

3,213,724



$

3,133,916



$

3,049,266



$

3,011,284



$

2,919,906























Period end shares outstanding



92,160




92,170




92,160




92,935




92,929


Tangible book value per share


$

34.87



$

34.00



$

33.09



$

32.40



$

31.42























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





















Tangible shareholders' equity


$

3,213,724



$

3,133,916



$

3,049,266



$

3,011,284



$

2,919,906


Total assets


$

38,271,186



$

37,833,970



$

36,512,119



$

36,099,924



$

35,558,418


Less: Goodwill and other intangible assets



(3,290,700)




(3,293,320)




(3,296,175)




(3,299,053)




(3,301,940)


Tangible assets


$

34,980,486



$

34,540,650



$

33,215,944



$

32,800,871



$

32,256,478


Period end tangible equity to period end tangible assets ratio



9.19

%



9.07

%



9.18

%



9.18

%



9.05

%






















Reconciliation of allowance for credit losses 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


$

285,163



$

286,380



$

287,187



$

302,884



$

307,210


Total loans


$

18,067,524



$

18,616,144



$

18,957,732



$

19,251,785



$

19,638,886


Less: Warehouse Purchase Program loans



(1,344,541)




(1,775,699)




(1,998,049)




(2,095,559)




(2,272,389)


Less: Paycheck Protection Program loans



(86,258)




(169,884)




(365,841)




(779,989)




(1,139,083)


     Total loans less Warehouse Purchase Program and Paycheck
          Protection Program loans


$

16,636,725



$

16,670,561



$

16,593,842



$

16,376,237



$

16,227,414


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



1.71

%



1.72

%



1.73

%



1.85

%



1.89

%






















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





















Noninterest expense


$

119,850



$

119,538



$

119,815



$

115,191



$

119,076























Net interest income


$

239,944



$

244,760



$

248,567



$

245,399



$

254,582


Noninterest income



35,122




35,757




34,645




35,556




34,008


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



689




1,165




255




(244)




(79)


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



34,433




34,592




34,390




35,800




34,087


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


$

274,377



$

279,352



$

282,957



$

281,199



$

288,669


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



43.68

%



42.79

%



42.34

%



40.96

%



41.25

%

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SOURCE Prosperity Bancshares, Inc.

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