Prosperity Bancshares, Inc. Files 10-Q for Q1 2024

TL;DR

<b>Prosperity Bancshares, Inc. has filed its Q1 2024 10-Q, detailing loan portfolio performance and financial instrument valuations.</b>

AI Summary

PROSPERITY BANCSHARES INC (PB) filed a Quarterly Report (10-Q) with the SEC on May 8, 2024. Prosperity Bancshares, Inc. filed its 10-Q report for the period ending March 31, 2024. The filing includes data related to various loan segments, including Agriculture and Agriculture Real Estate, Construction/Land Development, and Family Residential. Specific past due loan categories mentioned are 30-89 days past due and 90+ days past due, particularly within Commercial Real Estate. The report references fair value measurements for recurring items, including Mortgage-Backed Securities and Interest Rate Lock Commitments. Key financial instruments and programs mentioned include the Bank Term Funding Program and Warehouse Purchase Program Loans.

Why It Matters

For investors and stakeholders tracking PROSPERITY BANCSHARES INC, this filing contains several important signals. This filing provides a detailed look into the company's loan portfolio health, including specific segments and delinquency rates, which are crucial for assessing credit risk. The disclosure of fair value measurements for financial instruments offers insight into how market fluctuations and interest rate changes might impact the company's balance sheet.

Risk Assessment

Risk Level: medium — PROSPERITY BANCSHARES INC shows moderate risk based on this filing. The company's loan portfolio includes segments like construction and commercial real estate, which can be sensitive to economic downturns and interest rate changes, as indicated by the mention of past-due receivables.

Analyst Insight

Investors should review the detailed breakdown of loan delinquencies and the company's risk management strategies for construction and commercial real estate loans.

Key Numbers

• 2024-03-31 — Reporting Period End Date (10-Q Filing)
• 2024-05-08 — Filing Date (10-Q Filing)

Key Players & Entities

• PROSPERITY BANCSHARES INC (company) — Filer
• PB (company) — Ticker Symbol
• 2024-03-31 (date) — Reporting Period End Date
• 2024-05-08 (date) — Filing Date
• First Bancshares Of Texas Inc (company) — Subsidiary/Affiliate Mentioned

FAQ

Risk Factors

• Past Due Financing Receivables [medium — financial]: The filing details past due financing receivables, including specific categories like 30-89 days past due and greater than 90 days past due, particularly within commercial real estate.
• Fair Value Measurements [medium — financial]: The company reports on fair value measurements for recurring items, including Mortgage-Backed Securities and Interest Rate Lock Commitments, indicating exposure to market volatility.
• Loan Portfolio Concentration [medium — financial]: Specific loan segments such as Construction/Land Development and Commercial Real Estate are highlighted, suggesting potential concentration risks.

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-08: Filing Date — Date the 10-Q was officially filed with the SEC.

Glossary

10-Q

A quarterly report required by the U.S. Securities and Exchange Commission (SEC). (Provides a comprehensive overview of a company's financial performance during a specific quarter.)

Fair Value Measurements

The value at which an asset can be sold or a liability transferred in an orderly transaction between market participants. (Indicates how market conditions and valuation methodologies impact the company's assets and liabilities.)

Financing Receivables

Loans and other amounts due to the company from customers. (Key indicator of the company's lending activities and credit risk exposure.)

Key Financial Figures

• $1.00 — ch registered Common stock, par value $1.00 per share PB New York Stock Exchang

Filing Documents

• pb-20240331.htm (10-Q) — 5048KB
• pb-ex31_1.htm (EX-31.1) — 13KB
• pb-ex31_2.htm (EX-31.2) — 13KB
• pb-ex32_1.htm (EX-32.1) — 5KB
• pb-ex32_2.htm (EX-32.2) — 5KB
• 0000950170-24-055845.txt (&nbsp;) — 21683KB
• pb-20240331.xsd (EX-101.SCH) — 1666KB
• pb-20240331_htm.xml (XML) — 6260KB

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 3 Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023 3 Consolidated Statements of Income for the Three Months Ended March 31, 2024 and 2023 (unaudited) 4 Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023 (unaudited) 5 Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited) 6 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited) 7

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 32 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 54 Item 4.

Controls and Procedures

Controls and Procedures 54

—OTHER INFORMATION

PART II—OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 55 Item 1A.

Risk Factors

Risk Factors 55 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 55 Item 3. Defaults Upon Senior Securities 55 Item 4. Mine Safety Disclosures 55 Item 5. Other Information 55 Item 6. Exhibits 56

—FINANCI AL INFORMATION

PART I—FINANCI AL INFORMATION

FINANCI AL STATEMENTS

ITEM 1. FINANCI AL STATEMENTS PROSPERITY BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED B ALANCE SHEETS March 31, December 31, 2024 2023 (unaudited) (Dollars in thousands, except par value) ASSETS Cash and due from banks $ 1,086,444 $ 458,153 Federal funds sold 250 260 Total cash and cash equivalents 1,086,694 458,413 Available for sale securities, at fair value 315,300 438,588 Held to maturity securities, at cost (fair value of $ 10,478,359 and $ 10,984,598 , respectively) 11,985,838 12,365,308 Total securities 12,301,138 12,803,896 Loans held for sale 6,380 5,734 Loans held for investment 20,393,943 20,352,559 Loans held for investment - Warehouse Purchase Program 864,924 822,245 Total loans 21,265,247 21,180,538 Less: allowance for credit losses on loans ( 330,219 ) ( 332,362 ) Loans, net 20,935,028 20,848,176 Accrued interest receivable 97,671 96,327 Goodwill 3,396,402 3,396,086 Core deposit intangibles, net 60,757 63,994 Bank premises and equipment, net 372,333 369,992 Other real estate owned 2,204 1,708 Bank owned life insurance (BOLI) 380,615 379,447 Federal Home Loan Bank of Dallas stock 8,750 8,750 Other assets 114,928 121,088 TOTAL ASSETS $ 38,756,520 $ 38,547,877 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits: Noninterest-bearing $ 9,526,535 $ 9,776,572 Interest-bearing 17,648,983 17,403,237 Total deposits 27,175,518 27,179,809 Other borrowings 3,900,000 3,725,000 Securities sold under repurchase agreements 261,671 309,277 Accrued interest payable 75,871 34,819 Allowance for credit losses on off-balance sheet credit exposures 36,503 36,503 Other liabilities 202,413 183,139 Total liabilities 31,651,976 31,468,547 COMMITMENTS AND CONTINGENCIES — — SHAREHOLDERS' EQUITY: Preferred stock, $ 1 par value; 20,000,000 shares a

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (UNAUDITED) 1. BASIS OF PRESENTATION The consolidated financial statements include the accounts of Prosperity Bancshares, Inc. ("Bancshares") and its wholly-owned subsidiary, Prosperity Bank (the "Bank," and together with Bancshares, the "Company"). All intercompany transactions and balances have been eliminated. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis; and all such adjustments are of a normal recurring nature. These financial statements and the notes thereto should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Operating results for the three-month period ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other period. 2. INCOME PER COMMON SHARE The following table illustrates the computation of basic and diluted earnings per share: Three Months Ended March 31, 2024 2023 Amount Per Share Amount Amount Per Share Amount (Amounts in thousands, except per share data) Net income $ 110,426 $ 124,694 Basic: Weighted average shares outstanding 93,706 $ 1.18 91,207 $ 1.37 Diluted: Weighted average shares outstanding 93,706 $ 1.18 91,207 $ 1.37 There were no stock options outstanding at March 31, 2024 or exercisable during the three months ended March 31, 2024 or

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (UNAUDITED) or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company does not expect ASU 2023-09 to have an impact on its financial statements. ASU 2023-07, Segment Reporting (Topic 280)—Improvement to Reportable Segment Disclosures . ASU 2023-07 amends the disclosure requirements related to segment reporting primarily through enhanced disclosure about significant segment expenses and by requiring disclosure of segment information on an annual and interim basis. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect ASU 2023-07 to have a significant impact on its financial statements. ASU 2023-06, Disclosure Improvements—Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. ASU 2023-06 amends the FASB Accounting Standards Codification to incorporate certain disclosure requirements from SEC Release No. 33-10532 - Disclosure Update and Simplification that was issued in 2018. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company does not expect ASU 2023-06 to have a significant impact on its financial statements. ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The amendments in ASU 2022-02 eliminated the accounting guidance for troubled debt restructurings and enhanced disclosures for certain loan refinancing and restructurings to borrowers experiencing financial difficulty. This guidance was applied on a prospective basis. Additionally, ASU 2022-02 requires entities to disclose current-period gross charge-

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (UNAUDITED) December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Dollars in thousands) Available for Sale Corporate debt securities $ 20,698 $ 1,827 $ ( 738 ) $ 21,787 Collateralized mortgage obligations 321,881 967 ( 2,804 ) 320,044 Mortgage-backed securities 97,779 96 ( 1,118 ) 96,757 Total $ 440,358 $ 2,890 $ ( 4,660 ) $ 438,588 Held to Maturity U.S. Treasury securities and obligations of U.S. Government agencies $ 7,631 $ — $ ( 52 ) $ 7,579 116,497 1,864 ( 2,306 ) 116,055 Corporate debt securities 12,000 — ( 4,200 ) 7,800 Collateralized mortgage obligations 263,250 — ( 20,864 ) 242,386 Mortgage-backed securities 11,965,930 2,131 ( 1,357,283 ) 10,610,778 Total $ 12,365,308 $ 3,995 $ ( 1,384,705 ) $ 10,984,598 The investment securities portfolio is measured for expected credit losses by segregating the portfolio into two general classifications and applying the appropriate expected credit losses methodology. Investment securities classified as available for sale or held to maturity are evaluated for expected credit losses under FASB ASC 326 ,"Financial Instruments – Credit Losses." Available for sale securities . For available for sale securities in an unrealized loss position, the amount of the expected credit losses recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the expected credit losses will be recognized in earnings

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2024 (UNAUDITED) at which time the Company will receive full value for the securities. Accordingly, as of March 31, 2024 , management believes that there is no potential for material credit losses on held to maturity securities. Securities with unrealized losses, segregated by length of time, that have been in a continuous loss position were as follows: March 31, 2024 Less than 12 Months 12 Months or More Total Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses (Dollars in thousands) Available for Sale Corporate debt securities $ 5,265 $ ( 335 ) $ — $ — $ 5,265 $ ( 335 ) Collateralized mortgage obligations 58,266 ( 874 ) 136,540 ( 2,500 ) 194,806 ( 3,374 ) Mortgage-backed securities 10,043 ( 60 ) 91,458 ( 1,072 ) 101,501 ( 1,132 ) Total $ 73,574 $ ( 1,269 ) $ 227,998 $ ( 3,572 ) $ 301,572 $ ( 4,841 ) Held to Maturity U.S. Treasury securities and obligations of U.S. Government agencies $ 7,583 $ ( 107 ) $ — $ — $ 7,583 $ ( 107 ) 14,877 ( 68 ) 54,906 ( 2,513 ) 69,783 ( 2,581 ) Corporate debt securities — — 8,160 ( 3,840 ) 8,160 ( 3,840 ) Collateralized mortgage obligations 47,876 ( 1,261 ) 183,228 ( 23,815 ) 231,104 ( 25,076 ) Mortgage-backed securities 147,256 ( 1,836 ) 9,900,482 ( 1,475,191 ) 10,047,738 ( 1,477,027 ) Total $ 217,592 $ ( 3,272 ) $ 10,146,776 $ ( 1,505,359 ) $ 10,364,368 $ ( 1,508,631 ) December 31, 2023 Less than 12 Months 12 Months or More Total Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses (Dollars in thousands) Available for Sale C

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