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1. Company Snapshot

1.a. Company Description

Prosperity Bancshares, Inc.operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers.It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit.


The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery.In addition, it provides internet banking, mobile banking, trust and wealth management, retail brokerage, mortgage services, and treasury management, as well as debit and credit cards.As of December 31, 2021, the company operated 273 full-service banking locations comprising 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, Texas 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 doing business as LegacyTexas Bank.


Prosperity Bancshares, Inc.was founded in 1983 and is based in Houston, Texas.

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1.b. Last Insights on PB

The recent 3-month performance of Prosperity Bancshares, Inc. was negatively impacted by a decline in deposits, which offset higher net interest income (NII) and lower expenses. The company's Q2 earnings beat estimates, but revenue growth was modest, and credit risks remained a concern. Additionally, the announcement of a merger with American Bank Holding Corporation in Corpus Christi, Texas, may have created uncertainty among investors.

1.c. Company Highlights

2. Prosperity Bancshares Delivers Strong Q3 Earnings with NIM Expansion

Prosperity Bancshares reported net income of $137.6 million for Q3 2025, up from $127.3 million in Q3 2024, with net income per diluted common share increasing 8.2% to $1.45. The bank's net interest income before provision for credit losses was $273.4 million, a $11.7 million increase from Q3 2024. The net interest margin on a tax-equivalent basis expanded 29 basis points to 3.24% in Q3 2025, driving earnings growth. Notably, the actual EPS of $1.45 met analyst estimates.

Publication Date: Nov -14

📋 Highlights
  • Merger Progress:: Executed definitive merger agreements with Southwest Bancshares Inc. and American Bank Holding Corp. to expand presence in South/Central Texas.
  • Net Income Growth:: Q3 2025 net income rose 8.2% to $137.6M from $127.3M in Q3 2024, driven by a 29-bp net interest margin increase to 3.24%.
  • Nonperforming Assets:: NPAs rose to $119M (36 bps of earning assets) vs. $110M (33 bps) in Q2 2025, though credit quality remains strong.
  • Buyback Strategy:: CEO announced aggressive share repurchases post-mergers, citing 15% earnings growth and a reduced balance sheet, targeting stock price recovery.
  • Loan/Deposit Ratio:: Maintained 80% loan-to-deposit ratio, with plans to grow to 85%, focusing on core deposits and avoiding excessive rate competition.

Loan Growth and Credit Quality

The bank expects flat loan growth in Q4 2025 and low single-digit growth in 2026, with some construction deals yet to fund. Nonperforming assets slightly increased to $119 million, or 36 basis points of quarterly average earning assets, but credit remains strong. As Kevin Hanigan mentioned, "We've got some construction deals that have not yet funded, and we expect to have both of the acquisitions closed and on the books in the next year."

Strategic Acquisitions and Share Buybacks

Prosperity Bancshares signed definitive merger agreements with Southwest Bancshares Inc. and American Bank Holding Corporation, expected to close in 2026 and Q4 2025, respectively. The bank plans to be active in buying back shares, with David Zalman stating, "We're going to be active in buying back shares, and I expect very soon we'll be active again."

Valuation and Dividend Yield

With a Price-to-Tangible Book Value (P/TBV) not directly available, the Price-to-Book Ratio stands at 0.83, indicating the bank might be undervalued. The Dividend Yield is 3.47%, providing a relatively stable return for investors. The Net Interest Margin (NIM) expansion to 3.24% supports the bank's profitability.

Outlook and Expectations

Analysts estimate revenue growth at 19.0% for next year. Given the current valuation metrics and the bank's performance, the stock seems to be reasonably priced, with a P/E Ratio of 11.93 and an ROE of 7.06%. The bank's guidance on NIM and loan growth will be crucial in determining its future performance and potential returns for investors.

3. NewsRoom

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Pacific Valley Bancorp (OTCMKTS:PVBK) versus Prosperity Bancshares (NYSE:PB) Financial Analysis

07:30

Source: defenseworld.net

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Prosperity Bancshares (PB) Up 6.2% Since Last Earnings Report: Can It Continue?

Nov -28

Source: zacks.com

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Allworth Financial LP Buys 1,206 Shares of Prosperity Bancshares, Inc. $PB

Nov -21

Source: defenseworld.net

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AMERICAN BANK HOLDING CORPORATION SHAREHOLDERS APPROVE ACQUISITION BY PROSPERITY BANCSHARES, INC.®

Nov -04

Source: prnewswire.com

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Teacher Retirement System of Texas Buys 5,242 Shares of Prosperity Bancshares, Inc. $PB

Nov -04

Source: defenseworld.net

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Prosperity Bancshares Q3: Repricing Dynamics Still Point To Growth

Nov -02

Source: seekingalpha.com

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PB's Q3 Earnings Meet, Higher Top Line & Nil Provisions Aid, Stock Up

Oct -30

Source: zacks.com

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Prosperity Bancshares, Inc. (PB) Q3 2025 Earnings Call Transcript

Oct -29

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.00%)

6. Segments

Retail and Commercial Banking Services

Expected Growth: 9%

Prosperity Bancshares' 9% growth in Retail and Commercial Banking Services is driven by strategic acquisitions, expansion into new markets, and a strong focus on customer relationships. Additionally, investments in digital banking platforms and a robust loan portfolio have contributed to the segment's growth, along with a favorable interest rate environment and a growing Texas economy.

7. Detailed Products

Consumer Banking

Personal banking services for individuals, including checking and savings accounts, credit cards, personal loans, and mortgages.

Commercial Banking

Financial solutions for businesses, including commercial loans, cash management, and treasury management services.

Wealth Management

Investment and wealth management services, including brokerage, trust, and investment advisory services.

Mortgage Banking

Residential mortgage lending services, including purchase and refinance loans, and construction loans.

Treasury Management

Cash management and treasury services, including account management, payment processing, and fraud prevention.

Credit Cards

Personal and business credit cards, offering rewards, cashback, and other benefits.

Online Banking

Digital banking platform, offering online account management, bill pay, and mobile banking services.

8. Prosperity Bancshares, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Prosperity Bancshares, Inc. is medium due to the presence of alternative financial institutions and digital banking platforms.

Bargaining Power Of Customers

The bargaining power of customers for Prosperity Bancshares, Inc. is low due to the lack of concentration in the banking industry and the availability of multiple banking options.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Prosperity Bancshares, Inc. is low due to the bank's ability to negotiate with vendors and the lack of concentration in the supplier market.

Threat Of New Entrants

The threat of new entrants for Prosperity Bancshares, Inc. is low due to the high barriers to entry in the banking industry, including regulatory hurdles and capital requirements.

Intensity Of Rivalry

The intensity of rivalry for Prosperity Bancshares, Inc. is high due to the competitive nature of the banking industry, with many established players and a high level of competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 52.32%
Debt Cost 6.46%
Equity Weight 47.68%
Equity Cost 8.66%
WACC 7.51%
Leverage 109.75%

11. Quality Control: Prosperity Bancshares, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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First Interstate BancSystem

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Value: 5.9

Growth: 4.2

Quality: 7.4

Yield: 10.0

Momentum: 6.0

Volatility: 6.7

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Valley National Bank

A-Score: 6.4/10

Value: 5.9

Growth: 4.6

Quality: 6.4

Yield: 8.0

Momentum: 7.0

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Cullen Frost Bankers

A-Score: 6.3/10

Value: 4.2

Growth: 6.9

Quality: 6.9

Yield: 6.0

Momentum: 6.0

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Associated Banc

A-Score: 6.0/10

Value: 5.1

Growth: 4.8

Quality: 4.3

Yield: 8.0

Momentum: 7.0

Volatility: 7.0

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Prosperity Bancshares

A-Score: 5.7/10

Value: 4.1

Growth: 4.0

Quality: 7.5

Yield: 6.0

Momentum: 3.5

Volatility: 9.0

1-Year Total Return ->

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Western Alliance

A-Score: 5.5/10

Value: 8.1

Growth: 5.7

Quality: 7.0

Yield: 4.0

Momentum: 4.0

Volatility: 4.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

70.63$

Current Price

70.63$

Potential

-0.00%

Expected Cash-Flows