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Prosperity Bancshares (PB)
:PB
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Prosperity Bancshares
(NYSE:PB)
70Outperform
Positive Factors
Capital Flexibility
Credit remains pristine with 0 provisions and robust capital levels, providing management with flexibility for M&A or share repurchases.
Net Interest Margin
Prosperity Bancshares is uniquely positioned to generate meaningful NIM expansion due to asset repricing.
Negative Factors
Loan Growth
Growth remains a question mark with guidance for muted loan growth and a flat balance sheet.
Prosperity Bancshares (PB) vs. S&P 500 (SPY)
Market Cap
$6.73B
Dividend Yield3.16%
Average Volume (3M)585.26K
Price to Earnings (P/E)14.2
Beta (1Y)0.92
Revenue Growth11.96%
EPS Growth11.66%
CountryUS
Employees3,850
SectorFinancial
Sector Strength77
IndustryBanking
Share Statistics
EPS (TTM)5.04
Shares Outstanding95,262,720
10 Day Avg. Volume717,224
30 Day Avg. Volume585,258
Financial Highlights & Ratios
PEG Ratio1.22
Price to Book (P/B)N/A
Price to Sales (P/S)5.73
Price to Cash Flow (P/CF)-8.30
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$91.29Price Target Upside29.20% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Prosperity Bancshares Business Overview & Revenue Model
Company DescriptionProsperity Bancshares, Inc. is a holding company, which engages in the provision of financial products and solutions. It provides retail and commercial banking services such as deposits, online Internet banking, loan services, investments, trust, credit card and others. The company offers its products to small and medium-sized businesses and consumers. Prosperity Bancshares was founded by Tracy T. Rudolph in 1983 and is headquartered in Houston, TX.
How the Company Makes MoneyProsperity Bancshares generates revenue primarily through interest income from loans and securities, as well as non-interest income from service charges and fees on deposit accounts. The bank's loan portfolio includes commercial and industrial loans, real estate loans, and consumer loans, which are the main drivers of interest income. Additionally, the bank earns income from investments in securities. Non-interest revenue is derived from various banking services such as transaction fees, trust services, and other ancillary financial products. The company's performance is also influenced by strategic acquisitions and its ability to maintain a strong local presence in its operating regions.
Prosperity Bancshares Financial Statement Overview
Summary
Prosperity Bancshares shows strong profitability and equity growth, but faces challenges with increasing debt and declining free cash flow. Continued focus on managing expenses and improving cash flow efficiency is critical for sustainable growth.Income Statement
The income statement shows a strong net income with a net profit margin improvement from the previous year, indicating good profitability. However, the negative EBIT in the latest year is concerning, likely due to high operating expenses impacting profitability. Revenue growth has been inconsistent, reflecting potential volatility in revenue streams.70
Positive
Balance Sheet
The balance sheet is robust with a healthy debt-to-equity ratio, indicating manageable leverage. Stockholders' equity has steadily increased, contributing to a solid equity ratio. However, the total debt has increased significantly compared to earlier years, which could pose future risks if not controlled.75
Positive
Cash Flow
The cash flow statement shows a decline in free cash flow, with a negative growth rate from the previous year, suggesting potential cash management issues. Operating cash flow remains positive and sufficient to cover net income, which is a positive sign. However, the decrease in free cash flow to net income ratio indicates decreasing cash efficiency.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.62B | 1.07B | 1.11B | 1.10B | 1.12B | Gross Profit |
| 1.62B | 1.60B | 1.11B | 1.10B | 1.12B | EBIT |
| -1.24B | 691.28M | 755.78M | 659.65M | 645.03M | EBITDA |
| 0.00 | 0.00 | 694.47M | 689.30M | 676.43M | Net Income Common Stockholders |
| 479.39M | 419.32M | 524.52M | 519.30M | 528.90M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.31B | 458.41M | 880.33M | 3.06B | 1.99B | Total Assets |
| 39.57B | 38.55B | 37.69B | 37.83B | 34.06B | Total Debt |
| 3.20B | 3.73B | 1.85B | 497.50M | 446.58M | Net Debt |
| 1.23B | 3.27B | 1.43B | -2.05B | -896.41M | Total Liabilities |
| 32.13B | 31.47B | 30.99B | 1.26M | 3.46M | Stockholders Equity |
| 7.44B | 7.08B | 6.70B | 6.43B | 6.13B |
| Cash Flow | Free Cash Flow | |||
| 351.85M | 612.20M | 464.11M | 675.71M | 560.18M | Operating Cash Flow |
| 351.85M | 646.36M | 506.53M | 694.73M | 582.32M | Investing Cash Flow |
| -63.25M | 1.09B | -1.96B | -2.72B | -1.27B | Financing Cash Flow |
| -289.14M | -1.71B | -666.75M | 3.23B | 1.46B |
Prosperity Bancshares Technical Analysis
Negative
70.66
Price Trends
77.00
Negative
77.56
Negative
72.00
Negative
Market Momentum
-1.71
Positive
22.26
Positive
9.34
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PB, the sentiment is Negative. The current price of 70.66 is below the 20-day moving average (MA) of 75.93, below the 50-day MA of 77.00, and below the 200-day MA of 72.00, indicating a bearish trend. The MACD of -1.71 indicates Positive momentum. The RSI at 22.26 is Positive, neither overbought nor oversold. The STOCH value of 9.34 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PB.
Prosperity Bancshares Risk Analysis
Prosperity Bancshares disclosed 44 risk factors in its most recent earnings report. Prosperity Bancshares reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Prosperity Bancshares Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $7.83B | 14.29 | 15.13% | 2.98% | 7.81% | -2.49% | |
74 Outperform | $21.39B | 12.41 | 9.93% | 4.09% | 10.13% | -1.25% | |
72 Outperform | $26.24B | 12.78 | 11.92% | 3.67% | 11.21% | -2.26% | |
70 Outperform | $6.73B | 14.18 | 6.60% | 3.16% | 11.96% | 11.66% | |
69 Neutral | $6.98B | 10.13 | 13.15% | 3.56% | 7.91% | 13.79% | |
68 Neutral | $6.37B | 12.59 | 9.70% | 2.19% | 11.17% | 1.47% | |
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% |
* Financial Sector Average
Performance Comparison
PB
Prosperity Bancshares
70.66
10.15
16.77%
BOKF
Bok Financial
98.85
14.57
17.29%
CFR
Cullen/Frost Bankers
121.84
17.31
16.56%
FITB
Fifth Third Bancorp
38.23
2.87
8.12%
HBAN
Huntington Bancshares
14.40
1.54
11.98%
ZION
Zions Bancorporation National Association
47.33
7.77
19.64%
Prosperity Bancshares Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -11.68% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call reflects a generally positive outlook, driven by strong net income growth, improved efficiency, and a higher net interest margin. However, challenges include flat organic loan growth and an increase in non-performing assets.Highlights
Significant Increase in Net Income
Net income for the quarter ending December 31, 2024, was $130 million, up 36% from $95 million in the same period in 2023.
Improved Efficiency Ratio
The efficiency ratio improved to 46% from 55.6% in the same quarter of 2023.
Increased Net Interest Margin
Net interest margin increased by 30 basis points to 3.05% compared to 2.75% in the fourth quarter of 2023.
Stock Repurchase Program
A stock repurchase program was announced, under which up to 5% of outstanding common stock may be acquired.
Positive Deposit Growth
Deposits increased by $1.2 billion or 4.4% year-over-year, primarily due to the merger.
Lowlights
Flat Organic Loan Growth
Excluding the increase in loans due to the merger, loan growth was essentially flat in 2024.
Increase in Non-Performing Assets
Non-performing assets increased from $72 million to $81.5 million year-over-year.
Decrease in Fair Value Loan Income
Fair value loan income for the fourth quarter of 2024 was $3.6 million, down from $4.8 million in the third quarter of 2024.
Company Guidance
During Prosperity Bancshares' fourth quarter 2024 earnings call, several key financial metrics were highlighted. The company reported a net income of $130 million for the quarter, a 36% increase from the $95 million in the same period of 2023. The net income per diluted common share rose to $1.37, up 34% from $1.02 in 2023. Excluding merger-related expenses and the FDIC special assessment, net income was $111 million, marking a 16.8% increase. The company's net interest margin improved by 30 basis points to 3.05%, while the efficiency ratio was 46%. Total loans at the end of the year were $22.2 billion, up 4.6% from the previous year, primarily due to the merger with Lone Star Bank. Deposits also saw a 4.4% increase to $28.4 billion. Non-performing assets were noted at $81.5 million, representing 23 basis points of average interest-earning assets. The management expressed optimism about continuing this positive trend into 2025, driven by asset repricing and a conducive economic environment in Texas and Oklahoma.Prosperity Bancshares Corporate Events
Executive/Board Changes
Prosperity Bancshares Updates Executive Employment Agreement
Neutral
Jan 22, 2025
On January 21, 2025, Prosperity Bancshares and Prosperity Bank amended their employment agreement with H.E. Timanus, Jr., updating terms related to a Change in Control. The new agreement outlines specific conditions and compensation for Mr. Timanus, including cash payments and stock vesting, should his employment be terminated under certain circumstances linked to a Change in Control.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.