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Prosperity Bancshares (PB)
NYSE:PB

Prosperity Bancshares (PB) AI Stock Analysis

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PB

Prosperity Bancshares

(NYSE:PB)

Rating:74Outperform
Price Target:
$77.00
â–²(4.25%Upside)
Prosperity Bancshares demonstrates strong financial health with robust profitability and a solid balance sheet. While technical indicators show mixed signals, the stock's reasonable valuation and positive earnings call sentiment contribute to an overall positive outlook. Leadership stability through recent corporate events further supports the company's operational continuity.
Positive Factors
Credit Strength
Credit remains pristine with 0 provisions and robust capital levels, providing management with flexibility for M&A or share repurchases.
Net Interest Margin Expansion
Prosperity Bancshares is uniquely positioned to generate meaningful NIM expansion across any macro backdrop due to asset repricing.
Negative Factors
Loan Growth Concerns
Growth questions remain due to low-single digit loan growth guidance, limiting upside without a deal announcement.
Loan Growth Headwind
Loan growth remains a headwind with EOP balances down by another 1.0% Q/Q, but management was incrementally positive on the call that activity should begin to pick up.

Prosperity Bancshares (PB) vs. SPDR S&P 500 ETF (SPY)

Prosperity Bancshares Business Overview & Revenue Model

Company DescriptionProsperity 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.
How the Company Makes MoneyProsperity Bancshares makes money primarily through the interest income generated from its loan portfolio, which includes commercial loans, consumer loans, and real estate lending. The bank earns interest by charging borrowers a higher rate than it pays depositors, creating a net interest margin. Additionally, the bank generates revenue through non-interest income sources, such as service charges on deposit accounts, gains from the sale of loans, wealth management and trust fees, and other banking-related fees. The bank's profitability is also supported by its strategic focus on maintaining a strong asset quality and efficient cost management, which helps optimize its operational efficiency.

Prosperity Bancshares Earnings Call Summary

Earnings Call Date:Apr 23, 2025
(Q1-2025)
|
% Change Since: 10.90%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance with notable increases in net income and net interest margin. However, challenges persist with flat loan growth and high nonperforming assets. The sentiment reflects a cautious optimism with a balanced view of achievements and challenges.
Q1-2025 Updates
Positive Updates
Increased Net Income
Net income for Q1 2025 was $130 million, a 17.9% increase from $110 million in Q1 2024.
Improved Net Interest Margin
Net interest margin on a tax-equivalent basis increased to 3.14% in Q1 2025 from 2.79% in Q1 2024.
Strong Deposit Growth
Deposits grew to $28 billion as of March 31, 2025, an increase of $851 million or 3.1% from the previous year, primarily due to the merger with Lonestar State Bancshares.
Recognition and Awards
Prosperity was named the best overall bank in Texas by Money for 2024 and 2025, and ranked among America's best regional banks by Newsweek in 2025.
Negative Updates
Flat Loan Growth
Loans excluding warehouse purchase program loans, and loans acquired in the Lone Star merger decreased by $67.6 million since December 31, 2024.
Decrease in Linked Quarter Deposits
Deposits decreased by $354 million from December 31, 2024, primarily due to seasonality.
Nonperforming Assets Remain High
Nonperforming assets were $81.4 million as of March 31, 2025, slightly higher than historical levels due to acquired loans and accounting regulations.
Loan Charge-Off Increase
Net charge-offs for Q1 2025 were $2.704 million, an increase of $112,000 from the previous quarter.
Company Guidance
During the Prosperity Bancshares First Quarter 2025 Earnings Conference Call, the company reported a robust financial performance, marked by a net income of $130 million, up 17.9% from the previous year. The tangible equity to tangible asset ratio stood at a solid 11.2%, with tangible equity totaling $3.9 billion. The net interest margin improved to 3.14%, reflecting an increase from the prior year's 2.79%, driven by favorable repricing in their bond and loan portfolios. Loans increased by $712 million or 3.3%, largely due to the merger with Lonestar State Bancshares, while deposits rose by $851 million, reaching $28 billion. The efficiency ratio improved to 45.7% from 49.1% the previous year. Nonperforming assets totaled $81.4 million, maintaining stable asset quality. The company remains optimistic about loan growth in the low single digits for 2025, despite market volatility and the broader economic landscape, and continues to explore potential M&A opportunities to enhance shareholder value.

Prosperity Bancshares Financial Statement Overview

Summary
The company shows strong profitability with a high net profit margin of 29.0% and a solid balance sheet characterized by a low debt-to-equity ratio of 0.03. However, inconsistent revenue growth and negative free cash flow growth pose some challenges.
Income Statement
75
Positive
The income statement shows a steady revenue base with a TTM gross profit margin of 67.7% and a net profit margin of 29.0%. The revenue growth has been inconsistent, with a decline from 2024 to TTM, but overall profitability remains strong due to solid EBIT and EBITDA margins.
Balance Sheet
80
Positive
The balance sheet reflects a robust financial position with a low debt-to-equity ratio of 0.03 and a strong equity ratio of 19.4% for TTM. The return on equity is commendable at 6.6%, indicating efficient use of shareholder funds. The company's ability to manage its liabilities is noteworthy.
Cash Flow
70
Positive
The cash flow statement reveals stable operating cash flow with an operating cash flow to net income ratio of 0.94 for TTM. However, the free cash flow growth has been negative in recent periods, which could pose a future risk. The free cash flow to net income ratio remains healthy, showing good cash generation.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.77B1.18B1.07B1.20B1.15B1.24B
Gross Profit1.17B1.14B1.05B1.11B1.10B1.10B
EBITDA673.00M647.39M565.42M694.47M689.30M676.43M
Net Income499.19M479.39M419.32M524.52M519.30M528.90M
Balance Sheet
Total Assets38.76B39.57B38.55B37.69B37.83B34.06B
Cash, Cash Equivalents and Short-Term Investments2.03B12.95B458.41M880.63M3.06B1.99B
Total Debt216.09M3.42B3.73B1.85B497.50M389.58M
Total Liabilities31.25B32.13B31.47B30.99B31.41B27.93B
Stockholders Equity7.52B7.44B7.08B6.70B6.43B6.13B
Cash Flow
Free Cash Flow442.44M451.55M612.20M464.11M675.71M560.18M
Operating Cash Flow470.37M477.73M646.36M506.53M694.73M582.32M
Investing Cash Flow2.04B1.98B1.09B-1.96B-2.72B-1.27B
Financing Cash Flow-1.89B-940.22M-1.71B-666.75M3.23B1.46B

Prosperity Bancshares Technical Analysis

Technical Analysis Sentiment
Positive
Last Price73.86
Price Trends
50DMA
69.53
Positive
100DMA
70.16
Positive
200DMA
72.70
Positive
Market Momentum
MACD
0.90
Negative
RSI
69.34
Neutral
STOCH
94.27
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PB, the sentiment is Positive. The current price of 73.86 is above the 20-day moving average (MA) of 69.65, above the 50-day MA of 69.53, and above the 200-day MA of 72.70, indicating a bullish trend. The MACD of 0.90 indicates Negative momentum. The RSI at 69.34 is Neutral, neither overbought nor oversold. The STOCH value of 94.27 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PB.

Prosperity Bancshares Risk Analysis

Prosperity Bancshares disclosed 45 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 (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
$8.83B13.0411.58%1.52%7.10%4.65%
77
Outperform
$6.62B11.8110.17%2.21%6.58%26.56%
76
Outperform
$8.19B10.8113.06%3.10%4.84%28.90%
75
Outperform
$9.14B19.057.77%0.81%8.08%-11.31%
PBPB
74
Outperform
$7.04B14.116.83%3.14%9.02%20.88%
72
Outperform
$8.38B13.878.33%1.45%20.70%5.69%
61
Neutral
C$14.67B6.1420.17%5.70%26.93%-38.21%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PB
Prosperity Bancshares
73.86
16.50
28.77%
BOKF
Bok Financial
102.96
16.92
19.67%
PNFP
Pinnacle Financial Partners
117.83
41.19
53.74%
UMBF
UMB Financial
110.35
30.13
37.56%
WTFC
Wintrust Financial
131.92
37.02
39.01%
ZION
Zions Bancorporation National Association
55.50
14.28
34.64%

Prosperity Bancshares Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Prosperity Bancshares Secures Leadership with New Agreement
Positive
Apr 16, 2025

On April 15, 2025, Prosperity Bancshares, Inc. entered into an employment and change in control agreement with Kevin J. Hanigan, the President and COO of the company. The agreement outlines Mr. Hanigan’s compensation, including a base salary and eligibility for bonuses, and details the conditions under which he would receive severance payments in the event of termination. This agreement is significant as it secures leadership stability and outlines financial commitments in the event of a change in control, impacting the company’s operational continuity and stakeholder interests.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 24, 2025