PB

Wrapping up Q2 earnings, we look at the numbers and key takeaways for the regional banks stocks, including Prosperity Bancshares (NYSE:PB) and its peers. Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges. The 93 regional banks stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates. In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results. With a network of banking centers spanning the Lone Star State and beyond, Prosperity Bancshares (NYSE:PB) operates full-service banking locations throughout Texas and Oklahoma, offering a wide range of financial products and services to businesses and consumers. Prosperity Bancshares reported revenues of $383.6 million, up 23.8% year on year. This print exceeded analysts’ expectations by 0.8%. Overall, it was a strong quarter for the company with a solid beat of analysts’ tangible book value per share estimates. "I am excited to announce that on July 1, 2026, Prosperity Bancshares completed the merger of Stellar and its wholly owned subsidiary Stellar Bank, headquartered in Houston, Texas. Stellar Bank operated 52 banking offices including its main office in Houston and banking offices in the Houston, Beaumont and East Texas areas and in Dallas, Texas. I am also pleased to announce that in connection with the mergers, Robert Franklin, former CEO of Stellar, and Joe Swinbank, a former Stellar director, have joined the Prosperity Bancshares Board of Directors and that Ray Vitulli, former CEO of Stellar Bank, and Pat Parsons, a former Stellar Bank director, have joined the Prosperity Bank Board of Directors. Pat was instrumental in building Stellar Bank's Beaumont franchise over the years," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer. The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $73.50. Is now the time to buy Prosperity Bancshares? Access our full analysis of the earnings results here, it’s free. Originally founded in 1964 as a federal savings and loan institution, OFG Bancorp (NYSE:OFG) provides banking and financial services including commercial and consumer lending, wealth management, insurance, and trust services primarily in Puerto Rico and the U.S. Virgin Islands. OFG Bancorp reported revenues of $190.3 million, up 4.5% year on year, outperforming analysts’ expectations by 3.9%. The business had an exceptional quarter with a beat of analysts’ EPS and net interest income estimates. The market seems content with the results as the stock is up 4.6% since reporting. It currently trades at $52.32. Is now the time to buy OFG Bancorp? Access our full analysis of the earnings results here, it’s free. Originally established in 1941 and now operating with a tech-forward approach that includes its SmartStreet platform for homeowner associations, Banc of California (NYSE:BANC) is a California-based bank holding company that provides banking services to small and middle-market businesses, entrepreneurs, and individuals. Banc of California reported revenues of $285.7 million, up 4.7% year on year, falling short of analysts’ expectations by 3.1%. It was a disappointing quarter as it posted a significant miss of analysts’ tangible book value per share and net interest income estimates. As expected, the stock is down 11.5% since the results and currently trades at $18.74. Read our full analysis of Banc of California’s results here. Founded during the Great Depression in 1935 and evolving into a major Northeastern financial institution, Webster Financial (NYSE:WBS) is a bank holding company that provides commercial banking, consumer banking, and employee benefits solutions through its Webster Bank and HSA Bank division. Webster Financial reported revenues of $740 million, up 3.4% year on year. This number missed analysts’ expectations by 0.7%. Overall, it was a softer quarter as it also produced a miss of analysts’ net interest income estimates and a miss of analysts’ EPS estimates. The stock is up 3.9% since reporting and currently trades at $79.06. Read our full, actionable report on Webster Financial here, it’s free. Tracing its roots back to 1849 during the California Gold Rush era, KeyCorp (NYSE:KEY) operates KeyBank, a full-service regional bank providing retail and commercial banking, wealth management, and investment services across 15 states. KeyCorp reported revenues of $1.96 billion, up 6.7% year on year. This print met analysts’ expectations. However, it was a slower quarter as it logged a slight miss of analysts’ net interest income estimates and a miss of analysts’ tangible book value per share estimates. The stock is down 2.5% since reporting and currently trades at $22.74. Read our full, actionable report on KeyCorp here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Image source: The Motley Fool. Wednesday, July 29, 2026 at 11:30 a.m. ET Executive Vice President and General Counsel - Charlotte Rasche Senior Chairman and Chief Executive Officer - David E. Zalman Chairman - H.E. Tim Timanus, Jr. Chief Financial Officer - Asylbek Osmonov Senior Vice Chairman - Eddie Safady President and Chief Operating Officer - Kevin Hanigan Vice Chairman - Robert R. Franklin, Jr. Chief Lending Officer - Randy Hester Director of Corporate Strategy - Mays Davenport Executive Vice President - Bob Dowdell Houston Area Chairman - Ramon Vitulli Operator: Good day. And welcome to the Prosperity Bancshares Second Quarter Conference Call. All participants will be in listen-only mode. To ask a question, you may press star then one on a touchtone phone. Please note this event is being recorded. I would now like to turn the conference over to Charlotte Rasche. Please go ahead. Charlotte Rasche: Thank you. Good morning, ladies and gentlemen. And welcome to Prosperity Bancshares' Second Quarter 2026 Earnings Conference Call. This call is being broadcast live on our website and will be available for replay for the next few weeks. I am Charlotte Rasche, executive vice president and general counsel of Prosperity Bancshares. And here with me today is David E. Zalman, senior chairman and chief executive officer H.E. Tim Timanus, Jr., chairman; Asylbek Osmonov, chief financial officer; Eddie Safady, senior vice chairman; Kevin Hanigan, president and chief operating officer; Robert R. Franklin, Jr., vice chairman and former CEO of Stellar Bancorp Randy Hester, chief lending officer; Mays Davenport, director of corporate strategy; Bob Dowdell, executive vice president; and Ramon Vitulli, Houston area chairman and former president of Stellar Bancorp. David E. Zalman will lead off with a review of the highlights for the recent quarter. He will be followed by Asylbek Osmonov, who will review some of our recent financial statistics and Tim Timanus, who will discuss our lending activities including asset quality. Finally, we will open the call for questions. Before we begin, let me make the usual disclaimers. Certain of the matters discussed in this presentation may constitute forward-looking statements for purposes of the federal securities laws. And as such may involve known and unknown risks, uncertainties, and other factors which may cause the actual results or performance of Prosperity Bancshares to be materially different from future results or performance expressed or implied by such forward-looking statements. Additional information concerning factors that could cause actual results to be materially different than those in the forward-looking statements can be found in Prosperity Bancshares' filings with the Securities and Exchange Commission, including Forms 10-Q and 10-Ks and other reports and statements we have filed with the SEC. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. Now let me turn the call over to David E. Zalman. David E. Zalman: Thank you, Charlotte. I would like to welcome and thank everyone listening to our second quarter 2026 conference call. I am excited to announce that on July 1, 2026, Prosperity Bancshares completed the merger of Stellar Bancorp its wholly owned subsidiary Stellar Bank. Headquartered in Houston, Texas. Stellar Bank operated 52 banking offices including its main office in Houston and banking offices the Houston, Beaumont and East Texas areas, and in Dallas, Texas. I am also pleased to announce that Robert R. Franklin, Jr., former CEO of Stellar Bancorp, and Joe B. Swinbank, a former Stellar director have joined the Prosperity Bancshares board of directors and that Ramon Vitulli former President of Stellar Bank, and Pat Parsons, a former Stellar Bank director have joined the Prosperity Bank Board of Directors. Pat was instrumental in building Stellar's Beaumont franchise over the years. With regard to earnings, excluding the gain on the Visa Class B-2 stock exchange, and net of investment security sale that we had and merger-related expenses, net income was $162 million and earnings per diluted common share was $1.62. For the three months ended June 30, 2026. compared with $135 million or $1.42 per diluted common share for the same period in 2025. This represents a 20.4% increase in net income and a 14.1% increase in diluted earnings per share. These earnings for the second quarter of 2026 do not reflect any contribution from Stellar. Excluding one-time merger-related expenses and charges related to security sales, Stellar had $42.1 million in pretax pre-provision core income. Assuming a 21% tax rate, Stellar's second quarter net income would have been approximately $33 million. Annualizing this amount, for Stellar's and Prosperity's second quarter core net income after excluding the nonrecurring items shows an annual run rate of about approximately $780 million. This does not reflect any cost savings that we expect to achieve after the operational integrations of American Bank in September Texas Partners Bank in November, and Stellar Bank in March 2027. As mentioned on prior calls, these are the results we expected, and we believe these tailwinds should continue to be positive for the near future. With regard to loans, loans were $25 billion at June 30, 2026. An increase of $2.8 billion or 12.8% compared with the $22.2 billion at June 30, 2025, and this was primarily due to the American Bank and Texas Partners Bank's mergers. Loans excluding warehouse purchase program loans were $23.7 billion at June 30, 2026 compared with $23.8 billion at March 31, 2026. A decrease of $117 million. We experienced paydowns this quarter with our one- to four-family residential portfolio decreasing $100 million-plus as well as other large pay downs. We also are focusing on the integration with our new partners. Our deposits were $32.6 billion at June 30, 2026, an increase of $5.1 billion or 18.7% compared with $27.4 billion at June 30, 2025. Primarily again due to the American Bank and Texas Partners merger. Our linked-quarter deposits decreased $33 million from $32.6 billion at March 31, 2026. However, our noninterest-bearing deposits increased $159 million during the second quarter of 2026. Excuse me. Our noninterest-bearing deposits of $10.7 billion at June 30, 2026 represent 32.9% of our total deposits. The net interest margin, on a tax equivalent basis was 3.47% for the three months ended June 30, 2026, compared with 3.18% for the same period in 2025 and 3.51% for the three months ended March 31, 2026. The net interest margin in the first quarter of 2026 was impacted by a one-time loan interest income of $4 million from a nonaccrual loan. The net interest margin continues to be positively impacted by the repricing of assets as we predicted and mentioned during previous calls, and also back we will give you a lot more We are really excited where our net interest margin is headed. Asset quality, our nonperforming assets totaled $130 million or 34 basis points of quarterly average interest earning assets at June 30, 2026. Compared with $122 million or 33 basis points of quarterly average interest earning assets at March 31, 2026 and $110 million, again, at 33 basis points of quarterly average interest earning assets at June 30, 2025. So you saw somewhat of an increase there, but based with the new banks that have come in and the amount of assets, we are still basically at the same ratio. The allowance for credit losses on loans and off-balance-sheet credit exposure was $420 million at June 30, 2026. The allowance for credit losses on loans was 2.9x the amount of nonperforming assets. With regard to acquisitions, we are excited about the synergy we have with our new partners, Stellar Bank, Texas Partners Bank, and American Bank. Our top priority is the operational integration of all three banks and our combined teams are working very hard to ensure they are successful. While we continue to have conversation with other bankers, regarding potential acquisition opportunities, We remain focused on the integration of our three transactions. Texas has one of the strongest and most diverse state economies in the U.S., ranking as the second largest by GDP after California and approximately the eighth largest economy in the world. Oklahoma has a smaller but stable economy, heavily influenced by oil and gas, with more modest growth. Texas continues to shine as more people and companies move to the state because of the business-friendly political structure and no state income tax. Prosperity continues to focus on building core relationships, maintain sound asset quality, and operating the bank in an efficient manner while investing in ever-changing technology and product distribution channels. We intend to continue to grow the company both organically and through mergers and acquisitions. I want to thank everyone involved in our company for helping to make it the success of has become. Again for your support of our company. Let me turn over our discussion to Asylbek Osmonov our chief financial officer, to discuss some of the specific financial results we achieved. Asylbek. Asylbek Osmonov: Thank you, Mr. Zalman. Good morning, everyone. Net interest income before provision for credit losses for the three months ended June 30, 2026 was $330.6 million, an increase of $62.8 million compared to $207.7 million for the same period in 2025. An increase of $9.4 million compared to $321.2 million for the quarter ended March 31, 2026. The net interest margin on a tax equivalent basis was 3.47% for the three months ended June 30, 2026 an increase of 29 basis points compared to 3.18% for the same period in 2025. And a decrease of 4 basis points compared to 3.51% for the quarter ended March 31, 2026. The linked-quarter margin decrease was primarily due to the previously mentioned one-time loan interest income of $4 million recorded during the first quarter of 2026. Excluding this one-time loan income, the net interest margin increased by 1 basis point on a linked-quarter basis. Excluding purchase accounting adjustments, the net interest margin for the three months ended June 30, 2026 was 3.41% compared to 3.14% for the same period in 2025 and 3.40% for the quarter ended March 31, 2026. The fair value loan income for the second quarter of 2026 was $4 million compared to $3.7 million for the first quarter of 2026. Fair value loan income for the third quarter of 2026 is expected to be in the range of $6 million to $8 million. Noninterest income was $60.7 million for the three months ended June 30, 2026, compared to $46.5 million for the quarter ended March 31, 2026 and $43 million for the same period in 2025. The higher noninterest income during the second quarter of 2026 includes a net gain of $8.2 million resulting from the conversion of Visa stock, partially offset by loss on the sale of the investment securities. The noninterest expense was $176.2 million for the three months ended June 30, 2026 compared to $217.3 million for the quarter ended March 31, 2026 and $138.6 million for the same period in 2025. The first quarter included merger related expenses of $42.5 million For the third quarter of 2026, we expect noninterest expense to be in the range of $244 million to $250 million. This includes the addition of Stellar Bank operations. However, this projection does not include any one-time merger related expenses associated with the Stellar merger. The efficiency ratio was 46.0% for the three months ended June 30, 2026 compared to 59.2% for the quarter ended March 31, 2026 and 44.8% for the same period in 2025. The bond portfolio metrics at June 30, 2026 have a modified duration of 3.7 projected annual cash flows of approximately $2.2 billion. I will now provide a high-level overview of Stellar financial performance for the second quarter of 2026. Stellar also delivered strong financial results during the quarter. Stellar's net interest income before provision for credit losses for the three months ended June 2026 was $106.4 million, an increase compared to $105.9 million for the quarter ended March 31, 2026. The second quarter results included one-time merger-related expenses and losses related to the sale of certain investment securities. Excluding these one-time charges, Stellar's adjusted pretax pre-provision net income was $42.1 million, an increase of $2.9 million compared to the first quarter of 2026. Now let me turn over the presentation to Tim Timanus for some additional detail on loan and asset quality. Timanus. H.E. Tim Timanus, Jr.: Thank you, Asylbek. Our nonperforming assets at quarter-end June 30, 2026 totaled $131 million or 0.52 basis points of loans and other real estate. Compared to $122 million or 0.48 basis points at March 31, 2026. Since June 30, 2026, $5 million of nonperforming assets have been removed or put under contract for sale. The June 30, 2026 nonperforming asset total was comprised $119 million in loans, $9 thousand in repossessed assets, $11.3 million in other real estate. Net charge-offs for the three months ended June 30, 2026 were $2.18 million compared to net charge-offs of $41.3 million for the quarter ended March 31, 2026. There was no provision to the allowance for credit losses during the quarter ended June 30, 2026. $0 were taken into income from the allowance during the quarter ended June 30, 2026. The average monthly new loan production for the quarter ended June 30, 2026 was $454 million, compared to $312 million for the quarter ended March 31, 2026. Loans outstanding at June 30, 2026 were approximately $25.028 billion compared to $25.288 billion at March 31, 2026 The June 30, 2026 loan total is made up of 34% fixed-rate loans, 33% floating-rate loans and 33% variable-rate loans. I will now turn it over to Charlotte Rasche. Charlotte Rasche: Thank you, Timanus. At this time, we are prepared to answer your questions. Our call operator, David, will assist us with questions. Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Our first question comes from Janet Lee with TD Cowen. Please go ahead. Janet Lee: Good morning. David E. Zalman: Good morning. Kevin Hanigan: Good morning. Janet Lee: From the last call, you have talked about net interest margin reaching the 3.70 level as you exit 2026 and then getting in the 3.80 range in 2027. Do you still have a good line of sight into reaching that level, or is there any changes to the outlook versus before? David E. Zalman: Janet, no. We our models are still showing as hitting I think, again, Asylbek, you wanna jump in on this, but we are still saying that we will end up with 3.75 at the end of the year, but our models are still showing 3.70 to 3.80. Asylbek Osmonov: And Yeah. David E. Zalman: So I would exit yes. Asylbek Osmonov: It is. We provided guidance of 3.70. David E. Zalman: I think we are going to increase to 3.70, 3.75. Asylbek Osmonov: Because, you know, with the addition of Stellar, it is still very accretive to us. So guidance stays the same. And for 2027, we said 3.80. I think it is still for whole year, 3.80, 3.85, That will be updated guidance The only the only caution I would put as we start getting past 3.7% of net interest margin, You know, we are we still are very competitive. David E. Zalman: We offer some of the competitive CD rates, but we have been a little bit lower on our money market accounts, so we may wanna raise our money market accounts rate just a little bit. So that may temper the net interest margin a little bit anyway. We may be again, maybe trying grow more organically at that point in time once we hit 3.7. Janet Lee: Okay. Makes sense. But the 3.80-plus range still contemplates that you are raising rates on your deposits. David E. Zalman: Some rate. Asylbek Osmonov: Yes. We have increased some of them. So yes. But-- Janet Lee: Okay. Got it. I understand that the priority is on the integration part, but on the Stellar side, perhaps, or even on the legacy Prosperity side, what are you seeing in terms of loan growth and demand there? It looks like outside of the mortgage warehouse, it was fairly stable quarter-over-quarter. Just wanted to see what you are seeing on that front. David E. Zalman: Yeah. Kevin Hanigan: This is Kevin. I would say for the remainder of the year, companywide, still relatively flat for the remainder of the year. That does include Stellar has got a pretty robust pipeline of $1.2 billion-ish. Right? And so they feel as though they will grow their loans. They grow them about $200 million in the first half of the year. They will probably grow them another $200 million in the back half of the year. But overall for the company, I would call it flattish for the remainder of the year. Maybe on the better news front, as Timanus said, production has been picking up and we have several hundred million, probably closer to $400 million. Of construction deals, which we have approved so far this year that are booked. They are in our pipeline. They will not provide any fundings this year as all the equity has to go into those deals first. But beginning in the first quarter and more materially in the second quarter of next year, the pull through of those deals is going to start generating some positive overall company growth. H.E. Tim Timanus, Jr.: And this is Timanus. Everything that Kevin said is accurate in my opinion. We do forecast stability going forward. We have a decent pipeline of loans. We see decent loan activity Out there in the marketplace. Really, the only thing we see that is a hindrance is some of the very, very aggressive structure and pricing that the competition is putting forth. We have to be cognizant of that and careful with it. But, basically, everything looks decent right now. Kevin Hanigan: Yeah. As Tim said, and it is no news to all you on the call, but credit spreads are at 25- or 30-year lows across the risk spectrum. I mean, some things out there are just getting to the point of being ridiculous. We have looked at two meaningfully large transactions in the last two weeks priced at SOFR plus 125. You know, the math on that yields you an opening day coupon of, like 4.83%. H.E. Tim Timanus, Jr.: Yeah. Kevin Hanigan: Which is ridiculously low. And it is not like either one of those things came with massive amounts of demand deposits in a relationship. So just risk-reward across the spectrum right now is I think, slightly mispriced. David E. Zalman: And I will give you a little bit more color because I think that no disrespect, but the analysts continue to want to show just the growth in the loans and growth all the time. But you know, I think you need to take profitability into consideration and just to give you a little color last week, we had a loan committee and it was a grade A company. there is no question about it. But they it was a $20 million credit and they it was priced at, you know, with especially some of the regional banks coming from outside the state trying to make a mark inside the state. They priced it at a seven-year fixed rate at 5.5%. With a 25-year amortization. And, of course, there is not many of any deposits with that. And so you have to-- you have to consider, okay, do I want to make a loan at 5.5%? Or can I go with a pretty high duration, or do I want to just go buy a money-- buy a mortgage-backed security with a 4.8-year duration and get 5.0%? So can we really operate on 50 basis points? And I would tell you, the difference is no. You cannot pay the lender the officer, reserve for loan loss and make it off of 50 basis points. So we are really I guess my point is we are really paying attention to profitability at the same time. it is not an excuse. But I think that you guys just need to know that too. We are just not gonna we are not going to just put loans on. Most of the, you know, most of the loans that come, the bigger loans that come, they are really more of a dry relationship. I mean, if you are if you are really bringing over a customer and you are bringing over the customer deposits total relationship, that is a completely different story. And even that rate may make some sense. But the bigger, dry relationships just to grow loans to grow loans at those kind of pricing in my opinion, does not make a lot of sense. Janet Lee: Got it. Appreciate all the color. I will step back. Operator: And the next question comes from Brett Rabatin with Stonex Group. Please go ahead. Brett Rabatin: Hey. Good morning, everybody. Thanks for the questions. Wanted to start on the other income. I know there was some noise in 2Q with the gains and the securities. What would the would the increase in other was that related to anything in particular? And does that continue from here? David E. Zalman: Yeah. Asylbek Osmonov: On the other one, we had just about $2.5 million just I would say, annual income that we get that, but it is not going to be expected maybe next quarter. But there was an annual income, we would generate about $2.5 million. Other than every other than that, everything is a core except the, of course, gain on Visa stock. So if you are thinking going forward, I would say, you know, our range around $50 million Prosperity before Stellar, and Stellar has $5 million to $6 million. So I would say between $54 million to $56 million, that would be a good run rate on the noninterest income. Brett Rabatin: Okay. that is great color. Appreciate that. Awesome. Brett Rabatin: And then David, you were you were just talking about, you know, your kind of thesis on loans versus securities and with where the bond market has moved. I was just curious if there was any maybe increased appetite to actually grow the securities portfolio you know, from here and just thoughts on how you view the securities portfolio size kind of post Stellar integration? David E. Zalman: Well, again, our first focus will always be loans. But on the other hand, when the price is getting to where it is right now, you really cannot. We are not going to put a bunch of stuff on the books. And just to grow loans and not be profitable and take the risk. So I would say, I think you will continue to see you know, we are we are focused on building loans first, but whatever we do not, we will continue to put into the into the bond market. And you know, we still grow organically. it is still hard for you guys to see, but when we strip out when we strip out the banks that have joined us, I think, Kelly, you did a deal showing yesterday that our deposits actually have grown organic about 3.2%. So once things always stabilize, we will start-- we will start 2% to 4% organic deposit growth all the time. it is just when you put all these things together and some customers come, some customers leave, it will take a year or so but we will always have organic growth, and that in itself always outproduces what we are able to put in loans. Sometimes. So I think you will have a combination of both growth in loans and deposits. As loans and securities really going forward. Brett Rabatin: Okay. And then if I could just ask one, like, one quick last one just around you know, it sounds like you guys are still seeing some irrational stuff on the lending side but the monthly loan production was obviously stronger linked-quarter. Would you guys attribute that to just increased activity in the markets, you know, customer gains, anything in particular you would point to just kind of describe the linked-quarter improvement and loan production? H.E. Tim Timanus, Jr.: Yes. Once again, we see things as being very stable. And maybe growing a bit. Our people are constantly out there trying to bring customers in and that obviously includes loan customers. As well as deposit customers. The problem with the pricing and the structure that we are seeing in the market those things historically come and go. And right now, they are here. We are we are having to deal with it. But how long it lasts? I guess, is anybody's guess. So I think there is reason to think that we can improve our loan growth and therefore improve our loans outstanding. You have to understand that quite often, the loans that we put on the books do not fund right away. They are construction loans. They are they are their different types of loans where equity has to come in and get funded first. So it can be a few months before we start funding those loans. So that is a normal time delay. that is a good thing, not a bad thing. So I see a lot of positive things out there. And not that many negative things other than the current structure that we are having to deal with on a competitive basis. David E. Zalman: But the bottom line, Timanus, we are at Brent, we are again, Texas is still growing. You are still seeing businesses move into Texas. You are seeing population growth and business growth. So I think we are still gonna have opportunities to grow and build a portfolio. I mean, you know, you we saw a lot more we saw more production this time. You know, a lot of it was pay downs too. I mean, just the one- to four-families, if you look at it, it was over a $100 million decrease. And, again, we are getting paydowns in that in the housing market. People have not been willing with the higher interest rates to lock in and to buy the one- to four-family. So a lot of our pay downs were in that category right there, but Texas is still it is probably the best market out there. H.E. Tim Timanus, Jr.: there is just no question about it. Because that is absolutely correct. David E. Zalman: And Oklahoma is doing well also. H.E. Tim Timanus, Jr.: So from a geographical standpoint, everywhere we operate, right now looks good. David E. Zalman: And again, I again, we are probably more cautious. We are probably more focused on profitability than some of the other banks because we do not wanna just put loans on the books just to say that we have grown loans too at the same time. So we are trying we are trying to balance that out. Brett Rabatin: Okay. that is great. Appreciate all the color, guys. Operator: Mhmm. And the next question comes from Manan Gosalia with Morgan Stanley. Please go ahead. Manan Gosalia: Hi. Good morning. David E. Zalman: Good morning. Manan Gosalia: You spoke about credit spreads being at multi decade lows. In the $20 million credit line. I guess the question is how widespread is that competition on structure and pricing? Is that happening for a specific loan segment like construction or a specific type of client where there might be a higher likelihood maybe of getting other business down the line. Or is it widespread across construction, CRE, middle market, C and I? Kevin Hanigan: Yes. The SOFR 125s are outliers. that is that is two deals Both of them pretty recent, but I would say that is two deals. I think we go back all the way back into December, January time frame. it is two deals from then to now. So there is two recent deals, very large, prominent clientele, Asylbek can probably give you some a little bit of color on originations both at, and pricing on originations at both at Stellar and at Prosperity for the last quarter that might help you understand where what we are doing. David E. Zalman: But I would also say, though, that the 1 that I described with the seven-year fixed rate with 25-year amortization, 5.5% is not unusual, and that is those are loans that everybody's bidding on. I mean, they are not deposit they are not bringing deposits to the bottom line. that is that is loans like on one- to four-family, one- to four-family. Multifamily units, retail centers, office buildings, and stuff like that. And it is just it is just it is just going to the lowest it is just going to the lowest bidder for the most part. Kevin Hanigan: Yeah. H.E. Tim Timanus, Jr.: And, also, Asylbek, if-- yes, let me mention before you start. That it is not across the board. David E. Zalman: It is primarily the larger loans. And what we are seeing more often than not is the large banks or relatively large banks that have recently entered the Texas market or trying to enter the Texas market And they are focused on those larger loans. H.E. Tim Timanus, Jr.: They make a bigger splash that way, and it is understandable. I think that is a good point, Timanus. David E. Zalman: I mean, not everybody's doing this. it is not everybody. If you ask me can put them on one hand, and I do not even need all five fingers. Kevin Hanigan: Yeah. David E. Zalman: Mostly it is mostly the bigger loans. there is a couple of banks that have come in. More of the regionals the big regionals are trying to buy their way into the market. And I and I am not saying that they are wrong. We you know, when we go into a market before we did a lot of mergers and acquisitions, if we started to open up a banking center or something, we would give special deals to. And I guess that is what they are trying to do at the same time. But it is still not across the board, but these are all very large loans. it is just it is just rate driven and I think that is the way they can say that they are they are making a splash. that is just my opinion. H.E. Tim Timanus, Jr.: Right. Asylbek Osmonov: So I -- Asylbek, yeah. I am just gonna give the facts, you know, the average loan production monthly for the Q2 that Timanus mentioned, the $454 million, the average rate on that blended was around 6.5%. And I think when we talked to I looked at Stellar's number too. I think the new loans they are putting up also around 6.5%. So we are comparable at that point. So we know that our you know, fixed loans and some loans are going to reprice at a higher rate than at this rate. that is all very helpful color. Manan Gosalia: I really appreciate it. You know, I guess when we talk to some of the other banks, they have been talking about at the all-in returns of their client relationships, not just the loans and deposits, but also I guess, cash management, investment banking, etcetera. I guess the question for you is, you know, as you do more acquisitions, as you grow the size of the balance sheet, is there anything that you need to invest in on the product side or on the fees side to capture more of the economics of the client? David E. Zalman: Well, I think that is the good news. Is that over the last three years, we spent a lot of time, money, and energy on our new technology. If we would not have-- we would not have-- we had our own computer conversion that we had from we were on 5 Star from one platform to the DNA product. If we would not have done that and spent all that money and time there is no way that we could have done these three deals that we are doing right now. So I think that we are well positioned because we did spend the time, the money, and the energy to let us know that we did wanna be a bigger bank and to do that. We had to have the technology, and I think that you are seeing that growing. I think that we are even bringing in some really good people, especially at Texas Partners. It has a lot of experience and a lot of big bank experience with treasury management. And I see our treasury management really growing in our products. I think we are very, very good. Manan Gosalia: Got it. Thank you. Operator: And the next question comes from Peter Winter with D.A. Davidson. Please go ahead. Peter Winter: Good afternoon. I was wondering, Kevin, if you can give an update on the mortgage warehouse business and just also, with this increase in mortgage rates, does that kind of virtually shut down refi activity? Kevin Hanigan: Yeah. Refi activity is not all the way shut down. there is always been some, but it has been muted. And it is I just looked at the first 28 days of the quarter, so through last night. I think we are averaging right at a billion 250. In outstandings, which is off from the billion 16 or whatever it was, 16, I think. In Q2. So that is a little unusual for the third quarter. You usually, third quarter is pretty good, particularly in July and August with September being a little off. So it would not surprise me if we average a billion 200, maybe as good as a billion 225. In Q3, which is, you know, it is roughly $100 million off the average of Q2. Peter Winter: Got it. Thank you. And then David, just how are you thinking about deposit growth in the second half of the year? And you mentioned you might get a little bit more competitive on money market rates, but just how you are thinking about deposit rates going forward, assuming the Fed is on hold? David E. Zalman: I was wondering if you were going to ask me a question, Peter. Thank you. You are welcome. No. You know, it is hard to tell you that you are going to see a lot of growth because when you do these deals, there are some relationships that come and go. You know, the only thing I can tell you is and we are we really believe this. Our numbers show this. That on an organic basis, on legacy deposits, we always have continued to grow 2% to 4%. And where we do lose is when new banks join us, and, you know, they may have been paying a higher interest rate than we have been willing to pay. May have been some circumstances or the customer just does not like us to be part of that deal. But I think over time, if you ask me to make it a I guess, I first of all, I you know, the Fed a lot of people were talking about them raising rates because of inflation. I think the Trumpster put this new guy in, Walsh, and he is not gonna raise rates in my opinion. Having said that, I think our modeling guy our modeling guy has put in, what, a quarter of a point increase. End of the year. End of the year. And so I do not think they will. Our models really show really great net interest margin just where they are right now. I mean, it shows greater if interest rates go up. And it shows less if interest rates go down a little bit. But again, our customers have been very loyal to us. If you look at you know, if you look at the last you followed us, Peter, forever, and you just look take a look at a graph for the last 10 or 20 years. We have had increased earnings, increased earnings per share, increased assets, increased deposits every year. Until we get 2022. We start we have seen interest rates go up. You saw our net interest margin going down, and then we really got bombed in 2023 and 2024 with net interest margins going down to 2.75%. And, of course, now we have built it back up to 3.50, and we are going to 3.80. And our customers have stayed with us and they really did not have to. They could have gotten stuff better at some other place. And so when I commented earlier, that once we get up to 3.7, I would like to see us bump our customers up a little bit to We still wanna make good money, but I wanna reward them for staying with us at the same time too. And possibly start growing more organically in that phase. Asylbek Osmonov: I have that thing on the deposit. it is kinda hard to see you when you see our balance sheet, our deposits have decreased. But if you kinda peel off, there is a public fund that has seasonality each time. It goes down second and third quarter. But if you strip out the public fund, our core deposits have increased in the second quarter. David E. Zalman: Yeah. Mean, I was extremely excited this time because last year at this time, this is usually 1 of our worst quarters with public funds being down and we and quarterback being down, quarterback bills. So that I thought this was pretty good for usually a seasonal Asylbek Osmonov: Pretty tough deposit quarter. Yeah. Peter Winter: that is great. Thanks, David. David E. Zalman: You are welcome. Operator: And the next question comes from Michael Rose with Raymond James. Please go ahead. Michael Rose: Hey, good afternoon, everyone. Thanks for taking my questions. Wanted to start on the Stellar side. I think maybe Ray is there. Looks like the margin was up pretty meaningfully in the quarter, and it looks like maybe there might have been some restructuring, securities balances were down. And just trying to better understand how much of that benefit is driving the NIM guidance that Asylbek laid out? Ramon Vitulli: Yeah, Michael. This is Ray. So we picked up 9 basis points on the NIM. There was about a $30 million paydown of the of sub debt in there. But it is really driven by as Asylbek said, we booked $525 million, plus we renewed another $600 million or $700 million. So that is about $1.1 billion, $1.2 billion in the quarter. At an average rate of 6.50 on the loan side. Deposit cost held in there, and that was really the driver-- most of the driver of that NIM expansion. Asylbek Osmonov: And just to add on the sale of securities, it happened at the end of the quarter, so there was no impact on the margin. So the margin that they have 9 basis point increase, that was a core increase on the margin. Michael Rose: Okay. Very, very helpful. And then maybe just 1 follow-up, just as it relates to the integration efforts and cost savings realizations of the two other deals, not Stellar, but where do you stand with those? And I understand you gave the outlook. Just trying to better understand the puts and takes. Thanks. Asylbek Osmonov: Yeah. On American and Partners Bank, we realized some of them, but most of the cost savings is going to come in after the system Conversion, which we scheduled for September or November. But let's assuming that all the integration is done, we still expect from the-- I am sorry, from American and Texas Partners additional $20 million to $25 million cost savings coming in, So we should see the full impact of it in 2027. Before tax. David E. Zalman: Right? Before tax. Asylbek Osmonov: Yeah. Before tax. David E. Zalman: 2025. Asylbek Osmonov: Before tax. And on the Stellar, we are still on in line what we announced on the, you know, pre-merger, how much of savings we are gonna get. So we expect to get that savings. It might be a little bit pushed back on the timing of it because the system conversion does not happen till March of next year. Because of the, you know, the timing of everything going on with three acquisitions. So the timing might, but the cost savings that we project is still in line on Stellar as well. Michael Rose: Okay. that is very helpful, Asylbek. Thanks for taking my I will step back. Operator: And the next question comes from David Chiaverini with Jefferies. David Chiaverini: So you mentioned a couple of times about your focus on profitability. Can you remind us how you are thinking about ROTCE targets once the conversions are done and the cost savings are fully baked in looking out to 2027? David E. Zalman: What kind of targets? I did not catch that. David Chiaverini: Your return on tangible common equity. David E. Zalman: Common income. Well, I mean, we are right now we are, what, running even right now, we are running over 15% return on tangible capital, but really I am really hoping to get you might have these numbers in your model, but I am thinking if we hit the numbers we say we are gonna hit, we should be hitting 17%, 18%. Asylbek Osmonov: Yeah. I think initially, we are gonna take a hit because of the conversion, but we build it up very quickly. So our project So it is become a tangible capital, not return on tangible Are you talking about return on tangible capital or where tangible is gonna be? David Chiaverini: I think there are return on tangible capital. David E. Zalman: The return on tangible capital. You answered it. David Chiaverini: Yep. David E. Zalman: Yeah. Basically, they wanna kinda know what you know, I do you have that in your model? Asylbek Osmonov: But, I mean, if we are hitting the numbers that we are saying, you can do the math. Just add the extra money that he just told you on those cost savings to the $780 million and divide that by the share, you are going to get-- I think you are going to start hitting 17%, 18% return on tangible capital. that is right. Yeah. My that is correct. David Chiaverini: Perfect. And a follow-up to that. On capital with your buyback, you reduced it in the second quarter. How should we think about the buyback going forward? David E. Zalman: Whenever people are naughty and we have an opportunity to buy, we are gonna buy. And we are again, you can see the amount of money that we are making or proposed to make. Again, that is something there is no black swan. So we have a run rate of $780 million right now. We have a lot of cost savings that is gonna add to the bottom line. So I think our projections are $885 million to $880 million. We are paying how much in dividends? $200 million and-- yeah, 200 million. So the difference between that and what we are gonna make is or what we are making is a lot of money. So we have a we have a lot of gunpowder to do something with, and we will. I mean, if you know, that we see that there is real opportunity in the-- in the stock price falls and there is something out there in the market, we would definitely be buying our stock back. I mean, trading right now at 10x next year earnings or so. So you know, we are pretty cheap. Yeah. Kevin Hanigan: And it was muted in Q2 largely for blackout purposes. Right. We would have loved to buy a lot more, particularly dirt and certain periods in Q2, but we just we were blacked out. David E. Zalman: Right. David Chiaverini: Got it. Very helpful. Thank you. Operator: And the next question comes from Stephen Scouten with Piper Sandler. Please go ahead. Stephen Kendall Scouten: Yes. Morning. Thanks. Going back to the Stellar legacy results a little bit, it seems like with $33 million in net income you mentioned, maybe that is a fair bit ahead of where consensus numbers had them at one point in time. I am wondering if results are kind of ahead of what you guys assumed when you first announced the deal, if it is going, you know, kind of tracking ahead of expectations, and just if there are any material changes to the marks kind of at closing versus what you were expecting. Asylbek Osmonov: Yeah. On that, definitely running ahead. What we projected. I think when we put together expectation was about $126 million for 2027. On stellar net income. If you take the $33 million we are talking about $130 million. So it is ahead of it. But, on the mark side of it, I think it is maybe a little bit higher than what we projected, but we are still working on it right now, and we do not have we have not finalized the marks yet. But I think that preliminary number coming in a little bit higher than what we projected on the marks. Loan marks. Stephen Kendall Scouten: Okay. And you said $6 million to $8 million in accretion in the third quarter estimate? Yes. Asylbek Osmonov: That is including all Okay. Stephen Kendall Scouten: And then 1 question. Asylbek Osmonov: I am sorry? No. I just wanna say, it is always, you know, depends if there is some loan pays off with a or premium it could impact. But if you look at the model, it is $6 million to $8 million. Stephen Kendall Scouten: Sure. Kinda scheduled versus accelerated. Yep. That makes sense. And then in terms of the pro forma loan loss reserve, do you know where that will go to pro forma with the close for Stellar? And then you guys have had a kind of a zero-provision for several years now. Do you think we will start to see provision be more in line with loan growth moving forward? Or is there still some excess that can be worked out over time? Asylbek Osmonov: On the Stellar one, we are still working on it, so we do not have any number But I know it is gonna be addition to and maybe a pretty good healthy addition to that. But we are working through that. David E. Zalman: there is 24 right now. Asylbek Osmonov: Including that unfunded Prosperity Bank. David E. Zalman: Prosperity. And so you know, you are stellar going with Stellar could take us up to $600 million. Asylbek Osmonov: Yeah. We are we are still working on it, so we will we will could this so we will give you that more in the third quarter. But on the provision, it is kinda hard to say if we are going to provision or not. We just have to run the model and whatever the model tells us if we need to provision, we will do a provision. If it tells that we do not, we are not going to take provision. David E. Zalman: it is hard to provision when you get 3x the amount in an allowance compared to your nonperforming, so I see that. You are asking me personally, unless there is something that I do not know and in the loan portfolio is gonna blow up. But we have 3x the amount of money we have in allowance for loan losses compared to what we have in nonperforming right now. Mhmm. So I do not I do not see in the next 12 months any provisioning. that is just me. Stephen Kendall Scouten: Very good. Very helpful. Thank you guys for the time. Operator: And the next question comes from Jon Arfstrom with RBC Capital Markets. Jon Glenn Arfstrom: Hey. Thanks. Good morning, guys. Morning, Jon. Asylbek, can you just walk through the expense cadence again in terms of what you are expecting in the timeline? I am just trying to I know it is way out in the future, but just trying to get an understanding of what you think the run rate you know, looks like when everything is fully converted. Asylbek Osmonov: I will give you the, well, you know, run rate I gave $244 million to $250 million. that is including Stellar and have some savings that we pull forward from American Bank. And Texas Partners Bank, but not all of it. So, we expect, as I mentioned earlier, from Partners and American, additional $20 million to $25 million cost savings is going to be coming in. And for the Stellar, I think we expect that is all pretax numbers is what I am talking. And for the Stellar, we expect additional probable cost savings around $85 million, $80 million to $85 million. And that is, you know, cost base that we announced. Plus additional of new FDI. So in combination, it is around $85 million additional cost savings on the Stellar side, which with all baked in and everything's, of course, the timing, as I mentioned. that is pretax. David E. Zalman: Yeah. that is all pretax numbers. Yeah. Asylbek Osmonov: So you have got $85 million and $25 million. David E. Zalman: Yeah. Asylbek Osmonov: $20 million to $25 million, you would And you got to tax rate on that. David E. Zalman: Yeah. Asylbek Osmonov: So between additional $100 million to $110 million But, again, we ought to be conservative on that. David E. Zalman: I mean, these are numbers, and we like to give you a little bit less than Okay. In case we do screw up or we do not make it. But, you know, I think we leave a little room in there. Asylbek Osmonov: And it is also I mean, we will kinda looking long term. Right? We do not know what the inflation is, so there the additional cost there might be in, but this is what we have it right now, what we expect, and that is what we are projecting. David E. Zalman: You know, we feel very comfortable about the savings. We have looked at this up and down 2 and 3 times because I did not wanna we did not wanna just put something out there that we did not know it was gonna do it or not. But, I mean, we feel pretty good with these numbers. I mean, you guys have looked at it. Asylbek Osmonov: Yep. Jon Glenn Arfstrom: Okay. Yeah. You guys have definitely delivered on that in the past. David, you kind of alluded to this, but with your asset size, not that $50 billion is a big deal, but you are a much larger bank. Anything else you need to do at your asset size that maybe you were not thinking about or doing a year ago? David E. Zalman: You did kinda reference some hiring in products, but in is there anything else to do that could cause some expense pressures, or do you feel like you have what you need? No. In fact, we needed to get to this size just to utilize the cost that we had, quite frankly. I mean, the way the way the regulators treated us, they were treating us like we were $50 billion and $100 billion. So we are geared up-- we were geared up to be a bigger bank. And so this really just utilizes all the additional cost that we took on to do that, really. Jon Glenn Arfstrom: Okay. Alright. Thank you very much. Operator: This concludes our question and answer session. I would like to turn the conference back over to Charlotte Rasche for any closing remarks. Charlotte Rasche: Thank you. Thank you, ladies and gentlemen, for taking the time to participate in our call today. We appreciate your support of our company and we will continue to work on building shareholder value. Operator: The conference has now concluded. Thank you for attending today's presentation. May now disconnect. Before you buy stock in Prosperity Bancshares, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Prosperity Bancshares wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Prosperity Bancshares (PB) Q2 2026 Earnings Call was originally published by The Motley Fool

In late July 2026, Prosperity Bancshares reported higher second-quarter and year-to-date earnings, continued modest net charge-offs, completed a US$70.75 million share repurchase program, and affirmed a US$0.60 quarterly dividend payable on October 1, 2026. Together with management’s ongoing search for acquisition opportunities, these results highlight a combination of earnings strength, disciplined credit costs, and continued shareholder returns. With these stronger earnings and continued share repurchases in mind, we’ll now examine how the latest developments influence Prosperity Bancshares’ investment narrative. AI is about to change healthcare. These 41 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. To own Prosperity Bancshares, you need to be comfortable with a regional bank that leans on Texas and Sunbelt growth, disciplined credit costs, and acquisition-driven expansion. The latest results point to solid earnings and modest net charge-offs, which support that story, while the most important near term swing factor remains how well recent mergers are integrated. The biggest current risk is that acquisition dependence and integration complexity could strain profitability if new deals or existing transactions do not perform as planned. Among the recent announcements, the company’s confirmation that it is seeking further acquisitions stands out as most relevant. Management’s commitment to grow both organically and through mergers and acquisitions directly ties into the investment case, but also reinforces the execution and integration risks around the three banks currently being absorbed. How effectively Prosperity converts these deals into stable loans, deposits, and earnings will likely shape how investors view both its resilience and its room for future capital returns such as buybacks and dividends. Yet behind the stronger earnings and ongoing capital returns, investors should still be aware of how much hinges on the success of these integrations and the possibility that... Read the full narrative on Prosperity Bancshares (it's free!) Prosperity Bancshares' narrative projects $2.5 billion revenue and $1.1 billion earnings by 2029. This requires 21.4% yearly revenue growth and an earnings increase of about $537.7 million from $562.3 million today. Uncover how Prosperity Bancshares' forecasts yield a $80.85 fair value, a 8% upside to its current price. Two members of the Simply Wall St Community currently see Prosperity’s fair value between US$80.85 and US$117.60, highlighting how far apart individual views can be. When you set those expectations against the bank’s reliance on acquisition driven growth and the integration work still underway, it underlines why it can be helpful to compare several independent perspectives before forming your own view. Explore 2 other fair value estimates on Prosperity Bancshares - why the stock might be worth just $80.85! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your Prosperity Bancshares research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision. Our free Prosperity Bancshares research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Prosperity Bancshares' overall financial health at a glance. Every day counts. These free picks are already gaining attention. 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It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include PB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Prosperity Bancshares stock has delivered a 32.6% return over the past three years, while the current valuation work suggests the shares still trade at a discount to an intrinsic value estimate and to earnings based multiples. With several valuation checks pointing to upside but not all boxes ticked, investors are weighing how much of that potential is already in the price. The 32.6% three year return indicates shareholders have already seen a solid gain, which raises the bar for further upside from here. Future loan growth and credit quality can support the case for Prosperity Bancshares if they translate into steady earnings and capital returns, while any deterioration in asset quality or funding costs may put pressure on the valuation. The stock screens as undervalued on both the Excess Returns intrinsic value estimate and on market multiples, yet with a mixed overall picture because it is only passing 4 of 6 broader valuation checks according to the detailed scorecard. The issue now is whether Prosperity Bancshares still offers an attractive margin of safety after its recent performance or whether most of the easy gains are already behind it. Find out why Prosperity Bancshares' 17.5% return over the last year is lagging behind its peers. The Excess Returns model looks at how efficiently Prosperity Bancshares turns its equity base into earnings above the required return for shareholders. For this stock, the model uses a Book Value of $82.52 per share and a Stable EPS of $7.20 per share, based on weighted future Return on Equity estimates from 11 analysts. Those inputs compare with a Cost of Equity of $6.04 per share and an Excess Return of $1.17 per share, with an average Return on Equity of 8.48%. The model also assumes a Stable Book Value of $84.91 per share, again sourced from analyst projections. Using these assumptions, the Excess Returns framework arrives at an intrinsic value estimate of $117.60 per share. This figure sits above the current share price and indicates that, on this method, the stock appears 36.3% undervalued. On the Excess Returns view, Prosperity Bancshares appears undervalued relative to the earnings power implied by its equity base. Our Excess Returns analysis suggests Prosperity Bancshares is undervalued by 36.3%. Track this in your watchlist or portfolio, or discover 55 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Prosperity Bancshares. The P/E ratio is a common way to gauge what you are paying for each dollar of Prosperity Bancshares earnings. For a bank like Prosperity Bancshares, which is already producing positive earnings, this multiple gives a straightforward comparison with peers. The stock currently trades on a P/E of 13.4x. That sits below both the peer group average of 14.5x and the broader Banks industry average of 11.9x. It also falls short of the modelled fair P/E of 17.3x that reflects the company profile and risk. In other words, the current price implies a discount to what investors might typically pay for similar earnings in comparable bank stocks. This gap between the 13.4x market multiple and the 17.3x fair multiple suggests the market is not fully crediting Prosperity Bancshares for its earnings power at the moment. On the P/E measure, Prosperity Bancshares stock currently appears undervalued relative to what the model suggests investors might expect to pay for its earnings. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where the Prosperity Bancshares valuation puzzle leaves off by explaining which assumptions on growth, margins and earnings would need to hold for the stock to be worth materially more or less than today's price. Each one presents a fair value as a thesis about Prosperity Bancshares' business that investors can track over time, rather than treating valuation as a one off snapshot, and they are available on the Community page. You can add your own narrative on Prosperity Bancshares and present a clear, number-driven case for where its growth, margins, and execution go from here. Share your thesis and be one of the first voices in the Simply Wall St community tracking how that view holds up as new results arrive. Do you think there's more to the story for Prosperity Bancshares? Head over to our Community to see what others are saying! Prosperity Bancshares screens as undervalued on both the Excess Returns intrinsic value estimate and on earnings multiples, with those methods pointing in the same direction despite only a mixed overall valuation score. That combination suggests the current price already bakes in some caution around future loan growth, credit quality, and funding costs. The key question from here is whether Prosperity Bancshares can deliver stable returns on equity without a meaningful hit to asset quality. If it can, the current discount may reflect market caution rather than a value trap. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include PB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Prosperity Bancshares (PB) has drawn investor attention after reporting second quarter 2026 earnings alongside comments on ongoing bank integrations and future merger opportunities, setting the context for how the stock may be assessed today. See our latest analysis for Prosperity Bancshares. Prosperity Bancshares shares have gained 7.53% on a year to date basis and the 1 year total shareholder return of 17.55%, alongside recent earnings, dividend affirmation, share buybacks and ongoing acquisition discussions, points to gradually building momentum. If you are looking beyond banks for other ideas, this could be a useful moment to scan the market for potential standouts among 18 top founder-led companies Prosperity Bancshares appears to be a solid regional bank based on recent earnings, dividends and buybacks, and the stock has already moved this year. The next step is to determine whether that strength is already fully reflected in the price. The most followed narrative currently places Prosperity Bancshares fair value at $80.85 against a last close of $74.87, which frames a modest valuation gap investors are watching closely. Read the complete narrative. Want to see what is driving that valuation gap for Prosperity Bancshares? The narrative leans heavily on faster revenue expansion, higher margins, and a future earnings multiple that looks very different to today, all combined into one detailed set of assumptions. Result: Fair Value of $80.85 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, investors also need to weigh credit trends and growth reliance, since rising nonperforming assets and continued pressure on loans and deposits could be a challenge for the Prosperity Bancshares story. Find out about the key risks to this Prosperity Bancshares narrative. The first narrative for Prosperity Bancshares leans on future earnings and fair value. Yet the current P/E of 13.4x is higher than the US Banks industry at 11.9x, while the fair ratio sits at 17.3x. That mix hints at both downside risk and upside room. Which side matters more to you? See what the numbers say about this price — find out in our valuation breakdown. The mix of potential risks and rewards around Prosperity Bancshares will feel different for every investor, so it makes sense to review the details for yourself and decide where you stand. You can move quickly from headline impressions to a more complete view by weighing both sides through the 4 key rewards and 1 important warning sign If Prosperity Bancshares has sharpened your focus, do not stop here. Use the Simply Wall St screener to compare fresh ideas before the next move passes you by. Spot potential mispricings early by checking companies that appear overlooked on quality and valuation through the screener containing 19 high quality undiscovered gems. Strengthen your income plan by reviewing stocks with higher yields that still aim for resilience using the 9 dividend fortresses. Prioritise financial staying power by focusing on companies with strong fundamentals via the solid balance sheet and fundamentals stocks screener (45 results). This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include PB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Prosperity Bancshares, Inc.’s PB second-quarter 2026 adjusted earnings of $1.62 per share surpassed the Zacks Consensus Estimate of $1.54. The bottom line increased 14.1% from the year-ago quarter. Subsequent to the reported quarter, Prosperity Bancshares completed the acquisition of Stellar Bancorp and its subsidiary, Steller Bank, on July 1, 2026. The company also continued to integrate the acquisitions of American Bank Holding Corporation and Southwest Bancshares, which were completed earlier this year. Results benefited from higher net interest income (NII) and non-interest income alongside no provision for credit losses. Higher loans and deposit balances were another positive. However, increased operating expenses partly offset these tailwinds. The results excluded the net gain from the Visa Class B-2 stock exchange, investment securities sales, and merger-related expenses. Including non-recurring items, net income available to common shareholders was $168.6 million, or $1.67 per share, compared with $135.2 million or $1.42 per share in the year-ago quarter. Our estimate for net income available to common shareholders was $111.5 million. Total revenues were $391.3 million, up 25.9% year over year. The top line surpassed the Zacks Consensus Estimate of $376.1 million. NII rose 23.5% year over year to $330.6 million. Also, the net interest margin (NIM), on a tax-equivalent basis, expanded 29 basis points to 3.47%. Our estimates for NII and NIM were pegged at $326.2 million and 3.50%, respectively. Non-interest income totaled $60.7 million, up 41.2% year over year. The increase was primarily driven by the American and Southwest mergers and an $8.2 million gain on the Visa Class B-2 stock exchange, net of investment securities sales. Our estimate for the metric was $46.7 million and did not include Visa share sale gains. Non-interest expenses were $176.2 million, up 27.1% year over year. The increase was primarily due to higher salaries and benefits and additional expenses related to the American and Southwest operations. Our estimate for non-interest expenses was $228.1 million. The efficiency ratio improved to 45.99% from 44.80% in the prior-year quarter. As of June 30, 2026, total assets were $43.87 billion, up 14.2% year over year, primarily due to the acquisitions of American Bank Holding Corporation and Southwest Bancshares. Total loans were $25.03 billion, up 12.8% year over year. Deposits increased 18.7% year over year to $32.6 billion, mainly reflecting the impact of the two acquisitions. Our estimates for total loans and total deposits were $25.3 billion and $33.02 billion, respectively. As of June 30, 2026, the common equity tier 1 ratio was 15.94%, down from 17.10% in the year-ago quarter. The total risk-based capital ratio declined to 17.38% from 18.35% in the prior-year quarter. The equity-to-assets ratio was 18.93%, down from 19.78% as of June 30, 2025. At the end of the second quarter, return on average assets was 1.55%, up from 1.41% in the prior-year quarter. The return on average common equity was 8.14%, up from 7.13% in the prior-year quarter. As of June 30, 2026, non-performing assets were $130.6 million, up 18.2% from the year-ago period. Net charge-offs were $2.2 million, down from $3 million in the same quarter of 2025, primarily reflecting the resolution of purchased credit deteriorated (PCD) loans. The company reported no provision for credit losses during the reported quarter, unchanged from the year-ago period. The ratio of allowance for credit losses on loans was $1.53% of the total loans, down from 1.56% a year earlier. In the reported quarter, the company repurchased 0.2 million shares at an average weighted price of $68.34 per share for a total of $13.7 million under its ongoing 2026 stock buyback program. Prosperity Bancshares’ inorganic expansion strategy is expected to support revenue growth and strengthen its Texas franchise. The company’s favorable deposit mix and solid NIM remain key positives. However, rising expenses may hurt the bottom line to some extent. Prosperity Bancshares, Inc. price-consensus-eps-surprise-chart | Prosperity Bancshares, Inc. Quote Currently, Prosperity Bancshares carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. BOK Financial Corporation's BOKF second-quarter 2026 adjusted earnings of $2.59 per share surpassed the Zacks Consensus Estimate of $2.56. The bottom line jumped 18.3% from the prior-year quarter. BOKF’s results benefited from higher NII and total fees and commissions. An increase in loans was another positive. However, the rise in operating expenses was a major undermining factor. Bank OZK’s OZK second-quarter 2026 earnings per share of $1.49 surpassed the Zacks Consensus Estimate of $1.46. However, the bottom line declined 5.7% year over year from $1.58. Results reflected higher non-interest income and deposit balances. However, higher provisions, rising expenses, lower NII, and deteriorating credit quality were headwinds for OZK. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report BOK Financial Corporation (BOKF) : Free Stock Analysis Report Bank OZK (OZK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

For the quarter ended June 2026, Prosperity Bancshares (PB) reported revenue of $391.26 million, up 25.9% over the same period last year. EPS came in at $1.62, compared to $1.42 in the year-ago quarter. The reported revenue represents a surprise of +4.03% over the Zacks Consensus Estimate of $376.11 million. With the consensus EPS estimate being $1.54, the EPS surprise was +5.2%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Prosperity Bancshares performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Interest Margin (Tax Equivalent Basis): 3.5% versus 3.5% estimated by five analysts on average. Efficiency Ratio: 46% compared to the 49.8% average estimate based on five analysts. Net charge-offs to average loans: 0% versus 0.1% estimated by four analysts on average. Average balance - Total interest-earning assets: $38.31 billion versus $37.98 billion estimated by four analysts on average. Total nonperforming loans: $119.27 million versus $107.56 million estimated by three analysts on average. Total nonperforming assets: $130.58 million compared to the $122.65 million average estimate based on three analysts. Total Noninterest Income: $60.71 million versus $47 million estimated by five analysts on average. Net Interest Income (Tax Equivalent Basis): $331.13 million versus $331.73 million estimated by four analysts on average. Net Interest Income: $330.55 million versus $330.16 million estimated by three analysts on average. Credit card, debit card and ATM card income: $10.3 million versus the two-analyst average estimate of $9.79 million. Nonsufficient funds (NSF) fees: $11.35 million versus $10.82 million estimated by two analysts on average. Service charges on deposit accounts: $9.24 million versus the two-analyst average estimate of $8.2 million. View all Key Company Metrics for Prosperity Bancshares here>>> Shares of Prosperity Bancshares have returned +0.7% over the past month versus the Zacks S&P 500 composite's +1.9% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Prosperity Bancshares (PB) came out with quarterly earnings of $1.62 per share, beating the Zacks Consensus Estimate of $1.54 per share. This compares to earnings of $1.42 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +5.20%. A quarter ago, it was expected that this financial holding company would post earnings of $1.41 per share when it actually produced earnings of $1.5, delivering a surprise of +6.38%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Prosperity Bancshares, which belongs to the Zacks Banks - Southwest industry, posted revenues of $391.26 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.03%. This compares to year-ago revenues of $310.7 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Prosperity Bancshares shares have added about 6.4% since the beginning of the year versus the S&P 500's gain of 8.5%. While Prosperity Bancshares has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Prosperity Bancshares was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.57 on $492.63 million in revenues for the coming quarter and $6.25 on $1.73 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks - Southwest is currently in the top 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Cullen/Frost Bankers (CFR), has yet to report results for the quarter ended June 2026. The results are expected to be released on July 30. This financial holding company is expected to post quarterly earnings of $2.53 per share in its upcoming report, which represents a year-over-year change of +5.9%. The consensus EPS estimate for the quarter has been revised 0.2% lower over the last 30 days to the current level. Cullen/Frost Bankers' revenues are expected to be $594.16 million, up 4.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report Cullen/Frost Bankers, Inc. (CFR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management successfully closed the Stellar Bancorp merger on July 1, 2026, adding 52 banking offices and significantly expanding the Houston and East Texas footprint. Core net income growth of 20.4% year-over-year was driven by the repricing of assets and the successful inclusion of American Bank and Texas Partners Bank results. The bank is intentionally maintaining a flat loan growth outlook for the remainder of 2026 to prioritize profitability over volume in a highly competitive pricing environment. Management noted that some regional competitors are offering 'ridiculously low' rates, such as 5.5% fixed for seven years, which Prosperity is choosing to bypass to protect margins. The net interest margin remains on an upward trajectory due to asset repricing, despite a one-time loan interest benefit in the prior quarter that created a slight linked-quarter headwind. Operational focus has shifted entirely to the integration of three recent acquisitions, with system conversions scheduled through March 2027 to capture projected cost synergies. Management maintains a clear line of sight to a net interest margin of 3.70% to 3.75% by year-end 2026, with a target of 3.80% to 3.85% for the full year 2027. Noninterest expense for Q3 2026 is projected between $244 million and $250 million, reflecting the addition of Stellar Bank operations but excluding one-time merger costs. The bank expects to realize approximately $100 million to $110 million in total annual pretax cost savings once all three recent integrations are fully completed in 2027. Loan production is expected to remain stable, with a $1.2 billion pipeline at Stellar and several hundred million in construction deals slated to begin funding in early 2027. Capital allocation strategy remains flexible, with management indicating a readiness to resume share buybacks if the stock trades at attractive valuations post-blackout periods. Q2 results included an $8.2 million net gain from a Visa Class B-2 stock exchange, which was partially offset by losses from investment security sales. The bank reported a $100 million-plus decrease in the one-to-four family residential portfolio due to elevated paydowns as high interest rates deterred new mortgage lock-ins. Management flagged 'irrational' competition from out-of-state regional banks as a headwind to organic loan growth, specifically regarding aggressive loan structures and pricing. The allowance for credit losses remains robust at 2.9x nonperforming assets, leading management to suggest no provisioning may be required for the next 12 months. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed the 3.70% to 3.80% NIM target remains intact, noting that the Stellar merger is highly accretive to the margin profile. David Zalman indicated that once the NIM exceeds 3.70%, the bank may proactively raise money market rates to reward loyal depositors and stimulate organic growth. Kevin Hanigan noted that credit spreads are at 25- to 30-year lows, with some competitors pricing large transactions at SOFR plus 125 basis points. Management emphasized they will not grow the loan book for the sake of volume if the risk-adjusted return is lower than what can be achieved in the mortgage-backed securities market. Stellar is performing ahead of initial expectations, generating approximately $33 million in core net income for the second quarter. Preliminary loan marks for the Stellar transaction are coming in slightly higher than originally projected, though final valuations are still being processed. The full impact of cost savings from American Bank and Texas Partners Bank will not be realized until after system conversions in late 2026. Stellar's $80 million to $85 million in projected annual cost savings will largely materialize after its March 2027 system conversion.