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PB

Prosperity Bancshares NYSE:PB Stock Report

Last Price

US$71.14

Market Cap

US$6.5b

7D

5.1%

1Y

-0.3%

Updated

05 Oct, 2022

Data

Company Financials +
PB fundamental analysis
Snowflake Score
Valuation3/6
Future Growth1/6
Past Performance2/6
Financial Health6/6
Dividends5/6

PB Stock Overview

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers.

Prosperity Bancshares, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Prosperity Bancshares
Historical stock prices
Current Share PriceUS$71.14
52 Week HighUS$80.46
52 Week LowUS$64.69
Beta1.05
1 Month Change1.64%
3 Month Change2.36%
1 Year Change-0.31%
3 Year Change4.39%
5 Year Change10.74%
Change since IPO1,043.91%

Recent News & Updates

Aug 03

Prosperity Bancshares: Flattish Earnings, Unattractive Valuation

Higher interest rates will likely drag the value of investment securities, and consequently the equity book value. The second quarter's performance will likely be repeated in the year ahead. The December 2022 target price suggests a small upside from the current market price. Further, PB is offering a modest dividend yield. Earnings of Prosperity Bancshares, Inc. (PB) will most probably remain flattish this year relative to last year. Decent loan growth and slight margin expansion will likely drive the top line. On the other hand, an increase in expenses proportional to loan growth will keep earnings flattish. Overall, I'm expecting Prosperity Bancshares to report earnings of $5.64 per share for 2022, up by just 0.6% year-over-year. Compared to my last report on the company, I’ve slightly increased my earnings estimate mostly because I've tweaked upwards my loan growth estimate. The year-end target price suggests a small upside from the current market price. Therefore, I'm maintaining a hold rating on Prosperity Bancshares. Loan Portfolio’s Good Performance in 2Q Likely to Recur After seven consecutive quarters of decline, the loan portfolio finally turned around in the second quarter of 2022 and grew by 2.4%. Now that the paycheck protection program forgiveness is almost over, the loan portfolio will likely continue to grow in the coming quarters. As mentioned in the conference call, the management is positive that it can achieve mid-single-digit loan growth for 2022. As historically too loan growth, excluding acquisitions, has remained in the mid-single-digit range, the management's target for 2022 appears reasonable. Further, Prosperity Bancshares operates in the states of Texas and Oklahoma, where strong job markets bode well for loan growth. While Oklahoma has a remarkably strong job market with an unemployment rate much below the national average, Texas’ labor market isn't that strong. Nevertheless, both states have unemployment rates near multi-decade lows, as shown below. Texas Unemployment Rate data by YCharts Overall, I'm expecting the loan portfolio to grow by 3.4% in 2022. In my last report on Prosperity Bancshares, I estimated the loan portfolio to decline by 2.3% this year. I've revised my loan growth estimate due to the second quarter's good performance and an improved outlook. Rising Interest Rates to Hurt the Securities Portfolio Rising interest rates will have a negative impact on securities, and consequently equity. Prosperity Bancshares has a big investment securities portfolio, which made up 40% of total assets at the end of June 2022. As most securities carry fixed rates, their value will fall as rates rise. This means the book value per share is set to take a material hit from rising interest rates this year. Overall, I'm expecting the securities portfolio to grow by 4% and common equity to grow by 2% in the second half of 2022, (earnings and dividend estimates, which also drive the equity balance, are discussed below). The following table shows my balance sheet estimates. FY18 FY19 FY20 FY21 FY22E Financial Position Net Loans 10,284 18,758 19,931 18,330 18,944 Growth of Net Loans 3.5% 82.4% 6.3% (8.0)% 3.4% Other Earning Assets 9,439 8,571 8,590 12,826 15,515 Deposits 17,257 24,200 27,360 30,772 31,072 Borrowings and Sub-Debt 1,316 1,807 390 449 813 Common equity 4,053 5,971 6,131 6,427 6,650 Book Value Per Share ($) 58.1 81.2 65.9 69.7 72.5 Tangible BVPS ($) 30.4 36.2 30.4 34.0 36.6 Source: SEC Filings, Author's Estimates (In USD million unless otherwise specified) Margin is Only Moderately Sensitive to Rate Changes Prosperity Bancshares’ loan book is quite responsive to rate changes. This sensitivity is attributable to the floating and variable-rate loans that altogether made up 59.5% of total loans at the end of June 2022, as mentioned in the earnings presentation. Unfortunately, the deposit book also re-prices quickly because of the concentration in interest-bearing transaction deposits. Money market, savings, and non-interest-bearing demand deposits altogether make up a hefty 71.2% of total deposits at the end of June 2022. Moreover, the large securities portfolio is mostly based on fixed rates, which will drag the average earning asset yield in a rising interest-rate environment. The average duration of the securities portfolio is quite long at around 4.6 years, as mentioned in the earnings presentation. The results of the management’s interest-rate sensitivity analysis given in the 10-K filing showed that a 200-basis points hike in interest rates could boost the net interest income by 11% over twelve months. (Prosperity Bancshares has not provided any quarterly updated results for the rate-sensitivity analysis so far this year). This analysis assumed an interest rate shock. In reality, the interest rate hike has been gradual. Therefore, the impact of the rate hike will be much lower than 11%. 2021 10-K Filing Considering these factors, I'm expecting the margin to grow by six basis points in the second half of 2022 from 2.97% in the second quarter of the year. Normalized Provisioning Likely for the Remainder of the Year Prosperity Bancshares has not booked any net provision expense in the last seven consecutive quarters. This tradition will most probably break in the second half of 2022 mostly because of the heightened interest rates. Some of the borrowers on floating rates who are already stressed because of high inflation may be pushed into default by elevated borrowing costs. Moreover, banks may want to bolster their loan loss reserves ahead of a possible recession. Overall, I'm expecting the provision expense to return to a normal level in the second half of 2022. However, due to zero provisioning reported for the first half, the net provisioning for the full year will likely remain below normal. I'm expecting Prosperity Bancshares to report a net provision expense of 0.04% of loans for 2022. In comparison, the net provision expense averaged 0.09% of total loans in the last five years. Expecting Flattish Earnings for This Year I'm expecting Prosperity Bancshares to report flattish earnings for 2022 as higher net interest income will likely cancel out greater provision and non-interest expenses. Overall, I'm expecting the company to report earnings of $5.64 per share in 2022, up by just 0.6% from last year. The following table shows my income statement estimates. FY18 FY19 FY20 FY21 FY22E Income Statement Net interest income 630 696 1,031 993 1,008 Provision for loan losses 16 4 20 - 8 Non-interest income 116 124 132 140 147 Non-interest expense 326 397 497 474 485 Net income - Common Sh. 322 333 529 519 518 EPS - Diluted ($) 4.61 4.52 5.68 5.60 5.64 Source: SEC Filings, Author's Estimates (In USD million unless otherwise specified) In my last report on Prosperity Bancshares, I estimated earnings of $5.48 per share for 2022. I've revised upwards my earnings estimate mostly because I've increased my loan growth estimate.

Jul 21

Prosperity Bancshares declares $0.52 dividend

Prosperity Bancshares (NYSE:PB) declares $0.52/share quarterly dividend, in line with previous. Forward yield 2.96% Payable Oct. 3; for shareholders of record Sept. 15; ex-div Sept. 14. See PB Dividend Scorecard, Yield Chart, & Dividend Growth.

Shareholder Returns

PBUS BanksUS Market
7D5.1%6.3%4.4%
1Y-0.3%-21.8%-18.2%

Return vs Industry: PB exceeded the US Banks industry which returned -21.8% over the past year.

Return vs Market: PB exceeded the US Market which returned -18.2% over the past year.

Price Volatility

Is PB's price volatile compared to industry and market?
PB volatility
PB Average Weekly Movement3.4%
Banks Industry Average Movement3.5%
Market Average Movement6.9%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: PB is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: PB's weekly volatility (3%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19833,704David Zalmanhttps://www.prosperitybankusa.com

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit. The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery.

Prosperity Bancshares, Inc. Fundamentals Summary

How do Prosperity Bancshares's earnings and revenue compare to its market cap?
PB fundamental statistics
Market CapUS$6.49b
Earnings (TTM)US$506.19m
Revenue (TTM)US$1.12b

12.8x

P/E Ratio

1.0x

P/B Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PB income statement (TTM)
RevenueUS$1.12b
Cost of RevenueUS$0
Gross ProfitUS$1.12b
Other ExpensesUS$618.67m
EarningsUS$506.19m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Oct 26, 2022

Earnings per share (EPS)5.55
Gross Margin100.00%
Net Profit Margin45.00%
Debt/Equity Ratio12.0%

How did PB perform over the long term?

See historical performance and comparison

Dividends

2.9%

Current Dividend Yield

37%

Payout Ratio