Prosperity Bancshares (PB) investor relations material

Executive summary

• Completed the merger of Stellar Bancorp, Inc. on July 1, 2026, following earlier acquisitions of American Bank Holding Corporation and Southwest Bancshares, Inc. in 2026, adding 52 banking offices and key leadership to the board.

• Net income for Q2 2026 was $168.6 million, or $162.7 million excluding merger-related and non-recurring items, up 20.4%-24.7% year-over-year; diluted EPS was $1.67, or $1.62 adjusted, up 14.1%.

• Total assets reached $43.87 billion at June 30, 2026, up 14.1%-14.2% year-over-year, with pro forma assets exceeding $53 billion post-Stellar merger.

• Declared a $0.60 per share dividend for Q3 2026 and repurchased 1.04 million shares year-to-date.

• Focus remains on integrating recent acquisitions, prioritizing organic growth and profitability over loan growth for its own sake.

Financial highlights

• Net interest income for Q2 2026 was $330.6 million, up 23.5% year-over-year; net interest margin rose 29 bps to 3.47%.

• Noninterest income for Q2 2026 was $60.7 million, up 41.2% year-over-year, including an $8.2 million gain from Visa stock exchange.

• Noninterest expense for Q2 2026 was $176.2 million, up $37.6 million year-over-year, mainly due to higher salaries and merger-related costs; efficiency ratio improved to 45.99%.

• Loans totaled $25.03 billion at June 30, 2026, up 12.8% year-over-year, mainly from recent mergers; deposits reached $32.6 billion, up 18.7%.

• Allowance for credit losses on loans was $382.8 million (1.53% of total loans); nonperforming assets were 0.34% of average interest-earning assets.

Outlook and guidance

• Net interest margin guidance raised to 3.70%-3.75% for 2026, with 3.80%-3.85% targeted for 2027.

• Loan growth expected to remain flat for the rest of 2026, with construction loan fundings boosting growth in 2027.

• Noninterest expense projected at $244-$250 million in Q3 2026, excluding one-time merger costs.

• Management expects continued growth through internal expansion and integration of recent acquisitions, supported by strong economic conditions in Texas and Oklahoma.

• Cost savings from integrations expected to total $100-$110 million pre-tax when fully realized.