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Why Is Prosperity Bancshares (PB) Down 0.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Prosperity Bancshares (PB - Free Report) . Shares have lost about 0.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prosperity Bancshares due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Prosperity Bancshares’ second-quarter 2021 earnings per share of $1.41 surpassed the Zacks Consensus Estimate of $1.40. The bottom line compared favorably with the prior-year quarter’s adjusted earnings of $1.25 per share. The year-earlier quarter’s figure excludes merger-related charges and a net operating loss tax benefit.
Results were primarily aided by growth in non-interest income, a decline in expenses and nil provisions. The company witnessed sequential growth in average deposit balances in the quarter. However, a decline in net interest income (NII) and lower loan balances were the undermining factors.
Net income available to common shareholders (GAAP basis) was $130.6 million, down marginally year over year.
Revenues & Expenses Decline
Net revenues were $281 million, down 1.3% from the prior-year quarter. The figure lagged the Zacks Consensus Estimate of $283.4 million.
NII was $245.4 million, down 5.2% year over year. Net interest margin, on a tax-equivalent basis, contracted 58 basis points (bps) to 3.11%.
Non-interest income totaled $35.6 million, up 38.5% year over year. The rise was driven by an improvement in almost all fee income components, except for bank-owned life insurance income.
Non-interest expenses declined 14.3% from the prior-year quarter to $115.2 million. A decrease in almost all cost components, except for regulatory assessments and FDIC insurance costs, and other real estate expenses, resulted in the fall.
As of Jun 30, 2021, total average loans were $19.3 billion, down from $19.7 billion recorded at the end of the previous quarter. However, average deposits totaled $29.2 billion, up from $27.8 billion as of Mar 31, 2021.
Credit Quality Improves
In the reported quarter, the company did not record any provision for credit losses against provisions of $10 million in the year-ago quarter. Net charge-offs were $4.3 million, down from $13 million recorded in the year-ago period. As of Jun 30, 2021, total non-performing assets were $33.7 million, plunging 56.8% from the prior-year quarter end.
However, the ratio of allowance for credit losses to total loans was 1.57%, up 3 bps year over year.
Capital Ratios Improve
As of Jun 30, 2021, Tier-1 risk-based capital ratio was 15.26%, up from 12.29% as of Jun 30, 2020. Total risk-based capital ratio was 15.71% compared with the prior year’s 13.36%.
Profitability Ratios Deteriorate
At the end of the second quarter, the annualized return on average assets was 1.45%, down from 1.61% witnessed at the end of the prior-year quarter. Annualized return on common equity was 8.31%, down from the year-earlier period’s 8.84%.
Third-Quarter 2021 Outlook
The company expects non-interest expenses of $118-$120 million.
Fair value loan income is expected to be $3-$4 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Prosperity Bancshares has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Prosperity Bancshares has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Prosperity Bancshares (PB) Down 0.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Prosperity Bancshares (PB - Free Report) . Shares have lost about 0.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prosperity Bancshares due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Prosperity Bancshares Q2 Earnings Beat, Revenues Decline Y/Y
Prosperity Bancshares’ second-quarter 2021 earnings per share of $1.41 surpassed the Zacks Consensus Estimate of $1.40. The bottom line compared favorably with the prior-year quarter’s adjusted earnings of $1.25 per share. The year-earlier quarter’s figure excludes merger-related charges and a net operating loss tax benefit.
Results were primarily aided by growth in non-interest income, a decline in expenses and nil provisions. The company witnessed sequential growth in average deposit balances in the quarter. However, a decline in net interest income (NII) and lower loan balances were the undermining factors.
Net income available to common shareholders (GAAP basis) was $130.6 million, down marginally year over year.
Revenues & Expenses Decline
Net revenues were $281 million, down 1.3% from the prior-year quarter. The figure lagged the Zacks Consensus Estimate of $283.4 million.
NII was $245.4 million, down 5.2% year over year. Net interest margin, on a tax-equivalent basis, contracted 58 basis points (bps) to 3.11%.
Non-interest income totaled $35.6 million, up 38.5% year over year. The rise was driven by an improvement in almost all fee income components, except for bank-owned life insurance income.
Non-interest expenses declined 14.3% from the prior-year quarter to $115.2 million. A decrease in almost all cost components, except for regulatory assessments and FDIC insurance costs, and other real estate expenses, resulted in the fall.
As of Jun 30, 2021, total average loans were $19.3 billion, down from $19.7 billion recorded at the end of the previous quarter. However, average deposits totaled $29.2 billion, up from $27.8 billion as of Mar 31, 2021.
Credit Quality Improves
In the reported quarter, the company did not record any provision for credit losses against provisions of $10 million in the year-ago quarter. Net charge-offs were $4.3 million, down from $13 million recorded in the year-ago period. As of Jun 30, 2021, total non-performing assets were $33.7 million, plunging 56.8% from the prior-year quarter end.
However, the ratio of allowance for credit losses to total loans was 1.57%, up 3 bps year over year.
Capital Ratios Improve
As of Jun 30, 2021, Tier-1 risk-based capital ratio was 15.26%, up from 12.29% as of Jun 30, 2020. Total risk-based capital ratio was 15.71% compared with the prior year’s 13.36%.
Profitability Ratios Deteriorate
At the end of the second quarter, the annualized return on average assets was 1.45%, down from 1.61% witnessed at the end of the prior-year quarter. Annualized return on common equity was 8.31%, down from the year-earlier period’s 8.84%.
Third-Quarter 2021 Outlook
The company expects non-interest expenses of $118-$120 million.
Fair value loan income is expected to be $3-$4 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Prosperity Bancshares has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Prosperity Bancshares has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.