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Prosperity Bancshares (PB) Up on Q2 Earnings Beat, Higher Loans
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Shares of Prosperity Bancshares Inc. (PB - Free Report) rallied 1.2% in response to second-quarter 2022 results. Earnings per share of $1.40 surpassed the Zacks Consensus Estimate of $1.38. However, the bottom line declined marginally from the prior-year quarter’s figure.
The company did not record any provisions in the reported quarter, which was a major positive. An increase in revenues, rising rates and higher loan balance were other tailwinds. However, a rise in expenses hurt results to some extent.
Net income available to common shareholders was $128.5 million, down 1.6% year over year.
Revenues & Expenses Rise
Net revenues were $286.1 million, up 1.8% from the prior-year quarter. The top line also beat the Zacks Consensus Estimate of $283.7 million.
Net interest income (NII) was $248.5 million, up 1.3%. Net interest margin (NIM), on a tax-equivalent basis, contracted 14 basis points (bps) to 2.97%.
Non-interest income totaled $37.6 million, up 5.7%. The rise was driven by an increase in almost all fee income components, except for credit card, debit card and ATM card income, mortgage income and bank-owned life insurance income.
Non-interest expenses increased 6.7% to $122.9 million. The rise was mainly due to higher salaries and benefits costs.
The efficiency ratio was 43.12%, down from 40.96% in the prior-year quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Jun 30, 2022, total loans were $18.2 billion, up almost 1% from the end of the previous quarter. Deposits totaled $29.9 billion, down 3.9%.
Credit Quality Impressive
Similar to the year-ago quarter, the company did not record any provision for credit losses in the reported quarter. As of Jun 30, 2022, total non-performing assets were $22.2 million, down 34% from the prior-year quarter end.
Net charge-offs were $1.2 million, plunging 72.2% from the year-ago period. Also, the ratio of allowance for credit losses to total loans was 1.56%, down 1 bp.
Capital Ratios Improve, Profitability Ratios Deteriorate
As of Jun 30, 2022, the Tier-1 risk-based capital ratio was 15.26%, on par with the prior-year quarter level. The total risk-based capital ratio was 15.91%, up from 15.71% as of Jun 30, 2021.
At the end of the second quarter, the annualized return on average assets was 1.36%, down from 1.45% at the end of the prior-year quarter. Annualized return on common equity was 7.84%, down from the year-earlier period’s 8.31%.
Share Repurchase Update
During the reported quarter, PB repurchased 981,884 shares for an average weighted price of $66.90 per share.
Our Take
The company’s solid capital position, strong loan and deposit balances and impressive credit quality are expected to keep supporting financials in the quarters ahead. Nonetheless, margin pressure and elevated expenses remain concerning.
Prosperity Bancshares, Inc. Price, Consensus and EPS Surprise
Commerce Bancshares Inc.’s (CBSH - Free Report) second-quarter 2022 earnings of 96 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line, however, plunged 27.3% from the prior-year quarter.
Results benefited from an improvement in NII, a rise in loan balance and a modest increase in non-interest income. However, an increase in non-interest expenses and higher provisions were the major headwinds for CBSH.
East West Bancorp’s (EWBC - Free Report) second-quarter 2022 earnings per share of $1.81 handily surpassed the Zacks Consensus Estimate of $1.68. The bottom line also reflected a rise of 15.5% from the prior-year quarter.
Results were primarily aided by revenue growth and a rise in loan balances. Also, supported by the rise in interest rates, NIM recorded year-over-year growth. However, an increase in provisions and rising operating expenses were headwinds for EWBC.
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Prosperity Bancshares (PB) Up on Q2 Earnings Beat, Higher Loans
Shares of Prosperity Bancshares Inc. (PB - Free Report) rallied 1.2% in response to second-quarter 2022 results. Earnings per share of $1.40 surpassed the Zacks Consensus Estimate of $1.38. However, the bottom line declined marginally from the prior-year quarter’s figure.
The company did not record any provisions in the reported quarter, which was a major positive. An increase in revenues, rising rates and higher loan balance were other tailwinds. However, a rise in expenses hurt results to some extent.
Net income available to common shareholders was $128.5 million, down 1.6% year over year.
Revenues & Expenses Rise
Net revenues were $286.1 million, up 1.8% from the prior-year quarter. The top line also beat the Zacks Consensus Estimate of $283.7 million.
Net interest income (NII) was $248.5 million, up 1.3%. Net interest margin (NIM), on a tax-equivalent basis, contracted 14 basis points (bps) to 2.97%.
Non-interest income totaled $37.6 million, up 5.7%. The rise was driven by an increase in almost all fee income components, except for credit card, debit card and ATM card income, mortgage income and bank-owned life insurance income.
Non-interest expenses increased 6.7% to $122.9 million. The rise was mainly due to higher salaries and benefits costs.
The efficiency ratio was 43.12%, down from 40.96% in the prior-year quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Jun 30, 2022, total loans were $18.2 billion, up almost 1% from the end of the previous quarter. Deposits totaled $29.9 billion, down 3.9%.
Credit Quality Impressive
Similar to the year-ago quarter, the company did not record any provision for credit losses in the reported quarter. As of Jun 30, 2022, total non-performing assets were $22.2 million, down 34% from the prior-year quarter end.
Net charge-offs were $1.2 million, plunging 72.2% from the year-ago period. Also, the ratio of allowance for credit losses to total loans was 1.56%, down 1 bp.
Capital Ratios Improve, Profitability Ratios Deteriorate
As of Jun 30, 2022, the Tier-1 risk-based capital ratio was 15.26%, on par with the prior-year quarter level. The total risk-based capital ratio was 15.91%, up from 15.71% as of Jun 30, 2021.
At the end of the second quarter, the annualized return on average assets was 1.36%, down from 1.45% at the end of the prior-year quarter. Annualized return on common equity was 7.84%, down from the year-earlier period’s 8.31%.
Share Repurchase Update
During the reported quarter, PB repurchased 981,884 shares for an average weighted price of $66.90 per share.
Our Take
The company’s solid capital position, strong loan and deposit balances and impressive credit quality are expected to keep supporting financials in the quarters ahead. Nonetheless, margin pressure and elevated expenses remain concerning.
Prosperity Bancshares, Inc. Price, Consensus and EPS Surprise
Prosperity Bancshares, Inc. price-consensus-eps-surprise-chart | Prosperity Bancshares, Inc. Quote
Prosperity Bancshares currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Commerce Bancshares Inc.’s (CBSH - Free Report) second-quarter 2022 earnings of 96 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line, however, plunged 27.3% from the prior-year quarter.
Results benefited from an improvement in NII, a rise in loan balance and a modest increase in non-interest income. However, an increase in non-interest expenses and higher provisions were the major headwinds for CBSH.
East West Bancorp’s (EWBC - Free Report) second-quarter 2022 earnings per share of $1.81 handily surpassed the Zacks Consensus Estimate of $1.68. The bottom line also reflected a rise of 15.5% from the prior-year quarter.
Results were primarily aided by revenue growth and a rise in loan balances. Also, supported by the rise in interest rates, NIM recorded year-over-year growth. However, an increase in provisions and rising operating expenses were headwinds for EWBC.