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Prosperity Bancshares (PB) Gains on Q1 Earnings Beat, Costs Up
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Shares of Prosperity Bancshares Inc. (PB - Free Report) gained 1.1% following the release of its first-quarter 2022 results. Earnings per share of $1.33 surpassed the Zacks Consensus Estimate of $1.29. However, the bottom line declined 7.6% from the prior-year quarter’s figure.
The company did not record any provisions in the reported quarter, which was a major positive. A rise in non-interest income was another tailwind. However, lower net interest income (NII) and a marginal rise in expenses hurt results to some extent.
Net income available to common shareholders was $122.3 million, down 8.2% year over year.
Revenues Decline, Expenses Rise Marginally
Net revenues were $275.1 million, down 4.7% from the prior-year quarter. The top line, however, beat the Zacks Consensus Estimate of $271.1 million.
NII was $239.9 million, down 5.7% year over year. Net interest margin (NIM), on a tax-equivalent basis, contracted 53 basis points (bps) to 2.88%.
Non-interest income totaled $35.1 million, up 3.3% year over year. The rise was driven by an increase in almost all fee income components, except for trust income, mortgage income and bank-owned life insurance income.
Non-interest expenses increased marginally from $119.1 million in the prior-year quarter to $119.9 million. The rise was due to an increase in almost all cost components, except for core deposit intangibles amortization, salaries and benefits costs, and other real estate expenses.
As of Mar 31, 2022, total loans were $18.1 billion, down 2.9% from the end of the previous quarter. Deposits totaled $31.1 billion, up marginally on a sequential basis.
Credit Quality Improves
Similar to the year-ago quarter, the company did not record any provision for credit losses in the reported quarter. As of Mar 31, 2022, total non-performing assets were $27.2 million, down 38.4% from the prior-year quarter end.
Net charge-offs were $1.2 million, plunging 86.3% from the year-ago period. However, the ratio of allowance for credit losses to total loans was 1.58%, up 2 bps year over year.
Capital Ratios Improve
As of Mar 31, 2022, the Tier-1 risk-based capital ratio was 15.32%, up from 14.60% as of Mar 31, 2021. The total risk-based capital ratio was 15.99% compared with the prior year’s 15.07%.
Profitability Ratios Deteriorate
At the end of the first quarter, the annualized return on average assets was 1.29%, down from 1.54% at the end of the prior-year quarter. Annualized return on common equity was 7.54%, down from the year-earlier period’s 8.60%.
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 due to low rates and elevated expenses remains concerning.
Prosperity Bancshares, Inc. Price, Consensus and EPS Surprise
Truist Financial’s (TFC - Free Report) first-quarter 2022 adjusted earnings of $1.23 per share handily surpassed the Zacks Consensus Estimate of $1.12. The bottom line grew 4.2% from the prior-year quarter.
Truist Financial’s results were aided by modest average loan growth and provision benefits. However, lower revenues, a rise in expenses and relatively lower rates were the major headwinds.
U.S. Bancorp (USB - Free Report) reported first-quarter 2022 earnings per share of 99 cents, which beat the Zacks Consensus Estimate of 93 cents. However, the bottom line compares unfavorably with the prior-year quarter’s figure of $1.45.
U.S. Bancorp’s results were supported by an increase in revenues, loan growth and lower non-performing assets. USB’s capital position was decent in the quarter. However, higher expenses and elevated provision for credit losses were the offsetting factors.
Fifth Third Bancorp (FITB - Free Report) reported first-quarter 2022 earnings (excluding after-tax impacts of certain items) of 69 cents per share, missing the Zacks Consensus Estimate of 70 cents. Including the impacts of these items, earnings per share were 68 cents, indicating a 27% year-over-year decline.
Fifth Third’s performance displays a revenue decline primarily due to a fall in the fee income. Margin contraction and capital position deterioration played spoilsports for FITB.
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Prosperity Bancshares (PB) Gains on Q1 Earnings Beat, Costs Up
Shares of Prosperity Bancshares Inc. (PB - Free Report) gained 1.1% following the release of its first-quarter 2022 results. Earnings per share of $1.33 surpassed the Zacks Consensus Estimate of $1.29. However, the bottom line declined 7.6% from the prior-year quarter’s figure.
The company did not record any provisions in the reported quarter, which was a major positive. A rise in non-interest income was another tailwind. However, lower net interest income (NII) and a marginal rise in expenses hurt results to some extent.
Net income available to common shareholders was $122.3 million, down 8.2% year over year.
Revenues Decline, Expenses Rise Marginally
Net revenues were $275.1 million, down 4.7% from the prior-year quarter. The top line, however, beat the Zacks Consensus Estimate of $271.1 million.
NII was $239.9 million, down 5.7% year over year. Net interest margin (NIM), on a tax-equivalent basis, contracted 53 basis points (bps) to 2.88%.
Non-interest income totaled $35.1 million, up 3.3% year over year. The rise was driven by an increase in almost all fee income components, except for trust income, mortgage income and bank-owned life insurance income.
Non-interest expenses increased marginally from $119.1 million in the prior-year quarter to $119.9 million. The rise was due to an increase in almost all cost components, except for core deposit intangibles amortization, salaries and benefits costs, and other real estate expenses.
As of Mar 31, 2022, total loans were $18.1 billion, down 2.9% from the end of the previous quarter. Deposits totaled $31.1 billion, up marginally on a sequential basis.
Credit Quality Improves
Similar to the year-ago quarter, the company did not record any provision for credit losses in the reported quarter. As of Mar 31, 2022, total non-performing assets were $27.2 million, down 38.4% from the prior-year quarter end.
Net charge-offs were $1.2 million, plunging 86.3% from the year-ago period. However, the ratio of allowance for credit losses to total loans was 1.58%, up 2 bps year over year.
Capital Ratios Improve
As of Mar 31, 2022, the Tier-1 risk-based capital ratio was 15.32%, up from 14.60% as of Mar 31, 2021. The total risk-based capital ratio was 15.99% compared with the prior year’s 15.07%.
Profitability Ratios Deteriorate
At the end of the first quarter, the annualized return on average assets was 1.29%, down from 1.54% at the end of the prior-year quarter. Annualized return on common equity was 7.54%, down from the year-earlier period’s 8.60%.
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 due to low rates and elevated expenses remains 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
Truist Financial’s (TFC - Free Report) first-quarter 2022 adjusted earnings of $1.23 per share handily surpassed the Zacks Consensus Estimate of $1.12. The bottom line grew 4.2% from the prior-year quarter.
Truist Financial’s results were aided by modest average loan growth and provision benefits. However, lower revenues, a rise in expenses and relatively lower rates were the major headwinds.
U.S. Bancorp (USB - Free Report) reported first-quarter 2022 earnings per share of 99 cents, which beat the Zacks Consensus Estimate of 93 cents. However, the bottom line compares unfavorably with the prior-year quarter’s figure of $1.45.
U.S. Bancorp’s results were supported by an increase in revenues, loan growth and lower non-performing assets. USB’s capital position was decent in the quarter. However, higher expenses and elevated provision for credit losses were the offsetting factors.
Fifth Third Bancorp (FITB - Free Report) reported first-quarter 2022 earnings (excluding after-tax impacts of certain items) of 69 cents per share, missing the Zacks Consensus Estimate of 70 cents. Including the impacts of these items, earnings per share were 68 cents, indicating a 27% year-over-year decline.
Fifth Third’s performance displays a revenue decline primarily due to a fall in the fee income. Margin contraction and capital position deterioration played spoilsports for FITB.