We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Prosperity Bancshares (PB) Dips on Q3 Earnings Miss, Cost Hike
Read MoreHide Full Article
Shares of Prosperity Bancshares Inc. (PB - Free Report) lost 3.2% following the release of its third-quarter 2022 results. Earnings per share of $1.49 missed the Zacks Consensus Estimate of $1.51. However, the bottom line increased 7.2% from the prior-year quarter.
Results were hurt by an increase in expenses. However, higher revenues and increased loan balances were tailwinds. Also, the company did not record any provisions in the reported quarter, which was a major positive.
Net income available to common shareholders was $135.8 million, up 5.6% year over year.
Revenues & Expenses Rise
Net revenues were $295.4 million, up 4.3% from the prior-year quarter. The top line lagged the Zacks Consensus Estimate of $297.3 million.
Net interest income (NII) was $260.7 million, up 4.9% year over year. Net interest margin, on a tax-equivalent basis, expanded 1 basis point (bp) to 3.11%.
Non-interest income totaled $34.7 million, up marginally from the prior-year quarter. The rise was driven by an increase in almost all fee income components, except for mortgage income, bank-owned life insurance income, net gain on sale of the write-down of assets and other non-interest income.
Non-interest expenses increased 2% year over year to $122.2 million. The rise was due to an increase in almost all cost components except for core deposit intangibles amortization and depreciation costs.
The efficiency ratio was 41.38%, down from 42.34% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2022, total loans were $18.5 billion, up 1.6% from the end of the previous quarter. Deposits totaled $29.3 billion, down 1.9% sequentially.
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 Sep 30, 2022, total non-performing assets were $19.9 million, down 45.6% from the prior-year quarter end.
Net charge-offs were $1.8 million, plunging 88.7% from the year-ago period. However, the ratio of allowance for credit losses to total loans was 1.52%, up 1 bp.
Capital & Profitability Ratios Improve
As of Sep 30, 2022, the Tier-1 risk-based capital ratio was 15.44%, up from 14.84% recorded in the prior-year quarter. The total risk-based capital ratio was 16.09%, up from 15.20% as of Sep 30, 2021.
At the end of the third quarter, the annualized return on average assets was 1.45%, up from 1.42% at the end of the prior-year quarter. Annualized return on common equity was 8.24%, up from the year-earlier period’s 8.07%.
Share Repurchase Update
In the reported quarter, PB did not repurchase any shares.
Our Take
Aided by robust loans and deposit balances, along with opportunistic acquisitions, the company remains well-positioned for top-line growth. Its capital deployment activities, through which it will likely keep enhancing shareholder value, seem impressive.
Notably, on Oct 11, PB entered two separate agreements to acquire Lone Star State Bancshares, Inc. for $$228.7 million and First Bancshares of Texas, Inc. for $341.6 million. The closing of the deals, subject to certain conditions, including the approval by shareholders and customary regulatory approvals, is expected in the first quarter of 2023.
Prosperity Bancshares anticipates the deals to result in pro-forma earnings accretion of 5.9% in 2023 and 8.9% in 2024. The transactions are expected to result in cost savings of 25% of non-interest expenses. Of this, in 2023, 75% will likely be phased-in.
Prosperity Bancshares, Inc. Price, Consensus and EPS Surprise
SVB Financial Group’s third-quarter 2022 earnings per share of $7.21 surpassed the Zacks Consensus Estimate of $6.79. The bottom line reflects a rise of 15.5% from the prior-year quarter.
SIVB’s results were primarily aided by an improvement in NII, driven by higher rates and loan growth. However, a rise in expenses, lower non-interest income and higher provisions were the undermining factors.
BankUnited, Inc.’s (BKU - Free Report) third-quarter 2022 earnings per share of $1.12 outpaced the Zacks Consensus Estimate of $1.01. The bottom line also grew 19.1% from the prior-year quarter.
Results benefited from higher net interest income, a decent rise in loan balance and increasing rates. However, subdued fee income performance, a rise in expenses and an increase in credit costs acted as headwinds for BKU.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Prosperity Bancshares (PB) Dips on Q3 Earnings Miss, Cost Hike
Shares of Prosperity Bancshares Inc. (PB - Free Report) lost 3.2% following the release of its third-quarter 2022 results. Earnings per share of $1.49 missed the Zacks Consensus Estimate of $1.51. However, the bottom line increased 7.2% from the prior-year quarter.
Results were hurt by an increase in expenses. However, higher revenues and increased loan balances were tailwinds. Also, the company did not record any provisions in the reported quarter, which was a major positive.
Net income available to common shareholders was $135.8 million, up 5.6% year over year.
Revenues & Expenses Rise
Net revenues were $295.4 million, up 4.3% from the prior-year quarter. The top line lagged the Zacks Consensus Estimate of $297.3 million.
Net interest income (NII) was $260.7 million, up 4.9% year over year. Net interest margin, on a tax-equivalent basis, expanded 1 basis point (bp) to 3.11%.
Non-interest income totaled $34.7 million, up marginally from the prior-year quarter. The rise was driven by an increase in almost all fee income components, except for mortgage income, bank-owned life insurance income, net gain on sale of the write-down of assets and other non-interest income.
Non-interest expenses increased 2% year over year to $122.2 million. The rise was due to an increase in almost all cost components except for core deposit intangibles amortization and depreciation costs.
The efficiency ratio was 41.38%, down from 42.34% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2022, total loans were $18.5 billion, up 1.6% from the end of the previous quarter. Deposits totaled $29.3 billion, down 1.9% sequentially.
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 Sep 30, 2022, total non-performing assets were $19.9 million, down 45.6% from the prior-year quarter end.
Net charge-offs were $1.8 million, plunging 88.7% from the year-ago period. However, the ratio of allowance for credit losses to total loans was 1.52%, up 1 bp.
Capital & Profitability Ratios Improve
As of Sep 30, 2022, the Tier-1 risk-based capital ratio was 15.44%, up from 14.84% recorded in the prior-year quarter. The total risk-based capital ratio was 16.09%, up from 15.20% as of Sep 30, 2021.
At the end of the third quarter, the annualized return on average assets was 1.45%, up from 1.42% at the end of the prior-year quarter. Annualized return on common equity was 8.24%, up from the year-earlier period’s 8.07%.
Share Repurchase Update
In the reported quarter, PB did not repurchase any shares.
Our Take
Aided by robust loans and deposit balances, along with opportunistic acquisitions, the company remains well-positioned for top-line growth. Its capital deployment activities, through which it will likely keep enhancing shareholder value, seem impressive.
Notably, on Oct 11, PB entered two separate agreements to acquire Lone Star State Bancshares, Inc. for $$228.7 million and First Bancshares of Texas, Inc. for $341.6 million. The closing of the deals, subject to certain conditions, including the approval by shareholders and customary regulatory approvals, is expected in the first quarter of 2023.
Prosperity Bancshares anticipates the deals to result in pro-forma earnings accretion of 5.9% in 2023 and 8.9% in 2024. The transactions are expected to result in cost savings of 25% of non-interest expenses. Of this, in 2023, 75% will likely be phased-in.
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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
SVB Financial Group’s third-quarter 2022 earnings per share of $7.21 surpassed the Zacks Consensus Estimate of $6.79. The bottom line reflects a rise of 15.5% from the prior-year quarter.
SIVB’s results were primarily aided by an improvement in NII, driven by higher rates and loan growth. However, a rise in expenses, lower non-interest income and higher provisions were the undermining factors.
BankUnited, Inc.’s (BKU - Free Report) third-quarter 2022 earnings per share of $1.12 outpaced the Zacks Consensus Estimate of $1.01. The bottom line also grew 19.1% from the prior-year quarter.
Results benefited from higher net interest income, a decent rise in loan balance and increasing rates. However, subdued fee income performance, a rise in expenses and an increase in credit costs acted as headwinds for BKU.