Prosperity Bancshares Q3 profit rises as mergers lift interest income

Prosperity Bancshares Inc. (PB) said on Oct. 28 that third-quarter net income was $141.5 million, or $1.18 per diluted share, compared with $137.6 million, or $1.45 per diluted share, in the same quarter of 2025. Excluding merger related expenses and other items, adjusted diluted earnings per share were $1.67.

The Houston-based bank holding company had $54.1 billion in total assets at Sept. 30 and operates 352 banking locations in Texas and Oklahoma. The company said its net interest income increased mainly because of its three recent mergers, the most recent being Stellar Bancorp Inc., which merged into the company on July 1.

Here's how the company did:

• Adjusted diluted EPS: $1.67, excluding merger related expenses and other items
• Diluted EPS: $1.18 vs. $1.45 a year earlier
• Net income: $141.5 million vs. $137.6 million a year earlier
• Net interest income: $443.0 million vs. $273.4 million a year earlier

The net interest margin on a tax equivalent basis was 3.73%, compared with 3.24% a year earlier. Noninterest income was $52.7 million, up from $41.2 million. Noninterest expense was $308.6 million, including $69.7 million of merger related expenses.

Merger costs and tax items

The company incurred merger related expenses of $69.7 million, or 46 cents per diluted share, in the quarter. It also recorded an out of state tax settlement of $5.0 million, or 4 cents per diluted share.

A net gain of $927 thousand, or 1 cent per diluted share, from the exchange and conversion of Visa Class B-2 stock partly offset those costs.

Senior Chairman and Chief Executive Officer David Zalman said, “We remain focused on completing the operational integration of Texas Partners Bank and Stellar Bank and delivering the outcomes we believe are possible.”

Balance sheet

Loans were $32.1 billion at Sept. 30, an increase of 45.5% from $22.0 billion a year earlier, primarily due to the mergers. Deposits were $41.2 billion, up 48.4% from $27.8 billion a year earlier.

Noninterest-bearing deposits were $13.8 billion, or 33.6% of total deposits. Nonperforming assets were 0.41% of third-quarter average interest-earning assets.

Dividend and buybacks

The board approved a fourth-quarter 2026 dividend of 64 cents per share, up from 60 cents, an increase of 6.7%. The dividend is payable Jan. 4, 2027, to shareholders of record as of Dec. 15. The company said it is the 23rd consecutive annual dividend increase.

Under its 2026 stock repurchase program, the company bought about 457 thousand shares in the third quarter at an average price of $69.62, for $31.8 million. The program allows repurchases of up to about 4.87 million shares through Jan. 26, 2027.