Prosperity Bancshares Reports Strong Q1 2024 Earnings, Completes Merger with Lone Star State Bancshares

Prosperity Bancshares reports strong Q1 2024 earnings, completes merger with Lone Star State Bancshares, and maintains high capital position, delivering value to shareholders.

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Rizwan Shah
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Prosperity Bancshares Reports Strong Q1 2024 Earnings, Completes Merger with Lone Star State Bancshares

Prosperity Bancshares Reports Strong Q1 2024 Earnings, Completes Merger with Lone Star State Bancshares

Prosperity Bancshares, Inc., a Houston-based financial holding company, announced its first quarter 2024 earnings on Wednesday, reporting a profit of $110.4 million, or $1.18 per share, exceeding Wall Street expectations. The company's revenue for the period was $420.8 million, with revenue net of interest expense at $277.1 million, also beating analyst forecasts.

On April 1, 2024, Prosperity Bancshares completed its merger with Lone Star State Bancshares Inc. in Lubbock, Texas. The merger expands Prosperity's presence in the Lubbock market and strengthens its position in the state of Texas. The combined company will operate under the Prosperity Bancshares name and continue to be headquartered in Houston.

For the three months ended March 31, 2024, Prosperity reported net income of $110 million, or $1.18 per diluted common share, compared to $95 million, or $1.02 per diluted common share, in the previous quarter. Loans increased by $84 million, or 0.4% (1.6% annualized), from December 31, 2023, and by $1.931 billion, or 10%, compared to March 31, 2023. Deposits decreased slightly by $4.3 million from December 31, 2023, but increased by $171 million, or 0.6%, compared to March 31, 2023.

The bank's net interest margin on a tax-equivalent basis was 2.79% for the three months ending March 31, 2024, compared to 2.75% for the three months ended December 31, 2023. Prosperity maintained a high tangible equity to tangible asset ratio of 10.33% for the first quarter of 2024 and repurchased 567,692 shares of common stock during the quarter, in addition to the quarterly dividend.

Why this matters: Prosperity Bancshares' strong financial performance and successful merger with Lone Star State Bancshares demonstrate the bank's continued growth and stability in the Texas market. The acquisition is expected to enhance Prosperity's market presence and provide opportunities for further expansion and improved services for customers.

The operational integration of Lone Star Bank is scheduled for late October 2024, at which time Lone Star customers will have full access to Prosperity's 288 full-service locations. "The integration of Lone Star Bank is set to complete in late October 2024, promising further operational synergies," according to the earnings call reports. Despite facing challenges from increased expenses and economic fluctuations, Prosperity Bancshares maintained a hold rating amid mixed financial indicators and a robust capital position, continuing to deliver value to its shareholders through share repurchases and dividend payments in the first quarter of 2024.

Key Takeaways

  • Prosperity Bancshares reported Q1 2024 earnings of $110.4M, exceeding expectations.
  • Prosperity completed merger with Lone Star State Bancshares, expanding presence in Texas.
  • Loans increased 10% YoY, while deposits grew 0.6% YoY as of Q1 2024.
  • Net interest margin improved to 2.79% in Q1 2024, up from 2.75% in Q4 2023.
  • Prosperity maintained high capital ratios and repurchased shares in Q1 2024.