Prosperity Bancshares, Inc. · NYSE:PB
Prosperity Bancshares — Q2 2020 Earnings Presentation
28 slides from Prosperity Bancshares's earnings presentation, 2020
Slide 1: Investor Presentation Second Quarter 2020
Investor Presentation Second Quarter 2020
Slide 2: Safe Harbor Statement
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995 “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity’s management on the conference call may contain, forward-looking statements with
Slide 3: 2020 Second Quarter Highlights
2020 Second Quarter Highlights • Net income of $130.9 million and earnings per share (diluted) of $1.41 for three months ended June 30, 2020 • Assets of $33.0 billion, total loans of $21.0 billion, and deposits of $26.2 billion at June 30, 2020 • Common equity tier 1 ratio of 12.29% and leverage rat
Slide 4: Strong Presence in Texas and Oklahoma
Strong Presence in Texas and Oklahoma • A Texas-based financial holding company with $33.0 billion in total assets • Ranked #3 in deposit market share in Texas (1) Oklahoma INTERSTATE 44 • Texas and Oklahoma continue to benefit from strong Tulsa INTERSTATE 35 economies, and are home to 55 Fortune 50
Slide 5: Balance Sheet Summary
Balance Sheet Summary ($ in millions) $35,000 $7,000 Data as of 06/30/2020 Total Loans (1) $21.0 Bn $30,000 Deposits $26.2 Bn $6,000 Assets $33.0 Bn $25,000 10 Year CAGR (2) $5,000 Loans 18.8% Deposits 12.8% $20,000 $4,000 Assets 13.8% $15,000 $3,000 $10,000 $2,000 $5,000 $1,000 $0 $0 2009 2010 2011
Slide 6: Net Income
Net Income ($ in millions) (4) (1)(4) $369.2 (4) $400.0 10 Year CAGR: 12.7% $332.6 $346.3 $350.0 5 Year CAGR:(2)(4) 4.4% $321.8 $309.6 $311.7 $297.4 $286.6 $300.0 $274.5 $272.2 $255.5 $250.6 $259.3 $250.0 $236.2 $221.4 $200.0 $167.9 $185.7 (4) $154.9 $136.8 $141.7 $130.9 $116.4(4) $150.0 $127.7 $111
Slide 7: Earnings Per Share
Earnings Per Share (4) $5.50 10 Year EPS CAGR:(1)(4) 7.6% $5.02 (4) $4.52 $4.71 $5.00 5 Year EPS CAGR:(2)(4) 3.0% $4.61 $4.21 $4.32 $4.46 $4.50 $4.09 $3.94 $3.92 $4.00 $3.65 $3.65 $3.60 $3.73 $3.43 $3.50 $3.23 $3.07 $3.01 $2.98 $3.00 $2.73 $2.41 $2.50 (4) $1.47 $2.00 (4) $1.18 $1.41 $1.25 $1.50 $1.1
Slide 8: Net Interest Margin
Net Interest Margin 4.50% 4.08% 4.04% 3.98% 4.00% 3.80% 3.69% 3.58% 3.53% 3.50% 3.35% 3.38% 3.35% 3.29% 3.32% 3.33% 3.20% 3.13% 3.16% 3.19% 3.18% 3.18% 3.16% 3.12% 3.14% 3.09% 3.00% 2.50% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 2Q20 Net Interest Margin (Tax Equivalent) Net Intere
Slide 9: Acquisitions & Efficiency Ratio
Acquisitions & Efficiency Ratio ($ in millions) $35,000 $32,967 $32,186 60.0 $30,000 55.0 $25,000 $22,587 $22,693 $22,037 $22,331 $22,375 $21,508 50.0 46.3% 46.6% $20,000 44.8% $18,642 48.3% 43.5% 43.7% 43.7% 45.0 42.8% 42.5% 42.8% 41.6% 41.8% 41.9% $15,000 $14,584 44.0% 42.6% 40.0 $9,477 $9,823 $10
Slide 10: Return on Average Tangible Common Equity
Return on Average Tangible Common Equity ($ in millions) 40.00% $3,000 30.00% 28.66% $2,250 27.40% 25.11% 24.24% 21.93% 22.52% 20.89% 19.98% 20.00% $1,500 16.95% 19.98% 16.00% 15.80% 14.82% 15.06% 14.23% 10.00% $750 0.00% (1) (1) $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 2Q20 RO
Slide 11: Return on Average Assets
Return on Average Assets 2.00% 1.75% 1.68% 1.61% 1.53% 1.50% 1.47% 1.46% 1.44% 1.42% 1.38% 1.36% 1.38% 1.35% 1.33% 1.26% 1.25% 1.22% 1.25% 1.00% 0.75% (1) (1) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 2Q20 ROAA ROAA (Excluding Merger Charges) 11 (1) Interim periods shown on an annu
Slide 12: Deposit Composition
Deposit Composition As of June 30, 2020 ($ in millions) $mm Cost (%)(1) Noninterest-Bearing Demand $9,040 0.00% Interest-Bearing Demand $5,130 0.38% Money Market & Savings $8,871 0.41% CDs & Other Time $3,111 1.48% Total Deposits: $26.2Bn Total Cost of Deposits: 0.40%(1) Cost of Interest-Bearing Dep
Slide 13: Loan Growth
Loan Growth ($ in millions) $21,025 $20,000 100.0% $18,845 $2,557 $18,000 $1,553 92.5% $18,468 $17,293 $16,000 85.0% 80.4% 77.9% $14,000 77.5% $12,000 70.0% $10,370 $10,587 70.6% $10,000 $9,439 $9,622 $10,021 62.5% $9,244 66.1% 55.6% 56.2% 62.7% $7,775 52.2% 53.4% 60.1% $8,000 55.0% 46.5% 46.7% 46.7
Slide 14: Loan Portfolio Overview
Loan Portfolio Overview As of June 30, 2020 ($ in millions) Loan Portfolio by Category & Geography Loans by Rate Structure PPP Loans $1,393 6.6% Warehouse 1-4 Family $2,557 Home Equity Agriculture $4,185 12.2% $437 (Inc. Farm) 19.9% 2.1% Fixed $613 32.9% Floating 2.9% Consumer & 35.8% Other ~2.3yr E
Slide 15: Loan Portfolio Detail
Loan Portfolio Detail As of June 30, 2020 ($ in millions) Portfolio Commentary Commercial Real Estate Detail ($ in millions) • 29% of commercial real estate is owner occupied Multifamily (MF) $1,383 21% • CRE and construction loans conservatively Office C&I Retail $1,324 20% underwritten to cost of
Slide 16: Energy Portfolio Detail
Energy Portfolio Detail As of June 30, 2020 ($ in millions) Energy Detail - Outstanding Balance Portfolio Commentary ($ in millions) • Total energy loan loss reserves of 9.3%, or $59.5 Midstream million (excluding fair value marks)(1) $24 Reserve-based 4% $394 • $329.7 million, or 51.6% of energy lo
Slide 17: Changes to Allowance for Credit Losses
Changes to Allowance for Credit Losses ($ in millions) 1.88% ACL to Total 1.90% ACL to Total Loans (1)(2) Loans (1)(2) $36.5 $327.8 $324.2 ($13.0) Allowance for ($16.1) ($11.1) Allowance for Credit Losses ▪ Net Charge-offs Credit Losses ▪ $12.4 million related ▪ PCD recoveries ▪ Increased reserve to
Slide 18: Asset Quality
Asset Quality NPAs / Loans + OREO 6.00% 5.36% 4.98% 5.00% 4.72% 4.00% 3.00% 2.74% 2.32% 2.00% 1.55% 1.06% 1.17% 0.96% 0.94% 0.97% 1.00% 0.66% 0.49% 0.50% 0.60% 0.40% 0.48% 0.45% 0.40% 0.46% 0.37% 0.39% 0.37% 0.32% 0.25% 0.29% 0.33% 0.18% 0.00% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2
Slide 19: Asset Quality: Net Charge-Offs / Average Loans
Asset Quality Net Charge-Offs / Average Loans 2.00% 1.74% 1.66% 1.50% 0.96% 0.98% 1.00% 0.52% 0.50% 0.26% 0.29% 0.20% 0.17% 0.18% 0.17% 0.16% 0.15% 0.41% 0.41% 0.23% 0.21% 0.26%(2) 0.00% 0.18% 0.14% 0.16% 0.14% 0.10% 0.04% 0.05% 0.08% ($ in millions) 0.02% 0.00% (2) 2007 2008 2009 2010 2011 2012 201
Slide 20: Securities Portfolio Detail
Securities Portfolio Detail As of June 30, 2020 ($ in millions) U.S. Government Agency Securities 0.1% $mm States & Mortgage-Backed Securities $7,093 Mortgage- Political Backed Subdivisions Collateralized Mortgage Obligations $420 Securities 2.6% 91.9% States & Political Subdivisions $203 Collateral
Slide 21: Dividend History
Dividend History $1.80 $1.69 (d) (c) $1.60 Compounded Annual Growth $1.49 Rate from 2003 - 2019 was 12.7% $1.38 (b) $1.40 (a) $1.24 $1.20 $1.12 $0.99 $1.00 $0.89 $0.80 $0.80 $0.72 $0.64 $0.57 $0.60 $0.51 $0.46 $0.41 $0.40 $0.35 $0.31 $0.25 $0.20 $0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 201
Slide 22: Total Return Performance
Total Return Performance IPO (November 12, 1998) to June 30, 2020 1,800 $100,000 invested in Prosperity’s IPO on 11/12/98 was worth $1,400,030 1,600 on 6/30/2020 1,400 1,200 1,000 800 600 400 200 0 11/12/98 11/12/00 11/12/02 11/12/04 11/12/06 11/12/08 11/12/10 11/12/12 11/12/14 11/12/16 11/12/18 PB
Slide 23: Presence in Fast-Growing Markets
Presence in Fast-Growing Markets Positioned in Strong Markets Top 10 Fastest Growing MSAs in the U.S. (1) Prosperity 2020 - 2025 • Today, Texas is the 2nd largest Prosperity Deposits(2) Population state in the U.S., and largest in the 48 contiguous U.S. with over Metropolitan Statistical Area Presen
Slide 24: Corporate Relocations to Texas
California Corporate Relocations to Texas Aatonomy AccentCare Active Networks AEND Industries, Inc. The Allen Group, Inc. Allied Electronic Recycling Corporate Relocations to Texas (2004 – Present) ALL-Q-TELL Corp. Ameriflight LLC Canada Aviat Networks, Inc. Absolute Software (ABT) Banker’s Toolbox,
Slide 25: Houston Market Highlights
Houston Market Highlights Market Highlights Houston Franchise • Houston MSA is the 5th largest in the United States by population with approximately 7.2 million residents – Population is expected to grow 7.5% from 2020 to 2025 • In April 2020, total nonfarm employment dropped 8.5% YoY compared to th
Slide 26: Dallas/Ft. Worth Market Highlights
Dallas/Ft. Worth Market Highlights Market Highlights Dallas / Ft. Worth Franchise • Dallas/Ft. Worth MSA is the 4th largest in the United States by population with over 7.7 million residents – Population is expected to grow 7.4% from 2020 to 2025 • In June 2020, total nonfarm employment only decreas
Slide 27: Austin Market Highlights
Austin Market Highlights Market Highlights Austin Franchise Franchise • Ranked #1 place to live in the U.S. in 2019 by U.S. News and World Report for the third year in a row INTERSTATE 35 • Ranked as the 3rd best city for technology professionals to work – IT job growth is expected to expand 15% ove
Slide 28: Contact Information
Contact Information Corporate Headquarters Investor Contacts Prosperity Bank Plaza David Zalman 4295 San Felipe Chairman & CEO Houston Texas 77027 979-543-2200 david.zalman@prosperitybankusa.com 281-269-7199 Telephone 281-269-7222 Fax Cullen Zalman Investor Relations 281-269-7176 cullen.zalman@prosp
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