PB - Prosperity Banchares: Oil Exposure May Cause Problems
Earnings of Prosperity Bancshares, Inc (PB) are expected to rise due to loan growth and higher net interest margin following the acquisition of LegacyTexas Financial Group. However, some pressure is expected from higher provisions, which are expected to be driven by PB’s oil and gas sector exposure. The price war between OPEC producers and allies, and the resultant difficulties for oil producers in Texas has increased the chances of a rise in delinquencies. Loans from other sectors are also at risk of turning non-performing due to the COVID-19 pandemic. The estimated target price