PB - Prosperity Bancshares: Higher Rates Help Earnings But Persistent Loan Declines Remain Worrisome

• The loan portfolio will likely decline further before recovering in the second half of the year on the back of economic factors.
• The majority of the loan portfolio will re-price soon after every rate hike, which will benefit the top line.
• However, a worsening asset mix, long-duration bond portfolio, and rate-sensitive deposit portfolio will likely limit net interest income’s sensitivity to rate changes.
• The year-end target price suggests a small upside from the current market price. Further, PB is offering a modest dividend yield.

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