PB - Prosperity Bancshares Inc. (PB) Q4 2024 Earnings Call Transcript

2024-01-24 16:41:03 ET

Prosperity Bancshares, Inc. (PB)

Q4 2024 Results Conference Call

January 24, 2024 11:30 AM ET

Company Participants

Charlotte Rasche - Executive Vice President and General Counsel

David Zalman - Senior Chairman and Chief Executive Officer

Asylbek Osmonov - Chief Financial Officer

Tim Timanus - Chairman

Kevin Hanigan - President and Chief Operating Officer

Conference Call Participants

Dave Rochester - Compass Point

Brett Rabatin - Hovde Group

Michael Rose - Raymond James

Brandon King - Truist Securities

Stephen Scouten - Piper Sandler

Manan Gosalia - Morgan Stanley

Jon Arfstrom - RBC Capital Markets

Brady Gailey - KBW

Ben Gerlinger - Citi

Brody Preston - UBS

Presentation

Operator

Good day, and welcome to the Prosperity Bancshares Fourth Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Charlotte Rasche. Please go ahead.

Charlotte Rasche

Thank you. Good morning, ladies and gentlemen, and welcome to Prosperity Bancshares fourth quarter 2023 earnings conference call. This call is being broadcast live on our website and will be available for replay for the next few weeks.

I’m Charlotte Rasche, Executive Vice President and General Counsel of Prosperity Bancshares, and here with me today is David Zalman, Senior Chairman and Chief Executive Officer; H. E. Tim Timanus, Jr, Chairman; Asylbek Osmonov, Chief Financial Officer; Eddie Safady, Vice Chairman; Kevin Hanigan, President and Chief Operating Officer; Randy Hester, Chief Lending Officer; Merle Karnes, Chief Credit Officer; and Bob Dowdell, Executive Vice President. Mays Davenport, our Director of Corporate Strategy is ill and unable to join us today. David Zalman will lead off with a review of the highlights for the recent quarter. He will be followed by Asylbek Osmonov, who will review some of our recent financial statistics, and Tim Timanus, who will discuss our lending activities, including asset quality. Finally, we will open the call for questions.

Before we begin, let me make the usual disclaimers. Certain of the matters discussed in this presentation may constitute forward-looking statements for purposes of the federal securities laws, and as such, may involve known and unknown risks, uncertainties, and other factors, which may cause the actual results or performance of Prosperity Bancshares to be materially different from future results or performance expressed or implied by such forward-looking statements. Additional information concerning factors that could cause actual results to be materially different than those in the forward-looking statements can be found in our filings with the Securities and Exchange Commission, including Forms 10-Q and 10-K and other reports and statements we have filed with the SEC. All forward-looking statements are expressly qualified in their entirety by these cautionary statements.

Now, let me turn the call over to David Zalman.

David Zalman

Thank you, Charlotte. I would like to welcome and thank everyone listening to our fourth quarter 2023 conference call. For the three months ending December 31, 2023, our net income was $95 million or $1.02 per diluted common share, compared with $112 million or $1.20 per diluted common share for the three months ending September 30, 2023 and was impacted by a one-time FDIC special assessment of $19.9 million and merger-related expenses. Excluding the FDIC special assessment, net of tax and merger-related expenses, net of tax, net income was $111 million or $1.19 per diluted common share for the three months ending December 31, 2023.

Our annualized return on average assets, average common equity and average tangible common equity excluding the FDIC special assessment net of tax and merger-related expenses net of tax for the three months ended December 31, 2023, were 1.15% return on average assets, 6.29% return on average common equity and 12.3% return on average tangible common equity. Although our earnings excluding the one-time FDIC assessment and merger-related expenses were strong, they are still lower than last year, primarily because the majority of our earning assets have not yet repriced and our interest-bearing liabilities have. This will correct over time and we expect that our operating ratios will be more reflective of our historical returns....

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