Prosperity Bancshares Q2 Earnings Beat on Higher NII & Lower Expenses

Prosperity Bancshares Inc.’s PB second-quarter 2025 adjusted earnings per share (EPS) of $1.42 beat the Zacks Consensus Estimate of $1.40. Moreover, the bottom line compared favorably with adjusted EPS of $1.22 in the prior-year quarter.Results benefited from an increase in net interest income (NII), adjusted non-interest income, alongside lower provisions and expenses. Also, a higher loan balance was another positive. However, a lower deposit balance was a negative.Net income available to common shareholders was $135.2 million, up from $111.6 million in the year-ago quarter.PB’s Revenues Increase, Expenses DeclineQuarterly total revenues were $310.7 million, which increased 1.9% from the prior-year quarter. However, the top line missed the Zacks Consensus Estimate of $312.5 million.NII was $267.7 million, up 3.5% year over year. Net interest margin (NIM), on a tax-equivalent basis, expanded 24 basis points to 3.18%. Our estimates for NII and NIM were pegged at $271.1 million and 3.15%, respectively.Non-interest income was $43 million, down 6.6%. The fall was due to lower net gain on sale or write-up of securities. Our estimate for the metric was pegged at $40.6 million. Adjusted non-interest income was $41.6 million, up 14.9% from the prior-year quarter.Non-interest expenses declined 9.3% to $138.6 million. The decline can be attributed to a decrease in almost all cost components, except for net occupancy and equipment charges, as well as credit and debit card, data processing, and software amortization costs, communications charges, and other real estate expenses. Our estimate for non-interest expenses was $143.3 million.The adjusted efficiency ratio was 44.80%, which decreased from 49.13% in the prior year quarter. A decline in the efficiency ratio indicates better profitability.As of June 30, 2025, total loans were $22.2 billion, which rose 1% from the prior quarter. On the other hand, total deposits were $27.5 billion, a 2% sequential decline. Our estimates for total loans and total deposits were $23 billion and $28.3 billion, respectively.PB’s Credit Quality: A Mixed BagAs of June 30, 2025, total non-performing assets were $110.5 million, which rose from $89.6 million in the prior-year quarter. The ratio of allowance for credit losses to total loans was 1.56%, down from 1.61% year over year.Net charge-offs were $3 million compared with $4.4 million in the year-ago period.The company did not record any provision for credit losses during the reported quarter, down from the year-ago quarter figure of $9.1 million.Prosperity Bancshares’ Capital & Profitability Ratios ImproveAs of June 30, 2025, the common equity tier 1 capital ratio was 17.10%, up from 15.42% in the prior year quarter. The total risk-based capital ratio was 18.35%, up from 16.67%.At the end of the second quarter, the annualized return on average assets was 1.41%, up from 1.12% at the end of the prior-year quarter. Also, the annualized return on average common equity was 7.13%, which increased from 6.10%.Our Take on Prosperity BancsharesProsperity Bancshares' emphasis on strategic acquisitions is expected to contribute to its long-term financial strength. Decent loans, a solid deposit mix and improving fee income are likely to support the top line. However, a liability-sensitive balance sheet and elevated expenses remain near-term concerns.Prosperity Bancshares, Inc. Price, Consensus and EPS Surprise Prosperity Bancshares, Inc. price-consensus-eps-surprise-chart | Prosperity Bancshares, Inc. QuotePB currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Other BanksEast West Bancorp, Inc.’s EWBC second-quarter 2025 adjusted EPS of $2.28 beat the Zacks Consensus Estimate of $2.23. Moreover, the bottom line increased 9.1% from the prior-year quarter’s level.The results were primarily aided by an increase in NII and non-interest income. Also, loan and deposit balances increased sequentially in the quarter. However, higher provisions and non-interest expenses were headwinds for EWBC.Zions Bancorporation’s ZION second-quarter 2025 adjusted EPS of $1.58 beat the Zacks Consensus Estimate of $1.31. Moreover, the bottom line surged 30.6% from the year-ago quarter.Zions’ results were primarily aided by higher NII and non-interest income alongside a provision benefit. Additionally, higher loan amounts were another positive. However, a rise in adjusted non-interest expenses was a major headwind.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Zions Bancorporation, N.A. (ZION): Free Stock Analysis Report Prosperity Bancshares, Inc. (PB): Free Stock Analysis Report East West Bancorp, Inc. (EWBC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks