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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

5 Must-Read Analyst Questions From Prosperity Bancshares’s Q2 Earnings Call

PB Cover Image

Prosperity Bancshares faced a challenging second quarter, as its revenue growth did not meet Wall Street’s expectations and the market responded with a sharp decline in the company’s stock. Management attributed the quarter’s performance to seasonally lower deposits, with a particular impact from reductions in public funds and higher-cost deposits acquired in previous deals. CEO David Zalman highlighted that loan growth was mainly driven by seasonal strength in the mortgage warehouse business, while core commercial lending saw modest gains. Noninterest expenses were kept in check, but asset quality metrics saw an uptick in nonperforming assets, largely due to previously acquired loans and a specific increase in single-family mortgages.

Is now the time to buy PB? Find out in our full research report (it’s free).

Prosperity Bancshares (PB) Q2 CY2025 Highlights:

  • Revenue: $310.7 million vs analyst estimates of $314.4 million (1.9% year-on-year growth, 1.2% miss)
  • Adjusted EPS: $1.42 vs analyst estimates of $1.41 (in line)
  • Market Capitalization: $6.42 billion

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Prosperity Bancshares’s Q2 Earnings Call

  • Michael Edward Rose (Raymond James) asked about expectations for core loan growth, to which President and COO Kevin Hanigan replied that low single-digit growth is achievable, supported by commercial loan production and improved pipelines.
  • Catherine Fitzhugh Summerson Mealor (KBW) questioned prospects for net interest margin expansion, and CEO David Zalman, along with CFO Asylbek Osmonov, detailed that upward repricing in both loan and bond portfolios should drive continued improvement, even if deposit costs remain flat.
  • Manan Gosalia (Morgan Stanley) probed the NII impact of the American Bank acquisition, and Osmonov responded that the deal should be significantly margin-accretive, citing similar deposit costs and higher loan yields at American Bank.
  • Peter J. Winter (D.A. Davidson) inquired about the stabilization of the Lone Star portfolio and potential runoff from American Bank’s loans and deposits. Zalman and Hanigan expressed confidence that Lone Star has stabilized and that American Bank’s core franchise should see only minimal runoff.
  • Stephen Kendall Scouten (Piper Sandler) asked about the potential for additional M&A and branch expansion, particularly in San Antonio. Zalman signaled openness to further deals and noted the strategic importance of deepening the franchise in key Texas markets.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will closely watch (1) the pace and quality of integration for the American Bank acquisition, (2) stabilization and growth in both loan and deposit balances as seasonal effects fade, and (3) asset quality trends, especially in the single-family mortgage portfolio. Further M&A activity and realized margin expansion will also be important indicators of execution.

Prosperity Bancshares currently trades at $67.36, down from $72.90 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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