PROSPERITY BANCSHARES, INC.® REPORTS SECOND QUARTER 2026 EARNINGS

• Completed the merger of Stellar Bancorp, Inc. into Prosperity Bancshares on July 1, 2026
• Second quarter net interest margin increased 29 basis points to 3.47% compared to second quarter 2025
• Second quarter net income of $168.6 million, and $162.7 million⁽¹⁾ excluding non-recurring items, an increase of 20.4% compared to second quarter 2025
• Second quarter earnings per share (diluted) of $1.67, or $1.62 excluding non-recurring items, an increase of 14.1% compared to second quarter 2025
• Noninterest-bearing deposits of $10.7 billion, representing 32.9% of total deposits
• Allowance for credit losses on loans and on off-balance sheet credit exposure of $420.5 million and allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program loans, of 1.61%⁽¹⁾
• Nonperforming assets remain low at 0.34% of second quarter average interest-earning assets
• Return (annualized) on second quarter average assets of 1.55%, average common equity of 8.14% and average tangible common equity of 15.48%⁽¹⁾
• Repurchased 200 thousand shares of common stock during second quarter 2026, and 1.0 million shares during 2026

HOUSTON, July 29, 2026 /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB) ("Prosperity Bancshares"), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income of $168.6 million for the quarter ended June 30, 2026, compared with $135.2 million for the same period in 2025. Net income per diluted common share was $1.67 for the quarter ended June 30, 2026, compared with $1.42 for the same period in 2025. On January 1, 2026, American Bank Holding Corporation ("American") merged into Prosperity Bancshares and American Bank, N.A. ("American Bank") merged into Prosperity Bank (collectively, the "American Merger"), and on February 1, 2026, Southwest Bancshares, Inc. ("Southwest") merged into Prosperity Bancshares and Texas Partners Bank ("Texas Partners") merged into Prosperity Bank (collectively, the "Southwest Merger"). During the second quarter of 2026, Prosperity incurred a net gain of $8.2 million, or $0.06⁽¹⁾ per diluted common share as a result of the exchange and conversion of Visa Class B-2 stock and the sale of investment securities, partially offset by merger related expenses of $755 thousand, or $0.01⁽¹⁾per diluted common share. Excluding the net gain and merger related expenses, net income was $162.7(1) million and net income per diluted common share was $1.62⁽¹⁾ for the second quarter of 2026. The annualized return on second quarter average assets was 1.55%. Nonperforming assets remained low at 0.34% of second quarter average interest-earning assets. Subsequent to quarter end, on July 1, 2026, Stellar Bancorp, Inc. ("Stellar") merged into Prosperity Bancshares and Stellar Bank ("Stellar Bank") merged into Prosperity Bank (collectively, the "Stellar Merger").

"I am excited to announce that on July 1, 2026, Prosperity Bancshares completed the merger of Stellar and its wholly owned subsidiary Stellar Bank, headquartered in Houston, Texas. Stellar Bank operated 52 banking offices including its main office in Houston and banking offices in the Houston, Beaumont and East Texas areas and in Dallas, Texas. I am also pleased to announce that in connection with the mergers, Robert Franklin, former CEO of Stellar, and Joe Swinbank, a former Stellar director, have joined the Prosperity Bancshares Board of Directors and that Ray Vitulli, former CEO of Stellar Bank, and Pat Parsons, a former Stellar Bank director, have joined the Prosperity Bank Board of Directors. Pat was instrumental in building Stellar Bank's Beaumont franchise over the years," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer. 

"Texas has one of the strongest and most diverse state economies in the U.S., ranking as the second largest by GDP after California and approximately the 8th largest economy in the world. Oklahoma has a smaller but stable economy, heavily influenced by oil and gas, with more modest growth. Texas continues to shine as more people and companies move to the state because of the business-friendly political structure and no state income tax," stated Zalman.

"Excluding the gain on Visa Class B-2 stock exchange net of investment securities sales and merger related expenses, as noted above, net income increased 20.4% and diluted earnings per share increased 14.1% compared with the same period last year," added Zalman.

"We are pleased with our growth. Giving effect to the Stellar Bank merger, our assets are over $53 billion compared with $38 billion as of June 30, 2025. This represents a 39% growth over the year. I want to thank everyone involved in our company for helping to make it the success it has become," concluded Zalman.

Results of Operations for the Three Months Ended June 30, 2026

For the three months ended June 30, 2026, net income was $168.6 million⁽²⁾ or $1.67 per diluted common share compared with $135.2 million⁽³⁾ or $1.42 per diluted common share for the same period in 2025. Net income and net income per diluted common share for the second quarter of 2026 were primarily impacted by an increase in net interest income and a gain on Visa Class B-2 stock exchange net of investment securities sales of $8.2 million, partially offset by an increase in noninterest expenses related to the American and Southwest operations and an increase in provision for income taxes. On a linked quarter basis, net income was $168.6 million⁽²⁾ or $1.67 per diluted common share for the three months ended June 30, 2026, compared with $116.3 million⁽⁴⁾ or $1.16 for the three months ended March 31, 2026. The change was primarily due to an increase in net interest income, lower merger related expenses and a gain on Visa Class B-2 stock exchange net of investment securities sales of $8.2 million. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended June 30, 2026, were 1.55%, 8.14% and 15.48%⁽¹⁾, respectively.

Excluding the gain on Visa Class B-2 stock exchange net of investment securities sales, net of tax, and merger related expenses, net of tax, net income was $162.7⁽¹⁾million and earnings per diluted common share was $1.62⁽¹⁾ for the three months ended June 30, 2026, and annualized returns on average assets, average common equity and average tangible common equity were 1.50%⁽¹⁾, 7.85%⁽¹⁾ and 14.93%⁽¹⁾, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale, write-down or write-up of assets and securities) was 45.99%⁽¹⁾ for the three months ended June 30, 2026, and excluding the merger related expenses, the efficiency ratio was 45.79%⁽¹⁾.

Net interest income before provision for credit losses was $330.6 million for the three months ended June 30, 2026, compared with $267.7 million for the same period in 2025, an increase of $62.8 million or 23.5%. The net interest margin on a tax equivalent basis was 3.47% for the three months ended June 30, 2026, compared with 3.18% for the same period in 2025. The changes to both measures were primarily due to the repricing of assets, a decrease in the average balance and average rate on other borrowings and the impact of the American Merger and the Southwest Merger. Net interest income before provision for credit losses increased $9.4 million or 2.9% to $330.6 million for the three months ended June 30, 2026, compared with $321.2 million for the three months ended March 31, 2026. The net interest margin on a tax equivalent basis was 3.47% for the three months ended June 30, 2026, compared with 3.51% for the three months ended March 31, 2026. The decrease was primarily due to one-time loan interest income from a nonaccrual loan in the first quarter of 2026.

Noninterest income was $60.7 million for the three months ended June 30, 2026, compared with $43.0 million for the same period in 2025, an increase of $17.7 million or 41.2%. The change was primarily due to the American Merger and the Southwest Merger and a gain on Visa Class B-2 stock exchange net of investment securities sales of $8.2 million. Noninterest income was $60.7 million for the three months ended June 30, 2026, compared with $46.5 million for the three months ended March 31, 2026, an increase of $14.2 million or 30.6%. The change was primarily due to a gain on Visa Class B-2 stock exchange net of investment securities sales of $8.2 million and an increase in other noninterest income.

Noninterest expense was $176.2 million for the three months ended June 30, 2026, compared with $138.6 million for the same period in 2025, an increase of $37.6 million. The change was primarily due to an increase in salaries and benefits and an increase in additional expenses related to three months of American and Southwest operations. Noninterest expense was $176.2 million for the three months ended June 30, 2026, compared with $217.3 million for the three months ended March 31, 2026, a decrease of $41.1 million, which was primarily due to lower merger related expenses.

Results of Operations for the Six Months Ended June 30, 2026

For the six months ended June 30, 2026, net income was $284.9 million⁽⁵⁾ compared with $265.4 million⁽⁶⁾ for the same period in 2025, an increase of $19.5 million or 7.3%. Net income per diluted common share was $2.84 for the six months ended June 30, 2026, compared with $2.79 for the same period in 2025, an increase of 1.8%. Net income and net income per diluted common share for the six months ended June 30, 2026, were impacted by the American Merger and the Southwest Merger, merger related expenses of $43.3 million and a gain on Visa Class B-2 stock exchange net of investment securities sales of $8.2 million. Returns on average assets, average common equity and average tangible common equity for the six months ended June 30, 2026, were 1.33%, 6.93% and 13.02%⁽¹⁾, respectively.

Excluding the merger related expenses, net of tax, and gain on Visa Class B-2 stock exchange net of investment securities sales, net of tax, net income was $312.5⁽¹⁾million and earnings per diluted common share was $3.12⁽¹⁾ for the six months ended June 30, 2026, and annualized returns on average assets, average common equity and average tangible common equity were 1.46%⁽¹⁾, 7.60%⁽¹⁾and 14.29%⁽¹⁾, respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write-down of assets and securities) was 52.44%⁽¹⁾ for the six months ended June 30, 2026; and excluding merger related expenses, the efficiency ratio was 46.67%⁽¹⁾.

Net interest income before provision for credit losses for the six months ended June 30, 2026, was $651.7 million compared with $533.1 million for the same period in 2025, an increase of $118.6 million or 22.2%. The net interest margin on a tax equivalent basis for the six months ended June 30, 2026, was 3.49% compared with 3.16% for the same period in 2025. The changes to both measures were primarily due to the repricing of assets, the impact of the American Merger and the Southwest Merger and a decrease in the average balance and average rate on other borrowings.

Noninterest income was $107.2 million for the six months ended June 30, 2026, compared with $84.3 million for the same period in 2025, an increase of $22.9 million or 27.2%, primarily due to the American Merger and the Southwest Merger and a gain on Visa Class B-2 stock exchange net of investment securities sales of $8.2 million.

Noninterest expense was $393.5 million for the six months ended June 30, 2026, compared with $278.9 million for the same period in 2025, an increase of $114.6 million, primarily due to an increase in merger related expenses of $43.3 million, an increase in salaries and benefits and an increase in additional expenses related to six months of American operations and five months of Southwest operations.

Balance Sheet Information

Prosperity had $43.873 billion in total assets at June 30, 2026, an increase of $5.455 billion or 14.2%, compared with $38.417 billion at June 30, 2025, primarily due to the American Merger and the Southwest Merger. Linked quarter total assets increased by $253.3 million compared with $43.619 billion at March 31, 2026.

Loans were $25.028 billion at June 30, 2026, an increase of $2.831 billion or 12.8% from $22.197 billion at June 30, 2025. Linked quarter loans decreased $260.0 million from $25.288 billion at March 31, 2026. Loans, excluding Warehouse Purchase Program loans, were $23.738 billion at June 30, 2026, compared with $20.910 billion at June 30, 2025, an increase of $2.828 billion or 13.5%, and compared with $23.855 billion at March 31, 2026, a decrease of $117.0 million.

Deposits were $32.600 billion at June 30, 2026, an increase of $5.126 billion or 18.7% from $27.473 billion at June 30, 2025, primarily due to the American Merger and the Southwest Merger. Linked quarter deposits decreased $33.1 million from $32.633 billion at March 31, 2026.

Asset Quality

Nonperforming assets totaled $130.6 million or 0.34% of quarterly average interest-earning assets at June 30, 2026, compared with $110.5 million or 0.33% of quarterly average interest-earning assets at June 30, 2025 and $122.1 million or 0.33% of quarterly average interest-earning assets at March 31, 2026.

The allowance for credit losses on loans and off-balance sheet credit exposures was $420.5 million at June 30, 2026, compared with $383.7 million at June 30, 2025 and $421.5 million at March 31, 2026. There was no provision for credit losses for the three months and six months ended June 30, 2026 and 2025.

The allowance for credit losses on loans was $382.8 million or 1.53% of total loans at June 30, 2026, compared with $346.1 million or 1.56% of total loans at June 30, 2025 and $383.8 million or 1.52% of total loans at March 31, 2026. The allowance for credit losses on loans increased during the six months ended June 30, 2026 due to the American Merger and the Southwest Merger, of which $47.5 million was attributable to the American Merger and $45.1 million was attributable to the Southwest Merger. Excluding Warehouse Purchase Program loans, the allowance for credit losses on loans to total loans was 1.61%⁽¹⁾ at June 30, 2026, compared with 1.66%⁽¹⁾ at June 30, 2025 and 1.61%⁽¹⁾ at March 31, 2026.

Net charge-offs were $2.2 million for the three months ended June 30, 2026, compared with net charge-offs of $3.0 million for the three months ended June 30, 2025 and $41.3 million for the three months ended March 31, 2026. Net charge-offs for the three months ended June 30, 2026, included $962 thousand related to resolved purchased credit deteriorated ("PCD") loans, which had specific reserves that were allocated to the charge-offs. For the three months ended June 30, 2026, $10.3 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Net charge-offs were $43.5 million for the six months ended June 30, 2026, compared with net charge-offs of $5.7 million for the six months ended June 30, 2025. Net charge-offs for the six months ended June 30, 2026, included a $39.2 million increase in net charge-offs for commercial and industrial loans. Additionally, due to the American Merger and the Southwest Merger, reserves increased by Day One accounting for PCD loans of $53.3 million and Day One accounting for purchased seasoned loans ("PSLs") of $39.3 million. Further, $12.3 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Visa Class B-2 Stock Exchange

During the second quarter 2026, Prosperity tendered all of its shares of Visa, Inc. ("Visa") Class B-2 common stock in exchange for a combination of Visa Class B-3 common stock and Visa Class C common stock, pursuant to the terms and subject to the conditions of Visa's public exchange offer, which expired on May 8, 2026. Prosperity recorded an unrealized gain of $12.2 million during the second quarter 2026 based on the conversion privilege of the Class C common stock and the closing price of Visa Class A common stock. In the exchange, Prosperity received 24,246 shares of Class B-3 stock, recorded at zero cost basis, and 9,137 shares of Class C common stock and subsequently sold 3,045 shares of Class C stock. Prosperity intends to sell all remaining shares of Class C stock as permitted by the exchange agreement.

Dividend

Prosperity Bancshares declared a third quarter 2026 cash dividend of $0.60 per share to be paid on October 1, 2026, to all shareholders of record as of September 15, 2026.

Stock Repurchase Program

On January 26, 2026, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 4.87 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 26, 2027, at the discretion of management. Under its 2026 stock repurchase program, Prosperity Bancshares repurchased approximately 200 thousand shares of its common stock at an average weighted price of $68.34 per share for a total of $13.7 million during the three months ended June 30, 2026, and approximately 1.04 million shares of its common stock at an average weighted price of $68.19 per share for a total of $70.8 million during the six months ended June 30, 2026.

Acquisition of Stellar Bancorp, Inc.

On July 1, 2026, Prosperity Bancshares completed the merger of Stellar and its wholly owned subsidiary Stellar Bank, headquartered in Houston, Texas. Stellar Bank operated 52 banking offices including its main office in Houston and banking offices in the Houston, Beaumont and East Texas areas and in Dallas, Texas. As of June 30, 2026, Stellar, on a consolidated basis, reported total assets of $10.413 billion, total loans of $7.510 billion and total deposits of $8.716 billion.

Pursuant to the terms of the definitive agreement, Prosperity Bancshares issued 19,371,499 shares of its common stock plus approximately $578.66 million in cash for each outstanding share of Stellar common stock. 

Acquisition of Southwest Bancshares, Inc.

On February 1, 2026, Prosperity completed the acquisition of Southwest and its wholly owned subsidiary Texas Partners, headquartered in San Antonio, Texas. Texas Partners operated 11 banking offices in Central Texas including its main office in San Antonio, and banking offices in the San Antonio area, Austin and the Hill Country.

Pursuant to the terms of the definitive agreement, Prosperity Bancshares issued 4,094,974 shares of its common stock for all outstanding shares of Southwest common stock. This resulted in goodwill of $134.9 million as of June 30, 2026, which does not include all the subsequent fair value adjustments that have not yet been finalized. Additionally, Prosperity recognized $33.8 million of core deposit intangibles as of June 30, 2026.

Acquisition of American Bank Holding Corporation

On January 1, 2026, Prosperity completed the acquisition of American and its wholly owned subsidiary American Bank, headquartered in Corpus Christi, Texas. American Bank operated 18 banking offices and two loan production offices in South and Central Texas including its main office in Corpus Christi, and banking offices in San Antonio, Austin, Victoria and the greater Corpus Christi area including Port Aransas and Rockport and a loan production office in Houston, Texas.

Pursuant to the terms of the definitive agreement, Prosperity Bancshares issued 4,439,938 shares of its common stock for all outstanding shares of American common stock. This resulted in goodwill of $185.9 million as of June 30, 2026, which does not include all the subsequent fair value adjustments that have not yet been finalized. Additionally, Prosperity recognized $31.1 million of core deposit intangibles as of June 30, 2026.

Conference Call

Prosperity's management team will host a conference call on Wednesday, July 29, 2026, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's second quarter 2026 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The participant elite entry number is 9578428.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at www.prosperitybankusa.com. The webcast may be accessed from Prosperity's Investor Relations page by selecting "Presentations, Webcasts & Calls" from the menu and following the instructions.

Non-GAAP Financial Measures

Prosperity's management uses certain non-GAAP financial measures to evaluate its performance. Specifically, for internal planning and forecasting purposes, Prosperity reviews each of diluted earnings per share, return on average assets, return on average common equity, and return on average tangible common equity, in each case excluding merger related expenses, net of tax, FDIC special assessment, net of tax and net gain on the sale or write-up of securities; return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program loans; the efficiency ratio, excluding net gains and losses on the sale and securities, write-down or write-up of assets; and the efficiency ratio, excluding net gains and losses on the sale, write-down or write-up of assets and securities, merger related expenses, and FDIC special assessment. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and their presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting Prosperity's business and allow investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP financial measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP financial measures should not be considered a substitute for, nor of greater importance than, GAAP basis financial measures and results; Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. Please refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures to the nearest respective GAAP financial measures.

Prosperity Bancshares, Inc. ®

As of June 30, 2026, Prosperity Bancshares, Inc.® is a $43.873 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma. Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

Prosperity currently operates 363 full-service banking locations: 62 in the Houston area, including The Woodlands; 36 in the South Texas area including Corpus Christi and Victoria; 61 in the Dallas/Fort Worth area; 21 in the East Texas area; 28 in the Central Texas area including Austin and San Antonio; 45 in the West Texas area including Lubbock, Midland-Odessa, Abilene, Amarillo and Wichita Falls; 15 in the Bryan/College Station area, 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area; 18 in the Central, South Texas and San Antonio areas doing business as American Bank; 11 in the San Antonio area doing business as Texas Partners Bank and 52 in Houston, Beaumont, Dallas and the East Texas areas doing business as Stellar Bank.

Cautionary Notes on Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, oral or written forward-looking statements may also be included in other information released to the public. Such forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "believe," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may," or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity's possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for credit losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity's future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity's loan portfolio and allowance for credit losses, changes in deposits, borrowings and the investment securities portfolio, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity's operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of any proposed transactions, and statements about the assumptions underlying any such statement. These forward‑looking statements are not guarantees of future performance and are based on expectations and assumptions Prosperity currently believes to be valid. Because forward-looking statements relate to future results and occurrences, many of which are outside of Prosperity's control, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. These risks and uncertainties include, but are not limited to, whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); the possibility that the anticipated benefits of an acquisition transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of two companies or as a result of the strength of the economy and competitive factors generally; a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate, interest rate and commodity price fluctuations; changes in trade policies by the United States or other countries, such as tariffs or retaliatory tariffs; and the effect, impact, potential duration or other implications of weather and climate-related events. Prosperity disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. These and various other factors are discussed in Prosperity's Annual Report on Form 10-K for the year ended December 31, 2025, and other reports and statements Prosperity has filed with the Securities and Exchange Commission ("SEC"). Copies of the SEC filings for Prosperity may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.