Prosperity Bancshares Q1 Earnings Beat on Higher NII & Fee Income

Prosperity Bancshares Inc.’s PB first-quarter 2025 adjusted earnings per share (EPS) of $1.37 beat the Zacks Consensus Estimate of $1.35. Moreover, the bottom line compared favorably with adjusted EPS of $1.18 in the prior-year quarter.Results benefited from an increase in net interest income (NII) and adjusted non-interest income. During the quarter, provisions remained nil. However, a rise in expenses was a major headwind. Also, a lower loan and deposit balance was another negative.Net income available to common shareholders was $130.2 million, up from $110.4 million in the year-ago quarter.PB’s Revenues Increase, Expenses RiseQuarterly adjusted total revenues were $306.7 million, which increased 10.7% from the prior-year quarter. However, the top line missed the Zacks Consensus Estimate of $307.1 million.NII was $265.4 million, up 11.4% year over year. Net interest margin (NIM), on a tax-equivalent basis, expanded 35 basis points to 3.14%. Our estimates for NII and NIM were pegged at $269.5 million and 3.22%, respectively.Non-interest income was $41.3 million, up 6.3%. The rise was driven by an increase in almost all the non-interest income components except credit card, debit card and ATM card income, trust income, and net loss on sale or write-down of assets. Our estimate for the metric was pegged at $37.3 million. Adjusted non-interest income was $41.5 million, up 7.6% from the prior-year quarter.Non-interest expenses increased 3.3% to $140.3 million. The rise was mainly attributed to an increase in all the cost components except other real estate expense and other non-interest expense. Our estimate for non-interest expenses was $142.6 million.The adjusted efficiency ratio was 45.71%, which decreased from 49.07% in the prior year quarter. A decline in the efficiency ratio indicates better profitability.As of March 31, 2025, total loans were $22 billion, which declined marginally from the prior quarter. Total deposits were $28.03 billion, which declined 1.2% sequentially. Our estimates for total loans and total deposits were $22.4 billion and $28.32 billion, respectively.PB’s Credit Quality: A Mixed BagAs of March 31, 2025, total non-performing assets were $81.4 million, which fell from $83.8  million in the prior-year quarter. The ratio of allowance for credit losses to total loans was 1.59%, up from 1.55% year over year.Net charge-offs were $2.7 million compared with $2.1 million in the year-ago period.The company did not record any provision for credit losses during the reported quarter, similar to the year-ago quarter.Prosperity Bancshares’ Capital Ratios Improve, Profitability Ratios IncreaseAs of March 31, 2025, the common equity tier 1 capital ratio was 16.97%, up from 15.75% in the prior year quarter. The total risk-based capital ratio was 18.22%, up from 17.00%.At the end of the first quarter, the annualized return on average assets was 1.34%, up from 1.13% at the end of the prior-year quarter. Also, the annualized return on average common equity was 6.94%, which increased from 6.20%.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. Quote PB 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 first-quarter 2025 adjusted EPS of $2.09 beat the Zacks Consensus Estimate of $2.05. Moreover, the bottom line increased marginally from the prior-year quarter’s level. (See the Zacks Earnings Calendar to stay ahead of market-making news.)EWBC’s results were primarily aided by an increase in NII and non-interest income. Also, loan balances increased sequentially in the quarter. However, higher provisions and non-interest expenses alongside lower deposits were headwinds.Zions Bancorporation’s ZION first-quarter 2025 adjusted EPS of $1.24 beat the Zacks Consensus Estimate of $1.20. Moreover, the bottom line surged 29.2% from the year-ago quarter.Results were primarily aided by higher NII and non-interest income. Also, higher loans were another positive. However, higher provisions and a rise in adjusted non-interest expenses were major headwinds for ZION.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>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