PB - Earnings call transcript Q4 2024 | Prosperity Bancshares, Inc.

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Operator

Good morning, and welcome to the Prosperity Bancshares Fourth Quarter 2024 Earnings Conference Call. [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. gentlemen, Conference to Call. and Quarter Bancshares' ladies Earnings XXXX morning, and Prosperity welcome Fourth Good the This our be for website is and few call being will available broadcast for live on next weeks. replay Vice Executive General Prosperity Rasche, Charlotte President I'm Counsel and of Bancshares. is today Chief Zalman, Senior me Executive with Chairman H.E. Officer; here David And and Executive President Osmonov, Corporate Officer; Operating Mays Director of Tim Asylbek Officer; Safady, Chief Chief Timanus Jr., Vice and Eddie and Vice Bob Dowdell, Strategy; Financial Chairman; Chairman; President. Kevin Hanigan, Davenport, Lending Chief our Randy unable today. is Hester, join us Officer, to

will lead asset for Timanus, who Tim recent Zalman quality. by will off David our of with and including Osmonov, the the be who a will highlights will Asylbek He of statistics; review review discuss some recent our quarter. financial activities, followed lending

will call we open questions. for the Finally,

other cause and different uncertainties which Prosperity or let securities usual for such, forward-looking future to be and by constitute forward-looking of the performance we or disclaimers. presentation in statements. performance unknown of federal me statements may discussed results such known Before and the the actual from Certain laws or this of materially results implied make matters Bancshares the may involve risks, factors, as expressed the purposes begin, may

statements. reports Exchange Additional and different entirety Commission, information to with qualified including cautionary found statements in be by are All expressly that XX-Q the have and actual forward-looking forward-looking can we the Securities be SEC. their cause Forms than XX-K results concerning factors could materially statements in filed filings other statements and those in these the with and our

David Zalman. over let Now to call the me turn

David Zalman

and quarter our conference you, I XXXX welcome thank listening everyone to like fourth Thank Charlotte. would call. to

an with million for common months income XXXX $X.XX period of was interest was XX, and special increase per net and The XX%. income period compared to income the XXXX, diluted $XX changes ended $XX in net a an ending three due December the for for XXXX, were or three The million net the XXXX, for in of same XX%. in million compared months $XXX December share in XX, Our primarily the FDIC same decrease with the increase increase assessment. $X.XX an

assessment, and was net tax, expenses $XXX per the million $X.XX merger-related of three December FDIC share diluted for special the XX, each or net Excluding income months ending XXXX. the common

quarter increased when million fourth income of fourth increased share assessment, or or per XX.X% XXXX special XXXX. the earnings for $X.XX the net of expenses So XXXX quarter earnings for and $XX.X the XX.X% diluted comparing with merger-related excluding FDIC the the and

continue to As previously as mentioned, increased. assets on our return assets reprice and earnings have

this expect XXXX. in We to continue trend

and Our gains average were annualized or of December XXXX, XXXX. common was write-up net the net average three fourth the efficiency X.XX% XX months assets compared quarter The equity ratio, the for losses and X.XX%, December of sale XX% with write-downs Prosperity's excluding on XX, interest securities on for three basis X.XX% and XXXX. months increased to points ending margin tangible and the ending and assets XX, respectively. the XX.X%, for return

reprice As expect certain we our previously as XXXX assumptions. net for higher assets subject mentioned, a margin interest to

the stock on January January up a XXXX, to primarily merger management. billion at which approximately of increase XXXX, of announced under or repurchase X.X XXXX, Bancshares due over to an XX, were X% outstanding December million our period, expiring stock On X-year XX, a to compared Lone Star XX, billion with program common shares loans be 'XX, Prosperity or XX, $XXX million may at acquired loans, $XX.X Bank. the the $XX.X at regard December discretion with With of X.X%

XXXX. $XX production flat XXXX. growth the since at April Overall, December XX, centers X, the XXXX, XXXX when essentially in Excluding merger decreased XX, excluding loans in loan and in December merger, loans the due the loans to compared banking acquired at was new the acquired increase with million

positive comments after XXXX through Time organic follow did customers with our their we customers if However, experience positive from growth the but our hear loan election. in we will should momentum. tell,

of problem worked disposed through or a also total which loans We reduced acquisition, the from of number loans. FirstCapital

billion X.X% $XX.X regard at quarter primarily deposits at deposits, XX, or to merger. September were billion Linked to or XX, compared With XX, XXXX, increase with XXXX, deposits billion $XXX billion X.X% million of due annualized $XX.X an December from the $X.X X%, December XXXX. $XX.X increased at

leaving base bank. with low than fourth core has X of third assumed coming by for quarter of December merger cost April compared the basis XXXX, at X, decrease new a quarter and million generated since started deposit with deposits XXXX more deposits acquired centers with of of strong deposits XX, the a XXXX. XXXX the in with XXXX compared the to X.XX% points. Excluding Deposits increased Prosperity $XXX XX, banking deposits normalize XXXX, deposits at X.XX% December the in the a for of in

have total noninterest-bearing of billion $X.X representing we XX.X% our Additionally, of deposits deposits.

XX XX, With The million $XX quarterly assets compared totaled points exposure XXXX. XX, basis XXXX, sheet September loans regard on or our nonperforming at average or with of million interest-earning XX for interest-earning or quarterly at interest-earning December at XX, XXXX. credit December losses quarterly asset $XX average million points to of assets and basis points $XXX of XXXX allowance assets $XX.X basis million XX, off-balance credit was quality, and average XX at December assets

indications banks agencies acquisitions, responsible with institutions. merger to to transaction for new merger appears partnership and as administration be open show continues transactions of entertaining favorable and interested more the will that shareholders sense more a approval merger transaction Prosperity the we'll pursue when it makes in are both for the for that associates be proposals. Early and

addition growth about business-friendly income The Texas political country. economies and has The Texas Texas best excited the Texas both Oklahoma the XXXX. been and total bringing relocations Oklahoma a issue, have Texas people, of than with in tax We're $XX.X some of to the population no in climate. more million. XXX,XXX company. XXXX population future corporate are our to of and the their in Forbes state according and grew since XXX to any other XXXX Further, there the state July have

All future our well for growth. this bodes of

Prosperity acquisitions, has believe fund as increasing reprice, net our position margin ratio continue repurchase that stock in opportunities continue capital to should share. earnings per our the assets expand mergers that We more provides strong to growth to thereby a for or participate capital. and without organic our a normal need additional interest to

build I successful for bank. deposits also our to of your associates, for our a Thanks thank core We like company. customers, all and shareholders such with support strong XX.X% again have our strong accounts. noninterest-bearing helping deposits would in of directors

specific results Let discussion discuss we to Asylbek me Osmonov, Chief achieved. financial turn over our to of our the some Officer, Financial

Asylbek?

Asylbek Osmonov

of Zalman. $XX.X $XXX.X XX, $XXX.X period everyone. you, increase interest XXXX, million, provision an income million ended XXXX, before X million million the Mr. Good XX, compared Thank ended Net million December for compared to $XXX to was for XXXX. for in an credit increase morning, losses of months $X.X the same for September quarter the

XXXX range value for XXXX. third The $XXX.X million. million of full first in year expected income $XX.X the million to loan of compared fair million from Fair quarter to the $X million $X.XXX million $X.X quarter $X income for XXXX. the XXXX in XXXXis to of quarter income in for the was to the interest value be of increased fourth billion XXXX, For $X.X net

September for a net ended compared XX, the for period XX The quarter basis X was XX XX, point the X.XX% XXXX. interest increase margin same basis a the to months in increase X.XX% X.XX% December this equivalent and basis tax to on ended compared was for XXXX, point XXXX,

Excluding September to for the XX, net interest XXXX, XXXX, same purchase quarter accounting ended in for the ended the XX, X and X.XX% adjustments, December X% was period the XXXX. margin compared X.XX% months for

ended compared in special noninterest XXXX. quarter the the for XXXX, $XXX.X ended income same $XX.X $XX.X was the months months $XXX.X $XXX.X Noninterest XXXX. during Higher million. X million million and the to for ended of December expense Noninterest to the period XX, XXXX for period December of XX, XX, the for XX, quarter FDIC XXXX, to XXXX $XX.X due was million, for September expense million $XX.X X was compared for and in primarily quarter assessment the same ended million XXXX million September fourth

For XXXX. noninterest ended remain XXXX first expect The and to $XXX to for XX.X% million ratio XX.X% flat The bond September same $XXX XX.X% quarter the of of XX, range of cash for December modified have at $X.X X ] billion. in expense XXXX, duration million. months was period we metrics compared a approximately portfolio of the flows ended projected and XX/XX/XXXX the to quarter X for be efficiency annual [ the in the and XX, XXXX,

over on to turn and some me loans the quality. let asset with And Timanus for that, Tim details presentation

H. E. Timanus

Thank you, Asylbek.

other and put in quarter at December $X,XXX,XXX total was sale. Since real The estate repossessed $XX,XXX,XXX a December reduction asset at estate. end assets. or September XXXX of XX contract nonperforming assets is been points nonperforming XXXX to in XXXX, under assets XX, have $XX,XXX,XXX XX, basis and X% of loans nonperforming real This totaled other nonperforming basis of $XX,XXX,XXX XX, for XX December in assets $X,XXX,XXX XXXX. Our in or loans, comprised XX, $X,XXX compared points

monthly compared compared million basis. outstanding was taken loans. The No no production a ended XXXX. for $XX.XXX XXXX, quarter the XXXX fixed-rate XX, XX, This $X,XXX,XXX made quarter of million September allowance is a XXXX. compared ended XX% at September were variable to were Net credit December $XX.XXX XX, of December decrease XX% addition There dollars losses to December to ended rate ended the XXXX, XX, XXXX, income the The Loans loan on net XXXX. September allowance XX% new December was and from loans, to the quarter were into for ended billion up loans linked XXXX. quarter during months XX, XX, $X,XXX,XXX for billion charge-offs average for ended during the XX, $XXX XX, the loan rate at XX, December charge-offs $X,XXX,XXX is XXXX. total X quarter the approximately the December for $XXX quarter floating

turn it Charlotte now over will I to Rasche.

Charlotte Rasche

Tim. we to your are questions. answer you, Thank this At prepared time,

with Our call operator, Gary, will assist us questions.

Operator

will Manan We with Morgan Gosalia question from [Operator Instructions] today the begin Stanley. first comes session. now Our question-and-answer

Manan Gosalia

are about a telling higher, I the we've curve, any to to I you're update trajectory feeling NIM wanted long of on you? forward know your you of so last out had how the what models from cuts relative end couple us on thoughts NIM taken Can on here. is touch quarter?

David Zalman

we're I remember that is X.XX%, still year-end, right, track exactly in but last don't what we what somewhere to said around I think Asylbek? we on I X.XX%, here, between think we said be quarter. said I should

Asylbek Osmonov

XXXX. in X.XX% be a exit on Yes, bit X.XX%, and average at will it higher XXXX, for little the

David Zalman

mean, the said turned we so with he I switch I'll if no the black material the about goes, about blinker has Jon we where Southwest and from good feel the everything e-mail think I feel out corner, the got to I Yes. morning there's some good Mary an swan Freeway Arfstrom mean there. -- on. in it. hit Queen steal We're we this

Manan Gosalia

And market clients? means And maybe about you're credit were your bit, a on are asked growth over bullish comments that quarters? few then expand positive growth your at loan to and doing the hearing what is little well. same because rates you Texas that loan on from comments down, maybe more for time, the talk fairly next I can the sentiment

in what's So from you here? stopping leaning really

David Zalman

are too. have. get Kevin bank, lot of what's as But that maybe of too still -- let a here for in the to we to to banks, going the times, same you see minute, guys bottom in hard lot the times, we line, a that is buy I'm really the we that a up not loans Well, quality

loan And just small a over maybe guys so example, where it last just for acquisition, increase. see you takes us while the a

don't see in replace outsourced probably we maybe bought. $XXX that to a that million bank we previous You

to the too. that's it, So side other

from loan On the But see been, be a at not go deal. still our we loan-to-deposit I really side. anybody growth ever never a think, want on that's loan-to-deposit overall, to to lot don't we've growth. bank in, massive around again, standpoint. I'd from didn't after a XX% double-digit other hand, there that been ratio. we'd mean least you a Texas the say, population to of massive, I Again, loan think XXX% ratio. XX% That's close in growth has been And I know I we're

jump So that's just some of But to the you Kevin, in? there. want factors may

Kevin Hanigan

bit the David. Listen, year. can in the Sure, question I earning a of quarter in asset Thanks. reshape the given fourth of little growth shrinkage

David billion, back and loans. the at $X.XXX bank closed, if it, that have of maybe on would we alone, think, And -- of look is in -- to shade outsourced, at right chased million. whatever -- we off, David go renew acquisition, time just almost timing had FirstCapital said, $XXX that call David want and As million, I we X/X acquisition over portfolio $XXX say at to the a we failed it that the

It a the $X.XX won't bad smaller case It much as closed. and billion, better I time we Lone in bank be think, well. of quality was credit nearly the at footprint as Star,

So I think hasn't are It acquisitions, still stick and show improving. do manifested balance that be more yet, think sentiment of we're don't it leeway to it's will little coming. but onto kind the which pretty process Things sheet. feel of to I mid-single-digit the itself a is think to pertains two be some it's it gives robust. end good. at growth like Customer us low have as growth those it going to I I

David Zalman

all think that business all the even administration you're are those burden getting, comments. still still they just are were didn't and comfortable didn't last they good. though as and people -- feel at just I feel regulatory of all of those year, growth a Yes, with as lot And the seeing

seeing we'll committees pick So see, may we're comment Tim this, the and already we're of some what up the and already we some demand. see already, loans on loan of seeing,

do people right we mean, and we'll something, could be and it change, seem to at So to the do and to momentum right the want to grow does time. see. at again, something want the be I the but place seem

Kevin Hanigan

get do loans particularly while I that loan, construction to all in loan we nice in some what's that. that I've preview construction all to they're in take for Tim, a a seen And coming fund the was coming to equity a nice going of not got We generally of things coming first. Tuesday. on acquire and tomorrow. what's up. going add in preview I committee we've

X So We could in to expected may fund deal have put X we months highly a coming under approve nice of tomorrow. a to revolvers until couple funded not -- in. be equity they and do it for their

encouraging. more little a it's So

H. E. Timanus

Yes.

very I yet. early all year. of think that is of end not obviously the accurate. January in the to It's even We're

as So we the sentiment into positive the manifest year. has go to plenty time itself of

borrowers, to optimistic that a lot more I'm have a that decent do with we have we existing conversations So of growth. pretty should borrowers might want potential and so

Manan Gosalia

have maybe to what to and there? So get need growth round between out there you X.XX% to just the loan NIM that kind X.XX%, that discussion loan your model, growth, you get of NIM in do to

Asylbek Osmonov

tailwind impact -- our what the model, NII variables the will But few that for have we essentially us. kept have NIM now and balance On we the for static. positive a

we each all, First of down loans, of about have billion the principal $X pay year.

rate. So so. about or I more around a is fixed at the we say XX% X.XX average was think And

a alone. X.XX at X.XX X.XX to So XXX than loan the if pick on to basis current more points reprice that that up we rate, there's

we second securities, it, cash X.XX% The flow the billion of part about for have On securities. the $X.X has yielding from QX. our

our paying would we're either around There's or the reinvest have X%. we bonds, X.X% which X.X%. which could down a is pickup there at So in we borrowing,

So positively NII and margin. impact our those things

David Zalman

right. all, we're growth But static that's the on -- you, that's giving those at based line and numbers no is bottom

Asylbek Osmonov

we the had Yes. there's But paying borrowing down planned. a we're our -- shrinkage in as

So the it by $X to includes paying in down borrowing down billion end year. around borrowings of

Operator

from The Arfstrom question with Markets. next Jon Capital RBC is

Jon Arfstrom

shout I appreciate David. out, the

David Zalman

me at guy eye X:XX anyway. the one have in only I e-mails the morning. You're open that

Jon Arfstrom

of in what expect portfolio a follow stuck that of and yield. to X.XX%, think the stubborn the you over It's year looks to you reinvestments year. low been That just next Do kind that some securities making? the around you're up do Xs. on on comments the like Asylbek, climb that these with

Asylbek Osmonov

a year. least for the down to this continue projection, think at pay now, bit I pay want our down, right borrowing to on we continue little

I to around use want pay borrowing billion. million from down to to get borrowing going So about to $XXX $X.X billion, the $X we're the think

$X or going put reinvesting be So another billion we're we're to to growth. that money going loan to

going So purchase did it. good of know we pretty us. QX, either way, we million I the what bit could security because yield be in for positive it's to little purchased about we a get on $XXX

about think can X%, you got so we've I the do math.

If back X%, you billion on benefit around that securities. our put $X at X% around would or definitely yield the

Jon Arfstrom

what capital you on happens see M&A? David, on on repurchase any inclined repurchase? Are the do the on Or and more to appetite? thoughts you sit be want active to

David Zalman

time. save we've think waiting right I wait, is M&A long I for now. -- going been to to the money this would rather would a I like the be

I think mean, banks long have -- people seems the a be I out it there there's time. waiting there, should been like that

stock they're our is too. at interested, price, think a I good

I So there's to deals more think made. be

the to apt regulators more are are I think out there approve that deals.

wait see. would I and So like to

for Now our definitely some increased We having would to other part, went and would jump do the like stock in dividends the said it and most something. that, But price M&A way. I also. for save

Jon Arfstrom

the sellers to now? coming you, I excited, the a including come you're saying are to to to bit more are now table pretty be sellers willing the the probably you're And table. buyers the seem saying but know

David Zalman

X Right calls. election, phone the I had after

and So had worked stuff that some on cases cases, in stuff. in we previously new some

but that going like So want again, seem that you there's sides jump do on does to out to something. know people there don't just it's it both ever

Operator

Mealor from is The next with KBW. Catherine question

Catherine Mealor

provision zero enjoyed years. You've for a two the past

Is strong. 'XX? this zero where feel reserve where feasible growth a where been to expect outlook your still like provision for provisioning gets there another you start to to or need so your it's you in is Just has level credit year

David Zalman

can -- math. you got the we've do Well,

And over is million nonperforming we residential those have provision million of $XX loans. nonperforming. have We half family in and as in X-X the $XXX in that

for there's black something kind if I'd or we're swan. of So while unless say pretty things some change, don't go a reserved changes to

Catherine Mealor

And a is where gauge for on deposit there ended in then back as the quarter where to just deposit think quarter start the costs, margin, about you we first of a 'XX? way just to may the costs

Asylbek Osmonov

Yes.

for I XXX. deposit was Our rate, call spot it, the

our basis quarter. average So less than points the X it's for

Operator

question D.A. is Peter Davidson. with next from The Winter

Peter Winter

always wondering, mortgage the warehouse. Kevin, provide you good was guidance I for

about then outlook, quarter thinking just just in wondering mid-teen year So I growth? assuming it versus the industry was the do think the in, you of you're outlook which is kind comes and how for where first the

Kevin Hanigan

Yes.

We been trend going keep have hope and on right the being guess, I fortunate, the warehouse. to I let's close can on

as we level $X.XX think quarter a and we Just do somewhere billion. averaged set everybody, billion. fourth said in call $X.XXX between for we on $X.XX the I And billion the -- somewhere

So out In side last context, than slightly upper I we the further the just it thought. numbers of what at through better turned looked night.

down billion night, is $XXX that last quarter so million at of then from we to date, average And last to And closed quarter. the million. $X.XXX $XXX

been it's or X in a January, last the pretty January of So X particular, or part weak latter days.

last higher. gets $XXX it that million think night I before goes lower of

quarter, may Tuesday. couple we of I in average I for on million think that million. we of $XXX So clients I well, a the Again, have one things know looked them the and at pipeline. new $XXX do are if go

gotten of to a year dislocations add the we're of market So clients in and with some of out. who've the some couple hoping folks this the

with Bank exited merger up road Independent think their I the think business. closing, I the they've

some it. to been have grow opportunities So there

for hard to much me go out really beyond a It's quarter.

that track application a X things One It us takes are to the we -- of we closing, things application quarter-to-quarter. volume, it volume. weeks. we up do generally on application or X keep and can our how from these gives do From leg maybe

X do. The X and it's easy So really pretty project upon now. out you stand where we you on to R-squared weeks know is high based that from or what

out too, whole mortgage we mortgage out with and really depends call, how where say, look high. we're there. own book. a rates single-family when our Eddie on been tougher So And he longer, loan portfolio our it they're It's if across paying about your are, the on might -- little I'd is the talk rates doing

be quarter, atypical the a of it's for else. in has thing the -- natural relatively than little it been weak It's anything I that's a But So weak. matter a that's not general, QX. expect to but fact, more business

David Zalman

say to Eddie, would you like anything?

Edward Safady

people with Kevin stayed agree have I what rates mortgage higher assumed. had the longer says, for some than

seems think than to mortgage is we but debt, a bit what refinancing are see an But the continue counterintuitive. a cheaper consolidate been card people paying looking to the it's in bit credit little go into a of I actually out like. increase cash-out pushed the anticipation and has of which more the as new rates little do refi,

of this of think course, of first I better a have gauge slow happening is end towards season, So and the we'll what's quarter. the the

Kevin Hanigan

And in always I've it long this again. the really Thanksgiving for generally starts are said business, Super it Super general, and after In picking weak time. Things I've the up around a then and Yes. been Bowl. between Bowl,

if So be going which of we the has in pickup little see couple to think way should then business of it's a continue that's the typical be I operated March, the pretty we'll to get weeks. forever. weak And why for next

Peter Winter

much deposit managing were rates, more deposit just a a there for question. lowering costs the Can room this then is the the costs? outlook follow-up talk to did you very on guys lower I growth job up. to good if secondly, As stop way And Fed deposit year? about you mean

David Zalman

real start but rates. paying did started of say paid never which rate, really a deposit We pay than far we would really We We rates. the a really with I never the competitive banks cost. really, and more market. really lot paid went high where to higher went was never --

probably have as We bank of lowest of that of So our really I one would any say core the cost we controlled deposits. from funds standpoint, the costs.

out and buying that. same were We X% did never banks even deposits time, for and broker money. other the paying At of a going number

now us. book. with So good we is probably have we that a some think core lost of But what stayed right real I have that might money

go as say room but we X%. core that's people much go Month have offered would probably do we down special a account, other down, do said we CD CD, have money at down go couldn't X that could some of the having market good also if as and on We that, I the rates customers. some

think to much couple not be of may And as as able else. I we cut, cut so everybody a categories could just we that have we

As deposit in of far growth we X% positive. used as growth, that like historically, the they the aren't out always times, organic that Again, rate. X% deposits just bank were to normal going run back we're excited to they actually came

I X% think year, X.X%... in using this we're or budget, our what,

Asylbek Osmonov

X.X%.

David Zalman

X.X%.

So we'll -- hoping there. rate. to We hoping get more I'm that back again, deposit I'm a to get normalized should growth

And what so right for we're that's there. kind looking of

Asylbek Osmonov

cut on Just rate even XXX special that, on XXX pretty -- CD cuts. we we coming the and a don't rates, but did we we that have did did cut cuts, to a we much that basis in do point XXX rate beta add have each for Fed

time. be So those to over repricing going are

fourth mature first mature within just we CD for going going if to continue our the you are months. purposes, have that to XX% months about the to happen But quarter. saw repricing We'll some and quarter. just we CD XX of in So XX% of at our numbers X in within see look

we rate to So it. see those reprice lower decrease at you opportunity still can because CD there's special a

even we well, Fed as cuts. NII our benefit to going don't any rate don't have see -- we're we So

David Zalman

term, real long help us. the kept not We offered short. on that the should so product rates CD We've really

Operator

with The Stephens. next Matt from is question Olney

Matt Olney

earlier securities is the portfolio, to buying buying think mentioned Asylbek, or close On you investment that bank I has or newer some David securities. investment the been

that Just with you're any to looking at those color more yields on products and respect duration?

David Zalman

the as to used or as is XX been to for long product interest year we a we've -- security about years XX-year we X.X portfolio, buy that went that that mortgage-backed always have as anywhere up. so, a fully -- X our Historically, rates to extended life amortized try here -- I've primary has they

other never bit. buy rates much that it into the extended. -- we to But also some been rates. that. CRA loans try much pretty and the with that call buy Now We'll money product. shake try We with we'll in didn't the stay products product we We the stay for up always are But little has portfolio. we a majority the of -- put just have to pretty

went sucked money so of rates turning, And seeing we up, we right now. same It But gone finally, wind probably down X you these that's rates But of made nice had as you're we up couple last in that and the [ out it strategy. to good it now rates that now. looks ] that's years. to the And when for kind as still went right over had what mortgage, We'll of the does come and never or deals when is time. been and this X we've does portfolio. loss see it work keep

run, So be in always that if the we but home place. a hit right stick with strategy, you may you'll not

Asylbek Osmonov

Matt. right, That's

think buy being did average I the million $XXX about fourth X.XX%. end in yield quarter we So up

Matt Olney

there the commentary, the beyond for could any to think, And the quarter? to for a then technology just first first upgrades to back or us Asylbek, going a expect number beyond just should the first I we expense quarter are gave initiatives, low continue you other seen that pressure that Or projects any that incremental some single-digit that, assume we've to while? other now add quarter, range

Asylbek Osmonov

Yes.

quarter, is and different so the improving. on -- you in Technology usually evolving on always -- we have annual our think But see why constantly pickup That's first quarter we work -- increase. if do at look expenses. some projects. I beyond second the you during on merit

that. costs money it to So

based X.X% of year. X% increase second think more that second that now, X% increase right the of to our that I'm second half the based about can on expense to So on XXX X% And range I starting the guess half the is do providing, in say XXX up second quarterly like When that second see the you up the see on on year. if I expenses that would go to -- I on some had say, quarter X%, basis, half, X% and going I to on maybe the X.X%, maybe in half. analysis, to I or to

Operator

is Barclays. question Jared next Shaw The with from

Jonathan Rau

on This is Jared. Rau for Jon

little that and And resi Just Is of moving is higher? into in bit growth mortgage how doing loan a that in? in pickup growth demand activity? digging loan then is CRE pickup that activity. seeing What Are some customers? rates just too, are any there with buckets more, commercial

David Zalman

do want you to take Kevin, that?

Kevin Hanigan

lot construction the in be a usually of funding, Yes, take or to loan fundings I'd up. buckets the the mortgage is improving a say current and where can while buckets, C&I to a that's fund count you the getting Whereas on right? going

we of terms activity level, book we've much That our balance relative the the a pretty to didn't kind that on in got said it's of $X but single-family book. I know above It's billion or strategically, about slow but size board, what's ought it's probably billion. number, don't be -- I'd $X.X say down. to the adding last look So cautious more got good I we been across And sheet. to $X.X billion. at night's

that kind did of we slow down. So

stop You it. don't ever

if want be You this I less business on single-family to on or the we terms fully in think turn it to year, of But volume can Eddie will add you thought. spigot can't that not fully I a -- don't know add Tim or or it's related. off. the

H. E. Timanus

attitude our and time, exactly that's that at in don't forecast this and changing. At least You're correct. our see point I

Jonathan Rau

potential terms are be it's of like what metrics you I just sheet like the then or hallmarks, of in considering? that you're of deposits on some like size, interested M&A. on whether to -- levels loan capital balance targets location, guess, back What would And

David Zalman

same I like the them, really we're an people bank? just the I we not us I make for potential with going or at or look a it with Are going going look mean time. look really that e-mail, accretive -- bank I could a we look we -- it's that. deal that us look size first we're really can M&A, us list it the core the a to is don't of at it at you us? people that guess building I don't all, for be to so give a joining be will we of accretive good Is that to But get a the and really bank. people. be guess. at stay at We And

I've Texas. We're always like said again, always here. So that we

the before, to I state go always a in need again, where in in and go places. like Again, most. X We'll always for they that mentioned that state the bank. market just the at look share this own But it other everything least that If we'll because look to something still -- top another probably I be in has else. another we So advertising other we we'll dollars you and state, said to billion buy won't still that places. $X

the and we and to we our that people loans But has is and we the and that's really hire you we can bank some -- you Jon? core as really a you look have at us. than you, you build donors many bank deposits the grow people can go and really been loans, get In to Did with anything can like time always for opinion, else. as -- willing deposits core lose more the What always want. around some can are that you see

Jonathan Rau

I'm sorry.

upside Just The guidance level? one income other $XX quick any is for me. that to we similar recently, $XX fee a XXXX? Or in expect should million range million to one that for

Asylbek Osmonov

might couple couple of and stuff past what don't we that it's grow Yes, the happen quarter of fee, try saw one-off brokerage our in we stay as during there. going the to you you saw I the be quarters, think continue a know. the to to same. years, But They increase trust

on trust So business. like focused our we fees trust are

continue and the our department that. So on trust grow fee hopefully, to we'll

Operator

The is with Bill question Wolfe Research. from next Carcache

Bill Carcache

up loan comments. follow on to wanted growth your I First,

have been as banks bigger tight there's tap able have a this could that not little suggestion bank that you that credit spreads suggested and remain on borrowing? borrowers percentage have we're reliant been the markets accessing to a debt simply of capital capital been growth as really think loan via to those lending largely remain constraint markets growth around soft are your bit And markets. Can versus base been as many open. just has what some debt funding loan give customer color of capital a Some have I funding long

Kevin Hanigan

things. base be other rare our It's I'll funds pretty about take or this to accessing for debt thinking customer even one.

that a access middle of upper of might have there would that, Now call debt book call small market of is credits that you funds. end smaller than group, to segment kind the overall relatively in our larger BBB- do and what business. I some a that's And of portion our

those just of particularly isn't -- have. customers. and of active. from they see really it But how hear it We clients in most our we larger isn't So the wheelhouse they about active are, are

David Zalman

talk be I nontraditional banks I would also of didn't lender Kevin, But to mean to, we that. lending. wrong may with into think we've want that don't ever non-bank and markets I customer capital lost getting a lot I that say, about people a

Kevin Hanigan

a few we lost that wanted to. We've

Bill Carcache

so could essentially is haven't how they up. been just like essentially, And you characterize And borrowing. maybe would you then pent -- much

Super as bounce in the bit that delayed optimism from and pent-up maybe of growth, the You or in talked of sense after borrowing? about get of you later a like Bowl say sort much expectations the perhaps like little you deferred that kind we'll would year,

Kevin Hanigan

don't some on seeing business ever COVID starting think pent sidelines to warehouse own anything, partners advancing of I really was I been receivable than seeing the just and lines own shift it's Super mortgage the And some what people of credit. business. down inventory themselves. clear, expanding single-family builds. builds kind lines related not business out since to the business, and just we're if that's of Bowl they've more where And their up where But of been No, And paying mortgage is be to around on buying we're a within other their think up. or

good and so coming old And it's think back. businesses I just tackling is blocking

David Zalman

tackling kind turn business. better, That's is blocking and looking That of what we're at.

Bill Carcache

And I then can last squeeze one. finally, if one in

debt what's a that about think harder you other that X.XX% terms NIM. NII? Given of perspective. to parts that tell impact moving Could frame And of make to you're in how and pay range expecting from happening revenue down exactly it kind the to X.XX% NIM

Asylbek Osmonov

Yes.

we continue our was from which the to variables X%. repricing the securities I on think earlier describing NII in to in quarters. around And X.XX% to coming think increase see X.X% I I

those And XXX to we're of mature help Our going they're basis be for year to on going maturing this this prepayment, that's tailwind. be going they're in the is to CDs. X are points, repricing us margin, our of that CD repricing. XX% but so today, even including continue fixed is to piece margin, I that talked all to about loans months, a with going We the be repriced lower maturing special which NII standpoint, CD think last

those all So of to help going are specifically. with NII

Operator

I back to This conference our Charlotte closing over concludes the like Rasche would remarks. for any turn session. to question-and-answer

Charlotte Rasche

call to to shareholder ladies appreciate and our for company, building our support work gentlemen, today. participate Thank in of you, your will value. and time We on the taking we continue

Operator

conference The attending has Thank presentation. for concluded. now you today's

You now disconnect. may

Prosperity Bancshares (PB) 29 Jan 252024 Q4 Earnings call transcript