Prosperity Bancshares Inc. 's PB second-quarter 2018 earnings of $1.17 per share surpassed the Zacks Consensus Estimate of $1.15. Moreover, the figure improved 18.2% on a year-over-year basis.
Results were primarily driven by an improvement in revenues. Also, increasing loan balances supported results to some extent. However, an increase in expenses and higher provisions were the undermining factors. It is probably because of these negatives that shares of the company lost nearly 1% following the release.
Net income available to common shareholders for the reported quarter was $81.6 million, up from $68.6 million registered in the prior-year quarter.
Revenues Improve, Expenses Rise
Net revenues of $190.2 million in the reported quarter surpassed the Zacks Consensus Estimate of $186.5 million. Also, the figure increased 5.6% from the prior-year quarter.
Net interest income was $161.8 million, increasing nearly 6.3% year over year. The rise was primarily due to an increase in loan and investment yields and higher loan balances, partially offset by an increase in deposit rates.
Also, net interest margin, on a tax-equivalent basis, increased 14 basis points (bps) year over year to 3.28%.
Non-interest income increased 2.1% year over year to $28.4 million. This rise was driven by an increase in almost all components except bank owned life insurance income, service charges on deposit accounts and trust income.
Non-interest expenses increased 9.4% year over year to $83.6 million. The rise was due to an increase in almost all cost components except core deposit intangible amortization costs, communication expenses and other real estate costs.
Solid Balance Sheet
As of Jun 30, 2018, total loans were $10.1 billion, up 1.3% from the prior-quarter end. Total deposits decreased 2% from the previous quarter end to nearly $17 billion.
Credit Quality: A Mixed Bag
As of Jun 30, 2018, total non-performing assets were $31.6 million, decreasing 33.7% year over year. Also, the ratio of allowance for credit losses to total loans was down 1 bps year over year to 0.84%. Further, net charge-offs totaled $2.6 million, down from the year-ago quarter figure of $3.1 million. However, provision for credit losses increased 45.5% from the prior-year quarter to $4 million.
Capital & Profitability Ratios Improve
As of Jun 30, 2018, Tier-1 risk-based capital ratio was 15.65%, up from 14.80% as of Jun 30, 2017. Moreover, total risk-based capital ratio was 16.32%, up from 15.49% at the end of the year-ago quarter.
Also, common equity tier 1 capital ratio was 15.65%, up from 14.80% in the prior-year quarter.
The annualized return on average assets was 1.44% at the end of the reported quarter, up from 1.22% in the prior-year quarter. Similarly, annualized return on common equity was 8.33% compared with 7.36% in the prior-year quarter.
Prosperity Bancshares remains well positioned for organic growth, supported by a strong balance sheet position. Also, steady improvement in asset quality should support its profitability. However, continued margin pressure (despite interest rate hikes) remains a major concern. Also, exposure toward risky loans might hurt financials.
Prosperity Bancshares, Inc. Price, Consensus and EPS Surprise
Prosperity Bancshares, Inc. Price, Consensus and EPS Surprise | Prosperity Bancshares, Inc. Quote
Prosperity Bancshares currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Among other banks, Commerce Bancshares' CBSH second-quarter 2018 earnings per share of $1.01 surpassed the Zacks Consensus Estimate of 89 cents. Results primarily benefited from improvement in net interest income as well as non-interest income. Also, a decrease in provisions was a tailwind. However, elevated operating expenses acted as a headwind.
First Republic Bank's FRC second-quarter 2018 earnings per share came in at $1.20, outpacing the Zacks Consensus Estimate of $1.15. Revenues improved from the prior-year quarter. In addition, a considerable rise in loans and deposit balances was recorded. However, higher expenses and non-performing assets were undermining factors.
Zions Bancorporation's ZION second-quarter 2018 earnings of 89 cents per share lagged the Zacks Consensus Estimate of 92 cents. Results, to a great extent, benefited from improvement in both net interest income and non-interest income. Also, the company had a strong balance sheet in the quarter. However, higher adjusted non-interest expenses and a rise in provisions were headwinds.
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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 reportCommerce Bancshares, Inc. (CBSH): Free Stock Analysis ReportProsperity Bancshares, Inc. (PB): Free Stock Analysis ReportZions Bancorporation (ZION): Free Stock Analysis ReportFirst Republic Bank (FRC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research