Prosperity Bancshares Inc. 's PB fourth-quarter 2018 earnings of $1.19 per share surpassed the Zacks Consensus Estimate of $1.18. The figure improved 22.7% on a year-over-year basis.
Results were primarily driven by improvement in net interest income, lower costs and reduced provisions. Moreover, loan and deposit balances showed improvement. However, decrease in non-interest income weighed on the results.
Net income available to common shareholders for the reported quarter was $83.3 million, up from $67.1 million registered in the prior-year quarter.
Earnings per share for 2018 came in at $4.61per share, which outpaced the Zacks Consensus Estimate of $4.59. Further, the figure compares favorably with earnings of $3.92 per share reported in 2017. Net income available for common shareholders for 2018 amounted to $321.8 million, up from $272.2 million witnessed in the previous year.
Revenues Improve, Expenses Fall
Net revenues for the reported quarter came in at $186.3 million, up nearly 1% from the prior-year quarter. However, the figure lagged the Zacks Consensus Estimate of $188.3 million.
Net revenues for 2018 came in at $745.6 million, up 1.6% from the prior-year quarter. However, the figure missed the Zacks Consensus Estimate of $747.7 million.
Net interest income for the quarter was $157.2 million, increasing nearly 1% year over year.
Net interest margin, on a tax-equivalent basis, decreased 5 basis points (bps) year over year to 3.15%.
Non-interest income decreased marginally year over year to $29.1 million. This fall was owing to a decrease in almost all components except for nonsufficient funds (NSF) fees, credit card, debit card and ATM card income and other non-interest income.
Non-interest expenses decreased marginally year over year to $80.8 million. The fall can be attributed to a decrease in almost all cost components except for salaries and benefits, regulatory assessments and FDIC insurance and other non-interest expense.
Solid Balance Sheet
As of Dec 31, 2018, total loans were $10.4 billion, up nearly 1% from the prior-quarter end. Total deposits increased 3.1% from the previous quarter end to $17.3 billion.
Credit Quality Improves
As of Dec 31, 2018, total non-performing assets were $19 million, down 49.4% year over year. Moreover, the ratio of allowance for credit losses to total loans was down 1 bps year over year to 0.83%.
Further, net charge-offs totaled $0.56 million, down from the year-ago quarter figure of $4.8 million. Provision for credit losses decreased 50% from the prior-year quarter to $1 million.
Capital & Profitability Ratios Improve
As of Dec 31, 2018, Tier-1 risk-based capital ratio was 16.32%, up from 15.08% as of Dec 31, 2017. Moreover, total risk-based capital ratio was 16.99%, up from 15.74% at the end of the year-ago quarter.
Further, common equity tier 1 capital ratio was 16.32%, up from 15.08% in the prior-year quarter.
The annualized return on average assets was 1.47% at the end of the reported quarter, up from 1.20% in the prior-year quarter. Similarly, annualized return on common equity was 8.25% compared with 7.04% in the prior-year quarter.
The company's solid loan and deposit balances and steady improvement in credit quality is likely to support profitability. However, significant exposure to real estate loan portfolio remains a major near-term concern.
Prosperity Bancshares, Inc. Price, Consensus and EPS Surprise
Prosperity Bancshares currently carries a Zacks Rank #4 (Sell).
Performance of Other Banks
Washington Federal's WAFD first-quarter fiscal 2019 (ended Dec 31) earnings came in at 65 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. The figure also reflected year-over-year growth of 10.2%.
Synovus Financial's SNV fourth-quarter 2018 earnings of 92 cents per share lagged the Zacks Consensus Estimate of 94 cents. However, the reported figure came in 27.8% higher than the prior-year tally.
Hancock Whitney Corporation's HWC fourth-quarter 2018 operating earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.13. However, the reported figure came in 30.2% higher than the year-ago tally.
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