Prosperity Bancshares (PB) AI Stock Analysis

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Prosperity Bancshares

(NYSE:PB)

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Rating:74Outperform

Price Target:$78.00▲(5.99% Upside)

Action:reiterated

Date:10/28/26

PB scores well primarily on financial performance (strong margins and strong recent free cash flow/earnings quality) and a constructive earnings outlook driven by net interest margin expansion and planned cost savings. Valuation is supportive with a modest P/E and solid dividend yield. The main constraint on the score is mixed technical positioning (below longer-term moving averages) alongside earnings-call risks tied to integration costs, rising funding costs, and higher nonperforming assets.

Positive Factors

Strong cash generationRobust operating and free cash flow indicate that reported earnings are converting into internally generated funds. This supports capital retention, dividend capacity, technology investment, and future growth while reducing reliance on external financing over the next several quarters.

Negative Factors

Rising nonperforming assetsThe increase in nonperforming assets signals deterioration in credit quality, with acquired institutions contributing to the rise. Management expects balances to remain above historical lows, which could require higher provisions and constrain earnings quality over the coming quarters.

Prosperity Bancshares (PB) vs. SPDR S&P 500 ETF (SPY)

Market Cap: $8.79B
Dividend Yield: 3.28%
Average Volume (3M): 975.66K
Price to Earnings (P/E): 13.3
Beta (1Y): 0.58
Revenue Growth: 19.33%
EPS Growth: -1.65%
Country: US
Employees: 5,103
Sector: Financial
Sector Strength: 68
Industry: Banks - Regional

Prosperity Bancshares Business Overview & Revenue Model

Company Description

Prosperity Bancshares, Inc. serves as the holding company for Prosperity Bank, providing a comprehensive suite of financial solutions to both individual customers and corporate clients. The bank gathers various types of deposits, such as checking, sa...

How the Company Makes Money

Prosperity Bancshares primarily makes money through its banking subsidiary by earning interest income and collecting fees for banking services. The largest driver is net interest income: the bank takes in deposits and other funding (for which it pays...

Prosperity Bancshares Earnings Call Summary

Earnings Call Date:Oct 27, 2026(Q3-2026)|% Change Since:5.67%|Next Earnings Date:Jan 26, 2027

Earnings Call SentimentPositive

The call was strongly constructive. Highlights included substantial balance sheet and earnings growth, a 49-basis-point year-over-year net interest margin increase, improving loan production, strong core deposit performance, expected cost savings, substantial credit coverage, and prospects for double-digit EPS growth. The main challenges were merger-related expenses, higher nonperforming assets and charge-offs, higher funding costs, limited expected loan growth in 2027, and declining accretion. The positive operating and earnings outlook significantly outweighed the stated challenges.

Positive Updates

Dividend Increase and Shareholder Returns

The Board approved increasing the fourth-quarter 2026 dividend to $0.64 per share from $0.60, a 6.7% increase. Dividends declared had a 10.4% compound annual growth rate from 2003 to 2026, and the company continues to pursue opportunistic stock repurchases while growing capital.

Negative Updates

Higher Reported Noninterest Expense

Noninterest expense was $308.6 million, compared with $176.2 million in the second quarter and $138.6 million in the year-ago quarter. The third quarter included $69.7 million of merger-related expenses, and management expects fourth-quarter noninterest expense of $235 million to $238 million excluding remaining one-time merger-related expenses.

Company Guidance

For the fourth quarter of 2 thousand 26, fair value loan income is expected to be in the range of $7 million to $10 million, noninterest expense is expected to be in the range of $235 million to $238 million, excluding remaining onetime merger related expenses, CD accretion is expected to reduce a little bit to $1.3 million, and the exit rate on the fourth quarter margin is expected to be 3.73% to 3.75% as is; for next year, the average margin guidance is 3.80% to 3.85%, core deposits are expected to grow 2% to 4%, loan balances are projected flat to slightly increasing, additional cost savings are estimated at $65 million to $70 million pretax, quarterly clean expense run rate is expected to be about $220 million to $225 million per quarter, projected earnings are $850 to $880 million, and EPS growth is expected to be low to mid teen double digit EPS growth for 2027, with another $70 million worth of pretax cost saves; in 2028, low mid 3% to 5% loan growth kind of numbers and another year of double digit EPS growth are expected, while warehouse lending is expected to average $850 million to maybe on the high side, $900 million for the quarter.

Prosperity Bancshares Financial Statement Overview

Summary

Strong profitability (TTM net margin ~31.6%, EBIT margin ~40.5%) and high-quality cash generation (TTM FCF ~$780M; FCF/net income ~0.97) support a solid score. Offsetting factors include uneven revenue growth over time, margin normalization versus prior peaks, and a recent uptick in total debt (TTM vs. 2025) that increases sensitivity to funding/credit conditions.

Income Statement

78Positive

Balance Sheet

74Positive

Cash Flow

82Very Positive

Financial statement breakdown
Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.78B	1.74B	1.74B	1.56B	1.20B	1.15B
Gross Profit	1.29B	1.25B	1.14B	1.05B	1.11B	1.10B
EBITDA	760.05M	727.70M	647.39M	565.42M	694.47M	689.30M
Net Income	562.31M	542.84M	479.39M	419.32M	524.52M	519.30M
Balance Sheet
Total Assets	43.89B	38.46B	39.57B	38.55B	37.69B	37.83B
Cash, Cash Equivalents and Short-Term Investments	2.03B	12.28B	12.95B	896.74M	880.33M	3.06B
Total Debt	2.67B	2.15B	3.42B	4.03B	4.13B	448.10M
Total Liabilities	35.57B	30.85B	32.13B	31.47B	30.99B	31.41B
Stockholders Equity	8.29B	7.62B	7.44B	7.08B	6.70B	6.43B
Cash Flow
Free Cash Flow	602.05M	516.98M	451.55M	612.20M	464.11M	675.71M
Operating Cash Flow	620.71M	549.51M	472.69M	646.36M	506.53M	694.73M
Investing Cash Flow	-46.53M	773.91M	1.98B	1.09B	-1.96B	-2.72B
Financing Cash Flow	-196.11M	-1.55B	-940.22M	-1.71B	-666.75M	3.23B

Prosperity Bancshares Technical Analysis

Technical Analysis SentimentPositive

Last Price73.59

Price Trends

50DMA69.39Positive

100DMA70.92Positive

200DMA69.44Positive

Market Momentum

MACD1.14Negative

RSI67.78Neutral

STOCH85.34Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PB, the sentiment is Positive. The current price of 73.59 is above the 20-day moving average (MA) of 68.92, above the 50-day MA of 69.39, and above the 200-day MA of 69.44, indicating a bullish trend. The MACD of 1.14 indicates Negative momentum. The RSI at 67.78 is Neutral, neither overbought nor oversold. The STOCH value of 85.34 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PB.

Prosperity Bancshares Risk Analysis

Prosperity Bancshares disclosed 46 risk factors in its most recent earnings report. Prosperity Bancshares reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added

0 New Risks

Prosperity Bancshares Peers Comparison

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

PB against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FFIN	78Outperform	$4.51B	15.29	15.14%	2.64%	8.03%	19.76%
HOMB	78Outperform	$6.09B	12.19	10.95%	2.86%	2.37%	5.57%
TCBI	78Outperform	$4.53B	11.47	10.11%	0.39%	3.07%	27.52%
PB	74Outperform	$8.88B	13.29	6.69%	3.28%	19.33%	-1.65%
IBOC	72Outperform	$4.28B	9.96	12.67%	2.16%	2.17%	0.36%
Sector *	68Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
CFR	66Neutral	$9.97B	14.76	15.58%	2.55%	1.81%	10.44%

* Financial Sector Average

Performance Comparison

PB and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
PB	Prosperity Bancshares	73.59	9.63	15.05%
CFR	Cullen/frost Bankers	159.69	39.49	32.85%
FFIN	First Financial Bankshares	31.42	1.45	4.85%
HOMB	Home Bancshares	30.45	4.16	15.84%
IBOC	International Bancshares	69.02	3.05	4.63%
TCBI	Texas Capital Bancshares	106.03	21.72	25.77%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Oct 28, 2026

Prosperity Bancshares AI Stock Analysis