Prosperity Bancshares Q3 2026 Earnings Strengthen

Prosperity Bancshares, Inc. (PB) reported stronger third-quarter 2026 earnings on Oct. 28, reflecting the full impact of its July 1 Stellar Bancorp acquisition. Management highlighted expanded net interest margin, broad loan and deposit growth, and a higher quarterly dividend.

Quarter Results and Balance Sheet

The company said in a press release on Oct. 28, 2026, that net income for the quarter ended Sept. 30 was $141.5 million, or $1.18 per diluted share. Adjusted net income, excluding merger-related and other specified items, was $200.8 million, or $1.67 per diluted share.

The filing showed the tax-equivalent net interest margin expanded to 3.73%, while net interest income before provision rose to $443.0 million, up $169.5 million year over year. Total assets reached $54.1 billion at quarter-end, compared with $38.3 billion a year earlier.

Loans increased $7.03 billion, or 28.1%, and deposits grew $8.63 billion, or 26.5%, during the quarter. Noninterest-bearing deposits accounted for $13.8 billion, or 33.6% of total deposits.

Management reported an allowance for credit losses on loans and off-balance-sheet exposure of $629.6 million, with an allowance-for-loans ratio of 1.91% excluding Warehouse Purchase Program loans. Nonperforming assets represented 0.41% of third-quarter average interest-earning assets. Profitability metrics included an adjusted return on average assets near 1.50%, adjusted return on average tangible common equity of 15.81%, and an adjusted efficiency ratio around 48%.

Third-quarter noninterest expense totaled $308.6 million, including $69.7 million in merger-related costs. Excluding those expenses, noninterest expense was approximately $238.9 million.

Integration Outlook and Shareholder Returns

On the Oct. 28 earnings call, management projected an additional $65 million to $70 million in pretax cost savings compared with third-quarter expense levels. It expects fourth-quarter noninterest expense of about $235 million to $238 million, excluding remaining one-time merger costs, and targets a clean quarterly operating-expense run rate of roughly $220 million to $225 million once integrations are complete. The operational conversion of Texas Partners Bank is scheduled for November 2026, with Stellar Bank’s conversion planned for March 2027. Management noted, "The third quarter represents the first full quarter that includes Stellar Bank."

The board approved a fourth-quarter 2026 cash dividend of $0.64 per share, a 6.67% increase from the prior quarter. This marks the company’s 23rd consecutive annual dividend increase, with a compound annual growth rate of 10.4%.

The filing detailed the Stellar transaction: Prosperity issued 19,371,499 common shares and paid about $578.7 million in cash for all outstanding Stellar common stock. As of June 30, 2026, Stellar reported consolidated assets of $10.4 billion, loans of $7.5 billion, and deposits of $8.7 billion, operating 52 banking offices. Goodwill related to the transaction was $898.2 million at Sept. 30, with fair-value adjustments pending.

If realized, the projected savings and expense targets would drive the adjusted profitability metrics and operating leverage improvements underlying the company’s capital-return actions.