It’s all about acquisitions.
There is small organic growth for this bank. Between 2-4%. We can se revenue jumps only in periods of acquired assets.
source: https://www.gurufocus.com/stock/PB/financials
About acquisitions from Q2 2022 earning call.
The first question is, there will be M&A. We will — some of that money will be used in that. It just going to be for the right thing. And then secondly, I would say that you saw us pickup almost 900, and I don’t have it in front of me. 900 and something million shares. So I thought that it was really showing that we felt that our stock, we really undervalued. And I think our average price was 67 or something like that
About bond optionality.
That’s why you see the improvement on the yield. But as you look at our bond portfolio in big picture, as I mentioned earlier that we have about $2.2 billion of annualized cash flow from the bond portfolio. So that sets up pretty well for us to reprice those that what we just discussed, 3.6% or 3.7%. So its going to be very beneficial for us from that standpoint.
Prosperity Bancshares Free Cash Flow 2010-2022 | PB
source: https://www.macrotrends.net/stocks/charts/PB/prosperity-bancshares/free-cash-flow
Acqusition came – they deliver.
FirstCapital Bank operates sixteen (16) banking offices in six different markets in West, North
and Central Texas areas, including its main office in Midland, and banking offices in Midland,
Lubbock, Amarillo, Wichita Falls, Burkburnett, Byers, Henrietta, Dallas, Horseshoe Bay, Marble
Falls and Fredericksburg, Texas. As of June 30, 2022, First Bancshares, on a consolidated basis,
reported total assets of $2.121 billion, total loans of $1.589 billion and total deposits of $1.781
billion.
Under the terms of the definitive agreement, Prosperity will issue 3,583,370 shares of Prosperity
common stock plus $93.4 million in cash for all outstanding shares of First Bancshares capital
stock, subject to certain conditions and potential adjustments. Based on Prosperity’s closing
price of $69.27 on October 7, 2022, the total consideration was valued at approximately $341.6
million.
Lone Star Bank operates five (5) banking offices in the West Texas area, including its main office in Lubbock, and one (1) banking center in each of Brownfield, Midland, Odessa and Big Spring, Texas. As of June 30, 2022, Lone Star, on a consolidated basis, reported total assets of $1.305 billion, total loans of $933.5 million and total deposits of $1.174 billion
Under the terms of the definitive agreement, Prosperity will issue 2,376,182 shares of Prosperity common stock plus $64.1 million in cash for all outstanding shares of Lone Star capital stock, subject to certain conditions and potential adjustments. Based on Prosperity’s closing price of $69.27 on October 7, 2022, the total consideration was valued at approximately $228.7 million
Nothing big here + $2,4 billion assets, around 6,5% improvment, but good direction. $157,5 millions spent in cash.
source: https://www.macrotrends.net/stocks/charts/PB/prosperity-bancshares/cash-on-hand
The Houston-based company’s announced acquisitions of Lone Star State Bancshares Inc. and First Bancshares of Texas Inc. mark its first whole-bank transactions since the company acquired LegacyTexas Financial Group Inc. three years ago, which had $10.46 billion in total assets when the deal was announced in June 2019. But even when combined, the deals are relatively small for Prosperity and leave room for more M&A if future targets arise, according to a company executive and equity analysts.
“We do have an appetite for further M&A. Definitely.”
Not much dry powder left. Conclusion – PB will be slow grower. Chairman bought some stock recently. It’s a good sign and good company, but nothing outstanding will happen here.