Prosperity Bancshares, Inc.

Good day and welcome to the Prosperity Bancshares, Inc., third quarter 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded I'd now like to turn the conference over to Charlotte Rasche. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and welcome to Prosperity Bancshares' third quarter 2020 earnings conference call. This call is being broadcast live over the Internet at ProsperityBankUSA.com and will be available for replay at the same location for the next few weeks. I'm Charlotte Rasche. Executive Vice President and General Counsel of Prosperity Bancshares. And here with me today is David Zalman, Senior Chairman and Chief Executive Officer, H.E Timanus, Jr., Chairman, Asylbek Osmonov, Chief Financial Officer, Eddie Safady, Vice Chairman, Kevin Hanigan, President and Chief Operating Officer, Randy Hester, Chief Lending Officer, Merle Carnes, Chief Credit Officer, Mays Davenport, Director of Corporate Strategy, and Bob Dowdell, Executive Vice President. David Zalman will lead off with a review of the highlights for the recent quarter. He will be followed by Asylbek Osmonov, who will review some of our recent financial statistics, and Tim Timanus, who will discuss our lending activities. including asset quality. Finally, we will open the call for questions. During the call, interested parties may participate live by following the instructions that will be provided by our call moderator grant. Before we begin, let me make the usual disclaimers. Certain of the matters discussed in this presentation may constitute forward-looking statements for purposes of the federal securities laws. and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of prosperity bank shares to be materially different from future results or performance expressed or implied by such forward-looking statements. Additional information concerning factors that could cause actual results to be materially different than those in the forward-looking statements can be found in Prosperity Bancshares filings with the Securities and Exchange Commission, including Forms 10-Q and 10-K and other reports and statements we have filed with the SEC. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. Now let me turn the call over to David Zalman.

Thank you, Charlotte. I would like to welcome and thank everyone listening to our third quarter I'm excited to announce that because of the confidence in our company, our strong capital position, and our continued success in increasing earnings, as well as showing annualized returns of 19% on average tangible equity and 1.58% on average assets, our board of directors voted to increase the fourth quarter dividend to 49 cents, a 6.5% increase. The bank continues to do well, and we want to share that success with our shareholders. As stock prices experienced significant declines late in the third quarter, Prosperity Bank repurchased 98,000 shares of its common stock at a weighted price of $49.99. Our net income was $130.1 million in the third quarter 2020 compared with $81.8 million for the same period in 2019, an increase of $48.3 million or 59%. Our diluted earnings per share was $1.40 for the third quarter 2020 compared to $1.19 for the same period in 2019, an increase of 17.6%. Net income was $391 million for the nine months ended September 30, 2020, compared with $246 million for the same period in 2019, and increase of $145 million, or 59%. The earnings per diluted common share was $4.20 for the nine months ended September 30, 2020, compared with $3.55 for the same period in 2019, an increase of 18.3%. Loans at September 30, 2020 were $20,796,000,000, an increase of $10,122,000,000 or 94.8% compared with $10,673,000,000 at September 30, 2019. Our linked quarter loans decreased $229,000,000 are 1.1% from $21,025,000,000 at June 30, 2020. At September 30, 2020, the company had $1,394,000,000 of Paycheck Protection Program, also known as PPP loans. Obviously, the increase year over year and Total Loans is attributable to the legacy merger. Our deposits at September 30, 2020 were $26,459,000,000, an increase of $9,529,000,000, or 56%, compared with $16,930,000,000 at September 30, 2019. Our linked quarter deposits increased $306 million or 1.2%, 4.7% annualized from the $26,153,000,000 at June 30, 2020. We are starting to see people spending more money and generating more account activity than earlier this year. Our asset quality remains sound. with non-performing assets at 69.5 million or 24 basis points of average interest earning assets. Our total non-performing assets decreased 8.4 million compared with the second quarter of 2020. Our net charge-offs were 10.6 million for the three months ended September 30, 2020 and were primarily due to 8.6 million in resolved PCD loans. These PCD loans had specific reserves of $15.7 million of which 8.6 million was allocated to the charge-offs and 7.1 million was moved to the general reserve. In addition, 6.1 million of specific reserves was released into the General Reserve for resolved PCV loans with no charge-off. This represents a total of $13.2 million moved to the General Reserve this quarter. Loans on forbearance decreased from $3,625,000 for 17.2% of total loans as of June 30, 2020 to $231 million or 1.1% of total loans as of October 26, 2020. Our allowance for credit losses as a percent of total loans is higher than any time in my banking career and equates to a coverage ratio of 5.6 times our non-performing loans. While there have been some merger announcements recently in conversations with other bankers regarding potential acquisition opportunities, M&A activity overall is reduced. We believe that the M&A activity will start to pick up as economic activity continues to increase. We remain to enter into conversations and negotiations when it is right for all parties and is appropriately accretive to our existing shareholders. We are starting to see green sheets in the economy, with consumers and businesses feeling more confident. The unemployment numbers are better than predicted, and we believe third quarter GDP will also be higher than predicted. Thanks again for your support of our company. Let me turn over our discussion to Asylbek, our Chief Financial Officer, to discuss some of the specific financial results we achieved. Asylbek?