Prosperity Bancshares, Inc.

Good morning, and welcome to the Prosperity Bank Shares second quarter 2025 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 telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Charlotte Rasche. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and welcome to Prosperity Bank Shares' second quarter 2025 earnings conference call. This call is being broadcast live over on our website and will be available for replay for the next few weeks. I'm Charlotte Rasche, Executive Vice President and General Counsel of Prosperity Bank Shares, and here with me today is David Zalman, Senior Chairman and Chief Executive Officer, H.E. Tim Tomanis, Jr., Chairman, Alsobek Osmanov, Chief Financial Officer, Eddie Safedy, Vice Chairman, Kevin Hannigan, President and Chief Operating Officer, Randy Hester, Chief Lending Officer, Maze Davenport, Director of Corporate Strategy, and Bob Dowdell, Executive Vice President. David Zolman will lead off with a review of the highlights for the recent quarter. He will be followed by Osobek Osmanov, who will review some of our recent financial statistics, and Tim Tamanis, who will discuss our lending activities, including asset quality. Finally, we will open the call for questions. Before we begin, let me make the usual disclaimers. Certain of the matters discussed in this presentation may constitute forward-looking statements for the 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 our filings with the Securities and Exchange Commission, including forms 10Q and 10K and other reports and statements we have filed. 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 second quarter 2025 conference call. I'm proud to announce that we entered into a definitive agreement with the American Bank Holding Company and Corpus Christi to merge. We have followed American Bank closely for more than two decades and have tremendous respect for the bank and for the people that have contributed to its success. Our banks have a complementary footprint and we are familiar with and remain committed to the communities that American Bank serves, including with both financial products and community support. This combination will strengthen our presence and operations in South Texas and surrounding areas and enhance our presence in Central Texas, including in San Antonio, a highly desirable high growth area. With regard to earnings, Our net income was 135 million for the three months ending June 30, 2025, compared with 111 million for the same period in 2024, an increase of 23 million, or 21%. The net income per diluted common share was $1.42 for the three months ending June 30, 2025, compared with $1.17 for the same period in 2024, an increase of 21%. Net income for three months ending June 30, 2024 included the impact of a merger-related credit loss provision and merger-related expenses from the Lone Star transaction, the FDIC Special Assessment, a net gain on the Visa Stock Exchange, and the Sullivan Investment Securities. Excluding these one-time items for the three months ending in June 30, 2024, the net income was $116 million, and earnings per share was $1.22. When comparing these results with the quarter ended June 30, 2025, net income increased 18 million to 135 million, or 16%, and our earnings per share increased 20 cents or 16.4%. Our annualized return on average assets and average tangible common equity for the quarter ending June 30, 2025 compared with the same period in 2024 were a 1.41% return on average assets compared with 1.17% and 13.44% return on average tangible common equity compared to 12.34%. The net interest margin on a tax equivalent basis was 3.18% for the three months ending June 30, 2025, compared with 2.94% for the same period in 2024, and with 3.14% for the three months ending March 30, 2025. As mentioned on prior calls, these are the results we expected and we anticipate these tailwinds should continue to be positive for the near future. Loans were $22.1 billion at June 30, 2025, a decrease of $123 million compared with $22.3 billion at June 30, 2024. Our linked quarter loans increased $219 million, or 4% annualized from $21.9 billion at March 31st, 2025. Overall, the bank grew loans by $220 million in the second quarter of 2025, or 4% on an annualized basis, with most of the growth attributable to the seasonal strength of the mortgage warehouse business. We remain positive on our ability to grow loans in the second half of the year. We saw consistently higher monthly new production numbers in the second quarter, and core commercial loans, excluding mortgage warehouse loans, were up 73 million, or 2.4% annualized. We have been focused on using our liquidity to fund commercial loan growth, and we are starting to see progress. Deposits were 27.4 billion at June 30, 2025, a decrease of $459 million or 1.6% when compared with $27.9 billion at June 30, 2024. The linked quarter deposits decreased $553 million or 2% from $28 billion at March 31, 2025, primarily due to decreases in public fund deposits higher-cost deposits acquired in the recent acquisitions, and business deposits, and our disciplined deposit pricing. Prosperity generally experiences seasonality with its public fund deposits as public fund customers use the top tax dollars that they receive in December and January throughout the year, resulting in lower deposit balances in the second and third quarters of the year. Our bankers' focus is on building core deposits Our non-interest bearing deposits represented 34.3% of our total deposits at June 30, 2025. With regard to asset quality, our non-performing assets totaled 110 million or 33 basis points of quarterly average interest earning assets at June 30, 2025, compared with 89 million or 25 basis points of quarterly average interest earning assets at June 30, 2024, and 81 million, or 24 basis points, of quarterly average interest-earning assets at March 31, 2025, with a significant portion of the balance for each period attributable to the acquired loans. At June 30, 2025, the allowance for credit losses and loans was $346 million, and the allowance for credit losses on loans and off balance sheet credit exposure was $383 million. The allowance for credit losses on loans was 3.47 times the amount of non-performing assets. We were very excited about our pending merger with American Bank Holding Company and American Banking Corpus Christi. We also continue to have conversations with other bankers considering strategic opportunities. We believe that higher technology and staffing costs, loan competition, succession planning concerns, and increased regulatory burden all point to continued consolidation. We remain ready to move forward in the event a transaction materializes and will be beneficial to our company's long-term future and increased shareholder value. Texas was rated as the second best state for business in 2025 by CNBC. However, we believe it should have been number one. That's just a little humor, guys. Texas continues to shine as more people and companies move to the state because of the business-friendly political structure and no state income tax. Prosperity continues to focus on building core customer relationships, maintaining sound asset quality, and operating the bank in an efficient manner while investing in ever-changing technology and product distribution channels. We intend to continue to grow the company both organically and through mergers and acquisitions. I want to thank everyone involved in our company for helping to make it the success it has become. Thanks again for your support of our company. Let me turn over our discussion to Osobek Osmanov, our Chief Financial Officer, to discuss some of the specific financial results we achieved. Osobek.