Prosperity Bancshares, Inc.

Good day and welcome to the Prosperity Bank Shares Third 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 a touch-tone phone. 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' third quarter 2025 earnings conference call. This call is being broadcast live 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 Tmanis, Jr., Chairman, Osobek Osmanov, Chief Financial Officer, Eddie Saffody, Vice Chairman, Kevin Hannigan, President and Chief Operating Officer, Randy Hester, Chief Lending Officer, and Mays Davenport, Director of Corporate Strategy. Bob Dowdell, Executive Vice President, is unable to join us today. David Zalman 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 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 the actual results to be materially different than those in the forward-looking statements can be found in Prosperity Bankshare's filings with the Securities and Exchange Commission, including forms 10Q and 10K 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 Solman.

Thank you, Charlotte. I'd like to welcome and thank everyone listening to our third quarter 2025 conference call. In the third quarter, we signed a definitive merger agreement with Southwest Bank Shares, Inc., the parent company of Texas Partners Bank, headquartered in San Antonio, Texas. We are excited about this transaction as it significantly expands our San Antonio metro footprint with four additional branches and increased our deposit market share. and bolstered our presence in the Texas Hill Country and as an experienced C&I lending team. I would also be remiss not to mention how excited we are about our pending merger with American Bank Holding Corporation in Corpus Christi, Texas. The combination will strengthen our presence and operations in South Texas and the surrounding areas and enhance our presence in Central Texas, including San Antonio. Combined with the Texas Partners acquisition, we will have 10 banking centers in the San Antonio area. I am pleased to announce that the board of directors approved increasing the fourth quarter 2025 dividend to $0.60 per share from $0.58 per share that was paid in the prior four quarters. The increase reflects the continued confidence the board has in our company and our markets. The compound annual growth rate in dividends declared from 2003 to 2025 was 10.7%. We continue to share our success with our shareholders through the payment of dividends and opportunistic stock repurchases, while also continuing to grow our capital. Prosperity reported net income of $137.6 million for the quarter ending September 30, 2025. compared with $127.3 million for the same period in 2024. Net income per diluted common share was $1.45 for the quarter ended September 30, 2025, compared with $1.34 for the same period in 2024, an increase of 8.2%. Our earnings were primarily impacted by a higher net interest margin. The net interest margin on a tax equivalent basis was 3.24 for the three months ending September 30, 2025, compared with 2.95% for the same period in 2024. As mentioned in previous calls, our net interest margin should continue to improve over the next 24 to 36 months with interest rates either increasing or decreasing 200 basis points. Prosperity continues to exhibit solid operating metrics with annualized return on tangible equity of 13.43% and return on assets of 1.44%. Our loans, excluding the warehouse purchase program loans, were 20.7 billion at September 30, 2025, compared with 20.9 billion at June 30, 2025. a decrease of $160 million, or 77 basis points. We continue to work through credits acquired in previous mergers, and we are experiencing borrowers using their own cash to pay down balances or not drawing on their lines. It is also an extremely competitive lending environment with aggressive terms and conditions being offered, and in some cases, we've just elected not to participate. Deposits were $27.7 billion at September 30, 2025, an increase of $308 million, or 1.1%, 4.5% annualized from the $27.4 billion at June 30, 2025. We are encouraged at the deposit that the core deposits have grown. Importantly, Prosperity does not have any broker deposits. Our non-performing assets total 119 million or 36 basis points of quarterly average earning assets at September 30, 2025, compared with 110 million or 33 basis points of quarterly average interest earning assets at June 30, 2025. There is a slight increase in NPAs. However, credit remains strong with some isolated incidences. The allowance for credit losses on loans and off-balance sheet credit exposure was $377 million at September 30, 2025, compared to the $119 million in non-performing assets as of September 30, 2025. We remain focused on completing our pending acquisitions of American Bank Holding Company and Southwest Bank Shares, Inc., We also continue to have conversation with other banks considering strategic opportunities. We believe that higher technology and staffing costs, funding costs, loan competition, succession planning concerns, and 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 will increase shareholder value. As of October 2025, Texas boasts one of the world's strongest and most diverse economies, ranking eighth largest globally with a GDP of approximately $2.7 trillion in 2024. The state produces 9.3% of the US GDP and continues to outpace national growth in many metrics. Although the economy is showing some signs of moderation, influenced by factors such as tariffs, and immigration policies, we believe Texas remains the best place for business with a pro-business attitude and no state income tax. This is evidenced by major corporations continuing to move their operations to Texas and Oklahoma. As October 2025, Oklahoma's economy is demonstrating resilience and modest growth, outpacing national averages in key areas like unemployment and population expansion. despite broader U.S. slowdowns from tariffs and policy uncertainties. Thanks again for your support of our company. Let me turn over the discussion to Osselbeck Osmonov, our Chief Financial Officer, to discuss the specific financial results we achieved. Osselbeck?