Prosperity Bancshares, Inc.

Good morning, and welcome to the Prosperity Bank Shares fourth 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, Executive Vice President and General Counsel. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and welcome to Prosperity Bank Shares' fourth 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, General Counsel of Prosperity Bank Shares, and here with me today is David Zalman, Senior Chairman and Chief Executive Officer, H.E. Tim Tamanis, Jr., Chairman, Osobek Osmanov, Chief Financial Officer, Eddie Saffody, Vice Chairman, Kevin Hannigan, President and Chief Operating Officer, Mays Davenport, Director of Corporate Strategy, and Bob Dowdell, Executive Vice President. Randy Hester, our Chief Lending Officer, is unable to be here today. Also joining us this morning are Bob Franklin, Chief Executive Officer of Stellar Bancorp, Ray Vitulli, President of Stellar Bancorp, and Paul Agee, Chief Financial Officer of Stellar Bancorp. 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 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 Zalman.

Thank you, Charlotte. We had a stellar quarter. I would like to welcome and thank everyone for listening to our fourth quarter 2025 conference call. For the year ended December 31st, 2025, we had net income of $543 million compared with $480 million for the same period in 2024, an increase of $63 million or 13.2%. Our net income per diluted common share was $5.72 for the year ending December 31, 2025, compared with $5.05 for the same period in 2024, an increase of 13.3%. The net income was $139.9 million for three months ending December 31, 2025, compared with $130 million for the same period in 2024, an increase of 9.8 million or 7.6%. Our annualized return on average assets and average tangible common equity for the three months ending December 31st, 2025 were 1.49% on assets and 13.61% on tangible equity. Prosperity's efficiency ratio, excluding the net gains and losses on the sale, write-down, or write-up of assets and securities, was 43.6% for the three months ending December 31, 2025. As mentioned, since 2024, we expected our net interest margin to increase, and it has. The net interest margin on a tax-equivalent basis was 3.3%. for the three months ending December 31st, 2025, compared with 3.05% for the same period in 2024, and compared with 3.24% for the three months ending September 30, 2025. During the year ending December 31st, 2025, under its 2025 stock repurchase program, Prosperity Bank shares repurchased approximately $157 million are 2.34 million shares of its common stock at an average weighted price of $67.04. Our loans excluding warehouse purchase program loans were 20.5 billion at December 31, 2025 compared with 20.7 billion at September 30, 2025, a decrease of 249 million. We continue to see good demand for loans. However, we are not willing to compete with the terms and conditions being offered sometimes by out-of-state competitors on some of the larger deals. Our overall loans have been impacted by efforts to outsource some less desired loans acquired in previous transactions also. Deposits, as mentioned in our last quarter, we expected deposits to increase due to seasonality, but the increase exceeded our expectations. Deposits were $28.4 billion. at December 31st, 2025, an increase of $700 million from 27.7 billion at September 30, 2025. Our non-performing assets totaled 150 million or 46 basis points of quarterly average interest earning assets at December 31st, 2025, compared with 119 million or 36 basis points of quarterly average interest earning assets at September 30, 2025. The increase in non-performing assets during the year was primarily compromised of two loans made in our middle market lending group and one well-collateralized real estate loan acquired in one of our recent acquisitions, all of which Kevin will be able to answer and address in the Q&A. The allowance for credit losses on loans was $333 million, and the allowance for credit losses on loans and off-balance sheet exposure was $371 million as of December 31, 2025. Our allowance for credit losses on loans still stands strong at 2.21 times of our non-performing assets. I'm excited to announce that on January 1, 2026, Prosperity completed the merger with our new partner, American, and its wholly owned subsidiary, American Bank, headquartered in Corpus Christi, Texas. In connection with that transaction, we are pleased that Pat Wallace, the daughter of one of the founding families of the bank, and Steve Raphael, the CEO of American Bank, have joined our bank board of directors. We have also received all the regulatory and shareholder approvals for the merger with Southwest Bank Shares, the parent company of Texas Partners Bank, and expect the transaction will be effective on February 1, 2026. In connection with the Southwest deal, we are pleased that Gene Dawson, Interim Chairman of Southwest Bank Shares and Chairman of the nationally recognized Pate Dawson Engineering Firm, will be joining our Bank Board of Directors. To further add to our San Antonio presence, Charlie Amato has joined our Bank Board of Directors. In addition to his successful business, Charlie previously served as a board member of the Federal Reserve Board of Dallas, San Antonio branch, and regent of the Texas State University system, and as an investor in the San Antonio Spurs. There's much more, but it would be too much more to go over with all he's into. When prosperity went public in 1998, we were a small community bank in rural Texas with less than $500 million in assets. For 27 years, we have remained disciplined and focused on the same strategy, delivering shareholder value by prioritizing low-cost core deposits, operational efficiency, sound credit quality, and growth via opportunistic M&A. This morning's announcement that Prosperity is acquiring Stellar Bancorp is consistent with that strategy. and this transaction marks an important milestone for the company. Our combined Houston bank deposit rank goes from number nine to number five, making us the largest Texas-based bank in the market and second largest bank by deposits in the state. Importantly, Stellar is a well-run bank with similar credit discipline and an envious non-interest-bearing deposit mix. As a result, We view the transaction as a low-risk combination that significantly enhances our Texas footprint. I would like to thank all our customers, associates, directors, and shareholders for helping build such a successful bank. 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 achieve. Osobek?