Prosperity Bancshares, Inc.

Good day, and welcome to the Prosperity Bank Share's first quarter 2026 earnings conference call. All participants will be in a 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, and 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, ma'am.

Thank you. Good morning, ladies and gentlemen, and welcome to Prosperity Bankshare's first quarter 2026 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, and here with me today is David Zalman, Senior Chairman and Chief Executive Officer H.E. Tim Tomanis, Jr., Chairman, Osobek Osmanov, Chief Financial Officer, Eddie Staffady, Senior Vice Chairman, Kevin Hannigan, President and Chief Operating Officer, Randy Hester, Chief Lending Officer, Mays Davenport, Director of Corporate Strategy, and Bob Dowdell, Executive Vice President. 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. 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 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 Bankshear'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 would like to welcome and thank everyone listening to our first quarter 2026 conference call. The first quarter of 2026 was impactful for the company, and I'm excited to announce that during the quarter we completed the merger of American Bank Holding Corporation on January 1st, 2026. and completed the merger of Southwest Bank Shares Inc. on February 1st, 2026, and announced the merger of Stellar Bancorp on January 28th, 2026, for which we have now received all necessary regulatory approvals and expect to complete on July 1st, 2026. Additionally, we completed a core system conversion in February. We and others believe that Prosperity is doing the right thing. Prosperity has been ranked as one of Forbes America's Best Banks for 2026 and since the list inception in 2010 was ranked in the top 10 for 14 consecutive years. Prosperity has also been recognized by Newsweek as one of America's Best Regional Banks and was ranked 15th in the S&P global market intelligence top 50 U.S. public bank rankings for 2025. In an effort to continue to enhance shareholder value, Prosperity Bank shares repurchased approximately 837,000 shares of its common stock at an average weighted price of $68.15 a share for a total of $57 million during the three months ending March 31, 2026. Our net income was $116 million for three months ending March 31, 2026, compared with $130 million for the same period in 2025. The net income per diluted common share was $1.16 for three months ending March 31, 2026. compared to $1.37 for the same period in 2025. During the first quarter of 2026, Prosperity incurred merger related expenses from the mergers with American and Southwest of 42.5 million or 34 cents per diluted common share. Excluding these charges, the net income was 149.9 million and net income for diluted common share was $1.50 for the first quarter of 2026. This represents a 9.5% increase over the $1.37 reported for the same period in 2025. Our loans were $25.2 billion at March 31st, 2026, an increase of $3.3 billion, or 15.1%, compared with 21.9 billion at March 31st, 2025. The linked quarter loans increased to 3.4 billion or 16% from 21.8 billion at December 31st, 2025. Loans increased primarily due to the mergers with American and Southwest. Excluding the loan, increases due to the mergers and excluding the impact of the net charge off, total loans decreased 1.2% or about 4.8% annually. That did include about 100 million plus in warehouse lending increase, so excluding that, the decrease would have been somewhat more. The deposits were 32.6 billion at March 31st, 2026. an increase of 4.6 billion or 16.4% compared with 28 billion at March 31st, 2025. Our linked quarter deposits increased 4.1 billion or 14.6% from 28.4 billion at December 31st, 2025. Deposits increased primarily due to the mergers excluding the deposits acquired from American and Southwest, our core deposits increased about 1.2%, and public fund deposits experienced its normal seasonal decrease. Prosperity has strong non-interest-bearing deposits of 32.4% of the total deposits as of March 31st, 2026, with a cost of funds of 1.45% and a cost of deposits of 1.32%. compared with 1.38% for the same period last year. Our net interest margin on a tax equivalent basis was 3.51% for three months ending March 31st, 2026, compared with 3.3% for the three months ending December 31st, 2025. Obviously, the net interest margin was affected by the mergers, but it was also impacted by the repricing of assets as we predicted and mentioned during previous calls. Our asset quality or non-performing assets total 122 million or 33 basis points of quarterly average interest earning assets as of March 31st, 2026, compared with 150 million or 46 basis points of quarterly average interest earning assets at December 31st, 2025. The allowance for credit losses on loans and off balance sheet credit exposure was 421 million at March 31st, 2026, compared with 386 million at March 31st, 2025. The allowance for credit losses on loans increased during the first quarter of 2026 due to the mergers of which 47 million was attributable to the American merger and 43 million was attributable to the Southwest merger. Excluding warehouse purchase program loans, the allowance for credit losses on loans to total loans was 1.61% at March 31st, 2026. And that's compared with 1.67% at March 31, 2025. Our quarterly net charge-offs were $41 million, the largest amount in our bank's history. This is mitigated somewhat by the total being comprised primarily of two credits, both which were unique in nature and we believe do not represent a trend in the potential future losses. This is evidenced by the lack of any material additions to non-performing loans in Quarter 1, 2026. and only two non-performing relationships of more than $10 million. Both charged off credits were generated out of our Dallas office. Both loans were shared national credits. However, both were initially originated and syndicated by us before the loans were moved to much larger banks that were willing to provide modified loan structures that we were not. The larger charge off of approximately $30 million was to a startup insurance company. Once that loan was moved and syndicated, Prosperity purchased a percentage of that loan back, although it was a smaller exposure than we previously had. While the borrower had allegedly a strong sponsor that is well known in the industry with the history of backing its investments, it felt to do so this time. The smaller charge-off was a customer who legacy banks for over 15 years and is reflective that in lending money, sometimes things just don't work out. With regard to acquisitions, as previously mentioned, the merger of American Bank Holding Company was completed on January 1st, 2026, and the operational integration is scheduled for September 2026, and the merger of Southwest Bank Shares was completed on February 1st, 2026, and the operational integration is scheduled for November of 2026. We are fortunate to have American and Southwest Associates on the prosperity team. We are excited about our pending merger with Sterler Bank Corp and expect to complete the transaction on July 1st, 2026. While we continue to have conversation with other bankers regarding potential acquisition opportunities, we remain focused on the completion of the Stellar merger and the integration of all three transactions. Texas and Oklahoma continue to benefit from strong economies and are home to 57 Fortune 500 headquartered companies. Texas also benefits from diversification in various industries, including energy, oil, gas, renewables, technology, manufacturing, trade logistics, major ports, healthcare, and finance. Further, its business-friendly environment, no state income tax, population growth that supports spending and workforce expansion, and key role in trade and cross-border commerce position, Texas is well for 2026 and the future. While Texas continues to outperform the U.S. on output growth, the labor market has cooled noticeably after years of rapid expansion. The growth in 2026 is expected to be steady, although the state size, diversity, and policy advantages position it well for a rebound. Overall, I would like to thank all of our associates for helping create the success we have had. We have a strong team and a deep bench at Prosperity, and we'll continue to work hard to keep our customers and associates succeed and to increase shareholder value. Thanks again for your support of our company. Let me turn over the discussion to Osobek Osmanov, our Chief Financial Officer, to discuss some of the specific financial results we achieved. Osobek.