Track market-moving stories before they get noisy

The Zacks Audio Video Production industry participants like Dolby Laboratories, Inc. (DLB - Free Report) , Sonos Inc. (SONO - Free Report) and LiveOne, Inc. (LVO - Free Report) are likely to benefit from investments in cutting-edge technology solutions that drive enhanced communication experiences. Streaming, creator content, gaming, spatial audio and AI-powered tools are reimagining value creation across the industry. Rapid technological advances, such as 4K, 8K and immersive audio formats, are boosting the demand for new devices, which bodes well for participants like Dolby. The players also stand to gain as they increase focus on direct-to-customer sales channels.

However, the industry faces some headwinds. Hardware demand remains cyclical and sensitive to consumer spending. Global macroeconomic uncertainty amid escalating trade tensions, tariffs and associated inflationary pressure is likely to keep consumer spending in check. This does not bode well for the participants. A highly promotional environment and stiff competition from importers of comparatively low-priced devices are denting margins. Online accessibility of recording equipment and the availability of distribution channels on the Internet are additional headwinds.

Industry Description The Zacks Audio Video Production industry comprises television, speaker, video player and camcorder manufacturers. It includes companies that offer gaming consoles, drones and high-end cameras for individuals and industrial markets. These firms provide state-of-the-art audio, imaging and voice technologies that enhance entertainment and communication experiences. Some industry participants develop audio and imaging products, including digital cinema servers and products for film production and entertainment industries. Apart from providing theatrical and television production services for cinema exhibitions, broadcast and home entertainment, these companies work with film studios, content creators, broadcasters and video game designers. Some prominent players are present in the music and image-based software markets worldwide.

4 Trends Shaping the Future of the Audio-Video Production Industry Technological Advancement to Spur Growth: From rapid technological advances like 4K, 8K and immersive audio formats, the demand for high-resolution visual and audio experiences is a major growth driver. The rise of streaming or OTT platforms is fueling this trend, as consumers and businesses seek to recreate a cinematic atmosphere at home. Gaming is another catalyst, as PC and console gamers now seek enhanced visuals and immersive sound design. The rise of the creator economy is also fueling the demand for enhanced cameras and editing tools. Industry players like GoPro are benefiting from this trend, as its cameras are popular among creators. Automotive audio represents another lucrative opportunity as vehicles become more software-driven and experience-focused.

Increasing Demand for Premium Entertainment: The industry performed well despite drastic changes in how media is consumed and distributed. The rise in demand for premium entertainment from record labels, TV producers and advertisers is likely to stoke profitable growth. Strong demand across all regions with a more direct-to-consumer, subscription-centric model bodes well for industry participants.

Macroeconomic Headwinds Likely to Hurt Consumer Demand: The global macroeconomic uncertainty amid escalating trade tensions and tariffs, and associated inflationary pressures is likely to keep consumer spending, especially discretionary purchases, in check. While companies keep investing in market share gains and supply-chain resilience, a shortage of critical hardware components due to the disruption in the supply chain could hurt revenues in the near term. Fluctuations in commodity pricing for different components are additional concerns. Elevated promotional activity to boost sales amid weak spending is also affecting the performance of these industry participants.

Aggressive Competition: In the United States, smart-connected televisions, microphones and speaker enclosures are the most popular electronic devices among customers. However, U.S.-based manufacturers of audio and video systems face intense competition from importers of comparatively low-priced devices, particularly from China, Vietnam and Mexico. These firms face stiff competition across all end markets, often leading to intense price wars and margin contraction.

Zacks Industry Rank Indicates Bright Prospects The Zacks Audio Video Production industry is housed within the broader Zacks Consumer Discretionary sector. It currently has a Zacks Industry Rank of #16, placing it in the top 7% of more than 244 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

Before we present a few audio-video production stocks you may want to consider for your portfolio, let’s look at the industry’s recent stock market performance and valuation picture.

Industry Lags the Sector & the S&P 500 The Zacks Audio Video Production industry lags the broader Zacks Consumer Discretionary sector and the S&P 500 composite in the past year.

The industry has lost 13.8% over this period against the S&P 500’s 21.3% return. The broader sector has edged down 3% over the same timeframe.

1-Year Price Performance

 

Industry's Current Valuation Price-to-earnings is commonly used for valuing audio-video production stocks. The industry has a forward 12-month P/E of 16.94X compared with the S&P 500’s 21.57X. It is below the sector’s forward 12-month P/E of 17.22X.

In the past five years, the industry has traded as high as 23.92X and as low as 16.94X, with a median of 21.24X, as the chart below shows.

Price-to-Earnings Forward Ratio (Past Five Years)

 

3 Audio Video Production Stocks to Consider Sonos: Headquartered in Santa Barbara, CA, Sonos operates as a consumer electronics company that is primarily involved in the manufacturing of speakers with immersive sound experiences.

Product innovation is reaccelerating after a deliberate pause, with launches in the pipeline for the second half of fiscal 2026. Following the launch of Amp Multi, the company launched Sonos Play & Era 100 SL speakers last week. With this launch, the company is reinforcing its strategy of building a sound system that grows with users over time rather than forcing them to replace devices with each upgrade. The Sonos Play is positioned as the brand’s most versatile speaker to date. It combines the performance expected from a home speaker with the portability needed for on-the-go listening.

The Era 100 SL is a mic-free version of the popular Era 100, designed for users who prefer a more private listening experience without requiring a voice assistant functionality. By removing microphones and streamlining certain features, Sonos has created a more affordable gateway into its ecosystem.

Sonos is also refining its go-to-market strategy while expanding geographically to tap underpenetrated international markets. Sonos currently holds about 6% share of the $24-billion premium audio market, underscoring significant headroom for share gains.

Sonos expects second-quarter revenues between $250 million and $280 million, indicating a 4% year-over-year decline to an 8% increase, with a 2% rise at the mid-point.

At present, SONO sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

The Zacks Consensus Estimate for its fiscal 2026 bottom line is pegged at $1.20, unchanged in the past 30 days. The company’s shares have gained 16.8% in the past year.

Price & Consensus: SONO

Dolby: San Francisco-based Dolby develops audio and imaging technologies that revolutionize entertainment for user-generated content, TV shows, films, music and gaming.Dolby continues to see strong engagement across its ecosystem of creators, distributors and device OEMs for its Dolby Atmos and Dolby Vision technologies. The company’s Dolby Vision 2 for TVs builds on Dolby Vision and is designed to meet evolving viewer expectations while enhancing movies, sports and gaming with more vivid pictures and brighter colors across mainstream and premium TVs. Peacock and Canal+ announced support as early launch partners, and TP Vision (Philips), Hisense and TCL introduced upcoming models supporting Dolby Vision 2. Dolby expects the first Dolby Vision 2 TVs to be available by the end of the year.

Dolby is extending its presence in the automotive market, driven by strong demand from OEMs to elevate in-car entertainment quality. Dolby stated that it now has partnerships with more than 35 OEMs, up from 20 a year ago.  It also announced collaboration with Qualcomm to integrate Dolby Atmos and Dolby Vision into the latter’s Gen 5 Snapdragon Automotive platform. Integrations like these are aimed at expanding its footprint into the auto ecosystem.

For fiscal 2026, the company expects revenues of $1.4-$1.45 billion compared with the prior mentioned $1.39-$1.44 billion. The company reported revenues of $1.35 billion in fiscal 2025. Licensing revenues are projected to be $1.295-$1.345 billion compared with the previously stated $1.285 billion to $1.335 billion.

With Dolby Atmos, Dolby Vision and imaging patents growing at roughly 15% and accounting for nearly half of its licensing revenues, the company expects foundational revenues to decline slightly overall.

At present, DLB carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its fiscal 2026 bottom line is pegged at $4.31, unchanged in the past seven days. Shares have declined 25.5% in the past year.

Price & Consensus: DLB

LiveOne: Headquartered in Los Angeles, CA, LiveOne provides a platform for live stream and on-demand audio, video, and podcast/vodcast content in music, comedy, and pop culture and is the owner of LiveXLive, Slacker Radio, PodcastOne and React Presents, among others. LiveOne is focused on aggressively cutting down costs (declining 52% year over year in the third quarter of fiscal 2026) and reducing debt to strengthen its balance sheet. It is leveraging AI to streamline its workforce.

The company is strategically focusing on expanding its B2B deals, having established significant new agreements and identifying potential partnerships in the pipeline. On the last reported quarter’s earnings call, LVO highlighted that the pipeline was up 30% in the last 4 months, with more than 100 active enterprise opportunities (ranging from $1 billion to $1 trillion companies). Strengthening partnerships with platforms like Amazon, Apple and Tesla, and the expected launch of three Fortune 500 partnerships, bode well.

LVO is also targeting conversion of more than 1 million free and ad-supported users into paid tiers, while leveraging its 65 million-user database to launch proprietary products.

Management expects fiscal 2027 revenues of $85-$95 million, with $8-$10 million in adjusted EBITDA.

At present, LVO carries a Zacks Rank #2. The Zacks Consensus Estimate for its fiscal 2026 bottom line is pegged at a loss of $1.54, unchanged in the past 30 days. Shares have fallen 25.7% in the past year.

Price & Consensus: LVO

Here are five stocks added to the Zacks Rank #1 (Strong Buy) List today:

Astec Industries, Inc. (ASTE - Free Report) : This manufacturer of road building and construction equipment and components has seen the Zacks Consensus Estimate for its current year earnings increasing 14.6% over the last 60 days.

Sonos, Inc. (SONO - Free Report) : This audio products and services company has seen the Zacks Consensus Estimate for its current year earnings increasing 18.8% over the last 60 days.

BWX Technologies, Inc. (BWXT - Free Report) : This nuclear component manufacturer has seen the Zacks Consensus Estimate for its current year earnings increasing 5.4% over the last 60 days.

BCB Bancorp, Inc. (BCBP - Free Report) : This bank holding company for BCB Community Bank has seen the Zacks Consensus Estimate for its current year earnings increasing 11.9% over the last 60 days.

CrossAmerica Partners LP (CAPL - Free Report) : This distributor of motor fuels and owner and lessor of real estate used in the retailing of motor fuels, and operator of convenience stores has seen the Zacks Consensus Estimate for its current year earnings increasing 7.5% over the last 60 days.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

-

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Sonos, Inc. (Nasdaq: SONO) today announced that after market close on Monday, May 4, 2026 the company will report financial results for the second quarter ended March 28, 2026. The company will issue a press release and accompanying slide presentation at that time which will be accessible at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports.

The company will host a conference call and Q&A to discuss the results on the same day at 4:30 p.m. Eastern Time. A live webcast of the conference call and Q&A will be accessible at https://investors.sonos.com/news-and-events/default.aspx. A replay of the webcast and transcript will be available through the same link following the conference call.

The live conference call may also be accessed toll free by dialing 1 (888) 330-2454 with conference ID 8641747. Participants outside the U.S. can access the call by dialing 1 (240) 789-2714.

About Sonos

Sonos (Nasdaq: SONO) is a leading audio company dedicated to elevating life through sound. Sonos has built a connected system that brings together all the sounds people love, from music and movies to stories and conversations. Its portfolio of home theater speakers, components, plug-in and portable speakers, and headphones grows more powerful with every room and device added. Trusted by more than 17 million households in over 60 countries, Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com.

More News From Sonos

Back to Newsroom

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Sonos, Inc. (Nasdaq: SONO) today reported Second Quarter Fiscal 2026 results.

“The first half of Fiscal 2026 marks an important turning point for Sonos as we return to growth and change the trajectory of the business,” said Tom Conrad, Chief Executive Officer of Sonos. “The progress we’re seeing comes from coordinated execution across the areas that matter most: better products, a stronger software experience, more effective marketing, and continued expansion in growth markets. This translated into 8% revenue growth in Q2, our first positive Q2 Adjusted EBITDA in four years, and our third consecutive semiannual period of revenue growth improvement. We enter the second half with momentum and a clear focus on building durable growth while staying disciplined in how we operate.”

"Q2 results overall came in strong against our expectations, with revenue near the high end of our guidance, and Adjusted EBITDA above the midpoint. First half Adjusted EBITDA is up 48% year over year, reflecting gross profit dollar growth combined with operating expense reductions," said Saori Casey, Chief Financial Officer. "Q2 marks our seventh consecutive quarter of executing against our commitments"

Second Quarter Fiscal 2026 Financial Highlights (unaudited)

Revenue increased 8% year-over-year to $282 million GAAP gross margin of 44.3%, Non-GAAP gross margin of 46.0% GAAP net loss improved by $41 million year-over-year to ($29) million, GAAP diluted loss per share (EPS) improved by $0.34 year-over-year to ($0.24) Non-GAAP net loss improved by $19 million year-over-year to ($3) million, Non-GAAP diluted EPS improved by $0.16 year-over-year to ($0.02) Adjusted EBITDA increased $3 million year-over-year to $2 million Returned $40 million to shareholders through repurchase of 2.5 million shares First Half Fiscal 2026 Financial Highlights (unaudited)

Revenue increased 2% year-over-year to $827 million GAAP gross margin of 45.7%, Non-GAAP gross margin of 47.0% GAAP net income improved by $85 million year-over-year to $65 million, GAAP diluted EPS improved by $0.68 year-over-year to $0.52 Non-GAAP net income improved by $49 million year-over-year to $113 million, Non-GAAP diluted EPS improved by $0.40 year-over-year to $0.91 Adjusted EBITDA increased by $44 million year-over-year to $134 million Returned $65 million to shareholders through repurchase of 4.0 million shares Guidance

The company will provide guidance on its Second Quarter Fiscal 2026 earnings call.

Supplemental Earnings Presentation

The company has posted a supplemental earnings presentation accompanying its Second Quarter Fiscal 2026 results to the Earnings Reports section of its investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports.

Conference Call, Webcast and Transcript

The company will host a webcast of its conference call and Q&A related to its Second Quarter Fiscal 2026 results on May 4, 2026, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). Participants may access the live webcast in listen-only mode on the Sonos investor relations website at https://investors.sonos.com/news-and-events/default.aspx.

The conference call may also be accessed by dialing (888) 330-2454 with conference ID 8641747. Participants outside the U.S. can access the call by dialing (240) 789-2714 using the same conference ID.

An archived webcast of the conference call and a transcript of the company’s prepared remarks and Q&A session will also be available at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports following the call.

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(unaudited, in thousands, except share and per share amounts)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

Revenue

$

281,526

$

259,756

$

827,189

$

810,613

Cost of revenue

156,877

146,147

449,080

455,597

Gross profit

124,649

113,609

378,109

355,016

Operating expenses

Research and development

64,134

77,423

123,896

158,261

Sales and marketing

62,376

64,210

127,650

150,854

General and administrative

29,714

33,200

57,723

59,032

Total operating expenses

156,224

174,833

309,269

368,147

Operating (loss) income

(31,575

)

(61,224

)

68,840

(13,131

)

Other income (expense), net

Interest income

1,911

1,973

3,260

3,834

Interest expense

(104

)

(109

)

(220

)

(219

)

Other (expense) income, net

(1,361

)

193

(941

)

(5,836

)

Total other income (expense), net

446

2,057

2,099

(2,221

)

(Loss) income before (benefit from) provision for income taxes

(31,129

)

(59,167

)

70,939

(15,352

)

(Benefit from) provision for income taxes

(2,243

)

10,977

6,027

4,555

Net (loss) income

$

(28,886

)

$

(70,144

)

$

64,912

$

(19,907

)

(Loss) earnings per share:

Basic

$

(0.24

)

$

(0.58

)

$

0.54

$

(0.16

)

Diluted

$

(0.24

)

$

(0.58

)

$

0.52

$

(0.16

)

Weighted-average shares used in computing (loss) earnings per share:

Basic

120,209,712

119,919,163

120,349,630

120,995,375

Diluted

120,209,712

119,919,163

123,651,309

120,995,375

Total comprehensive (loss) income

Net (loss) income

(28,886

)

(70,144

)

64,912

(19,907

)

Change in foreign currency translation adjustment

(1,763

)

656

(28

)

(460

)

Net unrealized loss on marketable securities

(59

)

(33

)

(42

)

(117

)

Comprehensive (loss) income

$

(30,708

)

$

(69,521

)

$

64,842

$

(20,484

)

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except par values)

As of

March 28,
2026

September 27,
2025

Assets

Current assets:

Cash and cash equivalents

$

200,156

$

174,668

Marketable securities

48,897

52,858

Accounts receivable, net

95,511

65,847

Inventories

160,840

171,020

Prepaids and other current assets

34,718

39,642

Total current assets

540,122

504,035

Property and equipment, net

63,038

72,277

Operating lease right-of-use assets

43,950

45,297

Goodwill

82,854

82,854

Intangible assets, net

67,741

75,356

Deferred tax assets

10,409

10,509

Other noncurrent assets

31,368

32,950

Total assets

$

839,482

$

823,278

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

162,927

$

184,109

Accrued expenses

66,736

79,094

Accrued compensation

24,298

21,331

Deferred revenue, current

38,772

21,771

Other current liabilities

48,374

46,107

Total current liabilities

341,107

352,412

Operating lease liabilities, noncurrent

51,803

53,288

Deferred revenue, noncurrent

59,161

59,453

Deferred tax liabilities

118

126

Other noncurrent liabilities

2,930

2,774

Total liabilities

455,119

468,053

Commitments and contingencies

Stockholders’ equity:

Common stock, $0.001 par value

123

123

Treasury stock

(56,653

)

(37,398

)

Additional paid-in capital

486,326

502,775

Accumulated deficit

(47,166

)

(112,078

)

Accumulated other comprehensive income

1,733

1,803

Total stockholders’ equity

384,363

355,225

Total liabilities and stockholders’ equity

$

839,482

$

823,278

Condensed Consolidated Statements of Cash Flows

(unaudited, dollars in thousands)

Six Months Ended

March 28,
2026

March 29,
2025

Cash flows from operating activities

Net income (loss)

$

64,912

$

(19,907

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Stock-based compensation expense

30,056

45,436

Depreciation and amortization

25,862

32,778

Restructuring and other charges

848

4,889

Provision for excess and obsolete inventory

343

(143

)

Deferred income taxes

72

997

Other

4,402

1,528

Foreign currency transaction loss (gain)

1,222

(72

)

Changes in operating assets and liabilities:

Accounts receivable

(31,660

)

4,702

Inventories

9,837

92,615

Other assets

4,796

1,328

Accounts payable and accrued expenses

(33,297

)

(83,634

)

Accrued compensation

3,522

10,456

Deferred revenue

16,993

(257

)

Other liabilities

25

5,791

Net cash provided by operating activities

97,933

96,507

Cash flows from investing activities

Purchases of marketable securities

(25,219

)

(25,900

)

Purchases of property and equipment

(10,734

)

(18,662

)

Maturities of marketable securities

29,140

27,400

Net cash used in investing activities

(6,813

)

(17,162

)

Cash flows from financing activities

Payments for repurchase of common stock

(65,121

)

(60,602

)

Payments for repurchase of common stock related to shares withheld for tax in connection with vesting of stock awards

(15,929

)

(16,246

)

Proceeds from exercise of stock options

15,138

2,654

Payments for debt issuance costs

(780

)

—

Net cash used in financing activities

(66,692

)

(74,194

)

Effect of exchange rate changes on cash and cash equivalents

1,060

(1,725

)

Net increase in cash and cash equivalents

25,488

3,426

Cash and cash equivalents

Beginning of period

174,668

169,732

End of period

$

200,156

$

173,158

Supplemental disclosure

Cash paid for interest

$

123

$

126

Cash paid for taxes, net of refunds

$

3,346

$

16,493

Cash paid for amounts included in the measurement of lease liabilities, net of tenant improvement reimbursements received

$

4,473

$

1,149

Supplemental disclosure of non-cash investing and financing activities

Purchases of property and equipment in accounts payable and accrued expenses

$

4,588

$

1,311

Right-of-use assets obtained in exchange for new operating lease liabilities

$

1,829

$

1,491

Excise tax on share repurchases, accrued but not paid

$

130

$

264

Reconciliation of GAAP to Non-GAAP Cost of Revenue and Gross Profit

(unaudited, in thousands, except percentages)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

Reconciliation of GAAP cost of revenue

GAAP cost of revenue

$

156,877

$

146,147

$

449,080

$

455,597

Stock-based compensation expense

1,125

1,606

2,452

2,955

Amortization of intangibles

3,144

3,144

7,525

6,474

Restructuring and other charges

664

3,935

664

3,935

Non-GAAP cost of revenue

$

151,944

$

137,462

$

438,439

$

442,233

Reconciliation of GAAP gross profit

GAAP gross profit

$

124,649

$

113,609

$

378,109

$

355,016

Stock-based compensation expense

1,125

1,606

2,452

2,955

Amortization of intangibles

3,144

3,144

7,525

6,474

Restructuring and other charges

664

3,935

664

3,935

Non-GAAP gross profit

$

129,582

$

122,294

$

388,750

$

368,380

GAAP gross margin

44.3

%

43.7

%

45.7

%

43.8

%

Non-GAAP gross margin

46.0

%

47.1

%

47.0

%

45.4

%

Reconciliation of Selected Non-GAAP Financial Measures

(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

Research and Development (GAAP)

$

64,134

$

77,423

$

123,896

$

158,261

Stock-based compensation

5,471

8,021

11,960

21,336

Amortization of intangibles

20

18

40

196

Restructuring and other charges (2)(3)

857

12,766

857

12,706

Research and Development (Non-GAAP)

$

57,786

$

56,618

$

111,039

$

124,023

Sales and Marketing (GAAP)

$

62,376

$

64,210

$

127,650

$

150,854

Stock-based compensation

2,763

3,980

5,608

9,612

Amortization of intangibles

-

-

-

-

Restructuring and other charges (2)(3)

1,453

2,792

1,453

2,792

Sales and Marketing (Non-GAAP)

$

58,160

$

57,438

$

120,589

$

138,450

General and Administrative (GAAP)

29,714

33,200

57,723

59,032

Stock-based compensation

5,505

6,495

10,036

11,533

Legal and transaction related costs

3,523

1,429

6,034

1,624

Amortization of intangibles

24

24

48

47

Restructuring and other charges (2)(3)

90

4,207

90

4,207

General and Administrative (Non-GAAP)

$

20,572

$

21,045

$

41,515

$

41,621

Total Operating Expenses (GAAP)

$

156,224

$

174,833

$

309,269

$

368,147

Stock-based compensation

13,739

18,496

27,604

42,481

Legal and transaction related costs (1)

3,523

1,429

6,034

1,624

Amortization of intangibles

44

42

88

243

Restructuring and other charges (2)(3)

2,400

19,765

2,400

19,705

Operating Expenses (Non-GAAP)

$

136,518

$

135,101

$

273,143

$

304,094

Total Operating (Loss) Income (GAAP)

$

(31,575

)

$

(61,224

)

$

68,840

$

(13,131

)

Stock-based compensation

14,864

20,102

30,056

45,436

Legal and transaction related costs (1)

3,523

1,429

6,034

1,624

Amortization of intangibles

3,188

3,186

7,613

6,717

Restructuring and other charges (2)(3)

3,064

23,700

3,064

23,640

Operating (Loss) Income (Non-GAAP)

$

(6,936

)

$

(12,807

)

$

115,607

$

64,286

Depreciation

8,653

11,981

18,249

26,061

Adjusted EBITDA (Non-GAAP)

$

1,717

$

(826

)

$

133,856

$

90,347

Total Operating (Loss) Income (GAAP)

$

(31,575

)

$

(61,224

)

$

68,840

$

(13,131

)

Stock-based compensation expense

14,864

20,102

30,056

45,436

Legal and transaction related costs (1)

3,523

1,429

6,034

1,624

Amortization of intangibles

3,188

3,186

7,613

6,717

Restructuring and other charges (2)(3)

3,064

23,700

3,064

23,640

Operating (Loss) Income (Non-GAAP)

$

(6,936

)

$

(12,807

)

$

115,607

$

64,286

Interest income

1,911

1,973

3,260

3,834

Interest expense

(104

)

(109

)

(220

)

(219

)

Pre-tax (Loss) Income (Non-GAAP)

$

(5,129

)

$

(10,943

)

$

118,647

$

67,901

(Benefit from) provision for income taxes

(2,243

)

10,977

6,027

4,555

Net (loss) income (Non-GAAP)

(2,886

)

(21,920

)

112,620

63,346

Weighted-average shares non-GAAP, diluted

120,209,712

119,919,163

123,651,309

123,750,251

Non-GAAP (loss) earnings per share, diluted

$

(0.02

)

$

(0.18

)

$

0.91

$

0.51

(1) Legal and transaction-related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet and Google, which we do not consider representative of our underlying operating performance.

(2) Restructuring and other charges for the three and six months ended March 28, 2026, include costs associated with non-recurring organizational changes driven by new leadership, charges related to the partial abandonment of office space in support of operational efficiencies, and costs associated with exiting a partnership with one of our contract manufacturers to consolidate and improve supply chain efficiency.

(3) Restructuring and other charges for the three and six months ended March 29, 2025 primarily reflect costs associated with our cost transformation initiative including the 2025 restructuring plan and rationalization of our product roadmap, as well as non-recurring CEO transition costs related to modifications to equity awards.

Reconciliation of Net (Loss) Income to Adjusted EBITDA

(unaudited, dollars in thousands except percentages)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

(In thousands, except percentages)

Net (loss) income

$

(28,886

)

$

(70,144

)

$

64,912

$

(19,907

)

Add (deduct):

Depreciation and amortization

11,841

15,167

25,862

32,778

Stock-based compensation expense

14,864

20,102

30,056

45,436

Interest income

(1,911

)

(1,973

)

(3,260

)

(3,834

)

Interest expense

104

109

220

219

Other expense (income), net

1,361

(193

)

941

5,836

(Benefit from) provision for income taxes

(2,243

)

10,977

6,027

4,555

Legal and transaction related costs (1)

3,523

1,429

6,034

1,624

Restructuring and other charges (2)(3)

3,064

23,700

3,064

23,640

Adjusted EBITDA

$

1,717

$

(826

)

$

133,856

$

90,347

Revenue

$

281,526

$

259,756

$

827,189

$

810,613

Net (loss) income margin

(10.3

)%

(27.0

)%

7.8

%

(2.5

)%

Adjusted EBITDA margin

0.6

%

(0.3

)%

16.2

%

11.1

%

(1) Legal and transaction-related costs consist of expenses related to our IP litigation against Alphabet and Google, which we do not consider representative of our underlying operating performance.

(2) Restructuring and other charges for the three and six months ended March 28, 2026, include costs associated with non-recurring organizational changes driven by new leadership, charges related to the partial abandonment of office space in support of operational efficiencies, and costs associated with exiting a partnership with one of our contract manufacturers to consolidate and improve supply chain efficiency.

(3) Restructuring and other charges for the three and six months ended March 29, 2025 primarily reflect costs associated with our cost transformation initiative including the 2025 restructuring plan and rationalization of our product roadmap, as well as non-recurring CEO transition costs related to modifications to equity awards.

Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net (Loss) Income

(unaudited, in thousands, except share and per share amounts)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

GAAP net (loss) income

$

(28,886

)

$

(70,144

)

$

64,912

$

(19,907

)

Stock-based compensation expense

14,864

20,102

30,056

45,436

Legal and transaction related costs (1)

3,523

1,429

6,034

1,624

Amortization of intangibles

3,188

3,186

7,613

6,717

Restructuring and other charges (2)(3)

3,064

23,700

3,064

23,640

Other expense (income), net

1,361

(193

)

941

5,836

Non-GAAP net (loss) income

$

(2,886

)

$

(21,920

)

$

112,620

$

63,346

(Loss) earnings per share

GAAP (loss) earnings per share, diluted

$

(0.24

)

$

(0.58

)

$

0.52

$

(0.16

)

Non-GAAP (loss) earnings per share, diluted

$

(0.02

)

$

(0.18

)

$

0.91

$

0.51

Shares used to calculate (loss) earnings per share

Weighted-average shares GAAP, diluted

120,209,712

119,919,163

123,651,309

120,995,375

Weighted-average shares non-GAAP, diluted

120,209,712

119,919,163

123,651,309

123,750,251

(1) Legal and transaction-related costs consist of expenses related to our IP litigation against Alphabet and Google, which we do not consider representative of our underlying operating performance.

(2) Restructuring and other charges for the three and six months ended March 28, 2026, include costs associated with non-recurring organizational changes driven by new leadership, charges related to the partial abandonment of office space in support of operational efficiencies, and costs associated with exiting a partnership with one of our contract manufacturers to consolidate and improve supply chain efficiency.

(3) Restructuring and other charges for the three and six months ended March 29, 2025 primarily reflect costs associated with our cost transformation initiative including the 2025 restructuring plan and rationalization of our product roadmap, as well as non-recurring CEO transition costs related to modifications to equity awards.

Reconciliation of Cash Flows (Used in) Provided by Operating Activities to Free Cash Flow

(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

Cash flows (used in) provided by operating activities

$

(65,374

)

$

(59,666

)

$

97,933

$

96,507

Less: Purchases of property and equipment

(4,776

)

(5,556

)

(10,734

)

(18,662

)

Free cash flow

$

(70,150

)

$

(65,222

)

$

87,199

$

77,845

Revenue by Product Category

(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

(In thousands)

Sonos speakers

$

210,018

$

194,519

$

669,258

$

661,661

Sonos system products

52,411

50,540

117,469

110,814

Partner products and other revenue

19,097

14,697

40,462

38,138

Total revenue

$

281,526

$

259,756

$

827,189

$

810,613

Revenue by Geographical Region

(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

Americas

$

180,608

$

176,802

$

509,485

$

501,385

Europe, Middle East and Africa

83,161

68,785

272,602

266,397

Asia Pacific

17,757

14,169

45,102

42,831

Total revenue

$

281,526

$

259,756

$

827,189

$

810,613

Stock-based Compensation

(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

(In thousands)

Cost of revenue

$

1,125

$

1,606

$

2,452

$

2,955

Research and development

5,471

8,557

11,960

21,872

Sales and marketing

2,763

4,027

5,608

9,659

General and administrative

5,505

9,055

10,036

14,093

Total stock-based compensation expense

$

14,864

$

23,245

$

30,056

$

48,579

Amortization of Intangibles

(unaudited, dollars in thousands)

Three Months Ended

Six Months Ended

March 28,
2026

March 29,
2025

March 28,
2026

March 29,
2025

Cost of revenue

$

3,144

$

3,144

$

7,525

$

6,474

Research and development

20

18

40

196

Sales and marketing

-

-

-

-

General and administrative

24

24

48

47

Total amortization of intangibles

$

3,188

$

3,186

$

7,613

$

6,717

Use of Non-GAAP Measures

We have provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”), including Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP operating (loss) income, non-GAAP pre-tax (loss) income, free cash flow, non-GAAP gross margin, non-GAAP net (loss) income, non-GAAP cost of revenue, non-GAAP gross profit and non-GAAP diluted earnings (loss) per share. These non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude in these non-GAAP financial measures. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making. Non-GAAP financial measures should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of these financial measures to their nearest U.S. GAAP financial equivalents provided in the financial statement tables above. We define Adjusted EBITDA as net (loss) income adjusted to exclude the impact of depreciation and amortization, stock-based compensation expense, interest income, interest expense, other expense (income), income taxes, restructuring and other charges, legal and transaction related fees and other items that we do not consider representative of our underlying operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. We define non-GAAP operating (loss) income as total operating loss adjusted to exclude stock-based compensation expense, legal and transaction related costs, amortization of intangibles and restructuring and other charges. We define non-GAAP pre-tax (loss) income as non-GAAP operating (loss) income adjusted to include interest income and to exclude interest expense. We define free cash flow as net cash from operations less purchases of property and equipment. We define non-GAAP gross margin as GAAP gross margin, excluding stock-based compensation, amortization of intangible assets and restructuring and other charges. We define non-GAAP cost of revenue as GAAP cost of revenue less stock-based compensation and amortization of intangibles. We define non-GAAP gross profit as GAAP gross profit less stock-based compensation, amortization of intangibles, and restructuring and other charges. We calculate non-GAAP net (loss) income as GAAP net (loss) income less stock-based compensation, legal and transaction related fees, amortization of intangibles, other expense (income) and restructuring and other charges. We calculate non-GAAP diluted earnings (loss) per share as non-GAAP net (loss) income divided by non-GAAP weighted average diluted shares outstanding during the period. We do not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because we cannot do so without unreasonable effort due to unavailability of information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, we do so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for items such as stock-based compensation, which is inherently difficult to predict with reasonable accuracy. Stock-based compensation expense is difficult to estimate because it depends on our future hiring and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to constant change. In addition, for purposes of setting annual guidance, it would be difficult to quantify stock-based compensation expense for the year with reasonable accuracy in the current quarter. As a result, we do not believe that a GAAP reconciliation would provide meaningful supplemental information about our outlook.

Forward Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our long-term outlook, financial, growth and business strategies and opportunities, market growth and our market share, our operating model and cost structure, new product launches, including critical reception and the planned timing of such launches, and other factors affecting variability in our financial results. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, but not limited to: difficulties in and effect of implementing improvements to our operating model and cost structure; the risk that restructuring and related charges may be greater than anticipated or not occur in the expected time frame; local law requirements in various jurisdictions regarding elimination of positions; our ability to accurately forecast product demand and effectively forecast and manage owned and channel inventory levels; our ability to successfully introduce software updates; our ability to maintain, enhance and protect our brand image; the impact of global economic, market and political events, including tariffs, global trade tensions, continued inflationary pressures, high interest rates and, in certain markets, foreign currency exchange rate fluctuations; changes in consumer income and overall consumer spending as a result of economic or political uncertainty or conditions, including tariffs; changes in consumer spending patterns; our ability to successfully introduce new products and services and maintain or expand the success of our existing products; the success of our efforts to expand our direct-to-consumer channel; the success of our financial, growth and business strategies; our ability to compete in the market and maintain or expand market share; our ability to maintain relationships with our channel, distribution and technology partners; our ability to meet product demand and manage any product availability delays; supply chain challenges, including shipping and logistics challenges and component supply-related challenges, including memory costs and constraints; our ability to protect our brand and intellectual property; our use of artificial intelligence; and the other risk factors identified in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K and subsequent filings. Copies of our SEC filings are available free of charge at the SEC’s website at www.sec.gov, on our investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this press release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events. Sonos and Sonos product names are trademarks or registered trademarks of Sonos, Inc. All other product names and services may be trademarks or service marks of their respective owners.

About Sonos

Sonos (Nasdaq: SONO) is a leading audio company dedicated to elevating life through sound. Sonos has built a connected system that brings together all the sounds people love, from music and movies to stories and conversations. Its portfolio of home theater speakers, components, plug-in and portable speakers, and headphones grows more powerful with every room and device added. Trusted by more than 17 million households in over 60 countries, Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com.

More News From Sonos.

Sonos, Inc. (SONO) Q2 2026 Earnings Call Transcript

Sonos faces gross margin pressure from surging memory prices, but I reiterate my 'Buy' rating, viewing recent downside as short-term noise. SONO is actively mitigating memory cost headwinds via tariff refunds, engineering redesigns, and disciplined opex management, without resorting to price hikes. Strong Q2 results: revenue grew 8% y/y to $281.5 million, beating expectations and supporting management's confidence in accelerating growth for 2H FY26.

-

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Sonos, Inc. (Nasdaq: SONO) today announced that Saori Casey, Chief Financial Officer, will participate in a fireside chat with Jefferies analyst Brent Thill at the 2026 Jefferies Software, Internet, and AI Conference on Wednesday, May 27th. The fireside chat will begin at 3:30 pm Pacific. A live webcast and replay of the fireside chat will be accessible in the News & Events section of the Sonos investor relations website: https://investors.sonos.com/news-and-events/default.aspx#section=events-and-presentations.

About Sonos

Sonos (Nasdaq: SONO) is a leading audio company dedicated to elevating life through sound. Sonos has built a connected system that brings together all the sounds people love, from music and movies to stories and conversations. Its portfolio of home theater speakers, components, plug-in and portable speakers, and headphones grows more powerful with every room and device added. Trusted by more than 17 million households in over 60 countries, Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com.

More News From Sonos

Back to Newsroom

A month has gone by since the last earnings report for Sonos (SONO - Free Report) . Shares have added about 17.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sonos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Sonos' Reports Q2 Loss

Sonos reported second-quarter fiscal 2026 non-GAAP loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 4 cents. The company reported a loss of 18 cents in the prior-year quarter. On a GAAP basis, the company reported a loss per share of 24 cents compared with a loss of 58 cents in the year-ago quarter.

Quarterly revenues increased 8.4% year over year to $281.5 million. The figure came above the company’s guidance of $250 million to $280 million. The Zacks Consensus Estimate for the top line was pegged at $264.9 million.

Management highlighted that the first half of fiscal 2026 marked a key turning point as the company returned to growth, driven by strong execution across products, software, marketing and expansion in growth markets. This led to second-quarter revenue growth — the first positive second-quarter adjusted EBITDA in four years, and a third consecutive period of improving revenue trends. Second-quarter performance exceeded expectations, with revenue near the high end of guidance and adjusted EBITDA above the midpoint, while first-half adjusted EBITDA rose 48% year over year, supported by higher gross profit and lower operating expenses, reflecting continued disciplined execution.

Revenue Details

Revenues from Sonos speakers were $210 million, up 8% year over year.

Sonos’ system products’ revenues of $52.4 million increased 3.7%.

Revenues from Partner products and other totaled $19.1 million, up 29.9% year over year.

Region-wise, revenues from the Americas of $180.6 million increased 2.2% year over year. Europe, the Middle East and Africa generated revenues of $83.2 million, up 20.9%. Revenues from the Asia Pacific increased 25.3% to $17.8 million.

Margin Performance

Non-GAAP gross profit was $129.6 million, up 6% on a year-over-year basis.

Non-GAAP gross margin contracted 110 basis points (bps) to 46%.

Adjusted operating expenses amounted to $136.5 million, up 1.1% year over year.

Non-GAAP research and development (R&D) expenses increased 2.1%. Non-GAAP general and administrative (G&A) expenses were down 2.3%. Non GAAP sales and marketing expenses increased 1.3%.

Non-GAAP adjusted EBITDA totaled $1.7 million. The company’s second-quarter adjusted EBITDA was anticipated in the range from a loss of $18 million to a profit of $10 million.

Cash Flow & Liquidity

In the fiscal second quarter, Sonos used $65.4 million of cash from operations.

Free cash flow used was $70.2 million, up from $65.2 million used in the same period last year.

As of March 28, cash and cash equivalents were $200.2 million compared with $312.5 million as of Dec. 27, 2026. SONO has no debt.

In the second quarter, the company spent $40 million on share repurchases. Sonos still has $65 million remaining under its current share repurchase authorization.

Guidance

For the third quarter of fiscal 2026, the company expects revenue in the range of $355 million to $375 million, indicating year-over-year growth of 3% to 9%, with 6% growth at the midpoint. This guidance implies a modest acceleration from the second quarter on a constant-currency basis, as foreign exchange is expected to have a negligible impact on third-quarter growth. The company also noted that there will be no revenue contribution from App Multi during the quarter, as its launch is planned for the fall. Momentum is expected to continue into the fourth quarter, supporting a stronger second-half performance and full-year growth in line with prior expectations.

Gross margin for the third quarter is projected to be between 42% and 44.5% on a GAAP basis, with non-GAAP gross margin approximately 150 basis points higher, both remaining roughly flat year over year at the midpoint. The company stated that rising memory cost inflation is expected to continue into the fourth quarter, likely putting further pressure on gross margins. As a result, second-half fiscal 2026 gross margins, both GAAP and non-GAAP, are expected to be somewhat lower than those recorded in the second half of fiscal 2025.

Management emphasized ongoing mitigation efforts to address these industry headwinds while maintaining focus on driving revenue growth and profitability.

Operating expenses for the third quarter are projected to be between $150 million and $160 million on a GAAP basis, with non-GAAP operating expenses approximately $18 million lower and roughly flat sequentially at the midpoint. The company expects adjusted EBITDA in the range of $20 million to $48 million, translating to a margin of 5.6% to 12.7%.

The company remains focused on achieving sustainable revenue growth alongside improved profitability and disciplined reinvestment, with early benefits emerging from the adoption of AI to enhance productivity across multiple functions.

How Have Estimates Been Moving Since Then?Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM ScoresCurrently, Sonos has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook Sonos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

, /PRNewswire/ -- In conjunction with Prosperity Bancshares, Inc.® (NYSE: PB) First Quarter 2026 Earnings Announcement, scheduled before the market opens on Wednesday, April 29, 2026, you are invited to listen to its conference call at 11:30 AM, Eastern Time (10:30 AM, Central Time) on that day. Participants will include members of Prosperity's executive management team.

What:

Prosperity Bancshares, Inc.® First Quarter 2026 Earnings Conference Call

When:

Wednesday, April 29, 2026, at 10:30 AM (Central Time)

Where:

https://www.prosperitybankusa.com/Presentation-Webcasts-and-Calls

How:

Log on to the web at the address above or call 1-877-883-0383 for domestic participants, or 1-412-902-6506 for international participants, and enter Participant Elite Entry Number:   7638209

If you are unable to participate during the live webcast, the call will be archived on the website at https://www.prosperitybankusa.com/Investor-Relations. To access the replay, visit https://www.prosperitybankusa.com/Presentation-Webcasts-and-Calls and follow the instructions.

Prosperity Bancshares, Inc.®

As of December 31, 2025, Prosperity Bancshares, Inc.® is a $38.463 billion Houston, Texas-based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma.

Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses, and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, treasury management solutions, and wealth management services, including trust and retail brokerage.

Prosperity currently operates 312 full-service banking locations: 62 in the Houston area, including The Woodlands; 36 in the South Texas area including Corpus Christi and Victoria; 61 in the Dallas/Fort Worth area; 22 in the East Texas area; 28 in the Central Texas area including Austin and San Antonio; 45 in the West Texas area including Lubbock, Midland-Odessa, Abilene; Amarillo and Wichita Falls; 15 in the Bryan/College Station area, 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area, 18 in the Central, South Texas and San Antonio areas doing business as American Bank and 11 in the San Antonio area doing business as Texas Partners Bank.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and the remarks by Prosperity's management on the conference call may contain, forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may," or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity's possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity's future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity's loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity's operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of any acquisition transaction, and statements about the assumptions underlying any such statement. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); the possibility that the anticipated benefits of an acquisition transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of two companies or as a result of the strength of the economy and competitive factors generally; a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate, interest rate and commodity price fluctuations; and weather. These and various other factors are discussed in Prosperity Bancshares' Annual Report on Form 10-K for the year ended December 31, 2025 and other reports and statements Prosperity Bancshares has filed with the Securities and Exchange Commission ("SEC"). Copies of the SEC filings for Prosperity Bancshares may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

SOURCE Prosperity Bancshares, Inc.

Posted by Defense World Staff on Apr 13th, 2026

Massachusetts Financial Services Co. MA trimmed its position in shares of Prosperity Bancshares, Inc. (NYSE:PB – Free Report) by 0.6% during the 4th quarter, according to its most recent 13F filing with the SEC. The fund owned 2,242,597 shares of the bank’s stock after selling 14,612 shares during the quarter. Massachusetts Financial Services Co. MA owned about 2.36% of Prosperity Bancshares worth $154,986,000 at the end of the most recent reporting period.

Other institutional investors also recently bought and sold shares of the company. Mather Group LLC. purchased a new stake in Prosperity Bancshares during the 3rd quarter valued at about $26,000. Community Bank N.A. purchased a new stake in Prosperity Bancshares during the 3rd quarter valued at about $29,000. Danske Bank A S purchased a new stake in Prosperity Bancshares during the 3rd quarter valued at about $40,000. Annis Gardner Whiting Capital Advisors LLC purchased a new stake in Prosperity Bancshares during the 3rd quarter valued at about $42,000. Finally, Osaic Holdings Inc. grew its position in Prosperity Bancshares by 34.9% during the 2nd quarter. Osaic Holdings Inc. now owns 719 shares of the bank’s stock valued at $51,000 after purchasing an additional 186 shares during the last quarter. 80.69% of the stock is owned by hedge funds and other institutional investors.

Prosperity Bancshares Trading Down 0.0% PB opened at $68.79 on Monday. The company has a market cap of $6.98 billion, a price-to-earnings ratio of 12.00, a PEG ratio of 1.10 and a beta of 0.66. The company’s 50 day moving average is $69.26 and its 200 day moving average is $68.71. Prosperity Bancshares, Inc. has a 12-month low of $61.06 and a 12-month high of $77.20.

Prosperity Bancshares (NYSE:PB – Get Free Report) last posted its quarterly earnings data on Wednesday, January 28th. The bank reported $1.46 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $1.45 by $0.01. The company had revenue of $317.73 million for the quarter, compared to the consensus estimate of $319.30 million. Prosperity Bancshares had a net margin of 31.22% and a return on equity of 7.11%. The firm’s revenue was down 5.9% compared to the same quarter last year. During the same quarter last year, the firm posted $1.37 earnings per share. As a group, analysts predict that Prosperity Bancshares, Inc. will post 5.83 EPS for the current fiscal year.

Prosperity Bancshares Dividend Announcement The company also recently announced a quarterly dividend, which was paid on Wednesday, April 1st. Shareholders of record on Friday, March 13th were paid a dividend of $0.60 per share. The ex-dividend date was Friday, March 13th. This represents a $2.40 dividend on an annualized basis and a yield of 3.5%. Prosperity Bancshares’s dividend payout ratio (DPR) is presently 41.88%.

Insider Buying and Selling In other Prosperity Bancshares news, Director Ned S. Holmes sold 500 shares of the firm’s stock in a transaction that occurred on Wednesday, April 8th. The shares were sold at an average price of $68.99, for a total transaction of $34,495.00. Following the sale, the director owned 78,415 shares in the company, valued at approximately $5,409,850.85. This trade represents a 0.63% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last quarter, insiders have sold 13,200 shares of company stock worth $919,575. 3.96% of the stock is currently owned by company insiders.

Wall Street Analyst Weigh In PB has been the topic of several recent analyst reports. Barclays downgraded shares of Prosperity Bancshares from an “equal weight” rating to an “underweight” rating and cut their price objective for the company from $75.00 to $68.00 in a research report on Monday, February 2nd. DA Davidson reissued a “neutral” rating and set a $76.00 price objective on shares of Prosperity Bancshares in a research report on Thursday, January 29th. Janney Montgomery Scott downgraded shares of Prosperity Bancshares from a “buy” rating to a “neutral” rating in a research report on Tuesday, February 3rd. Weiss Ratings raised shares of Prosperity Bancshares from a “hold (c+)” rating to a “buy (b-)” rating in a research report on Thursday, April 2nd. Finally, TD Cowen reissued a “buy” rating on shares of Prosperity Bancshares in a research report on Wednesday, January 7th. Eight research analysts have rated the stock with a Buy rating, six have given a Hold rating and one has assigned a Sell rating to the stock. According to data from MarketBeat.com, Prosperity Bancshares has an average rating of “Hold” and an average price target of $78.31.

Check Out Our Latest Report on PB

Prosperity Bancshares Profile (Free Report)

Prosperity Bancshares, Inc is a holding company for Prosperity Bank, offering a broad range of commercial and consumer banking services across Texas, Oklahoma, Arkansas and Louisiana. Through its network of branches and digital platforms, the company provides deposit products, business and real estate lending, treasury management, mortgage origination and servicing, as well as wealth management and trust services.

Originally chartered in 1911 as First National Bank in McKinney, Texas, the organization rebranded to Prosperity Bank in 2009 following a series of strategic acquisitions aimed at deepening its regional presence.

Featured Stories Five stocks we like better than Prosperity Bancshares Want to see what other hedge funds are holding PB? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Prosperity Bancshares, Inc. (NYSE:PB – Free Report).

Receive News & Ratings for Prosperity Bancshares Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Prosperity Bancshares and related companies with MarketBeat.com's FREE daily email newsletter.

« PREVIOUS HEADLINEiShares Core S&P 500 ETF $IVV Shares Purchased by RFG Bristol Wealth Advisors LLC

NEXT HEADLINE »Sound Income Strategies LLC Acquires 2,433 Shares of Alphabet Inc. $GOOG

HOUSTON--(BUSINESS WIRE)--Prosperity Bancshares, Inc.® (NYSE: PB) (“Prosperity”), the parent company of Prosperity Bank®, and Stellar Bancorp, Inc. (NYSE: STEL) (“Stellar”), the parent company of Stellar Bank, today announced the receipt of all regulatory approvals necessary to complete Prosperity’s previously announced proposed acquisition of Stellar.

A waiver of prior approval with respect to the merger of the holding companies has been granted by the Federal Reserve Bank of Dallas, and each of the Federal Deposit Insurance Corporation and the Texas Department of Banking have approved the merger of Stellar Bank with and into Prosperity Bank following the merger of the holding companies.

The special meeting of Stellar shareholders to consider and vote on the Agreement and Plan of Merger, dated January 27, 2026, by and between Prosperity and Stellar (the “Merger Agreement”), is scheduled to be held on May 27, 2026. The merger is expected to be completed on or about July 1, 2026, subject to approval by Stellar shareholders and the satisfaction or waiver of other customary closing conditions set forth in the Merger Agreement.

About Prosperity Bancshares, Inc.®

As of December 31, 2025, Prosperity Bancshares, Inc.® is a $38.463 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma. Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

Prosperity currently operates 312 full-service banking locations: 62 in the Houston area, including The Woodlands; 36 in the South Texas area including Corpus Christi and Victoria; 61 in the Dallas/Fort Worth area; 22 in the East Texas area; 28 in the Central Texas area including Austin and San Antonio; 45 in the West Texas area including Lubbock, Midland-Odessa, Abilene; Amarillo and Wichita Falls; 15 in the Bryan/College Station area, 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area, 18 in the Central, South Texas and San Antonio areas doing business as American Bank and 11 in the San Antonio area doing business as Texas Partners Bank.

About Stellar Bancorp, Inc.

Stellar Bancorp, Inc. is a bank holding company headquartered in Houston, Texas. Stellar’s principal banking subsidiary, Stellar Bank, provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers across Houston, Dallas, Beaumont and surrounding communities in Texas.

Cautionary Notes on Forward Looking Statements

This press release contains statements regarding the proposed transaction between Prosperity and Stellar; future financial and operating results; benefits and synergies of the proposed transaction; future opportunities for Prosperity; the issuance of common stock of Prosperity contemplated by the Merger Agreement; the expected timing of the closing of the proposed transaction contemplated by the Merger Agreement; the ability of the parties to complete the proposed transaction considering the various closing conditions and any other statements about future expectations that constitute forward-looking statements within the meaning of the federal securities laws, including the meaning of the Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, oral or written forward-looking statements may also be included in other information released to the public. Such forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,” “is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,” “will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will result,” “would be,” variations of such words or phrases (including where the word “could,” “may,” or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective . Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates, and projections about Prosperity, Stellar and their respective subsidiaries or related to the proposed transaction between Prosperity and Stellar and are subject to significant risks and uncertainties that could cause actual results to differ materially from the results expressed in such statements.

These forward-looking statements may include information about Prosperity’s and Stellar’s possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity’s and Stellar’s future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity’s and Stellar’s loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity’s and Stellar’s future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity’s and Stellar’s operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement.

These forward-looking statements are not guarantees of future performance and are based on expectations and assumptions Prosperity and Stellar currently believe to be valid. Because forward-looking statements relate to future results and occurrences, many of which are outside of the control of Prosperity and Stellar, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Many possible events or factors could adversely affect the future financial results and performance of Prosperity, Stellar or the combined company and could cause those results or performance to differ materially from those expressed in or implied by the forward-looking statements. Such risks and uncertainties include, among others: (1) the risk that the cost savings and synergies from the proposed transaction may not be fully realized or may take longer than anticipated to be realized, (2) disruption to Prosperity’s and Stellar’s businesses as a result of the announcements and pendency of the proposed transaction, (3) the risk that the integration of Stellar’s businesses and operations into Prosperity will be materially delayed or will be more costly or difficult than expected, or that Prosperity is otherwise unable to successfully integrate Stellar’s business into its own, including as a result of unexpected factors or events, (4) the failure to obtain the necessary approval by the shareholders of Stellar, (5) reputational risk and the reaction of each company’s customers, suppliers, employees or other business partners to the proposed transaction, (6) the failure of the closing conditions in the Merger Agreement to be satisfied, or any unexpected delay in closing the proposed transaction or the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (7) the dilution caused by the issuances of additional shares of Prosperity’s common stock in the proposed transaction, (8) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (9) the outcome of any legal or regulatory proceedings that may be currently pending or later instituted against Prosperity before or after the proposed transaction, or against Stellar, (10) diversion of management’s attention from ongoing business operations and (11) general competitive, economic, political and market conditions and other factors that may affect future results of Prosperity and Stellar. Prosperity and Stellar disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. These and various other risks, uncertainties, assumptions, and factors are discussed in the Annual Reports on Form 10-K for the year ended December 31, 2025, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed by Prosperity or Stellar and in other filings made by Prosperity and Stellar with the Securities and Exchange Commission (the “SEC”) from time to time.

Additional Information about the Transaction and Where to Find It

In connection with the proposed transaction, Prosperity has filed with the SEC a registration statement (the “Registration Statement”) on Form S-4 (File No. 333-294882) to register the shares of Prosperity common stock to be issued to the shareholders of Stellar in connection with the proposed transaction. The Registration Statement includes a prospectus of Prosperity and a proxy statement of Stellar included therein (the “proxy statement/prospectus”), which will be sent to the shareholders of Stellar in connection with the proposed transaction. The Registration Statement was declared effective on April 21, 2026, at which time Prosperity filed a final prospectus and Stellar filed a definitive proxy statement. The mailing of the proxy statement/prospectus to Stellar shareholders is expected to commence on or about April 23, 2026. This communication is not a substitute for the Registration Statement, the proxy statement/prospectus or any other document that may be filed by Prosperity or Stellar with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE INTO THE PROXY/STATEMENT PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain the Registration Statement and the proxy statement/prospectus and other documents that are filed with the SEC by Prosperity or Stellar, as applicable, free of charge from the SEC’s website at https://www.sec.gov or through the investor relations section of Prosperity’s website at https://www.prosperitybankusa.com/investor-relations/ or Stellar’s website at https://ir.stellar.bank.

Participants in the Solicitation

Prosperity, Stellar and certain of their directors and executive officers and other employees may be deemed to be participants in the solicitation of proxies from Stellar’s shareholders in connection with the proposed transaction. Information about the directors and executive officers of Prosperity and their ownership of Prosperity common stock is contained in the definitive proxy statement for Prosperity’s 2026 annual meeting of shareholders (the “Prosperity Annual Meeting Proxy Statement”), which was filed with the SEC on March 16, 2026, including under the headings “Item 1. Election of Directors,” “Corporate Governance,” “Executive Compensation and Other Matters,” “Item 3. Advisory Vote on Executive Compensation,” and “Beneficial Ownership of Common Stock by Management of the Company and Principal Shareholders.” Information about the directors and executive officers of Stellar and their ownership of Stellar common stock is contained in Amendment No. 1 to the Annual Report on Form 10-K for the year ended December 31, 2025 of Stellar (the “Stellar 10-K/A”), which was filed with the SEC on April 17, 2026. Additional information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the shareholders of Stellar in connection with the proposed transaction, including a description of their direct or indirect interests, by security holdings or otherwise, is included in the proxy statement/prospectus relating to the proposed transaction filed with the SEC. To the extent holdings of securities by potential participants (or the identity of such participants) have changed since the information printed in the Prosperity Annual Meeting Proxy Statement or the Stellar 10-K/A, such information has been or will be reflected on Statements of Change in Ownership on Forms 3 and 4 filed with the SEC, as applicable. Free copies of the proxy statement/prospectus relating to the proposed transaction and free copies of the other SEC filings to which reference is made in this paragraph may be obtained from the SEC’s website at https://www.sec.gov or through the investor relations section of Prosperity’s website at https://www.prosperitybankusa.com/investor-relations/ or Stellar’s website at https://ir.stellar.bank.

No Offer or Solicitation

This communication is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or sell, or the solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, invitation, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, and otherwise in accordance with applicable law.

More News From Stellar Bancorp, Inc.

, /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB) today announced that its Board of Directors declared a quarterly common stock dividend of $0.60 per share for the second quarter of 2026, payable July 1, 2026, to shareholders of record as of June 15, 2026. 

Prosperity Bancshares, Inc.®

As of December 31, 2025, Prosperity Bancshares, Inc.® is a $38.463 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma.

Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses, and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

Prosperity currently operates 312 full-service banking locations: 62 in the Houston area, including The Woodlands; 36 in the South Texas area including Corpus Christi and Victoria; 61 in the Dallas/Fort Worth area; 22 in the East Texas area; 28 in the Central Texas area including Austin and San Antonio; 45 in the West Texas area including Lubbock, Midland-Odessa, Abilene; Amarillo and Wichita Falls; 15 in the Bryan/College Station area, 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area; 18 in the Central, South Texas and San Antonio areas doing business as American Bank and 11 in the San Antonio area doing business as Texas Partners Bank.

Cautionary Notes on Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may," or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates and projections about Prosperity Bancshares and its subsidiaries. These forward-looking statements may include information about Prosperity's possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity's future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity's loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity's operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of a proposed transaction, and statements about the assumptions underlying any such statement. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, many of which are outside of Prosperity's control, which may cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include but are not limited to whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); the possibility that the anticipated benefits of an acquisition transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of two companies or as a result of the strength of the economy and competitive factors generally; a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate, interest rate and commodity price fluctuations; and weather. These and various other factors are discussed in Prosperity Bancshares' Annual Report on Form 10-K for the year ended December 31, 2025 and other reports and statements Prosperity Bancshares has filed with the Securities and Exchange Commission ("SEC"). Copies of the SEC filings for Prosperity Bancshares may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

SOURCE Prosperity Bancshares, Inc.

Completed the merger of American Bank Holding Corporation on January 1, 2026 Completed the merger of Southwest Bancshares, Inc. on February 1, 2026 Net income of $116.3 million and diluted earnings per share of $1.16 for first quarter 2026; excluding merger related expenses of $42.5 million, net income was $149.9 million(1) and diluted earnings per share were $1.50(1) First quarter net interest margin increased 21 basis points to 3.51% compared to 3.30% for fourth quarter 2025 Loans, excluding Warehouse Purchase Program loans, increased $3.354 billion or 16.4% during first quarter 2026 Deposits increased $4.150 billion or 14.6% during first quarter 2026 Allowance for credit losses on loans and on off-balance sheet credit exposure of $421.5 million and allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program, of 1.61%(1) Nonperforming assets remain low at 0.33% of first quarter average interest-earning assets Completed core system conversion in February 2026 Received all necessary regulatory approvals for the pending merger of Stellar Bancorp, Inc. Named in Forbes' 2026 America's Best Banks and is ranked among "America's Best Regional Banks" by Newsweek in 2026 , /PRNewswire/ -- Prosperity Bancshares, Inc.® (NYSE: PB) ("Prosperity Bancshares"), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income of $116.3 million for the quarter ended March 31, 2026, compared with $130.2 million for the same period in 2025. Net income per diluted common share was $1.16 for the quarter ended March 31, 2026, compared with $1.37 for the same period in 2025. On January 1, 2026, American Bank Holding Corporation ("American") merged with Prosperity Bancshares and American Bank, N.A. ("American Bank") merged with Prosperity Bank (collectively, the "American Merger"), and on February 1, 2026, Southwest Bancshares, Inc. ("Southwest") merged with Prosperity Bancshares and Texas Partners Bank ("Texas Partners") merged with Prosperity Bank (collectively, the "Southwest Merger", and together with the American Merger, the "Mergers"). During the first quarter of 2026, Prosperity incurred merger related expenses of $42.5 million, or $0.34(1)per diluted common share. Excluding these charges, net income was $149.9(1) million and earnings per diluted common share was $1.50(1) for the first quarter of 2026. Additionally, during the first quarter of 2026, loans, excluding Warehouse Purchase Program loans, increased $3.354 billion or 16.4%, and deposits increased $4.150 billion or 14.6%, with both increases primarily due to the Mergers. The annualized return on first quarter average assets was 1.10%. Nonperforming assets remain low at 0.33% of first quarter average interest-earning assets.

"The first quarter of 2026 was impactful for the company and I am excited to announce that during the quarter we completed the merger of American Bank Holding Corporation on January 1, 2026, completed the merger of Southwest Bancshares, Inc. on February 1, 2026 and announced the merger of Stellar Bancorp, Inc. on January 28, 2026, for which we have now received all necessary regulatory approvals and expect to complete on July 1, 2026. Additionally, we completed a core system conversion in February," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

"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's 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 S&P Global Market Intelligence's "Top 50 US Public Bank Ranking" for 2025," continued Zalman.

"In an effort to continue to enhance shareholder value, Prosperity Bancshares repurchased approximately 837,000 shares of its common stock at an average weighted price of $68.15 per share for a total of $57.1 million during the first quarter of 2026," added Zalman.

"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 support spending and workforce expansion and key role in trade and cross-border commerce position it well for 2026 and the future," stated Zalman.

"While Texas continues to outperform the Unites States on output growth, the labor market has cooled after years of expansion. The growth in 2026 is expected to be steady, although the state's size, diversity and policy advantages position it well for a rebound," concluded Zalman. 

Results of Operations for the Three Months Ended March 31, 2026

For the three months ended March 31, 2026, net income was $116.3 million(2) or  $1.16 per diluted common share compared with $130.2 million(3) or  $1.37 per diluted common share for the same period in 2025. On a linked quarter basis, net income was $116.3 million(2) or  $1.16 per diluted common share for the three months ended March 31, 2026, compared with $139.9 million(4) or $1.49 per diluted common share for the three months ended December 31, 2025. Net income and net income per diluted common share for the first quarter of 2026 were impacted by the Mergers and merger related expenses of $42.5 million. Excluding these charges, net income was $149.9(1) million and earnings per diluted common share was $1.50(1) for the three months ended March 31, 2026. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2026 were 1.10%, 5.70% and 10.59%(1), respectively. Excluding merger related expenses, net of tax, annualized returns on average assets, average common equity and average tangible common equity for the three months ended March 31, 2026, were 1.42%(1), 7.35%(1) and 13.65%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale, write-down or write-up of assets and securities) was 59.16%(1) for the three months ended March 31, 2026, and excluding merger related expenses, the efficiency ratio was 47.58%(1).

Net interest income before provision for credit losses was $321.2 million for the three months ended March 31, 2026, compared with $265.4 million for the same period in 2025, an increase of $55.8 million or 21.0%. The net interest margin on a tax equivalent basis was 3.51% for the three months ended March 31, 2026, compared with 3.14% for the same period in 2025. Net interest income before provision for credit losses increased $46.2 million or 16.8% to $321.2 million for the three months ended March 31, 2026, compared with $275.0 million for the three months ended December 31, 2025. The net interest margin on a tax equivalent basis was 3.51% for the three months ended March 31, 2026, compared with 3.30% for the three months ended December 31, 2025. The change for both periods were primarily due to the repricing of assets and the impact of the Mergers.

Noninterest income was $46.5 million for the three months ended March 31, 2026, compared with $41.3 million for the same period in 2025, an increase of $5.2 million or 12.5%.  Noninterest income was $46.5 million for the three months ended March 31, 2026, compared with $42.8 million for the three months ended December 31, 2025, an increase of $3.7 million or 8.6%. The change for both periods was primarily due to the Mergers.

Noninterest expense was $217.3 million for the three months ended March 31, 2026, compared with $140.3 million for the same period in 2025, an increase of $77.0 million. Noninterest expense was $217.3 million for the three months ended March 31, 2026, compared with $138.7 million for the three months ended December 31, 2025, an increase of $78.6 million. The change for both periods was primarily due to an increase in merger related expenses of $42.5 million, an increase in salaries and benefits and an increase in additional expenses related to three months of American operations and two months of Southwest operations.

Balance Sheet Information

Prosperity had $43.619 billion in total assets at March 31, 2026, an increase of $4.855 billion or 12.5%, compared with $38.765 billion at March 31, 2025. Linked quarter total assets increased by $5.156 billion or 13.4% compared with $38.463 billion at December 31, 2025. Total assets increased primarily due to the Mergers.

Loans were $25.288 billion at March 31, 2026, an increase of $3.310 billion or 15.1% from $21.978 billion at March 31, 2025. Linked quarter loans increased $3.483 billion or 16.0% from $21.805 billion at December 31, 2025. Loans increased primarily due to the Mergers. Loans, excluding Warehouse Purchase Program loans, were $23.855 billion at March 31, 2026, compared with $20.920 billion at March 31, 2025, an increase of $2.935 billion or 14.0%, and compared with $20.501 billion at December 31, 2025, an increase of $3.354 billion or 16.4%.

Deposits were $32.633 billion at March 31, 2026, an increase of $4.606 billion or 16.4%, from $28.027 billion at March 31, 2025. Linked quarter deposits increased $4.150 billion or 14.6% from $28.482 billion at December 31, 2025. Deposits increased primarily due to the Mergers.

Asset Quality

Nonperforming assets totaled $122.1 million or 0.33% of quarterly average interest-earning assets at March 31, 2026, compared with  $81.4 million or 0.24% of quarterly average interest-earning assets at March 31, 2025 and $150.8 million or 0.46% of quarterly average interest-earning assets at December 31, 2025.

The allowance for credit losses on loans and off-balance sheet credit exposures was $421.5 million at March 31, 2026, compared with $386.7 million at March 31, 2025 and $371.4 million at December 31, 2025. There was no provision for credit losses for the three months ended March 31, 2026,  March 31, 2025 and December 31, 2025.

The allowance for credit losses on loans was $383.8 million or 1.52% of total loans at March 31, 2026, compared with $349.1 million or 1.59% of total loans at March 31, 2025 and $333.7 million or 1.53% of total loans at December 31, 2025. The allowance for credit losses on loans increased during the first quarter of 2026 due to the Mergers, of which $47.5 million was attributable to the American Merger and $43.9 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%(1) at March 31, 2026, compared with 1.67%(1) at March 31, 2025 and 1.63%(1) at December 31, 2025.

Net charge-offs were $41.3 million for the three months ended March 31, 2026, compared with net charge-offs of $2.7 million for the three months ended March 31, 2025 and net charge-offs of $5.9 million for the three months ended December 31, 2025. Net charge-offs for the first quarter 2026 included a $33.8 million increase in net charge-offs for commercial and industrial loans. Net charge-offs for the first quarter of 2026 included $2.0 million related to resolved purchased credit deteriorated ("PCD") loans, which had specific reserves that were allocated to the charge-offs. Additionally, reserves on PCD loans increased by $49.0 million due to Day One accounting for PCD loans at the time of the Mergers. Further, $2.0 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Dividend

Prosperity Bancshares declared a second quarter 2026 cash dividend of $0.60 per share to be paid on July 1, 2026, to all shareholders of record as of June 15, 2026.

Stock Repurchase Program

On January 26, 2026, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately 4.87 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 26, 2027, at the discretion of management. Under its 2026 stock repurchase program, Prosperity Bancshares repurchased approximately 837,000 shares of its common stock at an average weighted price of $68.15 per share for a total of $57.1 million during the three months ended March 31, 2026.

Pending Acquisition of Stellar Bancorp, Inc.

On January 28, 2026, Prosperity Bancshares and Stellar Bancorp, Inc. ("Stellar") jointly announced the signing of an Agreement and Plan of Merger (the "Merger Agreement"), which provides that Stellar, the parent company of Stellar Bank ("Stellar Bank"), will merge with and into Prosperity Bancshares, and Stellar Bank will merge with and into Prosperity Bank. Stellar Bank operates 52 banking offices in greater Houston and Beaumont, Texas and surrounding areas.

Under the terms and subject to the conditions of the Merger Agreement, Prosperity Bancshares will issue 0.3803 shares of its common stock and $11.36 in cash for each outstanding share of Stellar common stock. Based on Prosperity Bancshares' closing price of $72.90 on January 27, 2026, the total consideration was valued at approximately $2.002 billion. Prosperity has received all necessary regulatory approvals for the acquisition of Stellar and Stellar Bank, and the transaction is expected to be completed on or about July 1, 2026, subject to approval by Stellar shareholders and the satisfaction or waiver of other customary closing conditions set for in the Merger Agreement.

Acquisition of Southwest Bancshares, Inc.

On February 1, 2026, Prosperity completed the acquisition of Southwest and its wholly owned subsidiary Texas Partners, headquartered in San Antonio, Texas. Texas Partners operated 11 banking offices in Central Texas including its main office in San Antonio, and banking offices in the San Antonio area, Austin and the Hill Country. 

Pursuant to the terms of the definitive agreement, Prosperity Bancshares issued 4,094,974 shares of its common stock for all outstanding shares of Southwest common stock in the first quarter of 2026. This resulted in goodwill of $134.1 million as of March 31, 2026, which does not include all the subsequent fair value adjustments that have not yet been finalized. Additionally, Prosperity recognized $33.8 million of core deposit intangibles as of March 31, 2026.

Acquisition of American Bank Holding Corporation

On January 1, 2026, Prosperity completed the acquisition of American and its wholly owned subsidiary American Bank, headquartered in Corpus Christi, Texas. American Bank operated 18 banking offices and two loan production offices in South and Central Texas including its main office in Corpus Christi, and banking offices in San Antonio, Austin, Victoria and the greater Corpus Christi area including Port Aransas and Rockport and a loan production office in Houston, Texas. 

Pursuant to the terms of the definitive agreement, Prosperity Bancshares issued 4,439,938 shares of its common stock for all outstanding shares of American common stock in the first quarter of 2026. This resulted in goodwill of $185.0 million as of March 31, 2026, which does not include all the subsequent fair value adjustments that have not yet been finalized. Additionally, Prosperity recognized $31.1 million of core deposit intangibles as of March 31, 2026. 

Conference Call

Prosperity's management team will host a conference call on Wednesday, April 29, 2026, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's first quarter 2026 earnings. Individuals and investment professionals may participate in the call by dialing 877-883-0383 for domestic participants, or 412-902-6506 for international participants. The participant elite entry number is 7638209.

Alternatively, individuals may listen to the live webcast of the presentation by visiting Prosperity's website at www.prosperitybankusa.com. The webcast may be accessed from Prosperity's Investor Relations page by selecting "Presentations, Webcasts & Calls" from the menu and following the instructions.

Non-GAAP Financial Measures

Prosperity's management uses certain non-GAAP financial measures to evaluate its performance. Specifically, for internal planning and forecasting purposes, Prosperity reviews each of diluted earnings per share, return on average assets, return on average common equity, and return on average tangible common equity, in each case excluding merger related expenses, net of tax, and FDIC special assessment, net of tax; return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program loans; the efficiency ratio, excluding net gains and losses on the sale, write-down or write-up of assets; and the efficiency ratio, excluding net gains and losses on the sale, write-down or write-up of assets, merger related expenses, and FDIC special assessment. Prosperity believes these non-GAAP financial measures provide information useful to investors in understanding Prosperity's financial results and their presentation, together with the accompanying reconciliations, provide a more complete understanding of factors and trends affecting Prosperity's business and allow investors to view performance in a manner similar to management, the entire financial services sector, bank stock analysts and bank regulators. Further, Prosperity believes that these non-GAAP financial measures provide useful information by excluding certain items that may not be indicative of its core operating earnings and business outlook. These non-GAAP financial measures should not be considered a substitute for, nor of greater importance than, GAAP basis financial measures and results; Prosperity strongly encourages investors to review its consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. Please refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures to the nearest respective GAAP financial measures.

Prosperity Bancshares, Inc. ®

As of March 31, 2026, Prosperity Bancshares, Inc.® is a $43.619 billion Houston, Texas based regional financial holding company providing personal banking services and investments to consumers and businesses throughout Texas and Oklahoma. Founded in 1983, Prosperity believes in a community banking philosophy, taking care of customers, businesses and communities in the areas it serves by providing financial solutions to simplify everyday financial needs. In addition to offering traditional deposit and loan products, Prosperity offers digital banking solutions, credit and debit cards, mortgage services, retail brokerage services, trust and wealth management, and treasury management.

Prosperity currently operates 312 full-service banking locations: 62 in the Houston area, including The Woodlands; 36 in the South Texas area including Corpus Christi and Victoria; 61 in the Dallas/Fort Worth area; 22 in the East Texas area; 28 in the Central Texas area including Austin and San Antonio; 45 in the West Texas area including Lubbock, Midland-Odessa, Abilene; Amarillo and Wichita Falls; 15 in the Bryan/College Station area, 6 in the Central Oklahoma area; 8 in the Tulsa, Oklahoma area; 18 in the Central, South Texas and San Antonio areas doing business as American Bank and 11 in the San Antonio area doing business as Texas Partners Bank.

Cautionary Notes on Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This press release contains, and the remarks by Prosperity's management on the conference call may contain, statements regarding the proposed transaction between Prosperity Bancshares, Inc. ("Prosperity") and Stellar Bancorp, Inc. ("Stellar"); future financial and operating results; benefits and synergies of the proposed transaction; future opportunities for Prosperity; the issuance of common stock of Prosperity contemplated by the Agreement and Plan of Merger by and between Prosperity and Stellar (the "Merger Agreement"); the expected timing of the closing of the proposed transaction contemplated by the Merger Agreement; the ability of the parties to complete the proposed transaction considering the various closing conditions and any other statements about future expectations that constitute forward-looking statements within the meaning of the federal securities laws, including the meaning of the Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, oral or written forward-looking statements may also be included in other information released to the public. Such forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as "aim," "anticipate," "believe," "estimate," "expect," "goal," "guidance," "intend," "is anticipated," "is expected," "is intended," "objective," "plan," "projected," "projection," "will affect," "will be," "will continue," "will decrease," "will grow," "will impact," "will increase," "will incur," "will reduce," "will remain," "will result," "would be," variations of such words or phrases (including where the word "could," "may," or "would" is used rather than the word "will" in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates, and projections about Prosperity, Stellar and their respective subsidiaries or related to the proposed transaction between Prosperity and Stellar and are subject to significant risks and uncertainties that could cause actual results to differ materially from the results expressed in such statements.

These forward-looking statements may include information about Prosperity's and Stellar's possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity's and Stellar's future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity's and Stellar's loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity's and Stellar's future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity's and Stellar's operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement.

These forward-looking statements are not guarantees of future performance and are based on expectations and assumptions Prosperity currently believes to be valid. Because forward-looking statements relate to future results and occurrences, many of which are outside of the control of Prosperity and Stellar, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. These risks and uncertainties include, but are not limited to, whether Prosperity can: successfully identify acquisition targets and integrate the businesses of acquired companies and banks; continue to sustain its current internal growth rate or total growth rate; provide products and services that appeal to its customers; continue to have access to debt and equity capital markets; and achieve its sales objectives. Other risks include, but are not limited to: the possibility that credit quality could deteriorate; actions of competitors; changes in laws and regulations (including changes in governmental interpretations of regulations and changes in accounting standards); a deterioration or downgrade in the credit quality and credit agency ratings of the securities in Prosperity's securities portfolio; customer and consumer demand, including customer and consumer response to marketing; effectiveness of spending, investments or programs; fluctuations in the cost and availability of supply chain resources; economic conditions, including currency rate, interest rate and commodity price fluctuations; changes in trade policies by the United States or other countries, such as tariffs or retaliatory tariffs; and the effect, impact, potential duration or other implications of weather and climate-related events. Many possible events or factors could adversely affect the future financial results and performance of Prosperity, Stellar or the combined company and could cause those results or performance to differ materially from those expressed in or implied by the forward-looking statements. Such risks and uncertainties include, among others: (1) the risk that the cost savings and synergies from the proposed transaction may not be fully realized or may take longer than anticipated to be realized, (2) disruption to Prosperity's and Stellar's businesses as a result of the announcements and pendency of the proposed transaction, (3) the risk that the integration of Stellar's businesses and operations into Prosperity will be materially delayed or will be more costly or difficult than expected, or that Prosperity is otherwise unable to successfully integrate Stellar's business into its own, including as a result of unexpected factors or events, (4) the failure to obtain the necessary approval by the shareholders of Stellar, (5) reputational risk and the reaction of each company's customers, suppliers, employees or other business partners to the proposed transaction, (6) the failure of the closing conditions in the Merger Agreement to be satisfied, or any unexpected delay in closing the proposed transaction or the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (7) the dilution caused by the issuances of additional shares of Prosperity's common stock in the proposed transaction, (8) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (9) the outcome of any legal or regulatory proceedings that may be currently pending or later instituted against Prosperity before or after the proposed transaction, or against Stellar, (10) diversion of management's attention from ongoing business operations and (11) general competitive, economic, political and market conditions and other factors that may affect future results of Prosperity and Stellar. Prosperity and Stellar disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. These and various other risks, uncertainties, assumptions, and factors are discussed in the respective Annual Reports on Form 10-K for the year ended December 31, 2025, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed by Prosperity or Stellar and in other filings made by Prosperity and Stellar with the Securities and Exchange Commission (the "SEC") from time to time.

Additional Information about the Transaction and Where to Find It

In connection with the proposed transaction, Prosperity has filed with the SEC a registration statement (the "Registration Statement") on Form S-4 (File No. 333-294882) to register the shares of Prosperity common stock to be issued to the shareholders of Stellar in connection with the proposed transaction. The Registration Statement includes a prospectus of Prosperity and a proxy statement of Stellar (the "proxy statement/prospectus"), which has been sent to the shareholders of Stellar in connection with the proposed transaction. The Registration Statement was declared effective on April 21, 2026, at which time Prosperity filed a final prospectus and Stellar filed a definitive proxy statement. The mailing of the proxy statement/prospectus to Stellar shareholders commenced on April 23, 2026. This communication is not a substitute for the Registration Statement, the proxy statement/prospectus or any other document that may be filed by Prosperity or Stellar with the SEC.  INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE INTO THE PROXY/STATEMENT PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION.  Investors and security holders may obtain the Registration Statement and the proxy statement/prospectus and other documents that are filed with the SEC by Prosperity or Stellar, as applicable, free of charge from the SEC's website at https://www.sec.gov or through the investor relations section of Prosperity's website at https://www.prosperitybankusa.com/investor-relations/ or Stellar's website at https://ir.stellar.bank.

Participants in the Solicitation

Prosperity, Stellar and certain of their directors and executive officers and other employees may be deemed to be participants in the solicitation of proxies from Stellar's shareholders in connection with the proposed transaction. Information about the directors and executive officers of Prosperity and their ownership of Prosperity common stock is contained in the definitive proxy statement for Prosperity's 2026 annual meeting of shareholders (the "Prosperity Annual Meeting Proxy Statement"), which was filed with the SEC on March 16, 2026, including under the headings "Item 1. Election of Directors," "Corporate Governance," "Executive Compensation and Other Matters," "Item 3. Advisory Vote on Executive Compensation," and "Beneficial Ownership of Common Stock by Management of the Company and Principal Shareholders." Information about the directors and executive officers of Stellar and their ownership of Stellar common stock is contained in Amendment No. 1 to the Annual Report on Form 10-K for the year ended December 31, 2025 of Stellar (the "Stellar 10-K/A"), which was filed with the SEC on April 17, 2026.  Additional information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the shareholders of Stellar in connection with the proposed transaction, including a description of their direct or indirect interests, by security holdings or otherwise, is included in the proxy statement/prospectus relating to the proposed transaction filed with the SEC.  To the extent holdings of securities by potential participants (or the identity of such participants) have changed since the information printed in the Prosperity Annual Meeting Proxy Statement or the Stellar 10-K/A, such information has been or will be reflected on Statements of Change in Ownership on Forms 3 and 4 filed with the SEC, as applicable.  Free copies of the proxy statement/prospectus relating to the proposed transaction and free copies of the other SEC filings to which reference is made in this paragraph may be obtained from the SEC's website at https://www.sec.gov or through the investor relations section of Prosperity's website at https://www.prosperitybankusa.com/investor-relations/ or Stellar's website at https://ir.stellar.bank.

No Offer or Solicitation

This communication is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or sell, or the solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, invitation, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, and otherwise in accordance with applicable law.

(1)

Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

(2)

Includes purchase accounting adjustments of $4.8 million, net of tax, primarily comprised of loan discount accretion of $3.7 million and merger related provision for credit losses of $42.5 million for the three months ended March 31, 2026.

(3)

Includes purchase accounting adjustments of $3.2 million, net of tax, primarily comprised of loan discount accretion of $3.3 million for the three months ended March 31, 2025.

(4)

Includes purchase accounting adjustments of $2.7 million, net of tax, primarily comprised of loan discount accretion of $3.1 million for the three months ended December 31, 2025.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

Mar 31, 2026

Dec 31, 2025

Sep 30, 2025

Jun 30, 2025

Mar 31, 2025

Balance Sheet Data (at period end)

Loans held for sale

$

21,925

$

14,155

$

11,297

$

6,004

$

9,764

Loans held for investment

23,832,909

20,486,415

20,738,294

20,903,944

20,909,913

Loans held for investment - Warehouse Purchase

Program

1,433,152

1,304,798

1,278,178

1,287,440

1,057,893

Total loans

25,287,986

21,805,368

22,027,769

22,197,388

21,977,570

Investment securities(A)

11,951,591

10,613,425

10,232,462

10,608,104

10,792,731

Federal funds sold

209

217

210

197

221

Allowance for credit losses on loans

(383,840)

(333,742)

(339,626)

(346,084)

(349,101)

Cash and due from banks

1,547,967

1,747,511

1,766,115

1,304,993

1,694,637

Goodwill

3,822,283

3,503,127

3,503,127

3,503,127

3,503,127

Core deposit intangibles, net

111,243

51,605

55,194

58,796

62,406

Other real estate owned

13,257

13,296

13,750

7,874

8,012

Fixed assets, net

429,775

383,449

378,776

374,602

373,273

Other assets

838,712

679,169

692,692

708,355

701,799

Total assets

$

43,619,183

$

38,463,425

$

38,330,469

$

38,417,352

$

38,764,675

Noninterest-bearing deposits

$

10,580,920

$

9,467,911

$

9,522,028

$

9,426,657

$

9,675,915

Interest-bearing deposits

22,051,836

19,014,573

18,260,066

18,046,754

18,350,884

Total deposits

32,632,756

28,482,484

27,782,094

27,473,411

28,026,799

Other borrowings

2,200,000

1,950,000

2,400,000

2,900,000

2,700,000

Securities sold under repurchase agreements

176,099

201,216

185,797

183,572

216,086

Subordinated notes and junior subordinated debentures

76,186

—

—

—

—

Allowance for credit losses on off-balance sheet credit

exposures

37,646

37,646

37,646

37,646

37,646

Other liabilities

288,645

175,939

259,994

222,987

267,083

Total liabilities

35,411,332

30,847,285

30,665,531

30,817,616

31,247,614

Shareholders' equity(B)

8,207,851

7,616,140

7,664,938

7,599,736

7,517,061

Total liabilities and equity

$

43,619,183

$

38,463,425

$

38,330,469

$

38,417,352

$

38,764,675

(A)

Includes $44, ($375), ($1,987), ($1,657) and ($1,374) in unrealized gain (losses) on available for sale securities for the quarterly periods ended March 31, 2026, December 31, 2025, September 30, 2025, June 30, 2025, and March 31, 2025, respectively.

(B)

Includes $35, ($296), ($1,570), ($1,309) and ($1,085) in after-tax unrealized gain (losses) on available for sale securities for the quarterly periods ended March 31, 2026, December 31, 2025, September 30, 2025, June 30, 2025, and March 31, 2025, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

Three Months Ended

Mar 31,
2026

Dec 31,
2025

Sep 30,
2025

Jun 30,
2025

Mar 31,
2025

Income Statement Data

Interest income:

Loans

$

361,756

$

321,516

$

329,445

$

325,490

$

319,023

Securities(C)

70,531

56,767

58,207

57,836

57,886

Federal funds sold and other earning assets

9,488

8,364

10,455

9,438

15,896

Total interest income

441,775

386,647

398,107

392,764

392,805

Interest expense:

Deposits

104,237

94,625

95,965

93,790

95,597

Other borrowings

14,783

16,028

27,613

30,101

30,492

Securities sold under repurchase agreements

902

1,041

1,094

1,151

1,334

Subordinated notes and junior subordinated

debentures

703

—

—

—

—

Total interest expense

120,625

111,694

124,672

125,042

127,423

Net interest income

321,150

274,953

273,435

267,722

265,382

Provision for credit losses

—

—

—

—

—

Net interest income after provision for credit losses

321,150

274,953

273,435

267,722

265,382

Noninterest income:

Nonsufficient funds (NSF) fees

10,867

9,715

9,805

8,885

9,147

Credit card, debit card and ATM card income

9,483

9,462

9,446

9,761

8,739

Service charges on deposit accounts

8,680

7,618

7,317

7,645

7,408

Trust income

4,922

3,662

3,526

3,859

3,601

Mortgage income

1,280

954

931

965

1,009

Brokerage income

1,568

1,570

1,328

1,225

1,262

Bank owned life insurance income

2,598

2,117

2,111

1,985

2,115

Net gain (loss) on sale or write-down of assets

318

35

3

1,414

(235)

Other noninterest income

6,758

7,647

6,771

7,243

8,255

Total noninterest income

46,474

42,780

41,238

42,982

41,301

Noninterest expense:

Salaries and benefits

109,211

88,384

87,949

87,296

89,476

Net occupancy and equipment

10,654

9,379

9,395

9,168

9,146

Credit and debit card, data processing and software

amortization

18,114

12,621

12,515

12,056

11,422

Regulatory assessments and FDIC insurance

6,041

1,600

5,198

5,508

5,789

Core deposit intangibles amortization

5,259

3,588

3,602

3,610

3,641

Depreciation

5,548

5,155

4,966

4,779

4,774

Communications

3,834

3,528

3,480

3,507

3,473

Other real estate expense

341

219

314

204

140

Net (gain) loss on sale or write-down of other real

estate

(41)

109

(81)

(222)

(30)

Merger related expenses

42,516

268

62

—

—

Other noninterest expense

15,810

13,861

11,235

12,659

12,470

Total noninterest expense

217,287

138,712

138,635

138,565

140,301

Income before income taxes

150,337

179,021

176,038

172,139

166,382

Provision for income taxes

34,070

39,114

38,482

36,984

36,157

Net income available to common shareholders

$

116,267

$

139,907

$

137,556

$

135,155

$

130,225

(C) 

Interest income on securities was reduced by net premium amortization of $3,829, $4,668, $2,877, $4,926, and $5,027 for the three months ended March 31, 2026, December 31, 2025, September 30, 2025, June 30, 2025, and March 31, 2025, respectively.

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

(Dollars and share amounts in thousands, except per share data and market prices)

Three Months Ended

Mar 31,
2026

Dec 31,
2025

Sep 30,
2025

Jun 30,
2025

Mar 31,
2025

Profitability

Net income (D) (E)

$

116,267

$

139,907

$

137,556

$

135,155

$

130,225

Basic earnings per share

$

1.16

$

1.49

$

1.45

$

1.42

$

1.37

Diluted earnings per share

$

1.16

$

1.49

$

1.45

$

1.42

$

1.37

Return on average assets (F) (J)

1.10

%

1.49

%

1.44

%

1.41

%

1.34

%

Return on average common equity (F) (J)

5.70

%

7.30

%

7.18

%

7.13

%

6.94

%

Return on average tangible common equity (F) (G) (J)

10.59

%

13.61

%

13.43

%

13.44

%

13.23

%

Tax equivalent net interest margin (D) (E) (H)

3.51

%

3.30

%

3.24

%

3.18

%

3.14

%

Efficiency ratio (G) (I) (K)

59.16

%

43.66

%

44.06

%

44.80

%

45.71

%

Liquidity and Capital Ratios

Equity to assets

18.82

%

19.80

%

20.00

%

19.78

%

19.39

%

Common equity tier 1 capital

15.44

%

17.55

%

17.53

%

17.10

%

16.92

%

Tier 1 risk-based capital

15.44

%

17.55

%

17.53

%

17.10

%

16.92

%

Total risk-based capital

16.69

%

18.80

%

18.78

%

18.35

%

18.17

%

Tier 1 leverage capital

11.22

%

11.93

%

11.90

%

11.62

%

11.20

%

Period end tangible equity to period end tangible assets

(G)

10.77

%

11.63

%

11.81

%

11.58

%

11.23

%

Other Data

Weighted-average shares used in computing earnings

per common share

Basic

99,825

94,044

95,093

95,277

95,266

Diluted

99,825

94,044

95,093

95,277

95,266

Period end shares outstanding

100,835

93,058

94,993

95,277

95,258

Cash dividends paid per common share

$

0.60

$

0.60

$

0.58

$

0.58

$

0.58

Book value per common share

$

81.40

$

81.84

$

80.69

$

79.76

$

78.91

Tangible book value per common share (G)

$

42.39

$

43.64

$

43.23

$

42.38

$

41.48

Common Stock Market Price

High

$

77.20

$

73.90

$

75.44

$

74.56

$

82.75

Low

$

63.20

$

61.07

$

64.27

$

61.57

$

68.96

Period end closing price

$

67.18

$

69.11

$

66.35

$

70.24

$

71.37

Employees – FTE (excluding overtime)

4,429

3,941

3,937

3,921

3,898

Number of banking centers

312

283

283

283

284

(D)

Includes purchase accounting adjustments for the periods presented as follows:

Three Months Ended

Mar 31,

2026

Dec 31,

2025

Sep 30,

2025

Jun 30,

2025

Mar 31,

2025

Loan discount accretion

Purchased seasoned loans ("PS loans")

$2,562

$2,926

$2,242

$2,486

$2,615

PCD

$1,186

$205

$613

$638

$677

Securities net accretion

$1,573

$342

$1,475

$409

$705

Time deposits amortization

$(699)

$(1)

$(1)

$(2)

$(9)

(E)

Using effective tax rate of 22.7%, 21.8%, 21.9%, 21.5% and 21.7% for the three months ended March 31, 2026, December 31, 2025, September 30, 2025, June 30, 2025 and March 31, 2025, respectively.

(F)

Interim periods annualized.

(G)

Refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

(H)

Net interest margin for all periods presented is based on average balances on an actual 365-day basis.

(I)

Calculated by dividing total noninterest expense, excluding credit loss provisions, by net interest income plus noninterest income, excluding net gains and losses on the sale, write-down or write-up of assets and securities. Additionally, taxes are not part of this calculation.

(J)

For calculations of the annualized returns on average assets, average common equity and average tangible common equity excluding merger related expenses, net of tax, and FDIC special assessment, net of tax, refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of this non-GAAP financial measure to the nearest GAAP financial measure.

(K)

For calculations of the efficiency ratio excluding merger related expenses and FDIC special assessment refer to the "Notes to Selected Financial Data" at the end of this Earnings Release for a reconciliation of these non-GAAP financial measures to the nearest respective GAAP financial measures.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS

Three Months Ended

Mar 31, 2026

Dec 31, 2025

Mar 31, 2025

Average
Balance

Interest
Earned/
Interest
Paid

Average
Yield/
Rate

(L)

Average
Balance

Interest
Earned/
Interest
Paid

Average
Yield/
Rate

(L)

Average
Balance

Interest
Earned/
Interest
Paid

Average
Yield/
Rate

(L)

Interest-earning assets:

Loans held for sale

$

15,800

$

238

6.11 %

$

11,077

$

175

6.27 %

$

7,570

$

127

6.80 %

Loans held for investment

23,469,020

344,596

5.95 %

20,603,235

302,679

5.83 %

20,959,226

305,068

5.90 %

Loans held for investment -

Warehouse Purchase Program

1,207,793

16,922

5.68 %

1,258,036

18,662

5.89 %

876,086

13,828

6.40 %

Total loans

24,692,613

361,756

5.94 %

21,872,348

321,516

5.83 %

21,842,882

319,023

5.92 %

Investment securities

11,469,762

70,531

2.49 %

(M)

10,378,696

56,767

2.17 %

(M)

11,017,400

57,886

2.13 %

(M)

Federal funds sold and other

earning assets

1,026,015

9,488

3.75 %

830,926

8,364

3.99 %

1,443,220

15,896

4.47 %

Total interest-earning assets

37,188,390

441,775

4.82 %

33,081,970

386,647

4.64 %

34,303,502

392,805

4.64 %

Allowance for credit losses on

loans

(330,133)

(337,892)

(350,715)

Noninterest-earning assets

5,361,351

4,921,850

5,004,291

Total assets

$

42,219,608

$

37,665,928

$

38,957,078

Interest-bearing liabilities:

Interest-bearing demand deposits

$

6,266,423

$

13,993

0.91 %

$

4,812,342

$

9,088

0.75 %

$

5,224,796

$

9,019

0.70 %

Savings and money market

deposits

10,583,184

50,719

1.94 %

9,054,281

44,771

1.96 %

9,007,286

45,645

2.06 %

Certificates and other time

deposits

4,830,369

39,525

3.32 %

4,519,742

40,766

3.58 %

4,426,521

40,933

3.75 %

Other borrowings

1,620,556

14,783

3.70 %

1,595,652

16,028

3.99 %

2,776,667

30,492

4.45 %

Securities sold under repurchase

agreements

177,719

902

2.06 %

185,289

1,041

2.23 %

217,945

1,334

2.48 %

Subordinated notes and junior

subordinated debentures

63,673

703

4.48 %

—

—

—

—

—

—

Total interest-bearing liabilities

23,541,924

120,625

2.08 %

(N)

20,167,306

111,694

2.20 %

(N)

21,653,215

127,423

2.39 %

(N)

Noninterest-bearing liabilities:

Noninterest-bearing demand

deposits

10,260,022

9,543,581

9,504,540

Allowance for credit losses on off-

balance sheet credit exposures

38,070

37,646

37,646

Other liabilities

218,810

248,593

255,876

Total liabilities

34,058,826

29,997,126

31,451,277

Shareholders' equity

8,160,782

7,668,802

7,505,801

Total liabilities and shareholders' equity

$

42,219,608

$

37,665,928

$

38,957,078

Net interest income and margin

$

321,150

3.50 %

$

274,953

3.30 %

$

265,382

3.14 %

Non-GAAP to GAAP

reconciliation:

Tax equivalent adjustment

575

514

587

Net interest income and margin
     (tax equivalent basis)

$

321,725

3.51 %

$

275,467

3.30 %

$

265,969

3.14 %

(L)

Annualized and based on an actual 365-day basis.

(M)

Yield on securities was impacted by net premium amortization of $3,829, $4,668, and $5,027 for the three months ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively.

(N)

Total cost of funds, including noninterest bearing deposits, was 1.45%, 1.49% and 1.66% for the three months ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Mar 31, 2026

Dec 31, 2025

Sep 30, 2025

Jun 30, 2025

Mar 31, 2025

YIELD TREND (O)

Interest-Earning Assets:

Loans held for sale

6.11

%

6.27

%

6.64

%

6.79

%

6.80

%

Loans held for investment

5.95

%

5.83

%

5.90

%

5.88

%

5.90

%

Loans held for investment - Warehouse Purchase

Program

5.68

%

5.89

%

6.31

%

6.34

%

6.40

%

Total loans

5.94

%

5.83

%

5.92

%

5.91

%

5.92

%

Investment securities (P)

2.49

%

2.17

%

2.19

%

2.13

%

2.13

%

Federal funds sold and other earning assets

3.75

%

3.99

%

4.44

%

4.50

%

4.47

%

Total interest-earning assets

4.82

%

4.64

%

4.71

%

4.66

%

4.64

%

Interest-Bearing Liabilities:

Interest-bearing demand deposits

0.91

%

0.75

%

0.76

%

0.74

%

0.70

%

Savings and money market deposits

1.94

%

1.96

%

2.07

%

2.05

%

2.06

%

Certificates and other time deposits

3.32

%

3.58

%

3.60

%

3.59

%

3.75

%

Other borrowings

3.70

%

3.99

%

4.42

%

4.44

%

4.45

%

Securities sold under repurchase agreements

2.06

%

2.23

%

2.32

%

2.37

%

2.48

%

Subordinated notes and junior subordinated

debentures

4.48

%

—

—

—

—

Total interest-bearing liabilities

2.08

%

2.20

%

2.39

%

2.38

%

2.39

%

Net Interest Margin

3.50

%

3.30

%

3.23

%

3.18

%

3.14

%

Net Interest Margin (tax equivalent)

3.51

%

3.30

%

3.24

%

3.18

%

3.14

%

(O)

Annualized and based on average balances on an actual 365-day basis.

(P)

Yield on securities was impacted by net premium amortization of $3,829, $4,668, $2,877, $4,926 and $5,027 for the three months ended March 31, 2026, December 31, 2025, September 30, 2025, June 30, 2025, and March 31, 2025, respectively.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Mar 31, 2026

Dec 31, 2025

Sep 30, 2025

Jun 30, 2025

Mar 31, 2025

Balance Sheet Averages

Loans held for sale

$

15,800

$

11,077

$

8,371

$

9,813

$

7,570

Loans held for investment

23,469,020

20,603,235

20,851,896

20,907,400

20,959,226

Loans held for investment - Warehouse Purchase

Program

1,207,793

1,258,036

1,217,579

1,179,307

876,086

Total loans

24,692,613

21,872,348

22,077,846

22,096,520

21,842,882

Investment securities

11,469,762

10,378,696

10,530,807

10,867,856

11,017,400

Federal funds sold and other earning assets

1,026,015

830,926

934,318

841,933

1,443,220

Total interest-earning assets

37,188,390

33,081,970

33,542,971

33,806,309

34,303,502

Allowance for credit losses on loans

(330,133)

(337,892)

(343,872)

(348,310)

(350,715)

Cash and due from banks

391,668

311,541

291,809

294,379

326,066

Goodwill

3,718,640

3,503,127

3,503,127

3,503,127

3,503,128

Core deposit intangibles, net

50,089

53,553

56,956

60,739

64,293

Other real estate

14,690

14,004

11,533

8,749

7,105

Fixed assets, net

423,530

380,254

377,680

374,486

374,448

Other assets

762,734

659,371

689,659

691,735

729,251

Total assets

$

42,219,608

$

37,665,928

$

38,129,863

$

38,391,214

$

38,957,078

Noninterest-bearing deposits

$

10,260,022

$

9,543,581

$

9,451,153

$

9,508,845

$

9,504,540

Interest-bearing demand deposits

6,266,423

4,812,342

4,656,452

4,807,864

5,224,796

Savings and money market deposits

10,583,184

9,054,281

8,977,585

8,944,897

9,007,286

Certificates and other time deposits

4,830,369

4,519,742

4,422,996

4,366,510

4,426,521

Total deposits

31,939,998

27,929,946

27,508,186

27,628,116

28,163,143

Other borrowings

1,620,556

1,595,652

2,480,435

2,717,583

2,776,667

Securities sold under repurchase agreements

177,719

185,289

187,462

194,577

217,945

Subordinated notes and junior subordinated

debentures

63,673

—

—

—

—

Allowance for credit losses on off-balance sheet

credit exposures

38,070

37,646

37,646

37,646

37,646

Other liabilities

218,810

248,593

258,156

227,002

255,876

Shareholders' equity

8,160,782

7,668,802

7,657,978

7,586,290

7,505,801

Total liabilities and equity

$

42,219,608

$

37,665,928

$

38,129,863

$

38,391,214

$

38,957,078

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Mar 31, 2026

Dec 31, 2025

Sep 30, 2025

Jun 30, 2025

Mar 31, 2025

Period End Balances

Loan Portfolio

Commercial and industrial

$

2,759,190

10.9

%

$

1,864,337

8.6

%

$

1,879,282

8.5

%

$

1,897,117

8.6

%

$

1,915,124

8.7

%

Warehouse purchase

program

1,433,152

5.7

%

1,304,798

6.0

%

1,278,178

5.8

%

1,287,440

5.8

%

1,057,893

4.8

%

Construction, land

development and other

land loans

3,253,389

12.9

%

2,741,455

12.6

%

2,865,279

13.0

%

2,873,238

12.9

%

2,845,082

13.0

%

1-4 family residential

7,876,021

31.1

%

7,430,929

34.1

%

7,461,900

33.9

%

7,530,816

33.9

%

7,576,350

34.5

%

Home equity

846,739

3.3

%

843,708

3.8

%

848,740

3.9

%

869,370

3.9

%

896,529

4.1

%

Commercial real estate

(includes multi-family

residential)

7,126,212

28.2

%

5,776,397

26.5

%

5,796,937

26.3

%

5,827,645

26.3

%

5,783,410

26.3

%

Agriculture (includes

farmland)

1,064,540

4.2

%

1,027,904

4.7

%

1,019,589

4.6

%

1,029,250

4.6

%

1,013,960

4.6

%

Consumer and other

406,680

1.6

%

376,241

1.7

%

366,027

1.7

%

368,747

1.7

%

378,821

1.7

%

Energy

522,063

2.1

%

439,599

2.0

%

511,837

2.3

%

513,765

2.3

%

510,401

2.3

%

Total loans

$

25,287,986

$

21,805,368

$

22,027,769

$

22,197,388

$

21,977,570

Deposit Types

Noninterest-bearing DDA

$

10,580,920

32.4

%

$

9,467,911

33.2

%

$

9,522,028

34.3

%

$

9,426,657

34.3

%

$

9,675,915

34.5

%

Interest-bearing DDA

6,345,797

19.5

%

5,365,795

18.8

%

4,766,146

17.2

%

4,708,251

17.1

%

4,931,769

17.6

%

Money market

8,163,557

25.0

%

6,538,213

23.0

%

6,402,591

23.0

%

6,302,770

23.0

%

6,339,509

22.6

%

Savings

2,743,732

8.4

%

2,592,873

9.1

%

2,616,196

9.4

%

2,667,859

9.7

%

2,703,736

9.7

%

Certificates and other time deposits

4,798,750

14.7

%

4,517,692

15.9

%

4,475,133

16.1

%

4,367,874

15.9

%

4,375,870

15.6

%

Total deposits

$

32,632,756

$

28,482,484

$

27,782,094

$

27,473,411

$

28,026,799

Loan to Deposit Ratio

77.5

%

76.6

%

79.3

%

80.8

%

78.4

%

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Construction Loans

Mar 31, 2026

Dec 31, 2025

Sep 30, 2025

Jun 30, 2025

Mar 31, 2025

Single family residential construction

$

690,393

21.2

%

$

613,288

22.4

%

$

665,194

23.2

%

$

696,569

24.2

%

$

727,417

25.6

%

Land development

407,811

12.5

%

252,650

9.2

%

248,616

8.7

%

227,254

7.9

%

225,784

7.9

%

Raw land

276,693

8.5

%

220,169

8.0

%

230,021

8.0

%

248,380

8.7

%

261,918

9.2

%

Residential lots

249,071

7.7

%

199,709

7.3

%

203,396

7.1

%

217,835

7.6

%

219,115

7.7

%

Commercial lots

61,691

1.9

%

59,683

2.2

%

59,853

2.1

%

55,176

1.9

%

56,343

2.0

%

Commercial construction and other

1,567,640

48.2

%

1,396,850

50.9

%

1,459,255

50.9

%

1,428,985

49.7

%

1,355,587

47.6

%

Net unaccreted premium (discount)

90

(894)

(1,056)

(961)

(1,082)

Total construction loans

$

3,253,389

$

2,741,455

$

2,865,279

$

2,873,238

$

2,845,082

 Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of March 31, 2026

Houston

Dallas

Austin

OK City

Tulsa

Other (Q)

Total

Collateral Type

Shopping center/retail

$

237,105

$

218,672

$

60,763

$

16,078

$

10,018

$

364,143

$

906,779

Commercial and industrial

buildings

213,914

104,905

31,958

32,429

11,380

301,121

695,707

Office buildings

149,264

292,193

77,325

42,683

4,364

114,900

680,729

Medical buildings

112,178

23,961

25,942

42,033

25,393

74,690

304,197

Apartment buildings

144,493

83,548

101,393

9,566

12,568

224,751

576,319

Hotel

119,709

117,533

36,689

12,740

—

252,738

539,409

Other

192,874

70,247

153,285

4,638

6,663

433,289

860,996

Total

$

1,169,537

$

911,059

$

487,355

$

160,167

$

70,386

$

1,765,632

$

4,564,136

(R)

 Acquired Loans 

PS Loans

PCD Loans

Total Acquired Loans

Balance at
Acquisition
Date

Balance at
Dec 31,
2025

Balance at
Mar 31,
2026

Balance at
Acquisition
Date

Balance at
Dec 31,
2025

Balance at
Mar 31,
2026

Balance at
Acquisition
Date

Balance at
Dec 31,
2025

Balance at
Mar 31,
2026

Loan marks:

Acquired banks (S)

$

388,625

$

17,479

$

15,064

$

332,400

$

5,267

$

5,053

$

721,025

$

22,746

$

20,117

American Bank (T)

15,473

—

15,902

1,923

—

1,297

17,396

—

17,199

Texas Partners Bank (U)

38,467

—

37,626

2,422

—

2,090

40,889

—

39,716

Total

442,565

17,479

68,592

336,745

5,267

$

8,440

779,310

22,746

77,032

Acquired portfolio loan balances:

Acquired banks (S)

14,323,981

1,498,731

1,331,556

1,376,673

300,010

293,365

15,700,654

 (V)

1,798,741

1,624,921

American Bank (T)

1,810,982

—

1,684,101

93,300

—

89,055

1,904,282

—

1,773,156

Texas Partners Bank (U)

1,864,565

—

1,769,908

76,199

—

70,248

1,940,764

—

1,840,156

Total

17,999,528

1,498,731

4,785,565

1,546,172

300,010

452,668

19,545,700

1,798,741

5,238,233

Acquired portfolio loan

balances less loan marks

$

17,556,963

$

1,481,252

$

4,716,973

$

1,209,427

$

294,743

$

444,228

$

18,766,390

$

1,775,995

$

5,161,201

(Q)

Includes other MSA and non-MSA regions.

(R)

Represents a portion of total commercial real estate loans of $7.126 billion as of March 31, 2026.

(S)

Includes Bank Arlington, American State Bank, Community National Bank, First Federal Bank Texas, Coppermark Bank, First Victoria National Bank, The F&M Bank & Trust Company, Tradition Bank, LegacyTexas Bank, FirstCapital Bank and Lone Star Bank.

(T)

The American Merger was completed on January 1, 2026. The American Merger resulted in the addition of $1.904 billion in loans with related purchase accounting adjustments of $17.4 million at acquisition date.

(U)

The Southwest Merger was completed on February 1, 2026. The Southwest Merger resulted in the addition of $1.941 billion in loans with related purchase accounting adjustments of $40.9 million at acquisition date.

(V)

Actual principal balances acquired.

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Mar 31,
2026

Dec 31,
2025

Sep 30,
2025

Jun 30,
2025

Mar 31,
2025

Asset Quality

Nonaccrual loans

$

106,473

$

137,217

$

105,529

$

102,031

$

73,287

Accruing loans 90 or more days past due

2,241

317

268

576

91

Total nonperforming loans

108,714

137,534

105,797

102,607

73,378

Repossessed assets

136

12

16

6

29

Other real estate

13,257

13,296

13,750

7,874

8,012

Total nonperforming assets

$

122,107

$

150,842

$

119,563

$

110,487

$

81,419

Nonperforming assets:

Commercial and industrial (includes energy)

$

17,495

$

57,237

$

27,880

$

27,680

$

8,966

Construction, land development and other land loans

2,054

2,183

583

1,859

1,952

1-4 family residential (includes home equity)

63,168

60,296

57,241

50,501

42,481

Commercial real estate (includes multi-family residential)

17,880

9,215

11,471

12,865

12,257

Agriculture (includes farmland)

16,259

16,713

17,080

17,547

15,725

Consumer and other

5,251

5,198

5,308

35

38

Total

$

122,107

$

150,842

$

119,563

$

110,487

$

81,419

Number of loans/properties

484

449

424

392

363

Allowance for credit losses on loans

$

383,840

$

333,742

$

339,626

$

346,084

$

349,101

Net charge-offs (recoveries):

Commercial and industrial (includes energy)

$

39,225

$

5,388

$

3,341

$

1,044

$

330

Construction, land development and other land loans

—

(154)

34

(3)

(156)

1-4 family residential (includes home equity)

862

175

853

342

1,051

Commercial real estate (includes multi-family residential)

(121)

(665)

1,015

55

178

Agriculture (includes farmland)

52

(5)

(40)

(14)

—

Consumer and other

1,291

1,145

1,255

1,593

1,301

Total

$

41,309

$

5,884

$

6,458

$

3,017

$

2,704

Asset Quality Ratios

Nonperforming assets to average interest-earning assets

0.33

%

0.46

%

0.36

%

0.33

%

0.24

%

Nonperforming assets to loans and other real estate

0.48

%

0.69

%

0.54

%

0.50

%

0.37

%

Net charge-offs to average loans (annualized)

0.67

%

0.11

%

0.12

%

0.05

%

0.05

%

Allowance for credit losses on loans to total loans

1.52

%

1.53

%

1.54

%

1.56

%

1.59

%

Allowance for credit losses on loans to total loans, excluding Warehouse Purchase Program loans (G)

1.61

%

1.63

%

1.64

%

1.66

%

1.67

%

Prosperity Bancshares, Inc.®
Notes to Selected Financial Data (Unaudited)
(Dollars and share amounts in thousands, except per share data)

NOTES TO SELECTED FINANCIAL DATA

Prosperity's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Specifically, for internal planning and forecasting purposes, Prosperity reviews each of diluted earnings per share, return on average assets, return on average common equity, and return on average tangible common equity, in each case excluding merger related expenses, net of tax, and FDIC special assessment, net of tax; return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses to total loans excluding Warehouse Purchase Program loans; the efficiency ratio, excluding net gains and losses on the sale, write-down or write-up of assets; and the efficiency ratio, excluding net gains and losses on the sale, write-down or write-up of assets, merger related expenses and FDIC special assessment. In addition, due to the application of purchase accounting, Prosperity uses certain non-GAAP financial measures and ratios that exclude the impact of these items to evaluate its allowance for credit losses to total loans (excluding Warehouse Purchase Program loans). Prosperity has included information below relating to these non-GAAP financial measures for the applicable periods presented.

Three Months Ended

Mar 31,
2026

Dec 31,
2025

Sep 30,
2025

Jun 30,
2025

Mar 31,
2025

Reconciliation of diluted earnings per share to diluted earnings

per share excluding merger related expenses, net of tax, and 

FDIC special assessment, net of tax:

Diluted earnings per share (unadjusted)

$

1.16

$

1.49

$

1.45

$

1.42

$

1.37

Net income

$

116,267

$

139,907

$

137,556

$

135,155

$

130,225

Merger related expenses, net of tax(W)

33,588

212

49

—

—

FDIC special assessment, net of tax(W)

—

(2,807)

—

—

—

Net income excluding merger related expenses, net of tax, and FDIC

special assessment, net of tax(W):

$

149,855

$

137,312

$

137,605

$

135,155

$

130,225

Weighted average diluted shares outstanding

99,825

94,044

95,093

95,277

95,266

Merger related expenses, net of tax, per diluted common share(W)

$

0.34

$

—

$

—

$

—

$

—

FDIC special assessment, net of tax, per diluted common share(W)

$

—

$

(0.03)

$

—

$

—

$

—

Diluted earnings per share excluding merger related expenses, net of

tax, and FDIC special assessment, net of tax:(W)

$

1.50

$

1.46

$

1.45

$

1.42

$

1.37

Reconciliation of return on average assets to return on average

assets excluding merger related expenses, net of tax, and FDIC

special assessment, net of tax:

Return on average assets (unadjusted)

1.10

%

1.49

%

1.44

%

1.41

%

1.34

%

Net income excluding merger related expenses, net of tax, and FDIC

special assessment, net of tax(W):

$

149,855

$

137,312

$

137,605

$

135,155

$

130,225

Average total assets

$

42,219,608

$

37,665,928

$

38,129,863

$

38,391,214

$

38,957,078

Return on average assets excluding merger related expenses, net of

tax, and FDIC special assessment, net of tax (F) (W)

1.42

%

1.46

%

1.44

%

1.41

%

1.34

%

Reconciliation of return on average common equity to return on

average common equity excluding merger related expenses, net

of tax, and FDIC special assessment, net of tax:

Return on average common equity (unadjusted)

5.70

%

7.30

%

7.18

%

7.13

%

6.94

%

Net income excluding merger related expenses, net of tax, and FDIC

special assessment, net of tax(W):

$

149,855

$

137,312

$

137,605

$

135,155

$

130,225

Average shareholders' equity

$

8,160,782

$

7,668,802

$

7,657,978

$

7,586,290

$

7,505,801

Return on average common equity excluding merger related

expenses, net of tax, and FDIC

special assessment, net of tax (F) (W)

7.35

%

7.16

%

7.19

%

7.13

%

6.94

%

Reconciliation of return on average common equity to return on

average tangible common equity:

Net income

$

116,267

$

139,907

$

137,556

$

135,155

$

130,225

Average shareholders' equity

$

8,160,782

$

7,668,802

$

7,657,978

$

7,586,290

$

7,505,801

Less: Average goodwill and other intangible assets

(3,768,729)

(3,556,680)

(3,560,083)

(3,563,866)

(3,567,421)

Average tangible shareholders' equity

$

4,392,053

$

4,112,122

$

4,097,895

$

4,022,424

$

3,938,380

Return on average tangible common equity (F)

10.59

%

13.61

%

13.43

%

13.44

%

13.23

%

 (W) Calculated assuming a federal tax rate of 21.0%.

Three Months Ended

Mar 31,
2026

Dec 31,
2025

Sep 30,
2025

Jun 30,
2025

Mar 31,
2025

Reconciliation of return on average common equity to return on

average tangible common equity excluding merger related

expenses, net of tax, and FDIC special assessment, net of tax:

Net income excluding merger related expenses, net of tax, and FDIC

special assessment, net of tax(W):

$

149,855

$

137,312

$

137,605

$

135,155

$

130,225

Average shareholders' equity

$

8,160,782

$

7,668,802

$

7,657,978

$

7,586,290

$

7,505,801

Less: Average goodwill and other intangible assets

(3,768,729)

(3,556,680)

(3,560,083)

(3,563,866)

(3,567,421)

Average tangible shareholders' equity

$

4,392,053

$

4,112,122

$

4,097,895

$

4,022,424

$

3,938,380

Return on average tangible common equity excluding merger related

expenses, net of tax, and FDIC special assessment, net of tax (F) (W)

13.65

%

13.36

%

13.43

%

13.44

%

13.23

%

Reconciliation of book value per share to tangible book value per share:

Shareholders' equity

$

8,207,851

$

7,616,140

$

7,664,938

$

7,599,736

$

7,517,061

Less: Goodwill and other intangible assets

(3,933,526)

(3,554,732)

(3,558,321)

(3,561,923)

(3,565,533)

Tangible shareholders' equity

$

4,274,325

$

4,061,408

$

4,106,617

$

4,037,813

$

3,951,528

Period end shares outstanding

100,835

93,058

94,993

95,277

95,258

Tangible book value per share

$

42.39

$

43.64

$

43.23

$

42.38

$

41.48

Reconciliation of equity to assets ratio to period end tangible

equity to period end tangible assets ratio:

Tangible shareholders' equity

$

4,274,325

$

4,061,408

$

4,106,617

$

4,037,813

$

3,951,528

Total assets

$

43,619,183

$

38,463,425

$

38,330,469

$

38,417,352

$

38,764,675

Less: Goodwill and other intangible assets

(3,933,526)

(3,554,732)

(3,558,321)

(3,561,923)

(3,565,533)

Tangible assets

$

39,685,657

$

34,908,693

$

34,772,148

$

34,855,429

$

35,199,142

Period end tangible equity to period end tangible assets ratio

10.77

%

11.63

%

11.81

%

11.58

%

11.23

%

Reconciliation of allowance for credit losses to total loans to

allowance for credit losses on loans to total loans excluding

Warehouse Purchase Program:

Allowance for credit losses on loans

$

383,840

$

333,742

$

339,626

$

346,084

$

349,101

Total loans

$

25,287,986

$

21,805,368

$

22,027,769

$

22,197,388

$

21,977,570

Less: Warehouse Purchase Program loans

(1,433,152)

(1,304,798)

(1,278,178)

(1,287,440)

(1,057,893)

Total loans less Warehouse Purchase Program

$

23,854,834

$

20,500,570

$

20,749,591

$

20,909,948

$

20,919,677

Allowance for credit losses on loans to total loans excluding

Warehouse Purchase Program

1.61

%

1.63

%

1.64

%

1.66

%

1.67

%

Reconciliation of efficiency ratio to efficiency ratio excluding net

gains and losses on the sale, write-down  or write-up of assets:

Noninterest expense

$

217,287

$

138,712

$

138,635

$

138,565

$

140,301

Net interest income

$

321,150

$

274,953

$

273,435

$

267,722

$

265,382

Noninterest income

46,474

42,780

41,238

42,982

41,301

Less: net gain (loss) on sale or write-down of assets

318

35

3

1,414

(235)

Noninterest income excluding net gains and losses on the sale, write-

down or write-up of assets

46,156

42,745

41,235

41,568

41,536

Total income excluding net gains and losses on the sale, write-

down or write-up of assets

$

367,306

$

317,698

$

314,670

$

309,290

$

306,918

Efficiency ratio, excluding net gains and losses on the sale, write-

down or write-up of assets

59.16

%

43.66

%

44.06

%

44.80

%

45.71

%

Three Months Ended

Mar 31,
2026

Dec 31,
2025

Sep 30,
2025

Jun 30,
2025

Mar 31,
2025

Reconciliation of efficiency ratio to efficiency ratio, excluding net

gains and losses on the sale, write-down or write-up of assets,

merger related expenses and FDIC special assessment:

Noninterest expense

$

217,287

$

138,712

$

138,635

$

138,565

$

140,301

Less: merger related expenses

42,516

268

62

—

—

Less: FDIC special assessment

—

(3,554)

—

—

—

Noninterest expense excluding merger related expenses and FDIC

special assessment

$

174,771

$

141,998

$

138,573

$

138,565

$

140,301

Net interest income

$

321,150

$

274,953

$

273,435

$

267,722

$

265,382

Noninterest income

46,474

42,780

41,238

42,982

41,301

Less: net gain (loss) on sale or write down of assets

318

35

3

1,414

(235)

Noninterest income excluding net gains and losses on the sale, write-

 down or write-up of assets

46,156

42,745

41,235

41,568

41,536

Total income excluding net gains and losses on the sale, write-

down or write-up of assets

$

367,306

$

317,698

$

314,670

$

309,290

$

306,918

Efficiency ratio, excluding net gains and losses on the sale, write-

down or write-up of assets, merger related expenses and FDIC

special assessment

47.58

%

44.70

%

44.04

%

44.80

%

45.71

%

SOURCE Prosperity Bancshares, Inc.