About Prosperity Bancshares
Prosperity Bancshares, Inc. operates as the bank holding company for Prosperity Bank that provides a wide array of financial products and services to businesses and consumers throughout Texas and Oklahoma. The bank operates full service banking locations: in the Houston area, including The Woodlands; the South Texas area, including Corpus Christi and Victoria; the Dallas/Fort Worth area; the East Texas area; the Central Texas area, including Austin and San Antonio; the West Texas area, including Lubbock, Midland-Odessa, Abilene; Amarillo and Wichita Falls; the Bryan/College Station area, the Central Oklahoma area; and the Tulsa, Oklahoma area. The company’s market consists of the communities served by its banking centers. The company’s market areas outside of Houston, Dallas, Corpus Christi, San Antonio, Lubbock, Austin, Tulsa and Oklahoma City are dominated by either small community banks or branches of larger regional banks. Banking Activities The company, through the bank, offers a variety of traditional loan and deposit products to its customers, which consist primarily of individual consumers and businesses throughout Texas and Oklahoma. As of December 31, 2023, the bank maintained approximately 813,000 separate deposit accounts including certificates of deposit and 72,500 separate loan accounts. The company has been an active real estate lender, with commercial real estate (including farmland and multi-family residential), 1-4 family residential (including home equity) and construction, land development and other land loans comprising 29.6%, 38.5% and 14.5%, respectively, of the company’s total loans as of December 31, 2023. The company is active in commercial and industrial lending, with commercial loans comprising 10.9% of the company’s total loans as of December 31, 2023. The company also offers agricultural loans, loans for automobiles and other consumer durables, home equity loans, debit and credit cards, digital banking solutions, trust and wealth management, retail brokerage services, mortgage services and treasury management. The company offers businesses a broad array of loan products including term loans, lines of credit and loans for working capital, business expansion and the purchase of equipment and machinery; land development and interim construction loans for builders; and owner-occupied and non-owner occupied commercial real estate loans. The company has a Warehouse Purchase Program that allows mortgage banking company customers to close one-to-four-family real estate loans in their own name and manage their cash flow needs until the loans are sold to investors. By offering certificates of deposit, interest checking accounts, money market accounts and savings accounts at competitive rates, the company gives its depositors a full range of traditional deposit products. Strategy The key elements of the company’s strategy are to continue community banking emphasis; expand market share through internal growth and a disciplined acquisition strategy; increase loan volume and diversify loan portfolio; maintain sound asset quality; continue focus on efficiency; and enhance cross-selling. Loan Portfolio The company offers a broad range of short to medium-term commercial loans, primarily collateralized, to businesses for working capital (including inventory and receivables), business expansion (including acquisitions of real estate and improvements) and the purchase of equipment and machinery. Historically, the company has originated loans for its own account, including loans in the 1-4 family residential category, and has not securitized its loans. However, the company does originate longer-term residential mortgage loans for sale into the secondary market. The purpose of a particular loan generally determines its structure. Commercial and Industrial Loans: In nearly all cases, the company’s commercial loans are made in its market areas and are underwritten based on the borrower's ability to service the debt from income. Working capital loans are primarily collateralized by short-term assets whereas term loans are primarily collateralized by long-term assets. Included in commercial loans are commitments to oil and gas producers largely secured by proven, developed and producing reserves and commitments to service, equipment and midstream companies secured mainly by accounts receivable, inventory and equipment. Mineral reserve values supporting commitments to producers are normally re-determined semi-annually using reserve studies prepared by a third-party or the company’s oil and gas engineer. Commercial Real Estate: The company makes commercial real estate loans collateralized by owner-occupied and nonowner-occupied real estate to finance the purchase of real estate. The company’s commercial real estate loans are collateralized by first liens on real estate, typically have variable interest rates (or five year or less fixed rates) and amortize over a 15- to 25-year period. 1-4 Family Residential Loans: The company’s lending activities also include the origination of 1-4 family residential mortgage loans (including home equity loans) collateralized by owner-occupied and nonowner-occupied residential properties located in its market areas. The company offers a variety of mortgage loan portfolio products which generally are amortized over five to 30 years. Loans collateralized by 1-4 family residential real estate generally have been originated in amounts of no more than 89% of appraised value. The company requires mortgage title insurance, as well as hazard, wind and/or flood insurance as appropriate. The company prefers to retain residential mortgage loans for its own account rather than selling them into the secondary market. The company’s mortgage department also offers a variety of mortgage loan products which are generally amortized over 30 years, including FHA and VA loans, which are sold to secondary market investors. Construction, Land Development and Other Land Loans: The company makes loans to finance the construction of residential and nonresidential properties. Construction loans generally are collateralized by first liens on real estate and have variable interest rates. The company conducts periodic inspections, either directly or through an agent, prior to approval of periodic draws on these loans. Warehouse Purchase Program: The Warehouse Purchase Program allows unaffiliated mortgage originators (Clients) to close 1-4 family real estate loans in their own name and manage their cash flow needs until the loans are sold to investors. The company's Clients are strategically targeted for their experienced management teams and analyzed for the expected profitability of each Client’s business model over the long term. The Clients are located across the U.S. and originate mortgage loans primarily through traditional retail and/or wholesale business models using underwriting standards as required by United States government-sponsored enterprise agencies, Agencies, such as Fannie Mae, private investors to which the mortgage loans are ultimately sold and/or mortgage insurers. Agriculture Loans: The company provides agriculture loans for short-term livestock and crop production, including rice, cotton, milo and corn, farm equipment financing and agriculture real estate financing. The company evaluates agriculture borrowers primarily based on their historical profitability, level of experience in their particular industry segment, overall financial capacity and the availability of secondary collateral to withstand economic and natural variations common to the industry. Consumer Loans: Consumer loans made by the company include direct A-credit automobile loans, recreational vehicle loans, boat loans, home improvement loans, personal loans (collateralized and uncollateralized) and deposit account collateralized loans. The terms of these loans typically range from 12 to 180 months and vary based upon the nature of collateral and size of loan. Investment Portfolio As of December 31, 2023, the company’s investment portfolio included corporate debt securities, collateralized mortgage obligations and mortgage-backed securities. Supervision and Regulation The company is a financial holding company pursuant to the Gramm-Leach-Bliley Act and a bank holding company registered under the Bank Holding Company Act of 1956, as amended (‘BHCA’). Accordingly, the company is subject to supervision, regulation and examination by the Board of Governors of the Federal Reserve System (‘Federal Reserve Board’). The Gramm-Leach-Bliley Act, the BHCA and other federal laws subject financial and bank holding companies to particular restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations. Further, as a public company, the company files reports with the U.S. Securities and Exchange Commission (SEC) and is subject to its regulatory authority, including the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, with respect to the company’s securities, financial reporting and certain governance matters. Because the company’s securities are listed on the New York Stock Exchange (NYSE), the company is subject to NYSE's rules for listed companies, including rules relating to corporate governance. The company’s financial holding company status depends upon it maintaining its status as ‘well capitalized’ and ‘well managed’ under applicable Federal Reserve Board regulations. The Federal Reserve Board’s Regulation Y, for example, generally requires a holding company to give the Federal Reserve Board prior notice of any redemption or repurchase of its own equity securities if the consideration to be paid, together with the consideration paid for any repurchases or redemptions in the preceding year, is equal to 10% or more of the company’s consolidated net worth. The bank is a Texas-chartered banking association, the deposits of which are insured by the DIF of the FDIC. The bank is subject to supervision and regulation by the FDIC and the Texas Department of Banking. Such supervision and regulation subject the bank to special restrictions, requirements, potential enforcement actions and periodic examination by the FDIC and the Texas Department of Banking. Because the Federal Reserve Board regulates the company, the Federal Reserve Board also has supervisory authority, which affects the bank. Further, because the bank has total assets of over $10 billion, the bank is also subject to supervision and regulation by the Consumer Financial Protection Bureau (CFPB). The CFPB regulates the offering and provision of consumer financial products and services under the federal consumer financial laws. Transactions between the bank and its nonbanking affiliates, including the company, are subject to Section 23A and Section 23B of the Federal Reserve Act. In general, Section 23A imposes limits on the amount of such transactions to 10% of the bank’s capital stock and surplus and requires that such transactions be secured by designated amounts of specified collateral. Section 23B generally requires that certain transactions between the bank and its affiliates be on terms substantially the same, or at least as favorable to the bank, as those prevailing at the time for comparable transactions with or involving other nonaffiliated persons. The bank is subject to a number of federal and state consumer protection laws that extensively govern its relationship with its customers. These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices. The deposits of the bank are insured up to applicable limits by the DIF, and the bank must pay deposit insurance assessments to the FDIC for such deposit insurance protection. History Prosperity Bancshares, Inc., a Texas corporation, was founded in 1983. The company was incorporated in 1983.
