Announced the signing of a definitive merger agreement with First Bancshares of Texas, Inc., headquartered in Midland, Texas

•

Announced the signing of a definitive merger agreement with Lone Star State Bancshares, Inc., headquartered in Lubbock, Texas

HOUSTON, October 26, 2022. Prosperity Bancshares, Inc.® (NYSE: PB), the parent company of Prosperity Bank® (collectively, "Prosperity"), reported net income of $135.8 million for the quarter ended September 30, 2022 compared with $128.6 million for the same period in 2021. Net income per diluted common share was $1.49 for the quarter ended September 30, 2022 compared with $1.39 for the same period in 2021, an increase of 7.2%, and the annualized return on third quarter average assets was 1.45%. Additionally, loans, excluding Warehouse Purchase Program and SBA Paycheck Protection Program ("PPP") loans, increased $530.8 million or 3.1% (12.5% annualized) during the third quarter of 2022. Nonperforming assets remain low at 0.06% of third quarter average interest-earning assets.

"This is an exciting time for Prosperity. On October 11, 2022, we announced the signing of definitive merger agreements with First Bancshares of Texas, Inc., headquartered in Midland, Texas and Lone Star State Bancshares, Inc., headquartered in Lubbock, Texas. On a pro forma basis, we will have over $6 billion in assets located in our West Texas market, and the number one market share in the combined Midland and Odessa markets and the number three market share in Lubbock," said David Zalman, Prosperity's Senior Chairman and Chief Executive Officer.

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(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.

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"We also recently announced that the Board of Directors voted to increase the fourth quarter 2022 dividend to $0.55 a share. This represents a 6.0% increase in dividends declared in 2022 compared with 2021. The increase reflects the confidence the Board has in the continuing success of our company and in the communities we serve," continued Zalman.

"With the Federal Reserve continuing to raise rates, our net interest margin continues to increase, which improves our earnings. This trend should continue as our assets reprice over time. We saw strong loan growth for the quarter, with loans, excluding Warehouse Purchase Program and PPP loans, increasing 12.5% on an annualized basis. Our asset quality continues to be one of the best in banking with nonperforming assets of 0.06% of quarterly average interest-earning assets as of September 30, 2022," added Zalman.

"Individuals and businesses continue to move to Texas and Oklahoma because of lower tax rates and a pro-business political environment," stated Zalman.

"We are excited with our performance and the recently announced merger transactions and look forward to continuing to build our company. I want to thank our customers for their business and loyalty and our associates and board members for their work and dedication," concluded Zalman.

Results of Operations for the Three Months Ended September 30, 2022

Net income was $135.8 million(2) for the three months ended September 30, 2022 compared with $128.6 million(3) for the same period in 2021, an increase of $7.2 million or 5.6%. The change was primarily due to an increase in securities interest income, partially offset by a decrease in loan interest income (including a decrease in PPP fees and interest income of $13.9 million), a decrease in loan discount accretion of $4.1 million, and an increase in interest expense. Net income per diluted common share was $1.49 for the three months ended September 30, 2022 compared with $1.39 for the same period in 2021. On a linked quarter basis, net income was $135.8 million(2) for the three months ended September 30, 2022 compared with $128.5 million(4) for the three months ended June 30, 2022, an increase of $7.3 million or 5.7%. The change was primarily due to an increase in loan interest income and securities interest income, partially offset by an increase in interest expense. Net income per diluted common share was $1.49 for the three months ended September 30, 2022 compared with $1.40 for the three months ended June 30, 2022. Annualized returns on average assets, average common equity and average tangible common equity for the three months ended September 30, 2022 were 1.45%, 8.24% and 16.44%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and securities) was 41.38%(1) for the three months ended September 30, 2022.

Net interest income before provision for credit losses for the three months ended September 30, 2022 was $260.7 million compared with $248.6 million for the same period in 2021, an increase of $12.1 million or 4.9%. The change was primarily due to an increase in the average balance and average rates on investment securities and an increase in the average balance on loans held for investment, partially offset by a decrease in loan discount accretion of $4.1 million, a decrease in PPP fees and interest income of $13.9 million, and an increase in the average rates on interest-bearing liabilities. On a linked quarter basis, net interest income before provision for credit losses was $260.7 million compared with $248.5 million for the three months ended June 30, 2022, an increase of $12.2 million or 4.9%. The change was primarily due to an increase in the average balances and average rates on loans and average rates on investment securities, partially offset by an increase in the average rates on interest-bearing liabilities.

The net interest margin on a tax equivalent basis was 3.11% for the three months ended September 30, 2022 compared with 3.10% for the same period in 2021 and 2.97% for the three months ended June 30, 2022. The linked quarter increase was primarily due to higher average balances and average rates on loans and average rates on investment securities, partially offset by an increase in the average rates on interest-bearing liabilities.

Noninterest income was $34.7 million for the three months ended September 30, 2022 compared with $34.6 million for the same period in 2021. On a linked quarter basis, noninterest income was $34.7 million compared with $37.6 million for the three months ended June 30, 2022, a decrease of $2.9 million or 7.7%, primarily due to decreases in net gain on the sale or write-down of assets and other noninterest income.

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(2)

Includes purchase accounting adjustments of $997 thousand, net of tax, primarily comprised of loan discount accretion of $1.2 million for the three months ended September 30, 2022.

(3)

Includes purchase accounting adjustments of $4.3 million, net of tax, primarily comprised of loan discount accretion of $5.4 million for the three months ended September 30, 2021.

(4)

Includes purchase accounting adjustments of $103 thousand, net of tax, primarily comprised of loan discount accretion of $59 thousand for the three months ended June 30, 2022.

(5)

Includes purchase accounting adjustments of $5.2 million, net of tax, primarily comprised of loan discount accretion of $6.5 million for the nine months ended September 30, 2022.

(6)

Includes purchase accounting adjustments of $27.3 million, net of tax, primarily comprised of loan discount accretion of $33.9 million for the nine months ended September 30, 2021.

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Noninterest expense was$122.2 million for the three months ended September 30, 2022 compared with $119.8 million for the same period in 2021, an increase of $2.4 million or 2.0%, primarily due to an increase in salaries and credit and debit card, data processing and software amortization. On a linked quarter basis, noninterest expensedecreased $664 thousandto $122.2 million compared with $122.9 million for the three months ended June 30, 2022.

Results of Operations for the Nine Months Ended September 30, 2022

Net income was $386.6 million(5) for the nine months ended September 30, 2022 compared with $392.5 million(6) for the same period in 2021. Net income per diluted common share was $4.22 for the nine months ended September 30, 2022 compared with $4.23 for the same period in 2021. Annualized returns on average assets, average common equity and average tangible common equity for the nine months ended September 30, 2022 were 1.37%, 7.88% and 15.83%(1), respectively. Prosperity's efficiency ratio (excluding net gains and losses on the sale or write down of assets and securities) was 42.70%(1) for the nine months ended September 30, 2022.

Net interest income before provision for credit losses for the nine months ended September 30, 2022 was $749.1 million compared with $748.5 million for the prior year, an increase of $546 thousand.

The net interest margin on a tax equivalent basis for the nine months ended September 30, 2022 was 2.99% compared with 3.20% for the same period in 2021. The change was primarily due to a decrease in loan discount accretion of $27.4 million and a decrease in PPP fees and interest income of $36.1 million, partially offset by an increase in the average balances and rates on investment securities and a decrease in the average rate on interest-bearing liabilities.

Noninterest income was $107.4 million for the nine months ended September 30, 2022 compared with $104.2 million for the same period in 2021, an increase of $3.2 million or3.1%. The increase was primarily due to an increase in NSF income, a net gain on the sale or write-down of assets and an increase in trust income, partially offset by a decrease in mortgage income.

Noninterest expense was $364.9 million for the nine months ended September 30, 2022 compared with $354.1 million for the same period in 2021, an increase of $10.9 million or 3.1%. The increase was primarily due to an increase in salaries and benefits, the change in net loss (gain) on sale or write-down of other real estate and an increase in credit and debit card and data processing expense.

Balance Sheet Information

At September 30, 2022, Prosperity had $37.844 billion in total assets, an increase of $1.331 billion or 3.6%, compared with $36.512 billion at September 30, 2021.

Loans at September 30, 2022 were $18.506 billion, a decrease of $451.4 million or 2.4%, compared with $18.958 billion at September 30, 2021, primarily due to decreases in Warehouse Purchase Program, PPP and commercial real estate loans, partially offset by increases in 1-4 family residential and construction, land development and other land loans. Linked quarter loans increased $297.4 million or 1.6% (6.5% annualized) from $18.209 billion at June 30, 2022. Excluding Warehouse Purchase Program and PPP loans, loans at September 30, 2022 were $17.575 billion compared to $16.594 billion at September 30, 2021, an increase of $980.7 million or 5.9%. Linked quarter loans, excluding Warehouse Purchase Program and PPP loans, increased $530.8 million or 3.1% (12.5% annualized) from $17.044 billion at June 30, 2022.

As part of its lending activities, Prosperity extends credit to oil and gas production and servicing companies. Oil and gas production loans are loans to companies directly involved in the exploration and/or production of oil and gas. Oil and gas servicing loans are loans to companies that provide services for oil and gas production and exploration. At September 30, 2022, oil and gas loans totaled $410.1 million (net of discount and excluding PPP loans totaling $4.7 million) or 2.2% of total loans, of which $190.3 million were production loans and $219.7 million were servicing loans, compared with total oil and gas loans of $569.3 million (net of discount and excluding PPP loans totaling $55.8 million) or 3.0% of total loans at September 30, 2021, of which $352.4 million were production loans and $216.9 million were servicing loans. In addition, as of September 30, 2022, Prosperity had total unfunded commitments to oil and gas companies of $463.3 million compared with total unfunded commitments to oil and gas companies of $363.3 million as of September 30, 2021. Unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

Deposits at September 30, 2022 were $29.300 billion, a decrease of $151.6 million or 0.5%, compared with $29.452 billion at September 30, 2021. Linked quarter deposits decreased $565.5 million or 1.9% from $29.866 billion at June 30, 2022, primarily due to a decrease in public fund deposits. Prosperity generally experiences seasonality with its public fund deposits, as public fund customers use the tax dollars they receive in December and January throughout the year, resulting in lower deposit balances in the second and third quarters of the year. On a linked quarter basis, noninterest-bearing deposits increased by $122.0 million.

Asset Quality

Nonperforming assets totaled $19.9 million or 0.06% of quarterly average interest-earning assets at September 30, 2022 compared with $36.5 million or 0.11% of quarterly average interest-earning assets at September 30, 2021 and $22.2 million or 0.07% of quarterly average interest-earning assets at June 30, 2022.

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The allowance for credit losses on loans and off-balance sheet credit exposures was $312.1 millionat September 30, 2022compared with $317.1 million atSeptember 30, 2021 and $313.9 million at June 30, 2022. There was no provision for credit losses for the three and nine months ended September 30, 2022 and 2021.

The allowance for credit losses on loans was $282.2 million or 1.52% of total loans at September 30, 2022 compared with $287.2 million or 1.51% of total loans at September 30, 2021 and $284.0 million or 1.56% of total loans at June 30, 2022. Excluding Warehouse Purchase Program and PPP loans, the allowance for credit losses on loans to total loans was 1.61%(1) at September 30, 2022 compared with 1.73%(1) at September 30, 2021 and 1.67%(1) at June 30, 2022.

Net charge-offs were $1.8 million for the three months ended September 30, 2022 compared with net charge-offs of $15.7 million for the three months ended September 30, 2021 and net charge-offs of $1.2 million for the three months ended June 30, 2022. During the third quarter of 2022, net charge-offs did not include any purchased credit deteriorated ("PCD") loans and $16 thousand of specific reserves on resolved PCD loans was released to the general reserve.

Net charge-offs were $4.2 million for the nine months ended September 30, 2022 compared with $28.9 million for the nine months ended September 30, 2021. Net charge-offs for the nine months ended September 30, 2022 did not include any PCD loans and $2.0 million of specific reserves on resolved PCD loans was released to the general reserve during the period.

Dividend

Prosperity Bancshares declared a fourth quarter cash dividend of $0.55 per share to be paid on January 3, 2023, to all shareholders of record as of December 15, 2022, an increase of $0.03 per share, or 5.8%, from the prior quarter.

Stock Repurchase Program

On January 18, 2022, Prosperity Bancshares announced a stock repurchase program under which up to 5%, or approximately

4.61 million shares, of its outstanding common stock may be acquired over a one-year period expiring on January 18, 2023, at the discretion of management. Under its 2022 stock repurchase program, Prosperity Bancshares repurchased zero shares of its common stock during the three months ended September 30, 2022 and 981,884 shares of its common stock at an average weighted price of $66.90 per share during the nine months ended September 30, 2022.

Pending Acquisition of First Bancshares of Texas, Inc.

On October 11, 2022, Prosperity Bancshares and First Bancshares of Texas, Inc. ("First Bancshares") jointly announced the signing of a definitive merger agreement whereby First Bancshares, the parent company of FirstCapital Bank of Texas, N.A., ("FirstCapital Bank") will merge with and into Prosperity. FirstCapital Bank operates 16 banking offices in 6 different markets in West, North and Central Texas areas, including its main office in Midland, and banking offices in Midland, Lubbock, Amarillo, Wichita Falls, Burkburnett, Byers, Henrietta, Dallas, Horseshoe Bay, Marble Falls and Fredericksburg, Texas. As of June 30, 2022, First Bancshares, on a consolidated basis, reported total assets of $2.121 billion, total loans of $1.589 billion and total deposits of $1.781 billion.

Under the terms of the merger agreement, Prosperity will issue 3,583,370 shares of Prosperity common stock plus $93.4 million in cash for all outstanding shares of First Bancshares capital stock, subject to certain conditions and potential adjustments. Based on Prosperity's closing price of $69.27 on October 7, 2022, the total consideration was valued at approximately $341.6 million. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals and approval of the shareholders of First Bancshares. The transaction is expected to close during the first quarter of 2023, although delays could occur.

Pending Acquisition of Lone Star State Bancshares, Inc.

On October 11, 2022, Prosperity Bancshares and Lone Star State Bancshares, Inc. ("Lone Star") jointly announced the signing of a definitive merger agreement whereby Lone Star, the parent company of Lone Star State Bank of West Texas ("Lone Star Bank") will merge with and into Prosperity. Lone Star Bank operates 5 banking offices in the West Texas area, including its main office in Lubbock, and 1 banking center in each of Brownfield, Midland, Odessa and Big Spring, Texas. As of June 30, 2022, Lone Star, on a consolidated basis, reported total assets of $1.305 billion, total loans of $933.5 million and total deposits of $1.174 billion.

Under the terms of the merger agreement, Prosperity will issue 2,376,182 shares of Prosperity common stock plus $64.1 million in cash for all outstanding shares of Lone Star capital stock, subject to certain conditions and potential adjustments. Based on Prosperity's closing price of $69.27 on October 7, 2022, the total consideration was valued at approximately $228.7 million. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals and approval of the shareholders of Lone Star. The transaction is expected to close during the first quarter of 2023, although delays could occur.

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Conference Call

Prosperity's management team will host a conference call on Wednesday, October 26, 2022, at 11:30 a.m. Eastern Time (10:30 a.m. Central Time) to discuss Prosperity's third quarter 2022 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 7408913.

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 home page by selecting "Presentations, Webcasts & Calls" from the menu on the Investor Relations link and following the instructions.

Non-GAAP Financial Measures

Prosperity's management uses certain non-GAAP financial measures to evaluate its performance. Specifically, Prosperity reviews return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses on loans to total loans excluding Warehouse Purchase Program and PPP loans; and the efficiency ratio excluding net gains and losses on the sale or write down of assets and securities, for internal planning and forecasting purposes. 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, provides a more complete understanding of factors and trends affecting Prosperity's business and allows 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 September 30, 2022, Prosperity Bancshares, Inc.® is a $37.844 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 272 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 62 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area; 6 in the Central Oklahoma area; and 8 in the Tulsa, Oklahoma area.

Cautionary Notes on Forward-Looking Statements

"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. 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 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

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operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of each of the proposed transactions, and statements about the assumptions underlying any such statement, as well as expectations regarding the effects of the COVID-19 pandemic on Prosperity's operating income, financial condition and cash flows. 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 Prosperity's control, 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, First Bancshares, Lone Star 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: the occurrence of any event, change or other circumstance that could give rise to the right of a party to terminate the merger agreement with First Bancshares or Lone Star, as applicable, the outcome of any legal proceedings that may be instituted against Prosperity, First Bancshares or Lone Star, delays in completing either of the transactions, the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of each of the transactions) or First Bancshares shareholder approval or Lone Star shareholder approval or to satisfy any of the other conditions to the transactions on a timely basis or at all, the possibility that the anticipated benefits of the transactions are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors generally, or specifically in the West Texas area and the West, North and Central Texas area where First Bancshares and Lone Star, respectively, do a majority of their respective business and Prosperity has a significant presence, the possibility that the transactions may be more expensive to complete than anticipated, including as a result of unexpected factors or events, diversion of management's attention from ongoing business operations and opportunities, potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transactions, Prosperity's ability to complete the acquisition and integration of First Bancshares and of Lone Star successfully, and the dilution caused by Prosperity's issuance of additional shares of its common stock in connection with the transactions. Prosperity disclaims 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 factors are discussed in Prosperity's Annual Report on Form 10-K for the year ended December 31, 2021, and other reports and statements Prosperity has filed with the Securities and Exchange Commission ("SEC"). Copies of the SEC filings for Prosperity may be downloaded from the Internet at no charge from http://www.prosperitybankusa.com.

Additional Information about the First Bancshares Merger and Where to Find It

In connection with the proposed merger of First Bancshares into Prosperity, Prosperity will file with the SEC a registration statement on Form S-4 to register the shares of Prosperity common stock to be issued to the shareholders of First Bancshares. The registration statement will include a proxy statement/prospectus which will be sent to the shareholders of First Bancshares seeking their approval of the proposed transaction.

WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY, FIRST BANCSHARES AND THE PROPOSED TRANSACTION.

Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. You will also be able to obtain these documents, when they are filed, free of charge, from Prosperity at http://www.prosperitybankusa.com. Copies of the proxy statement/prospectus can also be obtained, when it becomes available, free of charge, by directing a request by telephone or mail to Prosperity Bancshares, Inc., Prosperity Bank Plaza, 4295 San Felipe, Houston, Texas 77027 Attn: Investor Relations, (281) 269-7199 or to First Bancshares of Texas, Inc., 310 West Wall Street, Suite 1200, Midland, Texas 79701, Attention: Ken Burgess, (844) 322-8392.

Additional Information about the Lone Star Merger and Where to Find It

In connection with the proposed merger of Lone Star into Prosperity, Prosperity will file with the SEC a registration statement on Form S-4 to register the shares of Prosperity common stock to be issued to the shareholders of Lone Star. The registration statement will include a proxy statement/prospectus which will be sent to the shareholders of Lone Star seeking their approval of the proposed transaction.

WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT PROSPERITY, LONE STAR AND THE PROPOSED TRANSACTION.

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Investors and security holders may obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. You will also be able to obtain these documents, when they are filed, free of charge, from Prosperity at http://www.prosperitybankusa.com. Copies of the proxy statement/prospectus can also be obtained, when it becomes available, free of charge, by directing a request by telephone or mail to Prosperity Bancshares, Inc., Prosperity Bank Plaza, 4295 San Felipe, Houston, Texas 77027 Attn: Investor Relations, (281) 269-7199 or to Lone Star State Bancshares, Inc., 6220 Milwaukee Avenue, Lubbock, Texas 79424, Attention: Alan Lackey, (806) 771-7717.

Participants in the Solicitation

Prosperity, First Bancshares and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of First Bancshares in connection with the proposed transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the proxy statement/prospectus regarding the proposed transaction when it becomes available.

Prosperity, Lone Star and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Lone Star in connection with the proposed transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the proxy statement/prospectus regarding the proposed transaction when it becomes available.

Additional information about Prosperity and its directors and executive officers may be found in the definitive proxy statement of Prosperity relating to its 2022 Annual Meeting of Shareholders filed with the SEC on March 14, 2022, and other documents filed by Prosperity with the SEC. These documents can be obtained free of charge from the sources described above.

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 of 1933, as amended, and otherwise in accordance with applicable law.

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Bryan/College Station Area

Garland

Palestine

Magnolia

Texas Tech Student Union

Bryan

Grapevine

Rusk

Magnolia Parkway

Bryan-29th Street

Grapevine Main

Seven Points

Mont Belvieu

Midland

Bryan-East

Kiest

Teague

Nederland

Wadley

Bryan-North

Lake Highlands

Tyler-Beckham

Needville

Wall Street

Caldwell

McKinney

Tyler-South Broadway

Rosenberg

College Station

McKinney Eldorado

Tyler-University

Shadow Creek

Odessa

Crescent Point

McKinney Redbud

Winnsboro

Spring

Grandview

Hearne

North Carrolton

Tomball

Grant

Huntsville

Park Cities

Houston Area

Waller

Kermit Highway

Madisonville

Plano

Houston

West Columbia

Parkway

Navasota

Plano-West

Aldine

Wharton

New Waverly

Preston Forest

Alief

Winnie

Other West Texas Area

Rock Prairie

Preston Parker

Bellaire

Wirt

Locations

Southwest Parkway

Preston Royal

Beltway

Big Spring

Tower Point

Red Oak

Clear Lake

South Texas Area -

Brownfield

Wellborn Road

Richardson

Copperfield

Corpus Christi

Brownwood

Richardson-West

Cypress

Calallen

Cisco

Central Texas Area

Rosewood Court

Downtown

Carmel

Comanche

Austin

The Colony

Eastex

Northwest

Early

Allandale

Tollroad

Fairfield

Saratoga

Floydada

Cedar Park

Trinity Mills

First Colony

Timbergate

Gorman

Congress

Turtle Creek

Fry Road

Water Street

Levelland

Lakeway

West 15th Plano

Gessner

Littlefield

Liberty Hill

West Allen

Gladebrook

Victoria

Merkel

Northland

Westmoreland

Grand Parkway

Victoria Main

Plainview

Oak Hill

Wylie

Heights

Victoria-Navarro

San Angelo

Research Blvd

Highway 6 West

Victoria-North

Slaton

Westlake

Fort Worth

Little York

Victoria Salem

Snyder

Haltom City

Medical Center

Other Central Texas Area

Hulen

Memorial Drive

Other South Texas Area

Oklahoma

Locations

Keller

Northside

Locations

Central Oklahoma Area

Bastrop

Museum Place

Pasadena

Alice

Oklahoma City

Canyon Lake

Renaissance Square

Pecan Grove

Aransas Pass

23rd Street

Dime Box

Roanoke

Pin Oak

Beeville

Expressway

Dripping Springs

Stockyards

River Oaks

Colony Creek

I-240

Elgin

Sugar Land

Cuero

Memorial

Flatonia

Other Dallas/Fort Worth Area

SW Medical Center

Edna

Georgetown

Locations

Tanglewood

Goliad

Other Central Oklahoma Area

Gruene

Arlington

The Plaza

Gonzales

Locations

Kingsland

Azle

Uptown

Hallettsville

Edmond

La Grange

Ennis

Waugh Drive

Kingsville

Norman

Lexington

Gainesville

Westheimer

Mathis

New Braunfels

Glen Rose

West University

Padre Island

Tulsa Area

Pleasanton

Granbury

Woodcreek

Palacios

Tulsa

Round Rock

Grand Prairie

Port Lavaca

Garnett

San Antonio

Jacksboro

Katy

Portland

Harvard

Schulenburg

Mesquite

Cinco Ranch

Rockport

Memorial

Seguin

Muenster

Katy-Spring Green

Sinton

Sheridan

Smithville

Runaway Bay

Taft

S. Harvard

Thorndale

Sanger

The Woodlands

Yoakum

Utica Tower

Weimar

Waxahachie

The Woodlands-College Park

Yorktown

Yale

Weatherford

The Woodlands-I-45

Dallas/Fort Worth Area

The Woodlands-Research Forest

West Texas Area

Other Tulsa Area Locations

Dallas

East Texas Area

Abilene

Owasso

14th Street Plano

Athens

Other Houston Area

Antilley Road

Abrams Centre

Blooming Grove

Locations

Barrow Street

Addison

Canton

Angleton

Cypress Street

Allen

Carthage

Bay City

Judge Ely

Balch Springs

Corsicana

Beaumont

Mockingbird

Camp Wisdom

Crockett

Cleveland

Carrollton

Eustace

East Bernard

Lubbock

Cedar Hill

Gilmer

El Campo

4th Street

Coppell

Grapeland

Dayton

66th Street

East Plano

Gun Barrel City

Galveston

82nd Street

Euless

Jacksonville

Groves

86th Street

Frisco

Kerens

Hempstead

98th Street

Frisco Warren

Longview

Hitchcock

Avenue Q

Frisco-West

Mount Vernon

Liberty

North University

- - -

Page 8

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Balance Sheet Data (at period end)

Loans held for sale

$

2,871

$

3,350

$

2,810

$

7,274

$

10,197

Loans held for investment

17,580,653

17,067,871

16,720,173

16,833,171

16,949,486

Loans held for investment - Warehouse Purchase Program

922,764

1,137,623

1,344,541

1,775,699

1,998,049

Total loans

18,506,288

18,208,844

18,067,524

18,616,144

18,957,732

Investment securities(A)

14,806,487

14,912,313

14,798,127

12,818,901

12,629,368

Federal funds sold

244

201

274

241

237

Allowance for credit losses on loans

(282,179

)

(283,959

)

(285,163

)

(286,380

)

(287,187

)

Cash and due from banks

602,152

393,716

1,560,321

2,547,739

1,055,386

Goodwill

3,231,636

3,231,636

3,231,636

3,231,636

3,231,636

Core deposit intangibles, net

53,906

56,483

59,064

61,684

64,539

Other real estate owned

1,758

1,555

1,705

622

150

Fixed assets, net

337,099

335,939

336,075

319,799

322,799

Other assets

586,111

530,528

501,623

523,584

537,459

Total assets

$

37,843,502

$

37,387,256

$

38,271,186

$

37,833,970

$

36,512,119

Noninterest-bearing deposits

$

11,154,143

$

11,032,184

$

10,776,652

$

10,750,034

$

10,326,489

Interest-bearing deposits

18,145,952

18,833,434

20,291,658

20,021,728

19,125,163

Total deposits

29,300,095

29,865,618

31,068,310

30,771,762

29,451,652

Other borrowings

1,165,000

300,000

-

-

-

Securities sold under repurchase agreements

454,304

481,785

440,891

448,099

440,969

Allowance for credit losses on off-balance sheet credit exposures

29,947

29,947

29,947

29,947

29,947

Other liabilities

282,514

188,079

227,614

156,926

244,110

Total liabilities

31,231,860

30,865,429

31,766,762

31,406,734

30,166,678

Shareholders' equity(B)

6,611,642

6,521,827

6,504,424

6,427,236

6,345,441

Total liabilities and equity

$

37,843,502

$

37,387,256

$

38,271,186

$

37,833,970

$

36,512,119

(A) Includes $(296), $1,517, $2,115, $2,290 and $2,483 in unrealized (losses) gains on available for sale securities for the quarterly periods ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, respectively.

(B) Includes $(234), $1,198 $1,671, $1,809 and $1,961 in after-tax unrealized (losses) gains on available for sale securities for the quarterly periods ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, respectively.

Page 9

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(In thousands)

Three Months Ended

Year-to-Date

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Sep 30, 2022

Sep 30, 2021

Income Statement Data

Interest income:

Loans

$

210,268

$

192,770

$

193,025

$

206,209

$

213,821

$

596,063

$

663,699

Securities(C)

68,761

64,111

55,011

46,857

46,217

187,883

128,602

Federal funds sold and other earning assets

525

925

847

563

302

2,297

993

Total interest income

279,554

257,806

248,883

253,629

260,340

786,243

793,294

Interest expense:

Deposits

14,669

8,641

8,754

8,685

11,578

32,064

44,228

Other borrowings

3,719

450

-

-

-

4,169

-

Securities sold under repurchase agreements

487

244

185

184

195

916

518

Total interest expense

18,875

9,335

8,939

8,869

11,773

37,149

44,746

Net interest income

260,679

248,471

239,944

244,760

248,567

749,094

748,548

Provision for credit losses

-

-

-

-

-

-

-

Net interest income after provision for credit losses

260,679

248,471

239,944

244,760

248,567

749,094

748,548

Noninterest income:

Nonsufficient funds (NSF) fees

8,887

8,484

8,124

8,401

7,962

25,495

21,209

Credit card, debit card and ATM card income

8,889

8,880

8,179

8,894

8,837

25,948

25,786

Service charges on deposit accounts

6,222

6,365

6,211

6,237

6,115

18,798

18,155

Trust income

3,174

2,875

2,703

2,698

2,467

8,752

7,580

Mortgage income

340

502

455

685

1,396

1,297

7,617

Brokerage income

940

917

892

953

861

2,749

2,367

Bank owned life insurance income

1,214

1,293

1,283

1,317

1,325

3,790

3,911

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

50

1,108

689

1,165

255

1,847

(68

)

Other noninterest income

4,972

7,170

6,586

5,407

5,427

18,728

17,652

Total noninterest income

34,688

37,594

35,122

35,757

34,645

107,404

104,209

Noninterest expense:

Salaries and benefits

79,578

80,371

79,411

76,496

78,412

239,360

234,060

Net occupancy and equipment

8,412

8,039

7,848

8,140

8,165

24,299

24,044

Credit and debit card, data processing and software amortization

9,516

9,246

8,849

9,050

9,103

27,611

26,054

Regulatory assessments and FDIC insurance

2,807

2,851

2,850

2,801

2,497

8,508

7,837

Core deposit intangibles amortization

2,577

2,581

2,620

2,855

2,878

7,778

8,696

Depreciation

4,436

4,539

4,547

4,518

4,524

13,522

13,577

Communications

3,374

3,206

2,919

3,134

3,013

9,499

8,894

Other real estate expense

198

195

214

24

30

607

472

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

(213

)

14

(621

)

2

4

(820

)

(2,722

)

Other noninterest expense

11,529

11,836

11,213

12,518

11,189

34,578

33,170

Total noninterest expense

122,214

122,878

119,850

119,538

119,815

364,942

354,082

Income before income taxes

173,153

163,187

155,216

160,979

163,397

491,556

498,675

Provision for income taxes

37,333

34,697

32,890

34,192

34,807

104,920

106,165

Net income available to common shareholders

$

135,820

$

128,490

$

122,326

$

126,787

$

128,590

$

386,636

$

392,510

(C) Interest income on securities was reduced by net premium amortization of $9,947, $11,450, $12,857, $16,006 and $15,141 for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, respectively, and $34,254 and $42,421 for the nine months ended September 30, 2022 and September 30, 2021, respectively.

Page 10

Prosperity Bancshares, Inc. ®

Financial Highlights (Unaudited)

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

Three Months Ended

Year-to-Date

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Sep 30, 2022

Sep 30, 2021

Profitability

Net income (D) (E)

$

135,820

$

128,490

$

122,326

$

126,787

$

128,590

$

386,636

$

392,510

Basic earnings per share

$

1.49

$

1.40

$

1.33

$

1.38

$

1.39

$

4.22

$

4.23

Diluted earnings per share

$

1.49

$

1.40

$

1.33

$

1.38

$

1.39

$

4.22

$

4.23

Return on average assets (F)

1.45

%

1.36

%

1.29

%

1.37

%

1.42

%

1.37

%

1.47

%

Return on average common equity (F)

8.24

%

7.84

%

7.54

%

7.91

%

8.07

%

7.88

%

8.32

%

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

16.44

%

15.73

%

15.30

%

16.26

%

16.72

%

15.83

%

17.53

%

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

3.11

%

2.97

%

2.88

%

2.97

%

3.10

%

2.99

%

3.20

%

Efficiency ratio (G) (I)

41.38

%

43.12

%

43.68

%

42.79

%

42.34

%

42.70

%

41.52

%

Liquidity and Capital Ratios

Equity to assets

17.47

%

17.44

%

17.00

%

16.99

%

17.38

%

17.47

%

17.38

%

Common equity tier 1 capital

15.44

%

(J)

15.26

%

(J)

15.32

%

(J)

15.10

%

14.84

%

15.44

%

(J)

14.84

%

Tier 1 risk-based capital

15.44

%

(J)

15.26

%

(J)

15.32

%

(J)

15.10

%

14.84

%

15.44

%

(J)

14.84

%

Total risk-based capital

16.09

%

(J)

15.91

%

(J)

15.99

%

(J)

15.45

%

15.20

%

16.09

%

(J)

15.20

%

Tier 1 leverage capital

9.94

%

(J)

9.58

%

(J)

9.44

%

(J)

9.62

%

9.55

%

9.94

%

(J)

9.55

%

Period end tangible equity to period end tangible assets (G)

9.62

%

9.48

%

9.19

%

9.07

%

9.18

%

9.62

%

9.18

%

Other Data

Weighted-average shares used in computing earnings per common share

Basic

91,209

91,772

92,161

92,162

92,683

91,710

92,823

Diluted

91,209

91,772

92,161

92,162

92,683

91,710

92,823

Period end shares outstanding

91,210

91,196

92,160

92,170

92,160

91,210

92,160

Cash dividends paid per common share

$

0.52

$

0.52

$

0.52

$

0.52

$

0.49

$

1.56

$

1.47

Book value per common share

$

72.49

$

71.51

$

70.58

$

69.73

$

68.85

$

72.49

$

68.85

Tangible book value per common share (G)

$

36.47

$

35.46

$

34.87

$

34.00

$

33.09

$

36.47

$

33.09

Common Stock Market Price

High

$

77.93

$

73.50

$

80.46

$

78.67

$

72.97

$

80.46

$

83.02

Low

$

65.37

$

64.69

$

69.08

$

68.53

$

64.40

$

64.69

$

64.40

Period end closing price

$

66.68

$

68.27

$

69.38

$

72.35

$

71.13

$

66.68

$

71.13

Employees - FTE (excluding overtime)

3,592

3,576

3,595

3,704

3,625

3,592

3,625

Number of banking centers

272

272

272

273

273

272

273

(D) Includes purchase accounting adjustments for the periods presented as follows:

Three Months Ended

Year-to-Date

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Sep 30, 2022

Sep 30, 2021

Loan discount accretion

ASC 310-20

$912

$(265)

$4,674

$4,635

$3,761

$5,321

$26,805

ASC 310-30

$322

$324

$521

$731

$1,618

$1,167

$7,107

Securities net amortization

$40

$12

$52

$139

$136

$104

$418

Time deposits amortization

$68

$84

$100

$127

$201

$252

$1,035

(E) Using effective tax rate of 21.6%, 21.3%, 21.2%, 21.2% and 21.3% for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, respectively, and 21.3% for the nine months ended September 30, 2022 and September 30, 2021.

(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 or write down of assets and securities. Additionally, taxes are not part of this calculation.

(J) Beginning on January 1, 2022, the cumulative amount of the current expected credit loss ("CECL") transition adjustments is being phased in over a three-year transition period.

Page 11

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS

Three Months Ended

Sep 30, 2022

Jun 30, 2022

Sep 30, 2021

Average

Balance

Interest

Earned/

Interest

Paid

Average

Yield/

Rate

(K)

Average

Balance

Interest

Earned/

Interest

Paid

Average

Yield/

Rate

(K)

Average

Balance

Interest

Earned/

Interest

Paid

Average

Yield/

Rate

(K)

Interest-earning assets:

Loans held for sale

$

4,136

$

57

5.47%

$

3,199

$

40

5.02%

$

11,714

$

91

3.08%

Loans held for investment

17,275,866

199,417

4.58%

16,799,609

182,286

4.35%

17,102,998

199,019

4.62%

Loans held for investment - Warehouse Purchase Program

938,589

10,794

4.56%

1,257,521

10,444

3.33%

1,836,252

14,711

3.18%

Total Loans

18,218,591

210,268

4.58%

18,060,329

192,770

4.28%

18,950,964

213,821

4.48%

Investment securities

14,962,847

68,761

1.82%

(L)

14,989,666

64,111

1.72%

(L)

12,184,964

46,217

1.50%

(L)

Federal funds sold and other earning assets

87,859

525

2.37%

540,907

925

0.69%

734,787

302

0.16%

Total interest-earning assets

33,269,297

279,554

3.33%

33,590,902

257,806

3.08%

31,870,715

260,340

3.24%

Allowance for credit losses on loans

(283,244

)

(284,550

)

(301,011

)

Noninterest-earning assets

4,480,512

4,448,060

4,728,965

Total assets

$

37,466,565

$

37,754,412

$

36,298,669

Interest-bearing liabilities:

Interest-bearing demand deposits

$

6,155,511

$

2,345

0.15%

$

6,437,614

$

2,154

0.13%

$

6,089,678

$

3,614

0.24%

Savings and money market deposits

10,172,986

9,479

0.37%

10,702,273

4,473

0.17%

9,944,664

4,522

0.18%

Certificates and other time deposits

2,185,529

2,845

0.52%

2,409,663

2,014

0.34%

2,897,123

3,442

0.47%

Other borrowings

577,828

3,719

2.55%

112,582

450

1.60%

-

-

-

Securities sold under repurchase agreements

473,584

487

0.41%

463,108

244

0.21%

448,338

195

0.17%

Total interest-bearing liabilities

19,565,438

18,875

0.38%

(M)

20,125,240

9,335

0.19%

(M)

19,379,803

11,773

0.24%

(M)

Noninterest-bearing liabilities:

Noninterest-bearing demand deposits

11,048,856

10,855,802

10,286,062

Allowance for credit losses on off-balance sheet credit exposures

29,947

29,947

29,947

Other liabilities

231,812

186,344

229,502

Total liabilities

30,876,053

31,197,333

29,925,314

Shareholders' equity

6,590,512

6,557,079

6,373,355

Total liabilities and shareholders' equity

$

37,466,565

$

37,754,412

$

36,298,669

Net interest income and margin

$

260,679

3.11%

$

248,471

2.97%

$

248,567

3.09%

Non-GAAP to GAAP reconciliation:

Tax equivalent adjustment

458

445

551

Net interest income and margin (tax equivalent basis)

$

261,137

3.11%

$

248,916

2.97%

$

249,118

3.10%

(K) Annualized and based on an actual 365-day basis.

(L) Yield on securities was impacted by net premium amortization of $9,947, $11,450 and $15,141 for the three months ended September 30, 2022, June 31, 2022 and September 30, 2021, respectively.

(M) Total cost of funds, including noninterest bearing deposits, was 0.24%, 0.12% and 0.16% for the three months ended September 30, 2022, June 31, 2022 and September 30, 2021, respectively.

Page 12

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

YIELD ANALYSIS

Year-to-Date

Sep 30, 2022

Sep 30, 2021

Average

Balance

Interest

Earned/

Interest

Paid

Average

Yield/

Rate

(N)

Average

Balance

Interest

Earned/

Interest

Paid

Average

Yield/

Rate

(N)

Interest-earning assets:

Loans held for sale

$

3,980

$

137

4.60%

$

19,507

$

439

3.01%

Loans held for investment

16,931,422

564,736

4.46%

17,228,462

613,813

4.76%

Loans held for investment - Warehouse Purchase Program

1,153,762

31,190

3.61%

2,061,432

49,447

3.21%

Total loans

18,089,164

596,063

4.41%

19,309,401

663,699

4.60%

Investment securities

14,579,521

187,883

1.72%

(O)

10,849,373

128,602

1.58%

(O)

Federal funds sold and other earning assets

913,923

2,297

0.34%

1,151,647

993

0.12%

Total interest-earning assets

33,582,608

786,243

3.13%

31,310,421

793,294

3.39%

Allowance for credit losses on loans

(284,486

)

(307,500

)

Noninterest-earning assets

4,462,318

4,644,874

Total assets

$

37,760,440

$

35,647,795

Interest-bearing liabilities:

Interest-bearing demand deposits

$

6,453,810

$

6,951

0.14%

$

6,160,988

$

15,028

0.33%

Savings and money market deposits

10,579,351

17,978

0.23%

9,747,706

15,765

0.22%

Certificates and other time deposits

2,409,251

7,135

0.40%

2,969,151

13,435

0.60%

Other borrowings

232,253

4,169

2.40%

-

-

-

Securities sold under repurchase agreements

462,994

916

0.26%

403,254

518

0.17%

Total interest-bearing liabilities

20,137,659

37,149

0.25%

(P)

19,281,099

44,746

0.31%

(P)

Noninterest-bearing liabilities:

Noninterest-bearing demand deposits

10,848,605

9,855,599

Allowance for credit losses on off-balance sheet credit exposures

29,947

29,947

Other liabilities

198,196

194,347

Total liabilities

31,214,407

29,360,992

Shareholders' equity

6,546,033

6,286,803

Total liabilities and shareholders' equity

37,760,440

$

35,647,795

Net interest income and margin

$

749,094

2.98%

$

748,548

3.20%

Non-GAAP to GAAP reconciliation:

Tax equivalent adjustment

1,375

1,772

Net interest income and margin (tax equivalent basis)

$

750,469

2.99%

$

750,320

3.20%

(N) Annualized and based on an actual 365-day basis.

(O) Yield on securities was impacted by net premium amortization of $34,254 and $42,421 for the nine months ended September 30, 2022 and 2021, respectively.

(P) Total cost of funds, including noninterest bearing deposits, was 0.16% and 0.21% for the nine months ended September 30, 2022 and 2021, respectively.

Page 13

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

YIELD TREND (Q)

Interest-Earning Assets:

Loans held for sale

5.47

%

5.02

%

3.52

%

3.20

%

3.08

%

Loans held for investment

4.58

%

4.35

%

4.44

%

4.53

%

4.62

%

Loans held for investment - Warehouse Purchase Program

4.56

%

3.33

%

3.18

%

3.12

%

3.18

%

Total loans

4.58

%

4.28

%

4.35

%

4.40

%

4.48

%

Investment securities (R)

1.82

%

1.72

%

1.62

%

1.46

%

1.50

%

Federal funds sold and other earning assets

2.37

%

0.69

%

0.16

%

0.16

%

0.16

%

Total interest-earning assets

3.33

%

3.08

%

2.98

%

3.07

%

3.24

%

Interest-Bearing Liabilities:

Interest-bearing demand deposits

0.15

%

0.13

%

0.15

%

0.14

%

0.24

%

Savings and money market deposits

0.37

%

0.17

%

0.15

%

0.15

%

0.18

%

Certificates and other time deposits

0.52

%

0.34

%

0.35

%

0.38

%

0.47

%

Other borrowings

2.55

%

1.60

%

-

-

-

Securities sold under repurchase agreements

0.41

%

0.21

%

0.17

%

0.17

%

0.17

%

Total interest-bearing liabilities

0.38

%

0.19

%

0.17

%

0.18

%

0.24

%

Net Interest Margin

3.11

%

2.97

%

2.87

%

2.96

%

3.09

%

Net Interest Margin (tax equivalent)

3.11

%

2.97

%

2.88

%

2.97

%

3.10

%

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

(R) Yield on securities was impacted by net premium amortization of $9,947, $11,450, $12,857, $16,006 and $15,141 for the three months ended September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, respectively.

Page 14

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Balance Sheet Averages

Loans held for sale

$

4,136

$

3,199

$

4,611

$

8,794

$

11,714

Loans held for investment

17,275,866

16,799,609

16,712,690

16,830,163

17,102,998

Loans held for investment - Warehouse Purchase Program

938,589

1,257,521

1,268,715

1,772,971

1,836,252

Total Loans

18,218,591

18,060,329

17,986,016

18,611,928

18,950,964

Investment securities

14,962,847

14,989,666

13,772,974

12,751,857

12,184,964

Federal funds sold and other earning assets

87,859

540,907

2,135,503

1,393,859

734,787

Total interest-earning assets

33,269,297

33,590,902

33,894,493

32,757,644

31,870,715

Allowance for credit losses on loans

(283,244

)

(284,550

)

(285,692

)

(287,191

)

(301,011

)

Cash and due from banks

302,479

309,223

326,552

329,406

570,765

Goodwill

3,231,637

3,231,637

3,231,637

3,231,637

3,231,637

Core deposit intangibles, net

55,158

57,728

60,346

63,091

65,955

Other real estate

1,652

1,639

1,893

321

279

Fixed assets, net

336,657

336,242

327,297

321,524

323,584

Other assets

552,929

511,591

510,944

530,603

536,745

Total assets

$

37,466,565

$

37,754,412

$

38,067,470

$

36,947,035

$

36,298,669

Noninterest-bearing deposits

$

11,048,856

$

10,855,802

$

10,636,624

$

10,587,441

$

10,286,062

Interest-bearing demand deposits

6,155,511

6,437,614

6,775,114

6,196,283

6,089,678

Savings and money market deposits

10,172,986

10,702,273

10,870,461

10,286,650

9,944,664

Certificates and other time deposits

2,185,529

2,409,663

2,637,529

2,766,123

2,897,123

Total deposits

29,562,882

30,405,352

30,919,728

29,836,497

29,217,527

Other borrowings

577,828

112,582

-

-

-

Securities sold under repurchase agreements

473,584

463,108

452,054

432,981

448,338

Allowance for credit losses on off-balance sheet credit exposures

29,947

29,947

29,947

29,947

29,947

Other liabilities

231,812

186,344

176,360

234,746

229,502

Shareholders' equity

6,590,512

6,557,079

6,489,381

6,412,864

6,373,355

Total liabilities and equity

$

37,466,565

$

37,754,412

$

38,067,470

$

36,947,035

$

36,298,669

Page 15

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Period End Balances

Loan Portfolio

Commercial and industrial

$

2,188,029

11.8

%

$

2,155,727

11.8

%

$

2,007,783

11.1

%

$

2,050,631

11.0

%

$

1,841,899

9.7

%

Warehouse purchase program

922,764

5.0

%

1,137,623

6.2

%

1,344,541

7.4

%

1,775,699

9.5

%

1,998,049

10.6

%

Construction, land development and other land loans

2,659,552

14.4

%

2,460,526

13.5

%

2,327,837

12.9

%

2,299,715

12.4

%

2,269,417

12.0

%

1-4 family residential

5,447,993

29.4

%

5,156,200

28.3

%

4,970,620

27.5

%

4,860,419

26.1

%

4,709,468

24.8

%

Home equity

943,197

5.1

%

932,725

5.1

%

870,130

4.8

%

808,289

4.4

%

746,426

3.9

%

Commercial real estate (includes multi-family residential)

4,966,243

26.8

%

4,967,662

27.3

%

5,150,555

28.5

%

5,251,368

28.2

%

5,550,841

29.3

%

Agriculture (includes farmland)

670,603

3.6

%

665,960

3.7

%

617,418

3.4

%

620,338

3.3

%

631,497

3.3

%

Consumer and other

288,834

1.6

%

274,532

1.5

%

246,433

1.4

%

288,496

1.6

%

274,980

1.5

%

Energy

410,069

2.2

%

430,339

2.4

%

445,949

2.5

%

491,305

2.6

%

569,314

3.0

%

Paycheck Protection Program

9,004

0.1

%

27,550

0.2

%

86,258

0.5

%

169,884

0.9

%

365,841

1.9

%

Total loans

$

18,506,288

$

18,208,844

$

18,067,524

$

18,616,144

$

18,957,732

Deposit Types

Noninterest-bearing DDA

$

11,154,143

38.1

%

$

11,032,184

36.9

%

$

10,776,652

34.7

%

$

10,750,034

34.9

%

$

10,326,489

35.0

%

Interest-bearing DDA

6,027,157

20.6

%

6,331,314

21.2

%

6,603,934

21.2

%

6,741,092

21.9

%

6,088,923

20.7

%

Money market

6,438,787

22.0

%

6,646,726

22.3

%

7,603,329

24.5

%

7,178,904

23.3

%

6,864,664

23.3

%

Savings

3,563,776

12.1

%

3,597,820

12.0

%

3,543,300

11.4

%

3,401,727

11.1

%

3,293,850

11.2

%

Certificates and other time deposits

2,116,232

7.2

%

2,257,574

7.6

%

2,541,095

8.2

%

2,700,005

8.8

%

2,877,726

9.8

%

Total deposits

$

29,300,095

$

29,865,618

$

31,068,310

$

30,771,762

$

29,451,652

Loan to Deposit Ratio

63.2

%

61.0

%

58.2

%

60.5

%

64.4

%

Page 16

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Construction Loans

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Single family residential construction

$

1,004,000

37.8

%

$

911,443

37.0

%

$

816,072

35.0

%

$

728,393

31.7

%

$

659,248

29.0

%

Land development

145,303

5.5

%

133,398

5.4

%

103,853

4.5

%

99,099

4.3

%

92,623

4.1

%

Raw land

343,066

12.9

%

316,750

12.9

%

310,987

13.4

%

322,673

14.0

%

315,803

13.9

%

Residential lots

237,714

8.9

%

223,703

9.1

%

212,029

9.1

%

206,978

9.0

%

195,201

8.6

%

Commercial lots

181,679

6.8

%

184,794

7.5

%

183,760

7.9

%

184,901

8.0

%

169,189

7.5

%

Commercial construction and other

747,803

28.1

%

690,453

28.1

%

701,148

30.1

%

757,687

33.0

%

837,436

36.9

%

Net unaccreted discount

(13

)

(15

)

(12

)

(16

)

(83

)

Total construction loans

$

2,659,552

$

2,460,526

$

2,327,837

$

2,299,715

$

2,269,417

Non-Owner Occupied Commercial Real Estate Loans by Metropolitan Statistical Area (MSA) as of September 30, 2022

Houston

Dallas

Austin

OK City

Tulsa

Other (S)

Total

Collateral Type

Shopping center/retail

$

422,432

$

257,332

$

50,427

$

18,868

$

27,159

$

276,875

$

1,053,093

Commercial and industrial buildings

160,956

78,735

18,646

32,753

16,267

166,892

474,249

Office buildings

92,541

322,061

26,391

68,836

4,378

64,189

578,396

Medical buildings

82,266

20,237

2,525

20,961

39,028

51,973

216,990

Apartment buildings

79,475

64,631

12,259

13,995

8,239

147,840

326,439

Hotel

92,257

68,683

44,188

28,364

-

131,290

364,782

Other

73,549

76,947

32,797

7,512

2,593

71,337

264,735

Total

$

1,003,476

$

888,626

$

187,233

$

191,289

$

97,664

$

910,396

$

3,278,684

(T)

Acquired Loans

Non-PCD Loans

PCD Loans

Total Acquired Loans

Balance at

Acquisition

Date

Balance at

Jun 30, 2022

Balance at

Sep 30, 2022

Balance at

Acquisition

Date

Balance at

Jun 30, 2022

Balance at

Sep 30, 2022

Balance at

Acquisition

Date

Balance at

Jun 30, 2022

Balance at

Sep 30, 2022

Loan marks:

Acquired banks (U)

$

345,599

$

3,734

$

2,836

$

320,052

$

3,993

$

3,671

$

665,651

$

7,727

$

6,507

Acquired portfolio loan balances:

Acquired banks (U)

12,286,159

1,559,270

1,410,748

689,573

68,125

66,613

12,975,732

(V)

1,627,395

1,477,361

Acquired portfolio loan balances less loan marks

$

11,940,560

$

1,555,536

$

1,407,912

$

369,521

$

64,132

$

62,942

$

12,310,081

$

1,619,668

$

1,470,854

(S) Includes other MSA and non-MSA regions.

(T) Represents a portion of total commercial real estate loans of $4.966 billion as of September 30, 2022.

(U) 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 and LegacyTexas Bank.

(V) Actual principal balances acquired.

Page 17

Prosperity Bancshares, Inc.®

Financial Highlights (Unaudited)

(Dollars in thousands)

Three Months Ended

Year-to-Date

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Sep 30, 2022

Sep 30, 2021

Asset Quality

Nonaccrual loans

$

17,729

$

20,619

$

21,765

$

26,269

$

35,035

$

17,729

$

35,035

Accruing loans 90 or more days past due

378

13

3,695

887

1,038

378

1,038

Total nonperforming loans

18,107

20,632

25,460

27,156

36,073

18,107

36,073

Repossessed assets

13

-

19

310

326

13

326

Other real estate

1,758

1,555

1,705

622

150

1,758

150

Total nonperforming assets

$

19,878

$

22,187

$

27,184

$

28,088

$

36,549

$

19,878

$

36,549

Nonperforming assets:

Commercial and industrial (includes energy)

$

2,376

$

2,964

$

4,403

$

6,150

$

8,199

$

2,376

$

8,199

Construction, land development and other land loans

1,712

1,866

1,761

1,841

803

1,712

803

1-4 family residential (includes home equity)

13,986

14,335

11,899

11,990

11,117

13,986

11,117

Commercial real estate (includes multi-family residential)

1,364

2,448

7,685

7,276

15,691

1,364

15,691

Agriculture (includes farmland)

434

567

1,402

816

643

434

643

Consumer and other

6

7

34

15

96

6

96

Total

$

19,878

$

22,187

$

27,184

$

28,088

$

36,549

$

19,878

$

36,549

Number of loans/properties

150

160

147

157

155

150

155

Allowance for credit losses on loans

$

282,179

$

283,959

$

285,163

$

286,380

$

287,187

$

282,179

$

287,187

Net charge-offs (recoveries):

Commercial and industrial (includes energy)

$

(15

)

$

(197

)

$

14

$

177

$

3,763

$

(198

)

$

8,876

Construction, land development and other land loans

(4

)

(5

)

430

(162

)

(4

)

421

(114

)

1-4 family residential (includes home equity)

(202

)

(32

)

87

(72

)

66

(147

)

107

Commercial real estate (includes multi-family residential)

757

395

(366

)

(10

)

11,180

786

18,286

Agriculture (includes farmland)

119

(9

)

(103

)

(102

)

(63

)

7

(39

)

Consumer and other

1,125

1,052

1,155

976

755

3,332

1,765

Total

$

1,780

$

1,204

$

1,217

$

807

$

15,697

$

4,201

$

28,881

Asset Quality Ratios

Nonperforming assets to average interest-earning assets

0.06

%

0.07

%

0.08

%

0.09

%

0.11

%

0.06

%

0.12

%

Nonperforming assets to loans and other real estate

0.11

%

0.12

%

0.15

%

0.15

%

0.19

%

0.11

%

0.19

%

Net charge-offs to average loans (annualized)

0.04

%

0.03

%

0.03

%

0.02

%

0.33

%

0.03

%

0.20

%

Allowance for credit losses on loans to total loans

1.52

%

1.56

%

1.58

%

1.54

%

1.51

%

1.52

%

1.51

%

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

1.61

%

1.67

%

1.71

%

1.72

%

1.73

%

1.61

%

1.73

%

Page 18

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, Prosperity reviews return on average tangible common equity; tangible book value per share; the tangible equity to tangible assets ratio; allowance for credit losses on loans to total loans excluding Warehouse Purchase Program and PPP loans; and the efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities, for internal planning and forecasting purposes. 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 on loans to total loans (excluding Warehouse Purchase Program loans and PPP loans). Prosperity has included information below relating to these non-GAAP financial measures for the applicable periods presented.

Three Months Ended

Year-to-Date

Sep 30, 2022

Jun 30, 2022

Mar 31, 2022

Dec 31, 2021

Sep 30, 2021

Sep 30, 2022

Sep 30, 2021

Reconciliation of return on average common equity to return on average tangible common equity:

Net income

$

135,820

$

128,490

$

122,326

$

126,787

$

128,590

$

386,636

$

392,510

Average shareholders' equity

$

6,590,512

$

6,557,079

$

6,489,381

$

6,412,864

$

6,373,355

$

6,546,033

$

6,286,803

Less: Average goodwill and other intangible assets

(3,286,795

)

(3,289,365

)

(3,291,983

)

(3,294,728

)

(3,297,592

)

(3,289,362

)

(3,300,990

)

Average tangible shareholders' equity

$

3,303,717

$

3,267,714

$

3,197,398

$

3,118,136

$

3,075,763

$

3,256,671

$

2,985,813

Return on average tangible common equity(F)

16.44

%

15.73

%

15.30

%

16.26

%

16.72

%

15.83

%

17.53

%

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

Shareholders' equity

$

6,611,642

$

6,521,827

$

6,504,424

$

6,427,236

$

6,345,441

$

6,611,642

$

6,345,441

Less: Goodwill and other intangible assets

(3,285,541

)

(3,288,119

)

(3,290,700

)

(3,293,320

)

(3,296,175

)

(3,285,541

)

(3,296,175

)

Tangible shareholders' equity

$

3,326,101

$

3,233,708

$

3,213,724

$

3,133,916

$

3,049,266

$

3,326,101

$

3,049,266

Period end shares outstanding

91,210

91,196

92,160

92,170

92,160

91,210

92,160

Tangible book value per share

$

36.47

$

35.46

$

34.87

$

34.00

$

33.09

$

36.47

$

33.09

Reconciliation of equity to assets ratio to period end tangible equity to period end tangible assets ratio:

Tangible shareholders' equity

$

3,326,101

$

3,233,708

$

3,213,724

$

3,133,916

$

3,049,266

$

3,326,101

$

3,049,266

Total assets

$

37,843,502

$

37,387,256

$

38,271,186

$

37,833,970

$

36,512,119

$

37,843,502

$

36,512,119

Less: Goodwill and other intangible assets

(3,285,541

)

(3,288,119

)

(3,290,700

)

(3,293,320

)

(3,296,175

)

(3,285,541

)

(3,296,175

)

Tangible assets

$

34,557,961

$

34,099,137

$

34,980,486

$

34,540,650

$

33,215,944

$

34,557,961

$

33,215,944

Period end tangible equity to period end tangible assets ratio

9.62

%

9.48

%

9.19

%

9.07

%

9.18

%

9.62

%

9.18

%

Reconciliation of allowance for credit losses to total loans to allowance for credit losses on loans to total loans excluding Warehouse Purchase Program and Paycheck Protection Program loans:

Allowance for credit losses on loans

$

282,179

$

283,959

$

285,163

$

286,380

$

287,187

$

282,179

$

287,187

Total loans

$

18,506,288

$

18,208,844

$

18,067,524

$

18,616,144

$

18,957,732

$

18,506,288

$

18,957,732

Less: Warehouse Purchase Program loans

(922,764

)

(1,137,623

)

(1,344,541

)

(1,775,699

)

(1,998,049

)

(922,764

)

(1,998,049

)

Less: Paycheck Protection Program loans

(9,004

)

(27,550

)

(86,258

)

(169,884

)

(365,841

)

(9,004

)

(365,841

)

Total loans less Warehouse Purchase Program and Paycheck Protection Program loans

$

17,574,520

$

17,043,671

$

16,636,725

$

16,670,561

$

16,593,842

$

17,574,520

$

16,593,842

Allowance for credit losses on loans to total loans excluding Warehouse Purchase Program and Paycheck Protection Program loans

1.61

%

1.67

%

1.71

%

1.72

%

1.73

%

1.61

%

1.73

%

Reconciliation of efficiency ratio to efficiency ratio excluding net gains and losses on the sale of assets and securities:

Noninterest expense

$

122,214

$

122,878

$

119,850

$

119,538

$

119,815

$

364,942

$

354,082

Net interest income

$

260,679

$

248,471

$

239,944

$

244,760

$

248,567

$

749,094

$

748,548

Noninterest income

34,688

37,594

35,122

35,757

34,645

107,404

104,209

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

50

1,108

689

1,165

255

1,847

(68

)

Noninterest income excluding net gains and losses on the sale or write down of assets and securities

34,638

36,486

34,433

34,592

34,390

105,557

104,277

Total income excluding net gains and losses on the sale or write down of assets and securities

$

295,317

$

284,957

$

274,377

$

279,352

$

282,957

$

854,651

$

852,825

Efficiency ratio, excluding net gains and losses on the sale or write down of assets and securities

41.38

%

43.12

%

43.68

%

42.79

%

42.34

%

42.70

%

41.52

%

Page 19

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Prosperity Bancshares Inc. published this content on 26 October 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 October 2022 10:37:01 UTC.