Prosperity Bancshares reported third-quarter net income of $141.5 million, or $1.18 per diluted share, as it absorbed costs from three acquisitions completed this year. Excluding merger-related expenses and other specified items, earnings were $200.8 million, or $1.67 per share. The quarter also brought sharp growth in loans and deposits, partly reflecting the acquisitions, and a higher dividend.
The Houston-based bank completed its acquisition of Stellar Bancorp on July 1, adding to two earlier deals. Prosperity says it is still integrating Texas Partners Bank and Stellar Bank and expects its larger scale to support efficiency, competitiveness and technology investment.
Key details
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Reported and adjusted earnings: Net income was $141.5 million, compared with $137.6 million in the third quarter of 2025. Diluted earnings per share fell to $1.18 from $1.45. Third-quarter results included $69.7 million in merger-related expenses, a $5 million out-of-state tax settlement and a $927,000 gain tied to the conversion of Visa Class B-2 stock. Excluding those items, net of tax, Prosperity reported net income of $200.8 million and diluted earnings per share of $1.67.
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Acquisitions expanded the bank: American Bank joined Prosperity on January 1, Texas Partners Bank on February 1, and Stellar Bank on July 1. At September 30, Prosperity had $54.1 billion in assets, up 41.1% from a year earlier. Loans totaled $32.1 billion, up 45.5%, and deposits were $41.2 billion, up 48.4%. The company said these increases primarily reflected the three mergers.
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Strong quarter-on-quarter balance growth: Loans increased by $7.03 billion, or 28.1%, and deposits by $8.63 billion, or 26.5%, during the quarter. Noninterest-bearing deposits were $13.8 billion, equal to 33.6% of total deposits.
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Interest margin improved: Net interest margin rose to 3.73%, up 26 basis points from the second quarter and 49 basis points from the year-earlier quarter.
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Credit measures: The allowance for credit losses on loans and off-balance-sheet credit exposure totaled $629.6 million. The allowance for loan losses was 1.91% of loans, excluding Warehouse Purchase Program loans. Nonperforming assets remained at 0.41% of average interest-earning assets.
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Dividend increased: The board approved a fourth-quarter dividend of $0.64 per share, up 4 cents, or 6.67%, from the $0.60 paid in each of the prior four quarters. Prosperity said this is its 23rd consecutive annual dividend increase; its stated compound annual dividend growth rate from 2003 to 2026 was 10.4%.
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Share repurchases: Prosperity bought back 457,000 shares during the third quarter and 1.5 million shares during 2026 to date.
What changes for investors
Prosperity is now a substantially larger bank following the three acquisitions, with the resulting loan, deposit and asset growth reflected in its year-over-year figures. Integration remains underway for Texas Partners Bank and Stellar Bank. The dividend increase raises the quarterly payout to $0.64 per share, while the earnings figures show the difference between reported results, which included significant merger costs, and the company’s adjusted measure.