Prosperity Bancshares: No Longer A Buy, But The Dividend Is Still Interesting

Summary

• Prosperity Bancshares has shown strong performance and solid fundamentals, but a recent rally suggests a more cautious approach with a hold rating.
• The bank's strategic focus on Texas and Oklahoma MSAs, particularly Austin, Dallas, and Houston, positions it well for future growth.
• Despite high deposit quality and low costs, loan growth remains sluggish due to high interest rates and economic uncertainty.
• Current valuation is not so cheap; waiting for a price drop to 1.75x TBV might be reasonable.

Walter Bibikow/DigitalVision via Getty Images

My last two articles on Prosperity Bancshares (NYSE:PB) highlighted the potential of this bank and how the price per share was undervalued. Since that time, the stock has outperformed the S&P 500 and is

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.