Prosperity Bancshares (PB) risk factors, FY2025 10-K

Other

1. 01The Company’s business is subject to interest rate risk, and fluctuations in interest rates may adversely affect its financial condition and results of operations25% rewritten
2. 02The Company’s business depends on its ability to successfully manage credit risk
3. 03The Company’s allowance for credit losses may not be sufficient to cover actual credit losses, which could adversely affect its earnings
4. 04The Company’s profitability depends significantly on local economic conditions
5. 05The Company’s dependence on loans secured by real estate subjects it to risks relating to fluctuations in the real estate market that could adversely affect its financial condition, results of operations and cash flows
6. 06The Company’s commercial real estate and commercial loans expose it to increased credit risks, and these risks will increase if the Company succeeds in increasing these types of loans
7. 07The Company may be adversely affected by weaknesses in the commercial real estate market
8. 08The Company’s Warehouse Purchase Program balances can fluctuate widely
9. 09The Company’s loan portfolio, and specifically its energy lending portfolio, could be adversely affected by declines in the prices of oil and natural gas, as well as other factors
10. 10The Company is subject to losses resulting from fraudulent and negligent acts on the part of loan applicants, correspondents or other third parties
11. 11The Company is subject to environmental liability risk associated with lending activities
12. 12Liquidity risk could impair the Company’s ability to fund operations and jeopardize its financial condition
13. 13The Company relies on customer deposits as a significant source of funding, and its deposits may decrease in the future
14. 14Negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system
15. 15The Company may need to raise additional capital in the future and such capital may not be available when needed on acceptable terms or at all
16. 16The fair value of the Company’s investment securities can fluctuate due to factors outside of its control

Strategic Risks

1. 17If the Company is not able to continue its historical levels of growth, it may not be able to maintain its historical earnings trends
2. 18If the Company is unable to manage its growth effectively, its operations and profitability could be negatively affected
3. 19In addition, in order to manage its growth and maintain adequate information and reporting systems within its organization, the Company must identify, hire and retain additional qualified associates, particularly in the accounting and operational areas of its business
4. 20The Company is subject to risks related to the pending acquisition of Stellar and the recent acquisitions of American and SouthwestNew
5. 21If the Company is unable to identify and acquire other financial institutions and successfully integrate its acquired businesses, its business and earnings may be negatively affected
6. 22Although most of these factors have either significantly subsided or no longer remain, to the extent these factors, or other factors outside of the Company’s control, return, persist, or arise, the Company’s ability to pursue and consummate acquisitions may be adversely impacted
7. 23Regulatory approvals for acquisitions may be delayed, impeded, or prohibited26% rewritten
8. 24If the goodwill that the Company recorded in connection with a business acquisition becomes impaired, it could require charges to earnings

Operational Risks

1. 25The Company’s accounting estimates and risk management processes rely on analytical and forecasting models and tools that may prove to be inaccurate
2. 26An interruption in the Company’s information systems or compromise in security of the Company’s information systems may result in a loss of customer business and have an adverse effect on the Company’s results of operations, financial condition and cash flows29% rewritten
3. 27The Company is subject to certain risks in connection with its use of technology
4. 28The Company’s operations rely on external vendors, which may fail to provide adequate services
5. 29The Company’s business may be adversely affected by consolidations of technology vendors
6. 30The Company’s business may be adversely affected by security breaches at third parties
7. 31The Company is subject to losses due to fraudulent and negligent acts
8. 32The Company’s risk management framework may not be effective in identifying, managing or mitigating risks and/or losses to it
9. 33The Company is subject to risk arising from the failure or circumvention of internal controls and procedures
10. 34The use of new technologies, including artificial intelligence (“AI”) and machine learning, may result in reputational harm, increased regulatory scrutiny and increased liability

Legal, Regulatory and Compliance Risks

1. 35The Company operates in a highly regulated environment and, as a result, is subject to extensive regulation and supervision
2. 36The Company is subject to claims and litigation pertaining to intellectual property
3. 37The Company is subject to claims and litigation pertaining to fiduciary responsibility
4. 38The Company’s financial condition and results of operations may be adversely affected by changes in accounting policies, standards and interpretations
5. 39Severe weather, natural disasters and other adverse external climate events could significantly impact the Company’s business and customers
6. 40Climate change, including the regulatory response thereto, could have a material negative impact on the Company and its customers
7. 41Expectations from customers, regulators, investors, and other stakeholders with respect to the Company’s environmental, social and governance practices may impose additional costs on the Company or expose it to new or additional risks
8. 42The Company’s corporate organizational documents and the provisions of Texas law to which it is subject may delay or prevent a change in control of the Company that a shareholder may favor
9. 43a provision establishing certain advance notice procedures for nomination of candidates for election as directors and for shareholder proposals to be considered at an annual or special meeting of shareholders
10. 44There are restrictions on the Company’s ability to pay dividends
11. 45There may be substantial fluctuations in the Company’s stock price
12. 46general market conditions, including real or anticipated changes in the strength of the Texas and Oklahoma economies; and

General Risks

1. 47Negative publicity could damage the Company’s reputation and business
2. 48Failure to compete effectively for customers could adversely affect the Company’s growth and profitability, which could have a material adverse effect on the Company’s business, financial condition and results of operations
3. 49The Company may be adversely affected by the soundness of other financial institutions
4. 50New lines of business or new products and services may subject the Company to additional risks