Brown Advisory Reduces Stake in Prosperity Bancshares by 11.6%

Brown Advisory Inc. has reduced its stake in Prosperity Bancshares, Inc. (NYSE: PB) by 11.6% during the second quarter of 2023. In its latest disclosure to the Securities and Exchange Commission (SEC), the firm reported holding 1,983,424 shares after selling 259,817 shares in the period. The value of Brown Advisory’s remaining holdings in Prosperity Bancshares is approximately $139.3 million.

A number of other institutional investors have also adjusted their positions in Prosperity Bancshares. Notably, XTX Topco Ltd increased its holdings by 62.0% in the first quarter, acquiring an additional 1,754 shares for a total of 4,585 shares valued at $327,000. Meanwhile, PNC Financial Services Group Inc. raised its holdings by 9.2%, bringing its total to 2,968 shares worth $212,000 after acquiring 249 additional shares.

Other institutional changes include Savvy Advisors Inc., which bought a new position worth approximately $4.5 million, and Angel Oak Capital Advisors LLC, which entered a new position valued at around $714,000. Additionally, Invesco Ltd. grew its stake by 4.0%, now owning 235,496 shares valued at approximately $16.8 million. Currently, institutional investors and hedge funds own 80.69% of Prosperity Bancshares’ stock.

Insider Trading Activity

In related developments, insider trading has occurred within the company. On September 10, Ned S. Holmes, a director, sold 600 shares at an average price of $67.18, totaling $40,308. Following this transaction, he retained 44,100 shares valued at approximately $2.96 million, marking a 1.34% decrease in his ownership.

Another director, Harrison Stafford II, sold 800 shares on December 4 for an average price of $70.76, a transaction valued at $56,608. After this sale, Stafford directly owns 107,937 shares worth about $7.64 million, reflecting a 0.74% decrease in his stake. Over the last quarter, insiders sold a total of 15,100 shares worth $1,006,458, with insiders owning 4.20% of the company’s stock.

Financial Performance and Dividend Increase

Prosperity Bancshares recently reported its quarterly earnings on October 29, 2023. The bank’s earnings per share (EPS) stood at $1.45, matching analysts’ expectations. The bank generated a revenue of $314.67 million, slightly below the anticipated $317.94 million. The company demonstrated a net margin of 30.28% and a return on equity of 7.06%, with revenue increasing by 3.9% year-over-year compared to $1.34 EPS in the same quarter the previous year.

In a positive development for shareholders, Prosperity Bancshares has declared a quarterly dividend of $0.60, scheduled for payment on January 2, 2024. Shareholders of record by December 15 will receive this dividend. This increase from the previous dividend of $0.58 represents an annualized dividend of $2.40, yielding 3.4%. The company’s dividend payout ratio currently stands at 41.35%.

Analyst ratings for Prosperity Bancshares vary, with numerous research firms revising their price targets. Citigroup maintained a “neutral” rating but lowered its price target from $78.00 to $68.00. Hovde Group downgraded its rating from “strong-buy” to “hold.” Meanwhile, Royal Bank of Canada reduced its price target from $78.00 to $72.00 and assigned a “sector perform” rating. Barclays also adjusted its target from $85.00 to $82.00, maintaining an “equal weight” rating. Conversely, TD Cowen raised its target from $79.00 to $83.00, giving the company a “buy” rating.

With ten analysts rating the stock as a Buy and six as a Hold, Prosperity Bancshares currently holds a consensus rating of “Moderate Buy” with a price target averaging $80.21 according to MarketBeat.com.

Prosperity Bancshares, Inc. operates as a bank holding company for Prosperity Bank, providing a range of financial products and services to both businesses and consumers. Its offerings include various deposit products, residential and commercial loans, and consumer loans, alongside other financial services tailored to meet diverse customer needs.