Prosperity Bancshares, Inc. (PB): A Bull Case Theory

We came across a bullish thesis on Prosperity Bancshares, Inc. on Wrigh’s Substack’s Substack by William Wright. In this article, we will summarize the bulls’ thesis on PB. Prosperity Bancshares, Inc.'s share was trading at $76.03 as of February 11th. PB’s trailing and forward P/E were 13.29 and 12.47 respectively according to Yahoo Finance.

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Prosperity Bancshares (PB) is a regional bank focused on retail and commercial banking in Oklahoma and Texas, with a loan portfolio heavily weighted toward real estate and C&I loans. The bank has a long history of growth through acquisitions, and current market dynamics, combined with a lower-than-historical valuation, position PB as a likely takeout candidate. Regional bank M&A in 2025 has surged, with record deal volumes totaling $21.4 billion in October alone, driven by relaxed regulatory requirements, Basel III rollbacks, and broader macro incentives.

Consolidation trends are supported by a bifurcated industry where only banks that can invest in next-gen technology remain competitive, margin pressures that limit organic growth, and the appeal of acquisitions to strengthen regulatory capital and core deposit bases. Texas has been a key driver of this activity, with multiple out-of-state banks acquiring local players to gain scale in the high-growth market, leaving PB as one of the few remaining sizable Texas-based banks and providing it with substantial scarcity value.

PB’s takeout potential is further supported by its structural quality, including a low efficiency ratio of ~42%, top-tier credit quality, and historically minimal net charge-offs, making its loan book highly attractive to buyers. Comparisons to recent Texas acquisitions suggest PB could command a premium above 2x P/TBV, reflecting both scarcity and superior fundamentals.

Management maintains that the bank is “not for sale,” but recent changes to executive change-in-control agreements, significantly enhancing payouts—including RSUs—suggest incentives are aligned for a potential transaction. These factors, coupled with PB’s attractive market position, make it a compelling candidate for acquisition with substantial upside for shareholders.