10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM              TO             

COMMISSION FILE NUMBER: 001-35388

PROSPERITY BANCSHARES, INC.^®

(Exact name of registrant as specified in its charter)

Texas	74-2331986
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Prosperity Bank Plaza
4295 San Felipe, Houston, Texas	77027
(Address of principal executive offices)	(Zip Code)

(281) 269-7199

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $1.00 per share	PB	New York Stock Exchange, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “accelerated filer”, “large accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 31, 2019, there were 68,396,378 outstanding shares of the registrant’s Common Stock, par value $1.00 per share.  

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

INDEX TO FORM 10-Q

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018	3
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	5
	Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018 (unaudited)	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	54
Item 4.	Controls and Procedures	54
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		57

2

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PROSPERITY BANCSHARES, INC.^® AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2019			2018
	(unaudited)
	(Dollars in thousands, except par value)
ASSETS
Cash and due from banks	$	420,359		$	410,575
Federal funds sold		521			552
Total cash and cash equivalents		420,880			411,127
Available for sale securities, at fair value		298,368			84,155
Held to maturity securities, at cost (fair value of $8,217,601 and $9,081,236, respectively)		8,196,838			9,324,811
Total securities		8,495,206			9,408,966
Loans held for sale		20,284			29,367
Loans held for investment		10,653,061			10,340,946
Total loans		10,673,345			10,370,313
Less: allowance for credit losses		(87,061	)		(86,440	)
Loans, net		10,586,284			10,283,873
Accrued interest receivable		53,789			56,532
Goodwill		1,900,845			1,900,845
Core deposit intangibles, net		29,051			32,883
Bank premises and equipment, net		263,703			257,046
Other real estate owned		815			1,805
Bank owned life insurance (BOLI)		262,381			260,335
Federal Home Loan Bank of Dallas stock		39,542			55,959
Other assets		40,321			24,031
TOTAL ASSETS	$	22,092,817		$	22,693,402
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing	$	5,784,002		$	5,666,115
Interest-bearing		11,145,918			11,590,443
Total deposits		16,929,920			17,256,558
Other borrowings		600,795			1,031,126
Securities sold under repurchase agreements		311,404			284,720
Accrued interest payable		5,438			4,201
Other liabilities		118,454			63,973
Total liabilities		17,966,011			18,640,578
COMMITMENTS AND CONTINGENCIES		—			—
SHAREHOLDERS’ EQUITY:
Preferred stock, $1 par value; 20,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $1 par value; 200,000,000 shares authorized; 68,396,778 shares issued and outstanding at September 30, 2019; 69,846,825 shares issued and outstanding at December 31, 2018		68,397			69,847
Capital surplus		1,959,960			2,045,351
Retained earnings		2,098,411			1,937,316
Accumulated other comprehensive income —net unrealized gain on available for sale securities, net of tax expense of $10 and $82, respectively		38			310
Total shareholders’ equity		4,126,806			4,052,824
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	22,092,817		$	22,693,402

See notes to consolidated financial statements.

3

PROSPERITY BANCSHARES, INC.^® AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019			2018		2019			2018
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees	$	134,943		$	128,645	$	398,533		$	373,336
Securities		50,872			55,705		160,464			165,739
Federal funds sold and other earning assets		363			326		1,083			940
Total interest income		186,178			184,676		560,080			540,015
INTEREST EXPENSE:
Deposits		26,939			19,208		78,629			49,741
Other borrowings		4,335			7,583		15,208			16,602
Securities sold under repurchase agreements		914			566		2,504			1,327
Total interest expense		32,188			27,357		96,341			67,670
NET INTEREST INCOME		153,990			157,319		463,739			472,345
PROVISION FOR CREDIT LOSSES		1,100			2,350		2,600			15,350
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		152,890			154,969		461,139			456,995
NONINTEREST INCOME:
Nonsufficient funds (NSF) fees		8,835			8,606		24,624			24,261
Credit card, debit card and ATM card income		6,688			6,242		19,139			18,538
Service charges on deposit accounts		5,020			5,137		15,007			15,562
Trust income		2,492			2,692		7,645			7,671
Mortgage income		839			856		2,551			2,728
Brokerage income		522			784		1,736			2,096
Net (loss) gain on sale of assets		(3	)		4		57			(40	)
Net loss on sale of securities		—			—		—			(13	)
Other		6,280			6,303		18,016			16,130
Total noninterest income		30,673			30,624		88,775			86,933
NONINTEREST EXPENSE:
Salaries and employee benefits		52,978			51,906		156,992			155,665
Net occupancy and equipment		5,607			5,808		16,565			17,109
Credit and debit card, data processing and software amortization		4,989			4,512		14,466			13,316
Regulatory assessments and FDIC insurance		1,814			3,347		6,513			10,497
Core deposit intangibles amortization		1,248			1,478		3,832			4,547
Depreciation		3,286			3,139		9,501			9,226
Communications		2,214			2,442		6,667			7,628
Other real estate expense, net		(47	)		217		(75	)		521
Other		8,610			8,911		25,630			26,907
Total noninterest expense		80,699			81,760		240,091			245,416
INCOME BEFORE INCOME TAXES		102,864			103,833		309,823			298,512
PROVISION FOR INCOME TAXES		21,106			21,310		63,405			60,031
NET INCOME	$	81,758		$	82,523	$	246,418		$	238,481
EARNINGS PER SHARE:
Basic	$	1.19		$	1.18	$	3.55		$	3.42
Diluted	$	1.19		$	1.18	$	3.55		$	3.42

See notes to consolidated financial statements.

4

PROSPERITY BANCSHARES, INC.^® AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Net income	$	81,758		$	82,523		$	246,418		$	238,481
Other comprehensive (loss) income, before tax:
Securities available for sale:
Change in unrealized (losses) gains during the period		(1,563	)		149			(344	)		729
Total other comprehensive (loss) income		(1,563	)		149			(344	)		729
Deferred tax benefit (expense) related to other comprehensive (loss) income		328			(31	)		72			(153	)
Other comprehensive (loss) income, net of tax		(1,235	)		118			(272	)		576
Comprehensive income	$	80,523		$	82,641		$	246,146		$	239,057

See notes to consolidated financial statements.

5

PROSPERITY BANCSHARES, INC.^® AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

													Accumulated
													Other			Total
	Common Stock						Capital			Retained			Comprehensive			Shareholders’
	Shares			Amount			Surplus			Earnings			Income			Equity
	(In thousands, except share and per share data)
Three Months Ended
BALANCE AT JUNE 30, 2019		69,261,431		$	69,261		$	2,012,665		$	2,044,696		$	1,273		$	4,127,895
Net income											81,758						81,758
Other comprehensive loss														(1,235	)		(1,235	)
Common stock issued in connection with the issuance of restricted stock awards, net		9,750			10			(10	)								—
Common stock repurchase		(874,403	)		(874	)		(55,189	)								(56,063	)
Stock based compensation expense								2,494									2,494
Cash dividends declared, $0.41 per share											(28,043	)					(28,043	)
BALANCE AT SEPTEMBER 30, 2019		68,396,778		$	68,397		$	1,959,960		$	2,098,411		$	38		$	4,126,806
Nine Months Ended
BALANCE AT DECEMBER 31, 2018		69,846,825		$	69,847		$	2,045,351		$	1,937,316		$	310		$	4,052,824
Net income											246,418						246,418
Other comprehensive loss														(272	)		(272	)
Common stock issued in connection with the issuance of restricted stock awards, net		23,184			23			(23	)								—
Common stock repurchase		(1,473,231	)		(1,473	)		(93,011	)								(94,484	)
Stock based compensation expense								7,643									7,643
Cash dividends declared, $1.23 per share											(85,323	)					(85,323	)
BALANCE AT SEPTEMBER 30, 2019		68,396,778		$	68,397		$	1,959,960		$	2,098,411		$	38		$	4,126,806

												Accumulated
												Other			Total
	Common Stock					Capital			Retained			Comprehensive			Shareholders’
	Shares			Amount		Surplus			Earnings			Income			Equity
	(In thousands, except share and per share data)
Three Months Ended
BALANCE AT JUNE 30, 2018		69,838,186		$	69,838	$	2,040,032		$	1,825,237		$	345		$	3,935,452
Net income										82,523						82,523
Other comprehensive income													118			118
Common stock issued in connection with the issuance of restricted stock awards, net		(200	)		—		—									—
Stock based compensation expense							2,746									2,746
Cash dividends declared, $0.36 per share										(25,142	)					(25,142	)
BALANCE AT SEPTEMBER 30, 2018		69,837,986			69,838		2,042,778			1,882,618			463			3,995,697
Nine Months Ended
BALANCE AT DECEMBER 31, 2017		69,490,910		$	69,491	$	2,035,219		$	1,719,557		$	(113	)	$	3,824,154
Net income										238,481						238,481
Other comprehensive income													576			576
Common stock issued in connection with the issuance of restricted stock awards, net		347,076			347		(347	)								—
Stock based compensation expense							7,906									7,906
Cash dividends declared, $1.08 per share										(75,420	)					(75,420	)
BALANCE AT SEPTEMBER 30, 2018		69,837,986		$	69,838	$	2,042,778		$	1,882,618		$	463		$	3,995,697

See notes to consolidated financial statements.

6

PROSPERITY BANCSHARES, INC.^® AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended
	September 30,
	2019			2018
	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	246,418		$	238,481
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and core deposit intangibles amortization		13,333			13,773
Provision for credit losses		2,600			15,350
Net amortization of premium on investments		22,223			24,276
Net (gain) loss on sale of other real estate and repossessed assets		(346	)		130
Net loss on sale of investment securities		—			13
Net (gain) loss on sale of assets		(57	)		40
Net accretion of discount on loans		(4,303	)		(11,006	)
Net amortization of premium on deposits		—			(106	)
Gain on sale of loans		(2,355	)		(2,590	)
Proceeds from sale of loans held for sale		132,554			145,961
Originations of loans held for sale		(121,212	)		(140,007	)
Stock based compensation expense		7,643			7,906
Decrease (increase) in accrued interest receivable and other assets		13,860			(36,038	)
Increase (decrease) in accrued interest payable and other liabilities		38,840			(29,975	)
Net cash provided by operating activities		349,198			226,208
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and principal paydowns of held to maturity securities		1,328,559			1,341,650
Purchase of held to maturity securities		(222,906	)		(1,322,082	)
Proceeds from maturities and principal paydowns of available for sale securities		9,020,085			8,123,942
Purchase of available for sale securities		(9,234,545	)		(7,999,686	)
Net increase in loans held for investment		(312,461	)		(278,155	)
Purchase of bank premises and equipment		(16,253	)		(10,491	)
Proceeds from sale of bank premises, equipment and other real estate		4,531			12,362
Proceeds from insurance claims		3,637			2,463
Net cash provided by (used in) investing activities		570,647			(129,997	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in noninterest-bearing deposits		117,887			76,920
Net decrease in interest-bearing deposits		(444,525	)		(1,164,510	)
Net (repayments of) proceeds from other short-term borrowings		(430,000	)		1,000,000
Repayments of other long-term borrowings		(331	)		(4,016	)
Net increase (decrease) in securities sold under repurchase agreements		26,684			(27,028	)
Repurchase of common stock		(94,484	)		—
Payments of cash dividends		(85,323	)		(75,420	)
Net cash used in financing activities		(910,092	)		(194,054	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		9,753			(97,843	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		411,127			392,313
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	420,880		$	294,470
NONCASH ACTIVITIES:
Acquisition of real estate through foreclosure of collateral	$	1,998		$	153
SUPPLEMENTAL INFORMATION:
Income taxes paid	$	63,250		$	114,960
Interest paid		95,104			66,861

See notes to consolidated financial statements

7

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

1. BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Prosperity Bancshares, Inc.^® (“Bancshares”) and its wholly-owned subsidiary, Prosperity Bank^® (the “Bank,” and together with Bancshares, the “Company”). All intercompany transactions and balances have been eliminated.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis; and all such adjustments are of a normal recurring nature. These financial statements and the notes thereto should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Operating results for the nine-month period ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other period.

2. INCOME PER COMMON SHARE

The following table illustrates the computation of basic and diluted earnings per share:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
	Amount		Per Share Amount		Amount		Per Share Amount		Amount		Per Share Amount		Amount		Per Share Amount
	(Amounts in thousands, except per share data)
Net income	$	81,758			$	82,523			$	246,418			$	238,481
Basic:
Weighted average shares outstanding		68,738	$	1.19		69,838	$	1.18		69,463	$	3.55		69,815	$	3.42
Diluted:
Weighted average shares outstanding		68,738	$	1.19		69,838	$	1.18		69,463	$	3.55		69,815	$	3.42

As of September 30, 2019, all stock options have been exercised and there are no options outstanding. There were no stock options exercisable during the three and nine months ended September 30, 2019 or 2018 that would have had an anti-dilutive effect on the above computation.

3. NEW ACCOUNTING STANDARDS

Accounting Standards Updates (“ASU”)

ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of current expected credit losses (“CECL”) is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Additionally, available for sale debt securities may realize value either through collection of contractual cash flows or through sale of the security at fair value. Therefore, the amendments limit the amount of the allowance for credit losses to the difference between amortized cost and fair value. ASU 2016-13 will be effective for the Company as of January 1, 2020. The Company’s implementation workgroup is comprised of individuals from various functional areas including credit, risk management, finance and information technology, among others, and meets periodically to discuss the latest developments and monitor implementation progress. During the third quarter of 2019, the Company had a third-party model validation completed and will continue running parallel processes during the fourth quarter of 2019. The Company continues to assess CECL disclosure requirements and developing appropriate internal controls around the CECL process. The Company continues to evaluate the potential impact of ASU 2016-13 on the Company’s financial statements. Based on the Company’s loan portfolio at September 30, 2019 and current expectation of future economic conditions, the allowance for credit losses as a percentage of total loans is expected to increase from 0.82% to between 1.00% and 1.10%. This estimate does not incorporate the anticipated impact of the merger with LegacyTexas Financial Group, Inc. (“LegacyTexas”), which was consummated on November 1, 2019. 

8

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 requires that lessees recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The requirements for lessors under ASU 2016-02 are largely unchanged from existing guidance, however certain necessary changes have been made to align with specific changes to lessee accounting and key aspects of the revenue recognition guidance (Topic 606).

The Company’s leases relate primarily to office space and banking centers. The Company identified and reviewed existing leases applicable to ASU 2016-02 and elected certain optional practical expedients: 1) not to reassess whether any expired or existing contracts are or contain leases, 2) not to reassess the lease classification for any expired or existing lease, 3) not to reassess initial direct cost for any existing leases and 4) not to separately identify lease and non-lease components. Additionally, the Company elected the short-term lease exemption for lease terms less than 12 months. The Company adopted ASU 2016-02 on January 1, 2019 using a modified retrospective transition approach without adjusting comparative periods. With the adoption of the new standard, the Company recognized right-of-use assets and lease liabilities of $17.3 million as of January 1, 2019. See Note 9 “Contractual Obligations and Off-Balance Sheet Items — Contractual Obligations — Leases” for additional information.

4. SECURITIES

The amortized cost and fair value of investment securities were as follows:

	September 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
States and political subdivisions	$	470	$	1	$	—		$	471
Collateralized mortgage obligations		242,013		134		(421	)		241,726
Mortgage-backed securities		55,836		734		(399	)		56,171
Total	$	298,319	$	869	$	(820	)	$	298,368
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	13,903	$	64	$	—		$	13,967
States and political subdivisions		189,000		6,398		(68	)		195,330
Collateralized mortgage obligations		435		5		—			440
Mortgage-backed securities		7,993,500		50,799		(36,435	)		8,007,864
Total	$	8,196,838	$	57,266	$	(36,503	)	$	8,217,601

	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
States and political subdivisions	$	1,159	$	7	$	—		$	1,166
Collateralized mortgage obligations		12,724		69		(37	)		12,756
Mortgage-backed securities		69,880		553		(200	)		70,233
Total	$	83,763	$	629	$	(237	)	$	84,155
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	25,778	$	—	$	(100	)	$	25,678
States and political subdivisions		253,198		3,440		(777	)		255,861
Collateralized mortgage obligations		509		1		(2	)		508
Mortgage-backed securities		9,045,326		5,798		(251,935	)		8,799,189
Total	$	9,324,811	$	9,239	$	(252,814	)	$	9,081,236

9

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI analysis.  Investment securities classified as available for sale or held to maturity are evaluated for OTTI under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, “Investments-Debt and Equity Securities.”

In determining OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at the time of such determination.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI will be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the OTTI will be separated into the amount representing the credit-related portion of the impairment loss (“credit loss”) and the noncredit portion of the impairment loss (“noncredit portion”). The amount of the total OTTI related to the credit loss is determined based on the difference between the present value of cash flows expected to be collected and the amortized cost basis and such difference is recognized in earnings. The amount of the total OTTI related to the noncredit portion is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings will become the new amortized cost basis of the investment.

Management has the ability and intent to hold the securities classified as held-to-maturity until they mature, at which time the Company will receive full value for the securities. Furthermore, as of September 30, 2019, management does not have the intent to sell any of the securities classified as available for sale before a recovery of cost. In addition, management believes it is more likely than not that the Company will not be required to sell any of its investment securities before a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2019, management believes any impairment in the Company’s securities is temporary, and therefore no impairment loss has been recognized in the Company’s consolidated statement of income.

Securities with unrealized losses, segregated by length of time, that have been in a continuous loss position were as follows:

	September 30, 2019
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in thousands)
Available for Sale
Collateralized mortgage obligations	$	201,708	$	(419	)	$	78	$	(2	)	$	201,786	$	(421	)
Mortgage-backed securities		17,839		(399	)		4		—			17,843		(399	)
Total	$	219,547	$	(818	)	$	82	$	(2	)	$	219,629	$	(820	)
Held to Maturity
States and political subdivisions	$	31,717	$	(59	)	$	4,718	$	(9	)	$	36,435	$	(68	)
Mortgage-backed securities		506,878		(1,794	)		3,560,213		(34,641	)		4,067,091		(36,435	)
Total	$	538,595	$	(1,853	)	$	3,564,931	$	(34,650	)	$	4,103,526	$	(36,503	)

10

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

	December 31, 2018
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in thousands)
Available for Sale
Collateralized mortgage obligations	$	12	$	—		$	2,096	$	(37	)	$	2,108	$	(37	)
Mortgage-backed securities		50,950		(197	)		2,091		(3	)		53,041		(200	)
Total	$	50,962	$	(197	)	$	4,187	$	(40	)	$	55,149	$	(237	)
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	20,720	$	(76	)	$	4,957	$	(24	)	$	25,677	$	(100	)
States and political subdivisions		89,407		(328	)		58,262		(449	)		147,669		(777	)
Collateralized mortgage obligations		—		—			292		(2	)		292		(2	)
Mortgage-backed securities		1,003,089		(8,401	)		6,873,948		(243,534	)		7,877,037		(251,935	)
Total	$	1,113,216	$	(8,805	)	$	6,937,459	$	(244,009	)	$	8,050,675	$	(252,814	)

At September 30, 2019 and December 31, 2018, there were 158 securities and 731 securities, respectively, in an unrealized loss position for 12 months or more.

The amortized cost and fair value of investment securities at September 30, 2019, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations at any time with or without call or prepayment penalties.

	Held to Maturity				Available for Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	37,313	$	37,430	$	470	$	471
Due after one year through five years		117,760		121,632		—		—
Due after five years through ten years		43,321		45,507		—		—
Due after ten years		4,509		4,728		—		—
Subtotal		202,903		209,297		470		471
Mortgage-backed securities and collateralized mortgage obligations		7,993,935		8,008,304		297,849		297,897
Total	$	8,196,838	$	8,217,601	$	298,319	$	298,368

The Company recorded no gain or loss on the sale of securities for the three and nine months ended September 30, 2019 and for the three months ended September 30, 2018.  The Company recorded a $13 thousand loss on the sale of securities for the nine months ended September 30, 2018. As of September 30, 2019, the Company did not own any non-agency collateralized mortgage obligations.

At September 30, 2019 and December 31, 2018, the Company did not own securities of any one issuer (other than the U.S. government and its agencies) for which aggregate adjusted cost exceeded 10% of the consolidated shareholders’ equity at such respective dates.

Securities with an amortized cost of $5.16 billion and $6.04 billion and a fair value of $5.16 billion and $5.86 billion at September 30, 2019 and December 31, 2018, respectively, were pledged to collateralize public deposits and for other purposes required or permitted by law.

11

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

5. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The loan portfolio consists of various types of loans and is categorized by major type as follows:

	September 30, 2019		December 31, 2018
	(Dollars in thousands)
Residential mortgage loans held for sale	$	20,284	$	29,367
Commercial and industrial		1,460,415		1,483,571
Real estate:
Construction, land development and other land loans		1,764,648		1,622,289
1-4 family residential (includes home equity)		2,703,398		2,677,542
Commercial real estate (includes multi-family residential)		3,652,176		3,538,557
Farmland		536,895		545,373
Agriculture		192,690		184,128
Consumer and other		342,839		289,486
Total loans held for investment		10,653,061		10,340,946
Total	$	10,673,345	$	10,370,313

Concentrations of Credit. Most of the Company’s lending activity occurs within the states of Texas and Oklahoma. Commercial real estate loans, 1-4 family residential loans and construction, land development and other land loans make up 76.1% of the Company’s total loan portfolio at September 30, 2019. As of September 30, 2019 and December 31, 2018, there were no concentrations of loans related to any single industry in excess of 10% of total loans.

Related Party Loans. As of September 30, 2019 and December 31, 2018, loans outstanding to directors, officers and their affiliates totaled $1.7 million and $1.9 million, respectively. All transactions between the Company and such related parties are conducted in the ordinary course of business and made on the same terms and conditions as similar transactions with unaffiliated persons.

An analysis of activity with respect to these related party loans is as follows:

	As of and for the nine months ended September 30, 2019			As of and for the year ended December 31, 2018
	(Dollars in thousands)
Beginning balance on January 1	$	1,923		$	2,694
New loans		1			5
Repayments		(196	)		(776	)
Ending balance	$	1,728		$	1,923

Nonperforming Assets and Nonaccrual and Past Due Loans. The Company has several procedures in place to assist it in maintaining the overall quality of its loan portfolio. The Company has established underwriting guidelines to be followed by its officers, including requiring appraisals on loans collateralized by real estate. The Company also monitors its delinquency levels for any negative or adverse trends. Nevertheless, the Company’s loan portfolio could become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

The Company generally places a loan on nonaccrual status and ceases accruing interest when the payment of principal or interest is delinquent for 90 days, or earlier in some cases, unless the loan is in the process of collection and the underlying collateral fully supports the carrying value of the loan.

With respect to potential problem loans, an evaluation of the borrower’s overall financial condition is made to determine the need, if any, for possible writedowns or appropriate additions to the allowance for credit losses.

12

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

An aging analysis of past due loans, segregated by category of loan, is presented below:

	September 30, 2019
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total  Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	4,686	$	—	$	4,686	$	390	$	1,759,572	$	1,764,648
Agriculture and agriculture real estate (includes farmland)		1,289		—		1,289		285		728,011		729,585
1-4 family (includes home equity) (1)		9,082		215		9,297		19,258		2,695,127		2,723,682
Commercial real estate (includes multi-family residential)		4,670		—		4,670		14,179		3,633,327		3,652,176
Commercial and industrial		4,550		125		4,675		15,822		1,439,918		1,460,415
Consumer and other		77		1		78		39		342,722		342,839
Total	$	24,354	$	341	$	24,695	$	49,973	$	10,598,677	$	10,673,345

	December 31, 2018
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total  Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	6,363	$	788	$	7,151	$	1,386	$	1,613,752	$	1,622,289
Agriculture and agriculture real estate (includes farmland)		705		—		705		256		728,540		729,501
1-4 family (includes home equity) (1)		10,479		2,995		13,474		4,515		2,688,920		2,706,909
Commercial real estate (includes multi-family residential)		9,063		—		9,063		2,727		3,526,767		3,538,557
Commercial and industrial		6,652		221		6,873		4,215		1,472,483		1,483,571
Consumer and other		1,012		—		1,012		48		288,426		289,486
Total	$	34,274	$	4,004	$	38,278	$	13,147	$	10,318,888	$	10,370,313

(1) Includes $20.3 million and $29.4 million of residential mortgage loans held for sale at September 30, 2019 and December 31, 2018, respectively.

The following table presents information regarding nonperforming assets as of the dates indicated:

	September 30, 2019			December 31, 2018
	(Dollars in thousands)
Nonaccrual loans (1)	$	49,973		$	13,147
Accruing loans 90 or more days past due		341			4,004
Total nonperforming loans		50,314			17,151
Repossessed assets		28			—
Other real estate		815			1,805
Total nonperforming assets	$	51,157		$	18,956
Nonperforming assets to total loans and other real estate		0.48	%		0.18	%

(1) Includes troubled debt restructurings of $14.2 million and $51 thousand as of September 30, 2019 and December 31, 2018, respectively.

The Company had $51.2 million in nonperforming assets at September 30, 2019 compared with $19.0 million at December 31, 2018. Nonperforming assets were 0.48% of total loans and other real estate at September 30, 2019 compared with 0.18% of total loans and other real estate at December 31, 2018.

13

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

If interest on nonaccrual loans had been accrued under the original loan terms, approximately $2.2 million and $1.4 million would have been recorded as income for the nine months ended September 30, 2019 and 2018, respectively. The Company had $50.0 million in nonaccrual loans at September 30, 2019 compared with $13.4 million at September 30, 2018.

Acquired Loans.  Acquired loans were preliminarily recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, interest rates, projected default rates, loss given default, and recovery rates. During the valuation process, the Company identified Purchased Credit-Impaired (“PCI”) and Non-PCI loans in the acquired loan portfolios. Loans acquired with evidence of credit quality deterioration at acquisition for which it was probable that the Company would not be able to collect all contractual amounts due were accounted for as PCI. PCI loan identification considers the following factors: payment history and past due status, debt service coverage, loan grading, collateral values and other factors that may indicate deterioration of credit quality since origination. Non-PCI loan identification considers the following factors: account types, remaining terms, annual interest rates or coupons, current market rates, interest types, past delinquencies, timing of principal and interest payments, loan to value ratios, loss exposures and remaining balances. Accretion of purchased discounts on PCI loans will be based on estimated future cash flows, regardless of contractual maturities. Accretion of purchased discounts on Non-PCI loans will be recognized on a level-yield basis based on contractual maturity of individual loans.

PCI Loans.  The recorded investment in PCI loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of September 30, 2019 and December 31, 2018.

	September 30, 2019			December 31, 2018
	(Dollars in thousands)
PCI loans:
Outstanding balance	$	9,630		$	11,419
Discount		(1,888	)		(2,831	)
Recorded investment	$	7,742		$	8,588

Changes in the accretable yield for acquired PCI loans for the three and nine months ended September 30, 2019 and 2018 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Balance at beginning of period	$	904		$	3,969		$	1,534		$	8,121
Reclassifications from nonaccretable		26			181			62			486
Accretion		(277	)		(2,170	)		(943	)		(6,627	)
Balance at September 30,	$	653		$	1,980		$	653		$	1,980

Income recognition on PCI loans is subject to the Company’s ability to reasonably estimate both the timing and amount of future cash flows. PCI loans for which the Company is accruing interest income are not considered non-performing or impaired. The non-accretable difference represents contractual principal and interest the Company does not expect to collect.

Non-PCI Loans. The recorded investment in Non-PCI loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of September 30, 2019 and December 31, 2018.

	September 30, 2019			December 31, 2018
	(Dollars in thousands)
Non-PCI loans:
Outstanding balance	$	431,319		$	526,840
Discount		(11,473	)		(14,833	)
Recorded investment	$	419,846		$	512,007

14

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

Changes in the discount accretion for Non-PCI loans for the three and nine months ended September 30, 2019 and 2018 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Balance at beginning of period	$	12,479		$	17,431		$	14,833		$	20,533
Accretion charge-offs		—			(20	)		—			(30	)
Accretion		(1,006	)		(1,287	)		(3,360	)		(4,379	)
Balance at September 30,	$	11,473		$	16,124		$	11,473		$	16,124

Impaired Loans. Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

15

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

Impaired loans are set forth in the following tables. No interest income was recognized on impaired loans subsequent to their classification as impaired. The average recorded investment presented in the tables below is reported on a year-to-date basis.

	September 30, 2019
	Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment
	(Dollars in thousands)
With no related allowance recorded:
Construction, land development and other land loans	$	—	$	—	$	—	$	496
Agriculture and agriculture real estate (includes farmland)		147		147		—		202
1-4 family (includes home equity)		11,825		12,560		—		8,001
Commercial real estate (includes multi-family residential)		13,206		13,606		—		7,966
Commercial and industrial		15,144		17,646		—		9,007
Consumer and other		39		43		—		44
Total		40,361		44,002		—		25,716
With an allowance recorded:
Construction, land development and other land loans		390		390		58		390
Agriculture and agriculture real estate (includes farmland)		138		138		14		69
1-4 family (includes home equity)		5,236		5,268		1,067		2,751
Commercial real estate (includes multi-family residential)		973		993		283		486
Commercial and industrial		678		681		174		1,003
Consumer and other		—		—		—		—
Total		7,415		7,470		1,596		4,699
Total:
Construction, land development and other land loans		390		390		58		886
Agriculture and agriculture real estate (includes farmland)		285		285		14		271
1-4 family (includes home equity)		17,061		17,828		1,067		10,752
Commercial real estate (includes multi-family residential)		14,179		14,599		283		8,452
Commercial and industrial		15,822		18,327		174		10,010
Consumer and other		39		43		—		44
	$	47,776	$	51,472	$	1,596	$	30,415

16

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

	December 31, 2018
	Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment
	(Dollars in thousands)
With no related allowance recorded:
Construction, land development and other land loans	$	993	$	995	$	—	$	788
Agriculture and agriculture real estate (includes farmland)		256		311		—		194
1-4 family (includes home equity)		4,177		4,903		—		4,048
Commercial real estate (includes multi-family residential)		2,727		2,848		—		2,475
Commercial and industrial		2,870		3,810		—		5,358
Consumer and other		48		76		—		135
Total		11,071		12,943		—		12,998
With an allowance recorded:
Construction, land development and other land loans		391		391		58		195
Agriculture and agriculture real estate (includes farmland)		—		—		—		—
1-4 family (includes home equity)		266		289		56		729
Commercial real estate (includes multi-family residential)		—		—		—		743
Commercial and industrial		1,328		1,332		571		3,740
Consumer and other		—		—		—		—
Total		1,985		2,012		685		5,407
Total:
Construction, land development and other land loans		1,384		1,386		58		983
Agriculture and agriculture real estate (includes farmland)		256		311		—		194
1-4 family (includes home equity)		4,443		5,192		56		4,777
Commercial real estate (includes multi-family residential)		2,727		2,848		—		3,218
Commercial and industrial		4,198		5,142		571		9,098
Consumer and other		48		76		—		135
	$	13,056	$	14,955	$	685	$	18,405

Credit Quality Indicators. As part of the on-going monitoring of the credit quality of the Company’s loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks loan grades to be used as credit quality indicators. The following is a general description of the loan grades used:

Grade 1—Credits in this category have risk potential that is virtually nonexistent.  These loans may be secured by insured certificates of deposit, insured savings accounts, U.S. Government securities and highly rated municipal bonds.

Grade 2—Credits in this category are of the highest quality.  These borrowers represent top rated companies and individuals with unquestionable financial standing with excellent global cash flow coverage, net worth, liquidity and collateral coverage.

Grade 3—Credits in this category are not immune from risk but are well protected by the collateral and paying capacity of the borrower. These loans may exhibit a minor unfavorable credit factor, but the overall credit is sufficiently strong to minimize the possibility of loss.

Grade 4—Credits in this category are considered to be of acceptable credit quality with moderately greater risk than Grade 3 and receiving closer monitoring.  Loans in this category have sources of repayment that remain sufficient to preclude a larger than normal probability of default and secondary sources are likewise currently of sufficient quantity, quality, and liquidity to protect the Company against loss of principal and interest.  These borrowers have specific risk factors, but the overall strength of the credit is acceptable based on other mitigating credit and/or collateral factors and can repay the debt in the normal course of business.

17

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

Grade 5—Credits in this category constitute an undue and unwarranted credit risk; however, the factors do not rise to a level of substandard.  These credits have potential weaknesses and/or declining trends that, if not corrected, could expose the Company to risk at a future date.  These loans are monitored on the Company’s internally-generated watch list and evaluated on a quarterly basis.

Grade 6—Credits in this category are considered “substandard” but “non-impaired” loans in accordance with regulatory guidelines.  Loans in this category have well-defined weakness that, if not corrected, could make default of principal and interest possible.  Loans in this category are still accruing interest and may be dependent upon secondary sources of repayment and/or collateral liquidation.

Grade 7—Credits in this category are deemed “substandard” and “impaired” pursuant to regulatory guidelines. As such, the Company has determined that it is probable that less than 100% of the contractual principal and interest will be collected. These loans are individually evaluated for a specific reserve and will typically have the accrual of interest stopped.

Grade 8—Credits in this category include “doubtful” loans in accordance with regulatory guidance. Such loans are no longer accruing interest and factors indicate a loss is imminent.  These loans are also deemed “impaired.” While a specific reserve may be in place while the loan and collateral is being evaluated, these loans are typically charged down to an amount the Company estimates is collectible.

Grade 9—Credits in this category are deemed a “loss” in accordance with regulatory guidelines and have been charged off or charged down. The Company may continue collection efforts and may have partial recovery in the future.

The following table presents loans by risk grade and category of loan at September 30, 2019. Impaired loans include loans in risk grades 7, 8 and 9, as well as any PCI loan that has a specific reserve allocated to it.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity) (1)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Grade 1	$	—	$	12,021	$	—	$	—	$	54,518	$	34,366	$	100,905
Grade 2		1,556		3,400		12,430		21,476		20,448		64,354		123,664
Grade 3		1,596,753		639,697		2,623,058		3,032,835		1,049,208		214,519		9,156,070
Grade 4		156,900		69,282		58,596		520,024		264,851		23,175		1,092,828
Grade 5		3,233		3,726		6,001		42,720		49,423		4,759		109,862
Grade 6		5,407		850		2,406		18,179		6,029		1,627		34,498
Grade 7		390		285		17,061		14,179		15,806		39		47,760
Grade 8		—		—		—		—		16		—		16
Grade 9		—		—		—		—		—		—		—
PCI Loans		409		324		4,130		2,763		116		—		7,742
Total	$	1,764,648	$	729,585	$	2,723,682	$	3,652,176	$	1,460,415	$	342,839	$	10,673,345

(1) Includes $20.3 million of residential mortgage loans held for sale at September 30, 2019.

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PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

The following table presents loans by risk grade and category of loan at December 31, 2018. Impaired loans include loans in risk grades 7, 8 and 9, as well as any PCI loan that has a specific reserve allocated to it.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity) (1)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Grade 1	$	—	$	15,725	$	—	$	—	$	59,979	$	37,135	$	112,839
Grade 2		1,040		3,974		21,465		22,207		11,003		55,802		115,491
Grade 3		1,509,532		636,674		2,598,600		2,974,474		1,083,328		171,758		8,974,366
Grade 4		99,087		66,650		61,430		481,735		243,743		20,164		972,809
Grade 5		3,673		5,578		12,522		37,942		58,088		2,978		120,781
Grade 6		7,081		282		4,332		16,006		23,081		1,601		52,383
Grade 7		1,384		256		4,395		2,727		4,165		48		12,975
Grade 8		—		—		48		—		33		—		81
Grade 9		—		—		—		—		—		—		—
PCI Loans		492		362		4,117		3,466		151		—		8,588
Total	$	1,622,289	$	729,501	$	2,706,909	$	3,538,557	$	1,483,571	$	289,486	$	10,370,313

(1) Includes $29.4 million of residential mortgage loans held for sale at December 31, 2018.

Allowance for Credit Losses. The allowance for credit losses is established through charges to earnings in the form of a provision for credit losses. Management has established an allowance for credit losses which it believes is adequate as of September 30, 2019 for estimated losses in the Company’s loan portfolio. The amount of the allowance for credit losses is affected by the following: (1) charge-offs of loans that occur when loans are deemed uncollectible and decrease the allowance, (2) recoveries on loans previously charged off that increase the allowance and (3) provisions for credit losses charged to earnings that increase the allowance. Based on an evaluation of the loan portfolio and consideration of the factors listed below, management presents a quarterly review of the allowance for credit losses to the Bank’s Board of Directors, indicating any change in the allowance since the last review and any recommendations as to adjustments in the allowance. Although management believes it uses the best information available to make determinations with respect to the allowance for credit losses, future adjustments may be necessary if economic conditions or the borrower’s performance differ from the assumptions used in making the initial determinations.

The Company’s allowance for credit losses consists of two components: (1) a specific valuation allowance based on probable losses on specifically identified loans and (2) a general valuation allowance based on historical loan loss experience, general economic conditions and other qualitative risk factors both internal and external to the Company.

In setting the specific valuation allowance, the Company follows a loan review program to evaluate the credit risk in the total loan portfolio and assigns risk grades to each loan. Through this loan review process, the Company maintains an internal list of impaired loans, which along with the delinquency list of loans, helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for credit losses. All loans that have been identified as impaired are reviewed on a quarterly basis in order to determine whether a specific reserve is required. For certain impaired loans, the Company allocates a specific loan loss reserve primarily based on the value of the collateral securing the impaired loan in accordance with ASC Topic 310-10, “Receivables.” The specific reserves are determined on an individual loan basis. Loans for which specific reserves are provided are excluded from the general valuation allowance described below.

In connection with this review of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements include:

• for 1-4 family residential mortgage loans, the borrower’s ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan to value ratio, and the age, condition and marketability of collateral;

• for commercial real estate loans and multifamily residential loans, the debt service coverage ratio (income from the property in excess of operating expenses compared to loan payment requirements), operating results of the owner in the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

case of owner-occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type;

• for construction, land development and other land loans, the perceived feasibility of the project including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio;

• for commercial and industrial loans, the operating results of the commercial, industrial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral;

• for agriculture real estate loans, the experience and financial capability of the borrower, projected debt service coverage of the operations of the borrower and loan to value ratio; and

• for non-real estate agriculture loans, the operating results, experience and financial capability of the borrower, historical and expected market conditions and the value, nature and marketability of collateral.

In addition, for each category, the Company considers secondary sources of income and the financial strength and credit history of the borrower and any guarantors.

In determining the amount of the general valuation allowance, management considers factors such as historical loan loss experience, concentration risk of specific loan types, the volume, growth and composition of the Company’s loan portfolio, current economic conditions that may affect the borrower’s ability to pay and the value of collateral, the evaluation of the Company’s loan portfolio through its internal loan review process, general economic conditions, other qualitative risk factors both internal and external to the Company and other relevant factors in accordance with ASC Topic 450, “Contingencies.” Based on a review of these factors for each loan type, the Company applies an estimated percentage to the outstanding balance of each loan type, excluding any loan that has a specific reserve allocated to it. The Company uses this information to establish the amount of the general valuation allowance.  At September 30, 2019, the allowance for credit losses totaled $87.1 million or 0.82% of total loans, including acquired loans with discounts.  At December 31, 2018, the allowance for credit losses totaled $86.4 million or 0.83% of total loans, including acquired loans with discounts.

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PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

The following table details activity in the allowance for credit losses by category of loan for the three and nine months ended September 30, 2019 and 2018.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Construction, Land Development and Other Land Loans			Agriculture and Agriculture Real Estate (includes Farmland)			1-4 Family (includes Home Equity)			Commercial Real Estate (includes Multi-Family Residential)			Commercial and Industrial			Consumer and Other			Total
	(Dollars in thousands)
Allowance for credit losses:
Three Months Ended
Balance June 30, 2019	$	15,886		$	3,816		$	14,383		$	12,166		$	39,177		$	1,578		$	87,006
Provision for credit losses		(290	)		188			543			452			(763	)		970			1,100
Charge-offs		—			(294	)		—			—			(419	)		(1,024	)		(1,737	)
Recoveries		6			16			9			1			502			158			692
Net charge-offs		6			(278	)		9			1			83			(866	)		(1,045	)
Balance September 30, 2019	$	15,602		$	3,726		$	14,935		$	12,619		$	38,497		$	1,682		$	87,061
Nine Months Ended
Balance December 31, 2018	$	15,582		$	3,693		$	14,135		$	11,220		$	40,223		$	1,587		$	86,440
Provision for credit losses		21			(921	)		799			1,396			(918	)		2,223			2,600
Charge-offs		(63	)		(358	)		(22	)		—			(2,501	)		(2,821	)		(5,765	)
Recoveries		62			1,312			23			3			1,693			693			3,786
Net charge-offs		(1	)		954			1			3			(808	)		(2,128	)		(1,979	)
Balance September 30, 2019	$	15,602		$	3,726		$	14,935		$	12,619		$	38,497		$	1,682		$	87,061
Allowance for credit losses:
Three Months Ended
Balance June 30, 2018	$	14,450		$	3,756		$	13,353		$	10,616		$	41,454		$	1,335		$	84,964
Provision for credit losses		519			(158	)		593			411			(17	)		1,002			2,350
Charge-offs		—			(25	)		(17	)		—			(742	)		(978	)		(1,762	)
Recoveries		1			138			6			10			85			204			444
Net charge-offs		1			113			(11	)		10			(657	)		(774	)		(1,318	)
Balance September 30, 2018	$	14,970		$	3,711		$	13,935		$	11,037		$	40,780		$	1,563		$	85,996
Nine Months Ended
Balance December 31, 2017	$	14,815		$	3,772		$	14,490		$	10,628		$	38,810		$	1,526		$	84,041
Provision for credit losses		276			(280	)		(173	)		1,887			11,690			1,950			15,350
Charge-offs		(130	)		(25	)		(403	)		(1,489	)		(10,112	)		(2,889	)		(15,048	)
Recoveries		9			244			21			11			392			976			1,653
Net charge-offs		(121	)		219			(382	)		(1,478	)		(9,720	)		(1,913	)		(13,395	)
Balance September 30, 2018	$	14,970		$	3,711		$	13,935		$	11,037		$	40,780		$	1,563		$	85,996

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

The following table details the amount of the allowance for credit losses allocated to each category of loan as of September 30, 2019, December 31, 2018 and September 30, 2018, on the basis of the impairment methodology used to determine the allowance for credit losses.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Allowance for credit losses related to:
September 30, 2019
Individually evaluated for impairment	$	58	$	14	$	1,067	$	283	$	174	$	—	$	1,596
Collectively evaluated for impairment		15,544		3,712		13,868		12,336		38,323		1,682		85,465
PCI loans		—		—		—		—		—		—		—
Total allowance for credit losses	$	15,602	$	3,726	$	14,935	$	12,619	$	38,497	$	1,682	$	87,061
December 31, 2018
Individually evaluated for impairment	$	58	$	—	$	56	$	—	$	571	$	—	$	685
Collectively evaluated for impairment		15,524		3,693		14,079		11,220		39,652		1,587		85,755
PCI loans		—		—		—		—		—		—		—
Total allowance for credit losses	$	15,582	$	3,693	$	14,135	$	11,220	$	40,223	$	1,587	$	86,440
September 30, 2018
Individually evaluated for impairment	$	—	$	—	$	53	$	10	$	500	$	—	$	563
Collectively evaluated for impairment		14,970		3,711		13,882		11,027		40,280		1,563		85,433
PCI loans		—		—		—		—		—		—		—
Total allowance for credit losses	$	14,970	$	3,711	$	13,935	$	11,037	$	40,780	$	1,563	$	85,996

22

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

The following table details the recorded investment in loans by category of loan on the basis of the impairment methodology used to determine the allowance for credit losses as of September 30, 2019, December 31, 2018 and September 30, 2018, excluding $20.3 million, $29.4 million and $28.0 million, respectively, of residential mortgage loans held for sale.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Recorded investment in loans:
September 30, 2019
Individually evaluated for impairment	$	390	$	285	$	17,061	$	14,179	$	15,822	$	39	$	47,776
Collectively evaluated for impairment		1,763,849		728,976		2,682,207		3,635,234		1,444,477		342,800		10,597,543
PCI loans		409		324		4,130		2,763		116		—		7,742
Total loans evaluated for impairment	$	1,764,648	$	729,585	$	2,703,398	$	3,652,176	$	1,460,415	$	342,839	$	10,653,061
December 31, 2018
Individually evaluated for impairment	$	1,384	$	256	$	4,443	$	2,727	$	4,198	$	48	$	13,056
Collectively evaluated for impairment		1,620,413		728,883		2,668,982		3,532,364		1,479,222		289,438		10,319,302
PCI loans		492		362		4,117		3,466		151		—		8,588
Total loans evaluated for impairment	$	1,622,289	$	729,501	$	2,677,542	$	3,538,557	$	1,483,571	$	289,486	$	10,340,946
September 30, 2018
Individually evaluated for impairment	$	869	$	262	$	4,427	$	2,256	$	5,506	$	68	$	13,388
Collectively evaluated for impairment		1,558,632		705,113		2,677,237		3,500,651		1,519,196		281,044		10,241,873
PCI loans		641		375		4,076		4,316		152		—		9,560
Total loans evaluated for impairment	$	1,560,142	$	705,750	$	2,685,740	$	3,507,223	$	1,524,854	$	281,112	$	10,264,821

23

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

Troubled Debt Restructurings. The restructuring of a loan is considered a “troubled debt restructuring” if both (1) the borrower is experiencing financial difficulties and (2) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.  Under ASC Topic 310-40 “Receivables—Troubled Debt Restructurings by Creditors,” the Company evaluates all loan modifications to identify whether the restructuring constitutes a troubled debt restructuring.  As of September 30, 2019 and 2018, the Company had $14.2 million and $115 thousand, respectively, in outstanding troubled debt restructurings. The following table presents information regarding the recorded investment of loans modified as troubled debt restructurings during the nine months ended September 30, 2019 and 2018.

	Nine Months Ended
	September 30,
	2019						2018
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt Restructurings
Construction, land development and other land loans		—	$	—	$	—		—	$	—	$	—
Agriculture and agriculture real estate (includes farmland)		—		—		—		—		—		—
1-4 Family (includes home equity)		—		—		—		—		—		—
Commercial real estate (includes multi-family residential)		—		—		—		—		—		—
Commercial and industrial		2		14,993		14,188		2		198		72
Consumer and other		—		—		—		—		—		—
Total		2	$	14,993	$	14,188		2	$	198	$	72

As of September 30, 2019, there have been no defaults on any loans that were modified as troubled debt restructurings during the preceding twelve months. Default is determined at 90 or more days past due. For the nine months ended September 30, 2019, the Company added two loans totaling $15.0 million as new troubled debt restructurings, of which $14.2 million remained outstanding at September 30, 2019. For the nine months ended September 30, 2018, the Company added two loans totaling $198 thousand as new troubled debt restructurings, of which $72 thousand remained outstanding at September 30, 2018. The modifications generally related to extending the amortization periods of the loans, which includes loans modified during bankruptcy. The Company did not grant principal reductions on any restructured loans at the time of modification. These modifications did not have a material impact on the Company’s determination of the allowance for credit losses.

24

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

6. FAIR VALUE

The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair values represent the estimated price that would be received from selling an asset or paid to transfer a liability, otherwise known as an “exit price.”  Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record other assets at fair value on a nonrecurring basis such as certain loans including residential mortgage loans held for sale, goodwill and other intangible assets and other real estate owned. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write downs of individual assets.  ASC Topic 820 “Fair Value Measurements and Disclosures” establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Fair Value Hierarchy

The Company groups financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities) or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability.

The fair value disclosures below represent the Company’s estimates based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding current economic conditions, risk characteristics of the various instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in the above methodologies and assumptions could significantly affect the estimates.

The following tables present fair values for assets and liabilities measured at fair value on a recurring basis:

	As of  September 30, 2019
	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
Assets:
Available for sale securities:
States and political subdivisions	$	—	$	471	$	—	$	471
Collateralized mortgage obligations		—		241,726		—		241,726
Mortgage-backed securities		—		56,171		—		56,171
Total	$	—	$	298,368	$	—	$	298,368

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PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
Assets:
Available for sale securities:
States and political subdivisions	$	—	$	1,166	$	—	$	1,166
Collateralized mortgage obligations		—		12,756		—		12,756
Mortgage-backed securities		—		70,233		—		70,233
Total	$	—	$	84,155	$	—	$	84,155

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These instruments include other real estate owned, repossessed assets, held to maturity debt securities, loans held for sale and impaired loans, which are included as loans held for investment.  For the three and nine months ended September 30, 2019, the Company had additions to other real estate owned of $59 thousand and $2.0 million, respectively, of which $59 thousand and $1.7 million, respectively, were outstanding as of September 30, 2019. For the three and nine months ended September 30, 2019, the Company had additions to impaired loans of $12.5 million and $42.9 million, respectively, of which $12.5 million and $40.4 million, respectively, were outstanding as of September 30, 2019. The remaining financial assets and liabilities measured at fair value on a non-recurring basis that were recorded in 2019 and remained outstanding at September 30, 2019 were not significant.

The following tables present carrying and fair value information of financial instruments as of the dates indicated:

	As of  September 30, 2019
	Carrying		Estimated Fair Value
	Amount		Level 1		Level 2		Level 3		Total
Assets	(Dollars in thousands)
Cash and due from banks	$	420,359	$	420,359	$	—	$	—	$	420,359
Federal funds sold		521		521		—		—		521
Held to maturity securities		8,196,838		—		8,217,601		—		8,217,601
Loans held for sale		20,284		—		20,284		—		20,284
Loans held for investment, net of allowance		10,566,000		—		—		10,498,468		10,498,468
Other real estate owned		815		—		815		—		815
Liabilities
Deposits:
Noninterest-bearing	$	5,784,002	$	—	$	5,784,002	$	—	$	5,784,002
Interest-bearing		11,145,918		—		11,142,770		—		11,142,770
Other borrowings		600,795		—		600,833		—		600,833
Securities sold under repurchase agreements		311,404		—		311,411		—		311,411

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PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

	As of December 31, 2018
	Carrying		Estimated Fair Value
	Amount		Level 1		Level 2		Level 3		Total
Assets	(Dollars in thousands)
Cash and due from banks	$	410,575	$	410,575	$	—	$	—	$	410,575
Federal funds sold		552		552		—		—		552
Held to maturity securities		9,324,811		—		9,081,236		—		9,081,236
Loans held for sale		29,367		—		29,367		—		29,367
Loans held for investment, net of allowance		10,254,506		—		—		10,144,556		10,144,556
Other real estate owned		1,805		—		1,805		—		1,805
Liabilities
Deposits:
Noninterest-bearing	$	5,666,115	$	—	$	5,666,115	$	—	$	5,666,115
Interest-bearing		11,590,443		—		11,564,521		—		11,564,521
Other borrowings		1,031,126		—		1,031,161		—		1,031,161
Securities sold under repurchase agreements		284,720		—		284,685		—		284,685

The following is a description of the fair value estimates, methods and assumptions that are used by the Company in estimating the fair values of financial instruments.

Loans held for sale— Loans held for sale are carried at the lower of cost or estimated fair value. Fair value for consumer mortgages held for sale is based on commitments on hand from investors or prevailing market prices. As such, the Company classifies loans held for sale subjected to nonrecurring fair value adjustments as Level 2.

Loans held for investment— The Company does not record loans at fair value on a recurring basis. As such, valuation techniques discussed herein for loans are primarily for estimating fair value disclosures. The Company refined the calculation to estimate fair value for loans held for investment to be in accordance with ASU 2016-01. The refined discounted cash flow calculation to determine fair value considers internal and market-based information such as prepayment risk, cost of funds and liquidity.

From time to time, the Company records nonrecurring fair value adjustments to impaired loans to reflect (1) partial write downs that are based on the observable market price or current appraised value of the collateral, or (2) the full charge-off of the loan carrying value. Where appraisals are not available, estimated cash flows are discounted using a rate commensurate with the credit risk associated with those cash flows. Assumptions regarding credit risk, cash flows and discount rates are judgmentally determined using available market information and specific borrower information. The Company classifies the estimated fair value of loans held for investment as Level 3.

Other real estate owned— Other real estate owned is primarily foreclosed properties securing residential loans and commercial real estate. Foreclosed assets are adjusted to fair value less estimated costs to sell upon transfer of the loans to other real estate owned. Subsequently, these assets are carried at the lower of carrying value or fair value less estimated costs to sell. Other real estate carried at fair value based on an observable market price or a current appraised value is classified by the Company as Level 2. When management determines that the fair value of other real estate requires additional adjustments, either as a result of a non-current appraisal or when there is no observable market price, the Company classifies the other real estate as Level 3.

The fair value estimates presented herein are based on pertinent information available to management at September 30, 2019. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

27

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

7. GOODWILL AND CORE DEPOSIT INTANGIBLES

Changes in the carrying amount of the Company’s goodwill and core deposit intangibles for the nine months ended September 30, 2019 and the year ended December 31, 2018 were as follows: 

	Goodwill		Core Deposit Intangibles
	(Dollars in thousands)
Balance as of December 31, 2017	$	1,900,845	$	38,842
Less:
Amortization		—		(5,959	)
Balance as of December 31, 2018		1,900,845		32,883
Less:
Amortization		—		(3,832	)
Balance as of September 30, 2019	$	1,900,845	$	29,051

Goodwill is recorded as of the acquisition date of each entity. The Company may record subsequent adjustments to goodwill for amounts undeterminable at acquisition date, such as deferred taxes and real estate valuations, and therefore the goodwill amounts may change accordingly. The Company initially records the total premium paid on acquisitions as goodwill. After finalizing the valuation, core deposit intangibles are identified and reclassified from goodwill to core deposit intangibles on the balance sheet. This reclassification has no effect on total assets, liabilities, shareholders’ equity, net income or cash flows. Management performs an evaluation annually, and more frequently if a triggering event occurs, of whether any impairment of the goodwill and core deposit intangibles has occurred. If any such impairment is determined, a write-down is recorded. As of September 30, 2019, there was no impairment recorded on goodwill and core deposit intangibles.

The measurement period for the Company to determine the fair value of acquired identifiable assets and assumed liabilities will be at the end of the earlier of (1) twelve months from the date of acquisition or (2) as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the date of acquisition.

Core deposit intangibles are being amortized on a non-pro rata basis over their estimated lives, which the Company believes is between 10 and 15 years. Amortization expense related to intangible assets totaled $1.2 million and $1.5 million for the three months ended September 30, 2019 and 2018, respectively, and $3.8 million and $4.5 million for the nine months ended September 30, 2019 and 2018, respectively. The estimated aggregate future amortization expense for core deposit intangibles remaining as of September 30, 2019 is as follows (dollars in thousands):

Remaining 2019	$	1,219
2020		4,483
2021		4,022
2022		3,664
2023		3,350
Thereafter		12,313
Total	$	29,051

8. STOCK–BASED COMPENSATION

At September 30, 2019, the Company had one stock-based employee compensation plan with awards outstanding.

During 2012, Bancshares’ Board of Directors established the Prosperity Bancshares, Inc. 2012 Stock Incentive Plan (the “2012 Plan”), which was approved by Bancshares’ shareholders and authorized the issuance of up to 1,250,000 shares of common stock upon the exercise of options granted under the 2012 Plan or pursuant to the grant or exercise, as the case may be, of other awards granted under the 2012 Plan, including restricted stock, stock appreciation rights, phantom stock awards and performance awards. As of September 30, 2019, a total of 346,500 shares of common stock have been issued pursuant to vested awards and 398,532 shares of unvested restricted stock have been granted under the 2012 Plan.

28

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

As of September 30, 2019, the Company had no stock options outstanding. Stock-based compensation expense related to restricted stock was $2.5 million and $2.8 million during the three months ended September 30, 2019 and 2018, respectively, and $7.6 million and $7.9 million during the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, there was $12.8 million of total unrecognized compensation expense related to stock-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 1.86 years.

9. CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ITEMS

Contractual Obligations

The Company’s contractual obligations and other commitments to make future payments as of September 30, 2019 (other than deposit obligations and securities sold under repurchase agreements) are summarized below.

Federal Home Loan Bank Borrowings

The Company’s future cash payments associated with its contractual obligations pursuant to its Federal Home Loan Bank (“FHLB”) advances and notes payable as of September 30, 2019 are summarized below. Payments for FHLB notes payable include interest of $64 thousand that will be paid over the future periods. The payments do not include pre-payment options that may be available to the Company.

	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)
Federal Home Loan Bank advances and notes payable	$	600,572	$	125	$	125	$	37	$	600,859

Leases

The Company’s leases relate primarily to operating leases for office space and banking centers. The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining lease terms of 1 to 13 years, which may include the option to extend the lease when it is reasonably certain for the Company to exercise that option. Operating lease right-of-use (ROU) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental collateralized borrowing rate to determine the present value of lease payments. Short-term leases and leases with variable lease costs are immaterial and the Company does not have any sublease arrangements. As of September 30, 2019, operating lease ROU assets and lease liabilities were approximately $17 million. ROU assets and lease liabilities were classified as other assets and other liabilities, respectively.

As of September 30, 2019, the weighted average remaining lease terms of the Company’s operating leases were 5.7 years. The weighted average discount rate used to determine the lease liabilities as of September 30, 2019 for the Company’s operating leases was 3.20%. Cash paid for the Company’s operating leases for the three and nine months ended September 30, 2019 was $1.4 million and $4.2 million, respectively.  The Company obtained $2.4 million in ROU assets in exchange for lease liabilities for two operating leases during the nine months ended September 30, 2019.

The Company’s future undiscounted cash payments associated with its operating leases as of September 30, 2019 are summarized below (dollars in thousands).

Remaining 2019	$	1,282
2020		4,607
2021		3,588
2022		3,111
2023		2,550
2024		1,641
Thereafter		4,426
Total undiscounted lease payments	$	21,205

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PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

The following table presents a summary of non-cancelable future operating lease commitments as of December 31, 2018 (dollars in thousands):

2019	$	4,897
2020		4,088
2021		3,013
2022		2,319
2023		2,025
Thereafter		3,597
Total non-cancelable lease payments	$	19,939

Off-Balance Sheet Items

In the normal course of business, the Company enters into various transactions that, in accordance with GAAP, are not included in its consolidated balance sheets. The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The Company’s commitments associated with outstanding standby letters of credit and commitments to extend credit expiring by period as of September 30, 2019 are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.

	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)
Standby letters of credit	$	62,393	$	5,663	$	1,932	$	—	$	69,988
Commitments to extend credit		1,169,623		357,578		102,431		1,050,959		2,680,591
Total	$	1,232,016	$	363,241	$	104,363	$	1,050,959	$	2,750,579

10. OTHER COMPREHENSIVE INCOME

The tax effects allocated to each component of other comprehensive income were as follows:

	Three Months Ended September 30,
	2019								2018
	Before Tax Amount			Tax Effect		Net of Tax Amount			Before Tax Amount		Tax Effect			Net of Tax Amount
	(Dollars in thousands)
Other comprehensive (loss) income:
Securities available for sale:
Change in unrealized gain during period	$	(1,563	)	$	328	$	(1,235	)	$	149	$	(31	)	$	118
Total securities available for sale		(1,563	)		328		(1,235	)		149		(31	)		118
Total other comprehensive (loss) income	$	(1,563	)	$	328	$	(1,235	)	$	149	$	(31	)	$	118

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PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

	Nine Months Ended September 30,
	2019								2018
	Before Tax Amount			Tax Effect		Net of Tax Amount			Before Tax Amount		Tax Effect			Net of Tax Amount
	(Dollars in thousands)
Other comprehensive (loss) income:
Securities available for sale:
Change in unrealized gain during period	$	(344	)	$	72	$	(272	)	$	729	$	(153	)	$	576
Total securities available for sale		(344	)		72		(272	)		729		(153	)		576
Total other comprehensive (loss) income	$	(344	)	$	72	$	(272	)	$	729	$	(153	)	$	576

Activity in accumulated other comprehensive income associated with securities available for sale, net of tax, was as follows:

	Securities Available for Sale			Accumulated Other Comprehensive Income
	(Dollars in thousands)
Balance at December 31, 2018	$	310		$	310
Other comprehensive loss		(272	)		(272	)
Balance at September 30, 2019	$	38		$	38
Balance at December 31, 2017	$	(113	)	$	(113	)
Other comprehensive income		576			576
Balance at September 30, 2018	$	463		$	463

11. SUBSEQUENT EVENTS

Merger with LegacyTexas Financial Group, Inc.—On November 1, 2019, the Company completed the merger with LegacyTexas and its wholly-owned subsidiary LegacyTexas Bank headquartered in Plano, Texas. LegacyTexas Bank operated 42 locations in 19 North Texas cities in and around the Dallas-Fort Worth area.  As of September 30, 2019, LegacyTexas, on a consolidated basis, reported total assets of $10.5 billion, total gross loans of $9.1 billion and total deposits of $6.5 billion.  In connection with the merger, each outstanding share of LegacyTexas common stock, including restricted stock awards, performance share awards and options, all of which were deemed vested immediately prior to the merger, subject to certain limited exceptions, was converted into the right to receive 0.5280 of a share of Prosperity common stock, with cash payable in lieu of any fractional share, and $6.28 in cash, in each case without interest. Additional disclosures required by ASC 805 have been omitted from this report due to the close proximity of the merger with the issue date of the accompanying consolidated financial statements.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Cautionary Notice Regarding Forward-Looking Statements

Statements and financial discussion and analysis contained in this quarterly report on Form 10-Q that are not statements of historical fact constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and involve a number of risks and uncertainties, many of which are beyond the Company’s control. Forward-looking statements can be identified by words such as “believes,” “intends,” “expects,” “plans,” “will” and similar references to future periods. Many possible events or factors could affect the future financial results and performance of the Company and could cause such results or performance to differ materially from those expressed in the forward-looking statements. These possible events or factors include, but are not limited to:

• changes in the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations resulting in, among other things, a deterioration in credit quality or reduced demand for credit, including the result and effect on the Company’s loan portfolio and allowance for credit losses;

• volatility in interest rates and market prices, which could reduce the Company’s net interest margins, asset valuations and expense expectations;

• changes in the levels of loan prepayments and the resulting effects on the value of the Company’s loan portfolio;

• changes in local economic and business conditions, including fluctuations in the price of oil, natural gas and other commodities, which adversely affect the Company’s customers and their ability to transact profitable business with the Company, including the ability of the Company’s borrowers to repay their loans according to their terms or a change in the value of the related collateral;

• increased competition for deposits and loans adversely affecting rates and terms;

• the expected cost savings, synergies and other financial and operational benefits from the LegacyTexas merger might not be realized within the expected time frames or at all, and costs or difficulties relating to the integration of LegacyTexas might be greater than expected;

• the timing, impact and other uncertainties of any future acquisitions, including the Company’s ability to identify suitable future acquisition candidates, the success or failure in the integration of their operations, and the ability to enter new markets successfully and capitalize on growth opportunities;

• the possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on the results of operations;

• increased credit risk in the Company’s assets and increased operating risk caused by a material change in commercial, consumer and/or real estate loans as a percentage of the total loan portfolio;

• the concentration of the Company’s loan portfolio in loans collateralized by residential and commercial real estate;

• the failure of assumptions underlying the establishment of and provisions made to the allowance for credit losses, including such assumptions related to potential, pending or recent acquisitions;

• changes in the availability of funds resulting in increased costs or reduced liquidity;

• a deterioration or downgrade in the credit quality and credit agency ratings of the securities in the Company’s securities portfolio;

• increased asset levels and changes in the composition of assets and the resulting impact on the Company’s capital levels and regulatory capital ratios;

• the Company’s ability to acquire, operate and maintain cost effective and efficient systems without incurring unexpectedly difficult or expensive but necessary technological changes;

• the loss of senior management or operating personnel and the potential inability to hire qualified personnel at reasonable compensation levels;

• government intervention in the U.S. financial system;

• changes in statutes and government regulations or their interpretations applicable to financial holding companies and the Company’s present and future banking and other subsidiaries, including changes in tax requirements and tax rates;

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• the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters;

• poor performance by external vendors;

• the cost and effects of a failure, interruption, or breach of security of our systems;

• the failure of analytical and forecasting models and tools used by the Company to estimate probable credit losses and to measure the fair value of financial instruments;

• additional risks from new lines of businesses or new products and services;

• claims or litigation related to intellectual property or fiduciary responsibilities;

• the failure of the Company’s enterprise risk management framework to identify or address risks adequately;

• a failure in or breach of operational or security systems of the Company’s infrastructure, or those of its third-party vendors and other service providers, including as a result of cyber attacks;

• potential risk of environmental liability associated with lending activities;

• acts of terrorism, an outbreak of hostilities or other international or domestic calamities, weather or other acts of God and other matters beyond the Company’s control; and

• other risks and uncertainties described in the Company’s Annual Report on Form 10-K or in the Company’s other reports and documents filed with the Securities and Exchange Commission.

A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. The Company believes it has chosen these assumptions or bases in good faith and that they are reasonable. However, the Company cautions that assumptions or bases almost always vary from actual results, and the differences between assumptions or bases and actual results can be material. Therefore, the Company cautions against placing undue reliance on its forward-looking statements. The forward-looking statements speak only as of the date the statements are made. The Company undertakes no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of the Company’s balance sheets and statements of income. This section should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included elsewhere in this report and with the consolidated financial statements and accompanying notes and other detailed information appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

OVERVIEW

Prosperity Bancshares, Inc., a Texas corporation, was formed in 1983 to acquire the former Allied First Bank in Edna, Texas, which was chartered in 1949 as The First National Bank of Edna and is now known as Prosperity Bank. The Company is a registered financial holding company that derives substantially all of its revenues and income from the operation of its bank subsidiary, Prosperity Bank. The Bank provides a wide array of financial products and services to small and medium-sized businesses and consumers. As of September 30, 2019, the Bank operated 243 full-service banking locations; with 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 33 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area including Austin and San Antonio; 34 in the West Texas area including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area; 6 in the Central Oklahoma area; and 8 in the Tulsa, Oklahoma area.  The Company’s principal executive office is located at Prosperity Bank Plaza, 4295 San Felipe in Houston, Texas, and its telephone number is (281) 269-7199. The Company’s website address is www.prosperitybankusa.com. Information contained on the Company’s website is not incorporated by reference into this quarterly report on Form 10-Q and is not part of this or any other report.

The Company generates the majority of its revenues from interest income on loans, service charges and fees on customer accounts and income from investment in securities. The revenues are partially offset by interest expense paid on deposits and other borrowings and noninterest expenses such as administrative and occupancy expenses. Net interest income is the difference between interest income on earning assets such as loans and securities and interest expense on liabilities such as deposits and borrowings which are used to fund those assets. Net interest income is the Company’s largest source of revenue. The level of interest rates and the volume and mix of earning assets and interest-bearing liabilities impact net interest income and margin.

Three principal components of the Company’s growth strategy are internal growth, efficient operations and acquisitions, including strategic merger transactions. The Company focuses on continual internal growth. The Company maintains separate data

33

with respect to each banking center’s net interest income, efficiency ratio, deposit growth and loan growth for purposes of measuring its overall profitability. Banking center presidents and managers are accountable for performance in these areas and compensated accordingly. The Company also focuses on maintaining efficiency and stringent cost control practices and policies. The Company has centralized many of its critical operations, such as data processing and loan processing. Management believes that this centralized infrastructure can accommodate substantial additional growth and achieve necessary controls while enabling the Company to minimize operational costs through certain economies of scale.  The Company also intends to continue to seek expansion opportunities.

Total assets were $22.09 billion at September 30, 2019 compared with $22.69 billion at December 31, 2018, a decrease of $600.6 million or 2.6%. Total loans were $10.67 billion at September 30, 2019 compared with $10.37 billion at December 31, 2018, an increase of $303.0 million or 2.9%. Total deposits were $16.93 billion at September 30, 2019 compared with $17.26 billion at December 31, 2018, a decrease of $326.6 million or 1.9%. Total shareholders’ equity was $4.13 billion at September 30, 2019 compared with $4.05 billion at December 31, 2018, an increase of $74.0 million or 1.8%.

CRITICAL ACCOUNTING POLICIES

The Company’s significant accounting policies are integral to understanding the results reported. The Company’s accounting policies are described in detail in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The Company believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity:

Allowance for Credit Losses — The allowance for credit losses is established through charges to earnings in the form of a provision for credit losses. The Company’s allowance for credit losses consists of two elements, (1) specific valuation allowances based on probable losses on impaired loans and (2) a general valuation allowance based on historical loan loss experience, general economic conditions and other qualitative risk factors both internal and external to the Company. The allowance for acquired credit losses is calculated as described under the heading “Accounting for Acquired Loans and the Allowance for Acquired Credit Losses” below. Management has established an allowance for credit losses which it believes is adequate for estimated losses in the Company’s loan portfolio. Based on an evaluation of the portfolio, management presents a quarterly review of the allowance for credit losses to the Bank’s Board of Directors, indicating any change in the allowance since the last review and any recommendations as to adjustments in the allowance. In making its evaluation, management considers factors such as historical loan loss experience, the amount of nonperforming assets and related collateral, the volume, growth and composition of the portfolio, current economic conditions that may affect the borrower’s ability to pay and the value of collateral, the evaluation of the portfolio through its internal loan review process and other relevant factors. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. Charge-offs occur when loans are deemed to be uncollectible. For further discussion of the methodology used in the determination of the allowance for credit losses, see “Financial Condition – Allowance for Credit Losses” below.  

Accounting for Acquired Loans and the Allowance for Acquired Credit Losses — The Company accounts for its acquisitions using the acquisition method of accounting. Accordingly, the assets, including loans, and liabilities of the acquired entity were recorded at their fair values at the acquisition date. No allowance for credit losses related to the acquired loans is recorded on the acquisition date, as the fair value of the acquired loans incorporates assumptions regarding credit risk. These fair value estimates associated with acquired loans, and based on a discounted cash flow model, include estimates related to market interest rates and undiscounted projections of future cash flows that incorporate expectations of prepayments and the amount and timing of principal, interest and other cash flows, as well as any shortfalls thereof.

At period-end after acquisition, the fair-valued acquired loans from each acquisition are reassessed to determine whether an addition to the allowance for credit losses is appropriate due to further credit quality deterioration. For further discussion of the methodology used in the determination of the allowance for credit losses for acquired loans, see “Financial Condition – Allowance for Credit Losses” below.

Fair Values of Financial Instruments—The Company determines the fair market values of financial instruments based on the fair value hierarchy established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value. Level 1 inputs include quoted active market prices, where available. If such quoted market prices are not available Level 2 inputs are used. These inputs are based upon internally developed analytical tools that primarily use observable market-based parameters. Level 3 inputs are unobservable inputs which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

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RECENT ACQUISITIONS

Merger with LegacyTexas Financial Group, Inc.—On November 1, 2019, the Company completed the merger with LegacyTexas Financial Group, Inc. (“LegacyTexas”) and its wholly-owned subsidiary LegacyTexas Bank headquartered in Plano, Texas. LegacyTexas Bank operated 42 locations in 19 North Texas cities in and around the Dallas-Fort Worth area. As of September 30, 2019, LegacyTexas, on a consolidated basis, reported total assets of $10.5 billion, total gross loans of $9.1 billion and total deposits of $6.5 billion. In connection with the merger, each outstanding share of LegacyTexas common stock, including restricted stock awards, performance share awards and options, all of which were deemed vested immediately prior to the merger, subject to certain limited exceptions, was converted into the right to receive 0.5280 of a share of Prosperity common stock, with cash payable in lieu of any fractional share, and $6.28 in cash, in each case without interest.

RESULTS OF OPERATIONS

Net income available to common shareholders was $81.8 million for the quarter ended September 30, 2019 compared with $82.5 million for the same period in 2018, a decrease of $765 thousand or 0.9%. Net income per diluted common share was $1.19 for the quarter ended September 30, 2019 compared with $1.18 for the same period in 2018, an increase of 0.8%. The Company posted annualized returns on average common equity of 7.89% and 8.30%, annualized returns on average assets of 1.47% and 1.46% and efficiency ratios of 43.70% and 43.50% for the quarters ended September 30, 2019 and 2018, respectively. The efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and non-interest income. Because the ratio is a measure of revenues and expenses resulting from our lending activities and fee-based banking services, net gains and losses on the sale of assets and securities are not included. Additionally, taxes are not part of this calculation.

For the nine months ended September 30, 2019, net income available to common shareholders was $246.4 million compared with $238.5 million for the same period in 2018, an increase of $7.9 million or 3.3%. Net income per diluted common share was $3.55 for the nine months ended September 30, 2019 compared with $3.42 for the same period in 2018, an increase of 3.8%. Net income and earnings per diluted common share for the nine months ended September 30, 2018 were impacted by significant charge-offs during the first quarter of 2018. The Company posted annualized returns on average common equity of 7.95% and 8.11%, annualized returns on average assets of 1.47% and 1.41% and efficiency ratios of 43.46% and 43.88% for the nine months ended September 30, 2019 and 2018, respectively.

Net Interest Income

The Company’s net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a “volume change.” It is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds, referred to as a “rate change.”

For the Three Months Ended September 30, 2019

Net interest income before the provision for credit losses was $154.0 million for the quarter ended September 30, 2019, a decrease of $3.3 million or 2.1%, compared with $157.3 million for the same period in 2018. This change was primarily due to higher rates on interest-bearing liabilities and lower investment securities balances, partially offset by an increase in loan balances and loan yield.

Interest income on loans was $134.9 million for the quarter ended September 30, 2019, an increase of $6.3 million or 4.9%, compared with $128.6 million for the same period in 2018. This increase was primarily due to higher average loans and higher loan rates, partially offset by a decrease in loan discount accretion for the third quarter of 2019.

Interest income on securities was $50.9 million for the quarter ended September 30, 2019, a decrease of $4.8 million or 8.7%, compared with $55.7 million for the same period in 2018. This decrease was primarily due to lower average securities balances, partially offset by higher yields.

Average interest-bearing liabilities were $12.25 billion for the quarter ended September 30, 2019, a decrease of $684.9 million or 5.3%, compared with $12.93 billion for the same period in 2018. The net interest margin on a tax-equivalent basis increased from 3.15% for the quarter ended September 30, 2018 to 3.16% for the quarter ended September 30, 2019.

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For the Nine Months Ended September 30, 2019

Net interest income before the provision for credit losses was $463.7 million for the nine months ended September 30, 2019, a decrease of $8.6 million or 1.8%, compared with $472.3 million for the same period in 2018.  This change was primarily due to higher rates on deposits, lower investment securities balances, a decrease in loan discount accretion and the collection of previously identified troubled assets during the second quarter of 2018. This change was partially offset by an increase in loan balances and higher loan yields.

Interest income on loans was $398.5 million for the nine months ended September 30, 2019, an increase of $25.2 million or 6.7%, compared with $373.3 million for the same period in 2018. This increase was primarily due to higher average loans and higher loan rates, partially offset by lower loan discount accretion and the collection of previously identified troubled assets during the second quarter of 2018. The Company had $13.4 million of total outstanding discounts on acquired loans, of which $12.1 million was accretable at September 30, 2019.

Interest income on securities was $160.5 million for the nine months ended September 30, 2019, a decrease of $5.3 million or 3.2%, compared with $165.7 million for the same period in 2018. This decrease was primarily due to lower average securities balances, partially offset by higher yields.

Average interest-bearing liabilities were $12.55 billion for the nine months ended September 30, 2019, a decrease of $458.2 million or 3.5%, compared with $13.00 billion for the same period in 2018. The net interest margin on a tax-equivalent basis decreased from 3.20% for the nine months ended September 30, 2018 to 3.17% for the nine months ended September 30, 2019. This change was primarily due to a decrease in loan discount accretion of $6.703 million and the collection of previously identified troubled assets during the second quarter of 2018.

36

The following tables present, for the periods indicated, the total dollar amount of average balances, interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities and the resultant rates.  Except as indicated in the footnotes, no tax-equivalent adjustments were made and all average balances are daily average balances. Any nonaccruing loans have been included in the table as loans carrying a zero yield.

	Three Months Ended September 30,
	2019								2018
	Average Outstanding Balance			Interest Earned/Paid		Average Yield/Rate (1)			Average Outstanding Balance			Interest Earned/Paid		Average Yield/Rate (1)
	(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans	$	10,610,349		$	134,943		5.05	%	$	10,208,171		$	128,645		5.00	%
Investment securities		8,758,056			50,872		2.30	%		9,647,744			55,705		2.29	%
Federal funds sold and other earning assets		74,751			363		1.93	%		67,974			326		1.90	%
Total interest-earning assets		19,443,156			186,178		3.80	%		19,923,889			184,676		3.68	%
Allowance for credit losses		(86,996	)							(85,254	)
Noninterest-earning assets		2,849,936								2,820,156
Total assets	$	22,206,096							$	22,658,791
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	3,575,249		$	5,602		0.62	%	$	3,676,452		$	4,699		0.51	%
Savings and money market deposits		5,524,277			12,588		0.90	%		5,465,143			9,206		0.67	%
Certificates and other time deposits		2,083,803			8,749		1.67	%		2,055,652			5,303		1.02	%
Other borrowings		749,814			4,335		2.29	%		1,447,328			7,583		2.08	%
Securities sold under repurchase agreements		315,277			914		1.15	%		288,706			566		0.78	%
Total interest-bearing liabilities		12,248,420			32,188		1.04	%		12,933,281			27,357		0.84	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		5,701,419								5,646,183
Other liabilities		111,526								102,092
Total liabilities		18,061,365								18,681,556
Shareholders' equity		4,144,731								3,977,235
Total liabilities and shareholders' equity	$	22,206,096							$	22,658,791
Net interest rate spread							2.76	%							2.84	%
Net interest income and margin (2) (3)				$	153,990		3.14	%				$	157,319		3.13	%
Net interest income and margin (tax equivalent) (4)				$	154,781		3.16	%				$	158,198		3.15	%

______________

(1) Annualized and based on average balances on an actual 365-day basis for the three months ended September 30, 2019 and 2018.

(2) Yield is based on amortized cost and does not include any component of unrealized gains or losses.

(3) The net interest margin is equal to net interest income divided by average interest-earning assets.

(4) In order to make pretax income and resultant yields on tax-exempt investments and loans comparable to those on taxable investments and loans, a tax-equivalent adjustment has been computed using a federal income tax rate of 21%.

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	Nine Months Ended September 30,
	2019								2018
	Average Outstanding Balance			Interest Earned/Paid		Average Yield/Rate (1)			Average Outstanding Balance			Interest Earned/Paid		Average Yield/Rate (1)
	(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans	$	10,508,469		$	398,533		5.07	%	$	10,081,649		$	373,336		4.95	%
Investment securities		9,079,314			160,464		2.36	%		9,720,089			165,739		2.28	%
Federal funds sold and other earning assets		70,320			1,083		2.06	%		76,516			940		1.64	%
Total interest-earning assets		19,658,103		$	560,080		3.81	%		19,878,254		$	540,015		3.63	%
Allowance for credit losses		(86,556	)							(83,853	)
Noninterest-earning assets		2,852,098								2,817,700
Total assets	$	22,423,645							$	22,612,101
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	3,810,765		$	18,227		0.64	%	$	4,010,724		$	14,745		0.49	%
Savings and money market deposits		5,548,375			36,494		0.88	%		5,428,577			21,157		0.52	%
Certificates and other time deposits		2,067,940			23,908		1.55	%		2,105,807			13,839		0.88	%
Other borrowings		825,733			15,208		2.46	%		1,152,909			16,602		1.93	%
Securities sold under repurchase agreements		292,347			2,504		1.15	%		305,297			1,327		0.58	%
Total interest-bearing liabilities		12,545,160			96,341		1.03	%		13,003,314			67,670		0.70	%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		5,645,145								5,601,370
Other liabilities		102,299								86,301
Total liabilities		18,292,604								18,690,985
Shareholders' equity		4,131,041								3,921,116
Total liabilities and shareholders' equity	$	22,423,645							$	22,612,101
Net interest rate spread							2.78	%							2.93	%
Net interest income and margin (2) (3)				$	463,739		3.15	%				$	472,345		3.18	%
Net interest income and margin (tax equivalent) (4)				$	466,220		3.17	%				$	475,068		3.20	%

____________

(1) Annualized and based on average balances on an actual 365-day basis for the nine months ended September 30, 2019 and 2018.

(2) Yield is based on amortized cost and does not include any component of unrealized gains or losses.

(3) The net interest margin is equal to net interest income divided by average interest-earning assets.

(4) In order to make pretax income and resultant yields on tax-exempt investments and loans comparable to those on taxable investments and loans, a tax-equivalent adjustment has been computed using a federal income tax rate of 21%.

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The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest-earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes in interest rates.  For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated to rate.

	Three Months Ended September 30,									Nine Months Ended September 30,
	2019 vs. 2018									2019 vs. 2018
	Increase									Increase
	(Decrease)									(Decrease)
	Due to Change in									Due to Change in
	Volume			Rate			Total			Volume			Rate			Total
	(Dollars in thousands)
Interest-Earning Assets:
Loans (1)	$	5,068		$	1,230		$	6,298		$	15,806		$	9,391		$	25,197
Investment securities (1)		(5,137	)		304			(4,833	)		(10,926	)		5,651			(5,275	)
Federal funds sold and other earning assets		32			5			37			(76	)		219			143
Total (decrease) increase in interest income		(37	)		1,539			1,502			4,804			15,261			20,065
Interest-Bearing Liabilities:
Interest-bearing demand deposits		(129	)		1,032			903			(735	)		4,217			3,482
Savings and money market deposits		100			3,282			3,382			467			14,870			15,337
Certificates and other time deposits (1)		73			3,373			3,446			(249	)		10,318			10,069
Other borrowings		(3,654	)		406			(3,248	)		(4,711	)		3,317			(1,394	)
Securities sold under repurchase agreements		52			296			348			(57	)		1,234			1,177
Total (decrease) increase in interest expense		(3,558	)		8,389			4,831			(5,285	)		33,956			28,671
Increase (decrease) in net interest income	$	3,521		$	(6,850	)	$	(3,329	)	$	10,089		$	(18,695	)	$	(8,606	)

______________

(1) Includes impact of purchase accounting adjustments.

Provision for Credit Losses

Management actively monitors the Company’s asset quality and provides specific loss provisions when necessary. Provisions for credit losses are charged to income to bring the total allowance for credit losses to a level deemed appropriate by management of the Company based on such factors as historical credit loss experience, the amount of nonperforming loans and related collateral, the volume growth and composition of the loan portfolio, current economic conditions that may affect the borrower’s ability to pay and the value of collateral, the evaluation of the loan portfolio through the internal loan review process and other relevant factors.

Loans are charged off against the allowance for credit losses when appropriate. Although management believes it uses the best information available to make determinations with respect to the provision for credit losses, future adjustments may be necessary if economic conditions differ from the assumptions used in making the initial determinations.

The Company recorded a $1.1 million provision for credit losses for the quarter ended September 30, 2019 and a $2.4 million provision for credit losses for the quarter ended September 30, 2018. Net charge-offs were $1.0 million for the quarter ended September 30, 2019 compared with net charge-offs of $1.3 million for the quarter ended September 30, 2018.  The Company made a $2.6 million provision for credit losses for the nine months ended September 30, 2019 and a $15.4 million provision for credit losses for the nine months ended September 30, 2018. Net charge-offs were $2.0 million for the nine months ended September 30, 2019 compared with $13.4 million for the nine months ended September 30, 2018. See "Financial Condition – Allowance for Credit Losses" below for more information.

Noninterest Income

The Company’s primary sources of recurring noninterest income are nonsufficient funds (“NSF”) fees, credit, debit and ATM card income and service charges on deposit accounts. Additionally, the Company generates recurring noninterest income from its trust, mortgage and brokerage lines of business. Noninterest income does not include loan origination fees which are recognized over the life of the related loan as an adjustment to yield using the interest method. Noninterest income totaled $30.7 million for the three months ended September 30, 2019 compared with $30.6 million for the same period in 2018, an increase of $49 thousand or 0.2%. Noninterest income totaled $88.8 million for the nine months ended September 30, 2019 compared with $86.9 million for the same period in 2018, an increase of $1.8 million or 2.1%. The change was primarily due to an increase in other noninterest income.

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The following table presents, for the periods indicated, the major categories of noninterest income:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
	(Dollars in thousands)
Nonsufficient funds (NSF) fees	$	8,835		$	8,606	$	24,624	$	24,261
Credit card, debit card and ATM card income		6,688			6,242		19,139		18,538
Service charges on deposit accounts		5,020			5,137		15,007		15,562
Trust income		2,492			2,692		7,645		7,671
Mortgage income		839			856		2,551		2,728
Brokerage income		522			784		1,736		2,096
Bank owned life insurance income		1,314			1,326		3,924		3,954
Net (loss) gain on sale of assets		(3	)		4		57		(40	)
Net loss on sale of securities		—			—		—		(13	)
Other		4,966			4,977		14,092		12,176
Total noninterest income	$	30,673		$	30,624	$	88,775	$	86,933

Noninterest Expense

Noninterest expense totaled $80.7 million for the quarter ended September 30, 2019 compared with $81.8 million for the quarter ended September 30, 2018, a decrease of $1.1 million or 1.3%. Noninterest expense totaled $240.1 million for the nine months ended September 30, 2019 compared with $245.4 million for the nine months ended September 30, 2018, a decrease of $5.3 million or 2.2%.  The change during both periods was primarily due to decreases in regulatory assessments and FDIC insurance and in other noninterest expense.

The following table presents, for the periods indicated, the major categories of noninterest expense:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019			2018
	(Dollars in thousands)
Salaries and employee benefits (1)	$	52,978		$	51,906	$	156,992		$	155,665
Non-staff expenses:
Net occupancy and equipment		5,607			5,808		16,565			17,109
Credit and debit card, data processing and software amortization		4,989			4,512		14,466			13,316
Regulatory assessments and FDIC insurance		1,814			3,347		6,513			10,497
Core deposit intangibles amortization		1,248			1,478		3,832			4,547
Depreciation		3,286			3,139		9,501			9,226
Communications (2)		2,214			2,442		6,667			7,628
Other real estate expense, net (3)		(47	)		217		(75	)		521
Other		8,610			8,911		25,630			26,907
Total noninterest expense	$	80,699		$	81,760	$	240,091		$	245,416

(1) Includes stock-based compensation expense of $2.5 million and $2.8 million for the three months ended September 30, 2019 and 2018, respectively, and $7.6 million and $7.9 million for the nine months ended September 30, 2019 and 2018, respectively.

(2) Communications expense includes telephone, data circuits, postage and courier expenses.

(3) Other real estate expense is net of rental income and gains and losses on sales of real estate.

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Income Taxes

Income tax expense totaled $21.1 million for the three months ended September 30, 2019 compared with $21.3 million for the same period in 2018, a decrease of $204 thousand or 1.0%. Income tax expense totaled $63.4 million for the nine months ended September 30, 2019 compared with $60.0 million for the same period in 2018, an increase of $3.4 million or 5.6%. This increase was due to higher pre-tax net earnings for the nine months ended September 30, 2019. The Company’s effective tax rate for the three months ended September 30, 2019 and 2018 was 20.5% for both periods. The Company’s effective tax rate for the nine months ended September 30, 2019 and 2018 was 20.5% and 20.1%, respectively. 

FINANCIAL CONDITION

Loan Portfolio

The Company separates its loan portfolio into two general categories of loans: (1) “legacy loans,” which are loans originated by Prosperity Bank and made pursuant to the Company’s loan policy and procedures in effect at the time the loan was made, and (2) “acquired loans,” which are loans acquired in a business combination and preliminarily recorded at fair value at acquisition date. Those acquired loans that are renewed or substantially modified after the date of the business combination, thereby subjecting them to the Company’s allowance for credit losses methodology, are referred to as “acquired legacy loans.” If a renewal or substantial modification of an acquired loan is underwritten by the Company with a new credit analysis, the loan may no longer be categorized as an acquired loan. For example, acquired loans to one borrower may be combined into a new loan with a new loan number and categorized as a legacy loan. Acquired loans with a fair value discount or premium at the date of the business combination that remained at the reporting date are referred to as “fair-valued acquired loans.” All fair-valued acquired loans are further categorized into “PCI loans” (purchased credit-impaired loans) and “Non-PCI loans.” Acquired loans with evidence of credit quality deterioration at acquisition for which it is probable that the Company would not be able to collect all contractual amounts due are PCI loans.

The following tables summarize the Company’s legacy and acquired loan portfolios broken out into legacy loans, acquired legacy loans, Non-PCI loans and PCI loans, as of the dates indicated.

	September 30, 2019
			Acquired Loans
	Legacy Loans		Acquired Legacy Loans		Non-PCI Loans		PCI Loans		Total Loans
	(Dollars in thousands)
Residential mortgage loans held for sale	$	20,284	$	—	$	—	$	—	$	20,284
Commercial and industrial		1,291,310		143,367		25,622		116		1,460,415
Real estate:
Construction, land development and other land loans		1,739,526		12,999		11,714		409		1,764,648
1-4 family residential (includes home equity)		2,517,274		62,371		119,623		4,130		2,703,398
Commercial real estate (includes multi-family residential)		3,212,779		223,825		212,809		2,763		3,652,176
Farmland		482,120		11,520		42,931		324		536,895
Agriculture		157,593		35,048		49		—		192,690
Consumer and other		318,513		17,228		7,098		—		342,839
Total loans held for investment		9,719,115		506,358		419,846		7,742		10,653,061
Total	$	9,739,399	$	506,358	$	419,846	$	7,742	$	10,673,345

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	December 31, 2018
			Acquired Loans
	Legacy Loans		Acquired Legacy Loans		Non-PCI Loans		PCI Loans		Total Loans
	(Dollars in thousands)
Residential mortgage loans held for sale	$	29,367	$	—	$	—	$	—	$	29,367
Commercial and industrial		1,281,069		170,221		32,130		151		1,483,571
Real estate:
Construction, land development and other land loans		1,595,052		11,101		15,644		492		1,622,289
1-4 family residential (includes home equity)		2,446,160		73,809		153,456		4,117		2,677,542
Commercial real estate (includes multi-family residential)		3,003,176		276,849		255,066		3,466		3,538,557
Farmland		485,101		13,431		46,479		362		545,373
Agriculture		139,849		44,208		71		—		184,128
Consumer and other		257,484		22,841		9,161		—		289,486
Total loans held for investment		9,207,891		612,460		512,007		8,588		10,340,946
Total	$	9,237,258	$	612,460	$	512,007	$	8,588	$	10,370,313

At September 30, 2019, total loans were $10.67 billion, an increase of $303.0 million or 2.9%, compared with $10.37 billion at December 31, 2018. Loans at September 30, 2019 included $20.3 million of loans held for sale compared with $29.4 million at December 31, 2018. At September 30, 2019, loans represented 48.3% of total assets compared with 45.7% of total assets at December 31, 2018.

The loan portfolio consists of various types of loans categorized by major type as follows:

(i) Commercial and Industrial Loans. In nearly all cases, the Company’s commercial loans are made in the Company’s market areas and are underwritten on the basis of the borrower’s ability to service the debt from income. As a general practice, the Company takes as collateral a lien on any available real estate, equipment or other assets owned by the borrower and obtains a personal guaranty of the borrower or principal. Working capital loans are primarily collateralized by short-term assets whereas term loans are primarily collateralized by long-term assets. In general, commercial loans involve more credit risk than residential mortgage loans and commercial mortgage loans and, therefore, usually yield a higher return. The increased risk in commercial loans is due to the type of collateral securing these loans as well as the expectation that commercial loans generally will be serviced principally from the operations of the business, and those operations may not be successful. Historical trends have shown these types of loans to have higher delinquencies than mortgage loans. As a result of these additional complexities, variables and risks, commercial loans require more thorough underwriting and servicing than other types of loans.

Included in commercial and industrial loans are (1) commitments to oil and gas producers secured by proven, developed and producing reserves and (2) commitments to service, equipment and midstream companies secured mainly by accounts receivable, inventory and equipment. Mineral reserve values supporting commitments to producers are normally re-determined semi-annually using reserve studies prepared by a third-party or the Company’s oil and gas engineer. Accounts receivable and inventory borrowing bases for service companies are typically re-determined monthly. Funding requests by both producers and service companies are monitored relative to the most recently determined borrowing base. As of September 30, 2019, oil and gas loans totaled $339.5 million or 3.2% of total loans, compared with total oil and gas loans of $372.5 million or 3.6% of total loans as of December 31, 2018. In addition, as of September 30, 2019, the Company had total unfunded commitments to oil and gas companies of $248.9 million compared with total unfunded commitments to oil and gas companies of $238.5 million as of December 31, 2018. Total unfunded commitments to producers include letters of credit issued in lieu of oil well plugging bonds.

(ii) Commercial Real Estate. The Company makes commercial real estate loans collateralized by owner-occupied and nonowner-occupied real estate to finance the purchase of real estate. The Company’s commercial real estate loans are collateralized by first liens on real estate, typically have variable interest rates (or five year or less fixed rates) and amortize over a 15- to 20-year period. Payments on loans secured by nonowner-occupied properties are often dependent on the successful operation or management of the properties. Accordingly, repayment of these loans may be subject to adverse conditions in the real estate market or the economy to a greater extent than other types of loans. The Company seeks to minimize these risks in a variety of ways, including giving careful consideration to the property’s operating history, future operating projections, current and projected occupancy, location and physical condition in connection with underwriting these loans. The underwriting analysis also includes credit verification, analysis of global cash flow, appraisals and a review of the financial condition of the borrower.

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(iii) 1-4 Family Residential Loans. The Company’s lending activities also include the origination of 1-4 family residential mortgage loans (including home equity loans) collateralized by owner-occupied and nonowner-occupied residential properties located in the Company’s market areas. The Company offers a variety of mortgage loan portfolio products which generally are amortized over five to 25 years. Loans collateralized by 1-4 family residential real estate generally have been originated in amounts of no more than 89% of appraised value or have mortgage insurance. The Company requires mortgage title insurance and hazard insurance. The Company retains these portfolio loans for its own account rather than selling them into the secondary market. By doing so, the Company incurs interest rate risk as well as the risks associated with nonpayments on such loans. The Company’s mortgage department also offers a variety of mortgage loan products which are generally amortized over 30 years, including FHA and VA loans. The Company sells these longer-term loans into the secondary market.

(iv) Construction, Land Development and Other Land Loans. The Company makes loans to finance the construction of residential and nonresidential properties. Construction loans generally are collateralized by first liens on real estate and have floating interest rates. The Company conducts periodic inspections, either directly or through an agent, prior to approval of periodic draws on these loans. Underwriting guidelines similar to those described above are also used in the Company’s construction lending activities. Construction loans involve additional risks attributable to the fact that loan funds are advanced upon the security of a project under construction, and the project is of uncertain value prior to its completion. Because of uncertainties inherent in estimating construction costs, the market value of the completed project and the effects of governmental regulation on real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan to value ratio. As a result of these uncertainties, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If the Company is forced to foreclose on a project prior to completion, the Company may not be able to recover all of the unpaid portion of the loan. In addition, the Company may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminate period of time. Although the Company has underwriting procedures designed to identify what it believes to be acceptable levels of risks in construction lending, these procedures may not prevent losses from the risks described above.

(v) Agriculture Loans. The Company provides agriculture loans for short-term beef and crop production, including rice, cotton, milo and corn, farm equipment financing and agriculture real estate financing. The Company evaluates agriculture borrowers primarily based on their historical profitability, level of experience in their particular agriculture industry, overall financial capacity and the availability of secondary collateral to withstand economic and natural variations common to the industry. Because agriculture loans present a higher level of risk associated with events caused by nature, the Company routinely makes on-site visits and inspections in order to identify and monitor such risks.

(vi) Consumer Loans. Consumer loans made by the Company include direct “A”-credit automobile loans, recreational vehicle loans, boat loans, home improvement loans, personal loans (collateralized and uncollateralized), credit cards and deposit account collateralized loans. The terms of these loans typically range from 12 to 180 months and vary based upon the nature of collateral and size of loan. Generally, consumer loans entail greater risk than do real estate secured loans, particularly in the case of consumer loans that are unsecured or collateralized by rapidly depreciating assets such as automobiles. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan balance. The remaining deficiency often does not warrant further substantial collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws may limit the amount which can be recovered on such loans.

The Company maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.

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Nonperforming Assets

Nonperforming assets include loans on nonaccrual status, accruing loans 90 days or more past due, repossessed assets and real estate which has been acquired through foreclosure and is awaiting disposition. Nonperforming assets do not include PCI loans unless the timing and amount of projected cash flows can no longer be reasonably estimated. PCI loans become subject to the Company's allowance for credit losses methodology when a deterioration in projected cash flows is identified.

The Company generally places a loan on nonaccrual status and ceases accruing interest when the payment of principal or interest is delinquent for 90 days, or earlier in some cases, unless the loan is in the process of collection and the underlying collateral fully supports the carrying value of the loan.

Nonperforming assets increased $32.2 million, or 169.9%, to $51.2 million at September 30, 2019 compared with $19.0 million at December 31, 2018, of which $5.9 million and $4.7 million, respectively, were attributable to acquired loans. The increase in nonperforming assets was primarily due to the addition of two commercial real estate loans, a commercial and industrial loan and a 1‑4 family residential loan during the nine months ended September 30, 2019.

The following tables present information regarding nonperforming assets differentiated among legacy loans, acquired legacy loans, Non-PCI loans and PCI loans, as of the dates indicated:

	September 30, 2019
				Acquired Loans
	Legacy Loans			Acquired Legacy Loans			Non-PCI Loans			PCI Loans			Total
	(Dollars in thousands)
Nonaccrual loans (1)	$	44,314		$	1,473		$	1,989		$	2,197		$	49,973
Accruing loans 90 or more days past due		179			147			15			—			341
Total nonperforming loans		44,493			1,620			2,004			2,197			50,314
Repossessed assets		28			—			—			—			28
Other real estate		721			—			94			—			815
Total nonperforming assets	$	45,242		$	1,620		$	2,098		$	2,197		$	51,157
Nonperforming assets to total loans and other real estate by category		0.46	%		0.32	%		0.50	%		28.38	%		0.48	%

	December 31, 2018
				Acquired Loans
	Legacy Loans			Acquired Legacy Loans			Non-PCI Loans			PCI Loans			Total
	(Dollars in thousands)
Nonaccrual loans (1)	$	9,177		$	1,737		$	2,214		$	19		$	13,147
Accruing loans 90 or more days past due		3,783			221			—			—			4,004
Total nonperforming loans		12,960			1,958			2,214			19			17,151
Repossessed assets		—			—			—			—			—
Other real estate		1,315			455			35			—			1,805
Total nonperforming assets	$	14,275		$	2,413		$	2,249		$	19		$	18,956
Nonperforming assets to total loans and other real estate by category		0.15	%		0.39	%		0.44	%		0.22	%		0.18	%

(1) Includes troubled debt restructurings of $14.2 million and $51 thousand as of September 30, 2019 and December 31, 2018, respectively.

Nonperforming assets were 0.48% of total loans and other real estate at September 30, 2019 compared with 0.18% of total loans and other real estate at December 31, 2018. The allowance for credit losses as a percentage of total nonperforming loans was 173.0% at September 30, 2019 and 504.0% at December 31, 2018.    

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Allowance for Credit Losses

The allowance for credit losses is established through charges to earnings in the form of a provision for credit losses. The amount of the allowance for credit losses is affected by the following: (1) charge-offs of loans that occur when loans are deemed uncollectible and decrease the allowance, (2) recoveries on loans previously charged off that increase the allowance and (3) provisions for credit losses charged to earnings that increase the allowance. Based on an evaluation of the loan portfolio and consideration of the factors listed below, management presents a quarterly review of the allowance for credit losses to the Bank’s Board of Directors, indicating any change in the allowance since the last review and any recommendations as to adjustments in the allowance. Although management believes it uses the best information available to make determinations with respect to the allowance for credit losses, future adjustments may be necessary if economic conditions or the borrower’s performance differ from the assumptions used in making the initial determinations.

The Company’s allowance for credit losses consists of two components: a specific valuation allowance based on probable losses on specifically identified loans and a general valuation allowance based on historical loan loss experience, general economic conditions and other qualitative risk factors both internal and external to the Company.

In setting the specific valuation allowance, the Company follows a loan review program to evaluate the credit risk in the total loan portfolio and assigns risk grades to each loan. Through this loan review process, the Company maintains an internal list of impaired loans which, along with the delinquency list of loans, helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for credit losses. All loans that have been identified as impaired are reviewed on a quarterly basis in order to determine whether a specific reserve is required. For certain impaired loans, the Company allocates a specific loan loss reserve primarily based on the value of the collateral securing the impaired loan. The specific reserves are determined on an individual loan basis. Loans for which specific reserves are provided are excluded from the general valuation allowance described below.

In determining the amount of the general valuation allowance, management considers factors such as historical loan loss experience, concentration risk of specific loan types, the volume, growth and composition of the Company’s loan portfolio, current economic conditions that may affect the borrower’s ability to pay and the value of collateral, the evaluation of the Company’s loan portfolio through its internal loan review process, general economic conditions and other qualitative risk factors both internal and external to the Company and other relevant factors. Based on a review of these factors for each loan type, the Company applies an estimated percentage to the outstanding balance of each loan type, excluding any loan that has a specific reserve allocated to it. The Company uses this information to establish the amount of the general valuation allowance.

A change in the allowance for credit losses can be attributable to several factors, most notably (1) specific reserves identified for impaired loans, (2) historical credit loss information, (3) changes in environmental factors and (4) growth in the balance of legacy loans and the re-categorization of fair-valued acquired loans to acquired legacy loans, which subjects such loans to the allowance methodology.

Changes in the Company’s asset quality are reflected in the allowance in several ways. Specific reserves that are calculated on a loan-by-loan basis and the qualitative assessment of all other loans reflect current changes in the credit quality of the loan portfolio. Historical credit losses, on the other hand, are based on a three-year look back period, which are then applied to estimate current credit losses inherent in the loan portfolio. A deterioration in the credit quality of the loan portfolio in the current period would increase the historical credit loss factor to be applied in future periods, just as an improvement in credit quality would decrease the historical credit loss factor.

The allowance for credit losses is further determined by the size of the loan portfolio subject to the allowance methodology and environmental factors that include Company-specific risk indicators and general economic conditions, both of which are constantly changing. The Company evaluates the economic and portfolio-specific factors on a quarterly basis to determine a qualitative component of the general valuation allowance. The factors include economic metrics, business conditions, delinquency trends, credit concentrations, nature and volume of the portfolio and other adjustments for items not covered by specific reserves and historical loss experience.  Management’s assessment of qualitative factors is a statistically based approach to determine the inherent probable loss associated with such factors. Based on the Company’s actual historical loan loss experience relative to economic and loan portfolio-specific factors at the time the losses occurred, management is able to identify the probable level of incurred losses as of the date of measurement. The correlation of historical loss experience with current economic conditions provides an estimate of inherent and probable losses that has not been previously factored into the general valuation allowance by the determination of specific reserves and recent historical losses.  Additionally, the Company considers qualitative factors not easily quantified and the possibility of model imprecision.

Utilizing the aggregation of specific reserves, historical loss experience and a qualitative component, management is able to determine the valuation allowance to reflect the full inherent probable loss.

45

In determining the allowance for credit losses, management also considers the type of loan (legacy or acquired) and the credit quality of the loan. The Company distinguishes between legacy loans and acquired legacy loans, which are accounted for under the contractual yield method, and fair-valued acquired loans consisting of Non-PCI loans and PCI loans, which are accounted for as purchased loans.

Loans acquired in business combinations are initially recorded at fair value, which includes an estimate of inherent credit losses expected to be realized over the remaining lives of the loans, and therefore no corresponding allowance for credit losses is recorded for these loans at acquisition.  When a fair-valued acquired loan is renewed at its maturity date, the loan is re-categorized as an acquired legacy loan. When a fair-valued acquired loan is modified after acquisition, the loan is independently evaluated subsequent to the modification decision to determine whether the modification was substantial, and therefore, requires that the loan be re-categorized as an acquired legacy loan.  This determination is based on a discounted cash-flow analysis.  Generally, when a change in discounted cash-flow of greater than 10% is identified, the fair-valued acquired loan becomes categorized as an acquired legacy loan.  If and when a fair-valued acquired loan becomes an acquired legacy loan, the acquired legacy loan is evaluated at the time of renewal or modification in accordance with the Company’s allowance for credit losses methodology described above.

Non-PCI loans that were not deemed impaired subsequent to the acquisition date are considered non-impaired and are evaluated as part of the general valuation allowance.  Non-PCI loans that have not become impaired subsequent to acquisition are segregated into a pool for each acquisition for allowance calculation purposes.  For each pool, the Company estimates a hypothetical allowance for credit losses also referred to as an “indicated reserve” that is calculated in accordance with GAAP requirements.  The Company uses the acquired bank’s past loss history adjusted for qualitative factors to establish the indicated reserve.  The indicated reserve for each pool of Non-PCI loans is compared with the remaining discount for the respective pool to test for credit quality deterioration and the possible need for a loan loss provision.  To the extent the remaining discount of the pool is greater than the indicated reserve, no additional allowance is necessary. If the remaining discount of the pool is less than the indicated reserve, the difference results in an increase to the allowance recorded through a provision for credit losses.

Non-PCI loans that have deteriorated to an impaired status subsequent to acquisition are evaluated for a specific reserve on a quarterly basis which, when identified, is added to the allowance for credit losses. The Company reviews impaired Non-PCI loans on a loan-by-loan basis and determines the specific reserve based on the difference between the recorded investment in the loan and one of three factors: expected future cash flows, observable market price or fair value of the collateral. Because essentially all of the Company’s impaired Non-PCI loans have been collateral-dependent, the amount of the specific reserve historically has been determined by comparing the fair value of the collateral securing the Non-PCI loan with the recorded investment in such loan. In the future, the Company will continue to analyze impaired Non-PCI loans on a loan-by-loan basis and may use an alternative measurement method to determine the specific reserve, as appropriate and in accordance with applicable accounting standards.

PCI loans are individually monitored on a quarterly basis to assess for deterioration subsequent to acquisition and are only subject to the Company’s allowance methodology when a deterioration in projected cash flows is identified.  If a deterioration in projected cash flows is identified, an additional provision for credit losses is made.  PCI loans were recorded at their acquisition date fair values, which were based on expected cash flows and included estimates of expected future credit losses. The Company’s estimates of loan fair values at the acquisition date may be adjusted for a period of up to one year as the Company continues to evaluate its estimate of expected future cash flows at the acquisition date. If the Company determines that losses arose after the acquisition date, the additional losses will be reflected as a provision for credit losses.  An allowance for credit losses is not calculated for PCI loans that have not experienced deterioration subsequent to the acquisition date.  See “Critical Accounting Policies” above for more information.

As described in the section captioned “Critical Accounting Policies” above, the Company’s determination of the allowance for credit losses involves a high degree of judgment and complexity. The Company’s analysis of qualitative, or environmental, factors on pools of loans with common risk characteristics, in combination with the quantitative historical loss information and specific reserves, provides the Company with an estimate of inherent losses. The allowance must reflect changes in the balance of loans subject to the allowance methodology, as well as the estimated imminent losses associated with those loans.

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The following tables present, as of and for the periods indicated, information regarding the allowance for credit losses differentiated between legacy loans and acquired loans. Reported net charge-offs may include those from Non-PCI loans and PCI loans, but only if the total charge-off required is greater than the remaining discount.

	As of and for the Nine Months Ended September 30, 2019
	Legacy			Acquired
	Loans			Loans			Total
	(Dollars in thousands)
Average loans outstanding	$	9,473,642		$	1,034,827		$	10,508,469
Gross loans outstanding at end of period	$	9,739,399		$	933,946		$	10,673,345
Allowance for credit losses at beginning of period	$	78,956		$	7,484		$	86,440
Provision for credit losses		4,624			(2,024	)		2,600
Charge-offs:
Commercial and industrial		(2,496	)		(5	)		(2,501	)
Real estate and agriculture		(424	)		(19	)		(443	)
Consumer and other		(2,800	)		(21	)		(2,821	)
Recoveries:
Commercial and industrial		1,175			518			1,693
Real estate and agriculture		1,384			16			1,400
Consumer and other		675			18			693
Net charge-offs		(2,486	)		507			(1,979	)
Allowance for credit losses at end of period	$	81,094		$	5,967		$	87,061
Ratio of allowance to end of period loans		0.83	%		0.64	%		0.82	%
Ratio of net charge-offs (recoveries) to average loans (annualized)		0.03	%		(0.07	%)		0.03	%
Ratio of allowance to end of period nonperforming loans		182.3	%		102.5	%		173.0	%

	As of and for the Nine Months Ended September 30, 2018
	Legacy			Acquired
	Loans			Loans			Total
	(Dollars in thousands)
Average loans outstanding	$	8,759,828		$	1,321,821		$	10,081,649
Gross loans outstanding at end of period	$	9,091,389		$	1,201,457		$	10,292,846
Allowance for credit losses at beginning of period	$	73,407		$	10,634		$	84,041
Provision for credit losses		16,777			(1,427	)		15,350
Charge-offs:
Commercial and industrial		(8,758	)		(1,354	)		(10,112	)
Real estate and agriculture		(1,658	)		(389	)		(2,047	)
Consumer and other		(2,860	)		(29	)		(2,889	)
Recoveries:
Commercial and industrial		122			270			392
Real estate and agriculture		276			9			285
Consumer and other		968			8			976
Net charge-offs		(11,910	)		(1,485	)		(13,395	)
Allowance for credit losses at end of period	$	78,274		$	7,722		$	85,996
Ratio of allowance to end of period loans		0.86	%		0.64	%		0.84	%
Ratio of net charge-offs to average loans (annualized)		0.18	%		0.15	%		0.18	%
Ratio of allowance to end of period nonperforming loans		751.8	%		143.9	%		545.0	%

The Company had gross charge-offs on legacy loans of $5.7 million during the nine months ended September 30, 2019. Partially offsetting these charge-offs were recoveries on legacy loans of $3.2 million. Gross charge-offs on acquired loans were $45 thousand during the nine months ended September 30, 2019. Offsetting these charge-offs were recoveries on acquired loans of $552 thousand. Total charge-offs for the nine months ended September 30, 2019 were $5.8 million, partially offset by total recoveries of $3.8 million.

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The following tables show the allocation of the allowance for credit losses among various categories of loans disaggregated between legacy loans, acquired legacy loans, Non-PCI loans and PCI loans at the dates indicated. The allocation is made for analytical purposes and is not necessarily indicative of the categories in which future losses may occur. The total allowance is available to absorb losses from any loan category, regardless of whether allocated to a legacy loan or an acquired loan.

	September 30, 2019
			Acquired Loans
	Legacy Loans		Acquired Legacy Loans		Non-PCI Loans		PCI Loans		Total Allowance		Percent of Loans to Total Loans
	(Dollars in thousands)
Balance of allowance for credit losses applicable to:
Commercial and industrial	$	34,443	$	4,054	$	—	$	—	$	38,497		13.7	%
Real estate		41,913		1,242		1		—		43,156		76.3	%
Agriculture and agriculture real estate		3,074		652		—		—		3,726		6.8	%
Consumer and other		1,664		18		—		—		1,682		3.2	%
Total allowance for credit losses	$	81,094	$	5,966	$	1	$	—	$	87,061		100.0	%

	December 31, 2018
			Acquired Loans
	Legacy Loans		Acquired Legacy Loans		Non-PCI Loans		PCI Loans		Total Allowance		Percent of Loans to Total Loans
	(Dollars in thousands)
Balance of allowance for credit losses applicable to:
Commercial and industrial	$	35,088	$	5,135	$	—	$	—	$	40,223		14.3	%
Real estate		39,475		1,453		9		—		40,937		75.9	%
Agriculture and agriculture real estate		2,828		865		—		—		3,693		7.0	%
Consumer and other		1,565		22		—		—		1,587		2.8	%
Total allowance for credit losses	$	78,956	$	7,475	$	9	$	—	$	86,440		100.0	%

At September 30, 2019, the allowance for credit losses totaled $87.1 million compared with $86.4 million at December 31, 2018, an increase of $621 thousand or 0.7%. The allowance for credit losses totaled 0.82% of total loans at September 30, 2019 and 0.83% of total loans at December 31, 2018.

At September 30, 2019, $81.1 million of the allowance for credit losses was attributable to legacy loans, an increase of $2.1 million or 2.7% compared with $79.0 million of the allowance at December 31, 2018. This change was primarily attributable to increases in the legacy loan balance and specific reserves identified for loans with deteriorated credit quality. At September 30, 2019, $6.0 million of the allowance for credit losses was attributable to acquired legacy loans compared with $7.5 million of the allowance at December 31, 2018, a decrease of $1.5 million or 20.2%. This change was primarily attributable to decreases in acquired legacy loan balances and specific reserves identified for loans with deteriorated credit quality, partially offset by higher historical loss rates. At September 30, 2019, $1 thousand of the allowance for credit losses was attributable to Non-PCI loans compared with $9 thousand of the allowance at December 31, 2018, a decrease of $8 thousand or 88.9%. At September 30, 2019 and December 31, 2018, there was no allowance for credit losses attributable to PCI loans.

At September 30, 2019, the Company had $13.4 million of total outstanding discounts on Non-PCI and PCI loans, of which $12.1 million was accretable.  

The Company believes that the allowance for credit losses at September 30, 2019 is adequate to cover estimated losses in the loan portfolio as of such date. Nevertheless, the Company could sustain losses in future periods which could be substantial in relation to the size of the allowance at September 30, 2019.

Securities

The carrying cost of securities totaled $8.50 billion at September 30, 2019 compared with $9.41 billion at December 31, 2018, a decrease of $913.8 million or 9.7%. At September 30, 2019, securities represented 38.5% of total assets compared with 41.5% of total assets at December 31, 2018.

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The amortized cost and fair value of investment securities were as follows:

	September 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
States and political subdivisions	$	470	$	1	$	—		$	471
Collateralized mortgage obligations		242,013		134		(421	)		241,726
Mortgage-backed securities		55,836		734		(399	)		56,171
Total	$	298,319	$	869	$	(820	)	$	298,368
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	13,903	$	64	$	—		$	13,967
States and political subdivisions		189,000		6,398		(68	)		195,330
Collateralized mortgage obligations		435		5		—			440
Mortgage-backed securities		7,993,500		50,799		(36,435	)		8,007,864
Total	$	8,196,838	$	57,266	$	(36,503	)	$	8,217,601

	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
States and political subdivisions	$	1,159	$	7	$	—		$	1,166
Collateralized mortgage obligations		12,724		69		(37	)		12,756
Mortgage-backed securities		69,880		553		(200	)		70,233
Total	$	83,763	$	629	$	(237	)	$	84,155
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	25,778	$	—	$	(100	)	$	25,678
States and political subdivisions		253,198		3,440		(777	)		255,861
Collateralized mortgage obligations		509		1		(2	)		508
Mortgage-backed securities		9,045,326		5,798		(251,935	)		8,799,189
Total	$	9,324,811	$	9,239	$	(252,814	)	$	9,081,236

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. In determining OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI will be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the OTTI will be separated into the amount representing the credit-related portion of the impairment loss (“credit loss”) and the noncredit portion of the impairment loss (“noncredit portion”). The amount of the total OTTI related to the credit loss is determined based on the difference between the present value of cash flows expected to be collected and the amortized cost basis and such difference is recognized in earnings. The amount of the total OTTI related to the noncredit portion is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings will become the new amortized cost basis of the investment.

49

Management has the ability and intent to hold the securities classified as held-to-maturity until they mature, at which time the Company will receive full value for the securities. Furthermore, as of September 30, 2019, management does not have the intent to sell any of the securities classified as available for sale before a recovery of cost. In addition, management believes it is more likely than not that the Company will not be required to sell any of its investment securities before a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2019, management believes any impairment in the Company’s securities is temporary, and therefore no impairment loss has been realized in the Company’s consolidated statements of income.

Deposits

Total deposits were $16.93 billion at September 30, 2019 compared with $17.26 billion at December 31, 2018, a decrease of $326.6 million or 1.9%. At September 30, 2019, noninterest-bearing deposits totaled $5.78 billion, an increase of $117.9 million or 2.1% compared with $5.67 billion at December 31, 2018. Interest-bearing deposits totaled $11.15 billion at September 30, 2019 compared with $11.59 billion at December 31, 2018, a decrease of $444.5 million or 3.8%.

Average deposits for the nine months ended September 30, 2019 were $17.07 billion, a decrease of $74.3 million or 0.4%, compared with $17.15 billion for the nine months ended September 30, 2018. This change was primarily due to a decrease in municipal account balances. The ratio of average interest-bearing deposits to total average deposits was 66.9% during the first nine months of 2019 compared with 67.3% during the first nine months of 2018.

The following table summarizes the daily average balances and weighted average rates paid on deposits for the periods indicated below:

	Nine Months Ended September 30,
	2019					2018
	Average Balance		Average Rate (1)			Average Balance		Average Rate (1)
	(Dollars in thousands)
Interest-bearing demand deposits	$	3,810,765		0.64	%	$	4,010,724		0.49	%
Regular savings		2,179,441		0.46	%		2,301,072		0.36	%
Money market savings		3,368,934		1.15	%		3,127,505		0.64	%
Certificates, IRAs and other time deposits		2,067,940		1.55	%		2,105,807		0.88	%
Total interest-bearing deposits		11,427,080		0.92	%		11,545,108		0.58	%
Noninterest-bearing demand deposits		5,645,145					5,601,370
Total deposits	$	17,072,225		0.62	%	$	17,146,478		0.39	%

(1) Annualized and based on average balances on an actual 365-day basis for the nine months ended September 30, 2019 and 2018.

Other Borrowings

The following table presents the Company’s borrowings as of the dates indicated:

	September 30, 2019		December 31, 2018
	(Dollars in thousands)
FHLB advances	$	600,000	$	1,030,000
FHLB long-term notes payable		795		1,126
Total other borrowings		600,795		1,031,126
Securities sold under repurchase agreements		311,404		284,720
Total	$	912,199	$	1,315,846

FHLB advances and long-term notes payable— The Company has an available line of credit with the FHLB of Dallas, which allows the Company to borrow on a collateralized basis. The Company’s FHLB advances are typically considered short-term borrowings and are used to manage liquidity as needed. Maturing advances are replaced by drawing on available cash, making additional borrowings or through increased customer deposits. At September 30, 2019, the Company had total funds of $6.72 billion available under this line. FHLB advances of $600.0 million were outstanding at September 30, 2019, at a weighted average rate of 2.05%. Long-term notes payable were $795 thousand at September 30, 2019, with a weighted average rate of 4.83%. The maturity dates on the FHLB notes payable range from the years 2020 to 2027 and have interest rates ranging from 4.54% to 5.23%.

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Securities sold under repurchase agreements— At September 30, 2019, the Company had $311.4 million in securities sold under repurchase agreements with banking customers compared with $284.7 million at December 31, 2018, an increase of $26.7 million or 9.4%.  Repurchase agreements are generally settled on the following business day; however, approximately $7.4 million of the repurchase agreements outstanding at September 30, 2019 have maturity dates ranging from 6 to 24 months. All securities sold under repurchase agreements are collateralized by certain pledged securities.

Liquidity

Liquidity involves the Company’s ability to raise funds to support asset growth or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate the Company on an ongoing basis. The Company’s largest source of funds is deposits and its largest use of funds is loans. The Company does not expect a change in the source or use of its funds in the future. Although access to purchased funds from correspondent banks is available and has been utilized on occasion to take advantage of investment opportunities, the Company does not generally rely on this external funding source. The cash and federal funds sold position, supplemented by amortizing investment and loan portfolios, has generally created an adequate liquidity position.

As of September 30, 2019, the Company had outstanding $2.68 billion in commitments to extend credit and $70.0 million in commitments associated with outstanding standby letters of credit. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the total outstanding may not necessarily reflect the actual future cash funding requirements.

The Company has no exposure to future cash requirements associated with known uncertainties or capital expenditures of a material nature.

Asset liquidity is provided by cash and assets which are readily marketable or which will mature in the near future. As of September 30, 2019, the Company had cash and cash equivalents of $420.9 million compared with $411.1 million at December 31, 2018, an increase of $9.8 million or 2.4%. The increase was primarily due to the net proceeds on investment securities of $891.2 million, partially offset by the net decrease in interest-bearing deposits of $444.5 million and repayments of proceeds from other short-term borrowings of $430.0 million.

Share Repurchases

In January 2018, the Bancshares Board of Directors authorized a stock repurchase program under which Bancshares may repurchase up to 5%, or approximately 3.47 million shares, of its outstanding common stock over a two-year period expiring on January 16, 2020, at the discretion of management. Repurchases under this program may be made from time to time in open market transactions, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (“Exchange Act”). In June 2019, the Bancshares Board of Directors authorized Bancshares to repurchase shares of its outstanding common stock outside the safe harbor provided by Rule 10b-18 of the Exchange Act prior to the time that a joint proxy statement/prospectus is sent to the shareholders of LegacyTexas and Bancshares seeking their vote on the approval of the merger of LegacyTexas into Bancshares, and after completion of such votes. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities.  Shares of stock repurchased are held as authorized but unissued shares. Bancshares is not obligated to purchase any particular number of shares, and may suspend, modify or terminate the program at any time and for any reason, without prior notice. Bancshares repurchased 654.6 thousand shares of its common stock at an average weighted price of $63.59 per share during the three months ended September 30, 2019 and 1.473 million shares of its common stock at an average weighted price of $64.10 per share during the nine months ended September 30, 2019.

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Contractual Obligations

The Company’s contractual obligations and other commitments to make future payments as of September 30, 2019 (other than deposit obligations and securities sold under repurchase agreements) are summarized below.

Federal Home Loan Bank Borrowings

The Company’s future cash payments associated with its contractual obligations pursuant to its FHLB borrowings as of September 30, 2019 are summarized below. Payments for FHLB borrowings include interest of $64 thousand that will be paid over the future periods. The payments do not include pre-payment options that may be available to the Company.

	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)
Federal Home Loan Bank advances and notes payable	$	600,572	$	125	$	125	$	37	$	600,859

Leases

The Company’s leases relate primarily to operating leases for office space and banking centers. The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining lease terms of 1 to 13 years, which may include the option to extend the lease when it is reasonably certain for the Company to exercise that option. Operating lease right-of-use (ROU) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental collateralized borrowing rate to determine the present value of lease payments. Short-term leases and leases with variable lease costs are immaterial, and the Company does not have any sublease arrangements. As of September 30, 2019, operating lease ROU assets and lease liabilities were approximately $17 million. ROU assets and lease liabilities were classified as other assets and other liabilities, respectively.

As of September 30, 2019, the weighted average remaining lease terms of the Company’s operating leases were 5.7 years. The weighted average discount rate used to determine the lease liabilities as of September 30, 2019 for the Company’s operating leases was 3.20%. Cash paid for the Company’s operating leases for the three and nine months ended September 30, 2019 was $1.4 million and $4.2 million, respectively.  The Company obtained $2.4 million in ROU assets in exchange for lease liabilities for two operating leases during the nine months ended September 30, 2019.  

The Company’s future undiscounted cash payments associated with its operating leases as of September 30, 2019 are summarized below (dollars in thousands).

Remaining 2019	$	1,282
2020		4,607
2021		3,588
2022		3,111
2023		2,550
2024		1,641
Thereafter		4,426
Total undiscounted lease payments	$	21,205

The following table presents a summary of non-cancelable future operating lease commitments as of December 31, 2018 (dollars in thousands):

2019	$	4,897
2020		4,088
2021		3,013
2022		2,319
2023		2,025
Thereafter		3,597
Total non-cancelable lease payments	$	19,939

52

Off-Balance Sheet Items

In the normal course of business, the Company enters into various transactions that, in accordance with GAAP, are not included in its consolidated balance sheets. The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The Company’s commitments associated with outstanding standby letters of credit and commitments to extend credit expiring by period as of September 30, 2019 are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.

	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)
Standby letters of credit	$	62,393	$	5,663	$	1,932	$	—	$	69,988
Commitments to extend credit		1,169,623		357,578		102,431		1,050,959		2,680,591
Total	$	1,232,016	$	363,241	$	104,363	$	1,050,959	$	2,750,579

Capital Resources

Total shareholders’ equity was $4.13 billion at September 30, 2019 compared with $4.05 billion at December 31, 2018, an increase of $74.0 million or 1.8%. The increase was primarily the result of net income of $246.4 million, partially offset by dividend payments of $85.3 million for the nine months ended September 30, 2019

The Basel III Capital Rules adopted by the federal regulatory authorities in 2013 substantially revised the risk-based capital requirements applicable to the Company and the Bank. The Basel III Capital Rules became effective for the Company on January 1, 2015, subject to a phase-in period for certain provisions. The Basel III Capital Rules require a capital conservation buffer with respect to each of the Common Equity Tier 1, Tier 1 risk-based and total risk-based capital ratios, which provides for capital levels that exceed the minimum risk-based capital adequacy requirements.  The capital conservation buffer of 2.5% was fully phased-in on January 1, 2019.  A financial institution with a conservation buffer of less than the required amount will be subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers.

Financial institutions are categorized by the FDIC based on minimum Common Equity Tier 1, Tier 1 risk-based, total risk-based and Tier 1 leverage ratios. As of September 30, 2019, the Bank’s capital ratios were above the levels required for the Bank to be designated as “well capitalized.”

The following table provides a comparison of the Company’s and the Bank’s risk-weighted and leverage capital ratios to the minimum and well-capitalized regulatory standards as of September 30, 2019:

	Minimum Required For Capital Adequacy Purposes				Minimum Required Plus Capital Conservation Buffer			To Be Categorized As Well Capitalized Under Prompt Corrective Action Provisions			Actual Ratio as of September 30, 2019
The Company
CET1 capital (to risk weighted assets)		4.50	%			7.00	%	N/A				16.68	%
Tier 1 capital (to risk weighted assets)		6.00	%			8.50	%	N/A				16.68	%
Total capital (to risk weighted assets)		8.00	%			10.50	%	N/A				17.34	%
Tier 1 capital (to average assets)		4.00	%	(1)		4.00	%	N/A				10.86	%
The Bank
CET1 capital (to risk weighted assets)		4.50	%			7.00	%		6.50	%		16.62	%
Tier 1 capital (to risk weighted assets)		6.00	%			8.50	%		8.00	%		16.62	%
Total capital (to risk weighted assets)		8.00	%			10.50	%		10.00	%		17.28	%
Tier 1 capital (to average assets)		4.00	%	(2)		4.00	%		5.00	%		10.82	%

(1) The Federal Reserve Board may require the Company to maintain a leverage ratio above the required minimum.

(2) The FDIC may require the Bank to maintain a leverage ratio above the required minimum.

53

ITEM  3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company manages market risk, which for the Company is primarily interest rate risk, through its Asset Liability Committee consisting of senior officers of the Company, in accordance with policies approved by the Company’s Board of Directors.

The Company uses simulation analysis to examine the potential effects of market changes on net interest income and market value. The Company considers macroeconomic variables, Company strategy, liquidity and other factors as it quantifies market risk. See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Sensitivity and Liquidity” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 27, 2019 (the “2018 Form 10-K”), for further discussion. There have been no material changes in the Company’s market risk exposures that would affect the quantitative and qualitative disclosures from those disclosed in the 2018 Form 10-K and presented as of December 31, 2018.

ITEM  4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply judgment in evaluating its controls and procedures. Based on this evaluation, the Company’s Chief Executive Officer and Interim Chief Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were effective as of the end of the period covered by this report.

Changes in internal control over financial reporting. There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

54

PART II—OTHER INFORMATION

ITEM  1. LEGAL PROCEEDINGS

The Company and the Bank are defendants, from time to time, in legal actions arising from transactions conducted in the ordinary course of business. After consultations with legal counsel, the Company and the Bank believe that the ultimate liability, if any, arising from such actions will not have a material adverse effect on their financial statements.

ITEM  1A. RISK FACTORS

There have been no material changes in the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

ITEM  2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

a. None.

b. None.

c. The following table details the Company’s repurchases of shares of its common stock during the three months ended September 30, 2019:

Period	Total Number of Shares Purchased		Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Program		Maximum Number of Shares That May Yet Be Purchased Under the Plan at the End of the Period (1)
July 1 - July 31, 2019		—	$	—		—		2,655,855
August 1 - August 31, 2019		654,590		63.59		654,590		2,001,265
September 1 - September 30, 2019		—		—		—		2,001,265
Total		654,590	$	63.59		654,590

(1) On January 19, 2018, the Company announced a stock repurchase program that authorized the repurchase of up to 5%, or approximately 3.47 million shares, of the Company’s outstanding common stock over a two-year period expiring on January 16, 2020, at the discretion of management. Under the stock repurchase program, the Company could repurchase shares from time to time at prevailing market prices, through open-market purchases or privately negotiated transactions, depending upon market conditions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Share Repurchases” for additional information.

ITEM  3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM  4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

55

ITEM  6. EXHIBITS

Exhibit Number	Description of Exhibit
2.1	Agreement and Plan of Reorganization, dated as of June 16, 2019, by and between Prosperity Bancshares, Inc. and LegacyTexas Financial Group, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 17, 2019)
3.1	Amended and Restated Articles of Incorporation of Prosperity Bancshares, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (Registration No. 333-63267) (the “Registration Statement”))
3.2	Articles of Amendment to Amended and Restated Articles of Incorporation of Prosperity Bancshares, Inc. (incorporated herein by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006)
3.3	Amended and Restated Bylaws of Prosperity Bancshares, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 20, 2019)
4.1	Form of certificate representing shares of the Company’s common stock (incorporated herein by reference to Exhibit 4 to the Registration Statement)
31.1*	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
31.2*	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
32.1**	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (formatted as Inline XBRL and contained in Exhibits 101)

* Filed with this Quarterly Report on Form 10-Q.

** Furnished with this Quarterly Report on Form 10-Q.

56

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PROSPERITY BANCSHARES, INC. ®         (Registrant)
Date: 11/07/19	/S/    DAVID ZALMAN
	David Zalman
	Chairman and Chief Executive Officer
Date: 11/07/19	/S/    ASYLBEK OSMONOV
	Asylbek Osmonov
	Chief Financial Officer

57

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, David Zalman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Prosperity Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2019

/s/ David Zalman

David Zalman 

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Asylbek Osmonov, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Prosperity Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2019

/s/ Asylbek Osmonov

Asylbek Osmonov

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Prosperity Bancshares, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David Zalman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and operating results of the Company.

/s/ David Zalman

David Zalman 

Chief Executive Officer

November 7, 2019

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Prosperity Bancshares, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Asylbek Osmonov, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and operating results of the Company.

/s/ Asylbek Osmonov

Asylbek Osmonov

Chief Financial Officer

November 7, 2019

XML

Securities - Schedule of Amortized Cost and Fair Value of Investment Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Available for Sale, Amortized Cost	$ 298,319	$ 83,763
Available for Sale, Gross Unrealized Gains	869	629
Available for Sale, Gross Unrealized Losses	(820)	(237)
Available for Sale	298,368	84,155
Held to Maturity, Amortized Cost	8,196,838	9,324,811
Held to Maturity, Gross Unrealized Gains	57,266	9,239
Held to Maturity, Gross Unrealized Losses	(36,503)	(252,814)
Held to Maturity	8,217,601	9,081,236
US States and Political Subdivisions [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for Sale, Amortized Cost	470	1,159
Available for Sale, Gross Unrealized Gains	1	7
Available for Sale	471	1,166
Held to Maturity, Amortized Cost	189,000	253,198
Held to Maturity, Gross Unrealized Gains	6,398	3,440
Held to Maturity, Gross Unrealized Losses	(68)	(777)
Held to Maturity	195,330	255,861
Collateralized Mortgage Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for Sale, Amortized Cost	242,013	12,724
Available for Sale, Gross Unrealized Gains	134	69
Available for Sale, Gross Unrealized Losses	(421)	(37)
Available for Sale	241,726	12,756
Held to Maturity, Amortized Cost	435	509
Held to Maturity, Gross Unrealized Gains	5	1
Held to Maturity, Gross Unrealized Losses		(2)
Held to Maturity	440	508
Collateralized Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for Sale, Amortized Cost	55,836	69,880
Available for Sale, Gross Unrealized Gains	734	553
Available for Sale, Gross Unrealized Losses	(399)	(200)
Available for Sale	56,171	70,233
Held to Maturity, Amortized Cost	7,993,500	9,045,326
Held to Maturity, Gross Unrealized Gains	50,799	5,798
Held to Maturity, Gross Unrealized Losses	(36,435)	(251,935)
Held to Maturity	8,007,864	8,799,189
U.S. Treasury Securities and Obligations of U.S. Government Agencies [Member]
Schedule Of Available For Sale Securities [Line Items]
Held to Maturity, Amortized Cost	13,903	25,778
Held to Maturity, Gross Unrealized Gains	64
Held to Maturity, Gross Unrealized Losses		(100)
Held to Maturity	$ 13,967	$ 25,678

XML

Loans and Allowance for Credit Losses - Types of Loans in Loan Portfolio (Details) - USD ($) $ in Thousands		Sep. 30, 2019		Dec. 31, 2018		Sep. 30, 2018
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale		$ 20,284		$ 29,367
Total loans held for investment		10,653,061		10,340,946		$ 10,264,821
Total		10,673,345		10,370,313
Residential Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale		20,284		29,367
Commercial and Industrial [Member]
Accounts Notes And Loans Receivable [Line Items]
Total loans held for investment		1,460,415		1,483,571		1,524,854
Total		1,460,415		1,483,571
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Total loans held for investment		1,764,648		1,622,289		1,560,142
Total		1,764,648		1,622,289
Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Accounts Notes And Loans Receivable [Line Items]
Total loans held for investment		2,703,398		2,677,542		2,685,740
Total	[1]	2,723,682	[2]	2,706,909	[3]
Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Accounts Notes And Loans Receivable [Line Items]
Total loans held for investment		3,652,176		3,538,557		3,507,223
Total		3,652,176		3,538,557
Real Estate [Member] | Farmland [Member]
Accounts Notes And Loans Receivable [Line Items]
Total loans held for investment		536,895		545,373
Agriculture [Member]
Accounts Notes And Loans Receivable [Line Items]
Total loans held for investment		192,690		184,128
Consumer and Other [Member]
Accounts Notes And Loans Receivable [Line Items]
Total loans held for investment		342,839		289,486		$ 281,112
Total		$ 342,839		$ 289,486

[1] Includes $20.3 million and $29.4 million of residential mortgage loans held for sale at September 30, 2019 and December 31, 2018, respectively.

[2] Includes $20.3 million of residential mortgage loans held for sale at September 30, 2019.

[3] Includes $29.4 million of residential mortgage loans held for sale at December 31, 2018.

XML

Loans and Allowance for Credit Losses - Aging Analysis of Past Due Loans (Parenthetical) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale	$ 20,284	$ 29,367
Residential Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale	$ 20,284	$ 29,367

XML

Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

8. STOCK–BASED COMPENSATION

At September 30, 2019, the Company had one stock-based employee compensation plan with awards outstanding.

During 2012, Bancshares’ Board of Directors established the Prosperity Bancshares, Inc. 2012 Stock Incentive Plan (the “2012 Plan”), which was approved by Bancshares’ shareholders and authorized the issuance of up to 1,250,000 shares of common stock upon the exercise of options granted under the 2012 Plan or pursuant to the grant or exercise, as the case may be, of other awards granted under the 2012 Plan, including restricted stock, stock appreciation rights, phantom stock awards and performance awards. As of September 30, 2019, a total of 346,500 shares of common stock have been issued pursuant to vested awards and 398,532 shares of unvested restricted stock have been granted under the 2012 Plan.

As of September 30, 2019, the Company had no stock options outstanding. Stock-based compensation expense related to restricted stock was $2.5 million and $2.8 million during the three months ended September 30, 2019 and 2018, respectively, and $7.6 million and $7.9 million during the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, there was $12.8 million of total unrecognized compensation expense related to stock-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 1.86 years.

XML

Securities

9 Months Ended

Sep. 30, 2019

Investments Debt And Equity Securities [Abstract]

Securities

4. SECURITIES

The amortized cost and fair value of investment securities were as follows:

	September 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
States and political subdivisions	$	470	$	1	$	—		$	471
Collateralized mortgage obligations		242,013		134		(421	)		241,726
Mortgage-backed securities		55,836		734		(399	)		56,171
Total	$	298,319	$	869	$	(820	)	$	298,368
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	13,903	$	64	$	—		$	13,967
States and political subdivisions		189,000		6,398		(68	)		195,330
Collateralized mortgage obligations		435		5		—			440
Mortgage-backed securities		7,993,500		50,799		(36,435	)		8,007,864
Total	$	8,196,838	$	57,266	$	(36,503	)	$	8,217,601

	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
States and political subdivisions	$	1,159	$	7	$	—		$	1,166
Collateralized mortgage obligations		12,724		69		(37	)		12,756
Mortgage-backed securities		69,880		553		(200	)		70,233
Total	$	83,763	$	629	$	(237	)	$	84,155
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	25,778	$	—	$	(100	)	$	25,678
States and political subdivisions		253,198		3,440		(777	)		255,861
Collateralized mortgage obligations		509		1		(2	)		508
Mortgage-backed securities		9,045,326		5,798		(251,935	)		8,799,189
Total	$	9,324,811	$	9,239	$	(252,814	)	$	9,081,236

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI analysis.  Investment securities classified as available for sale or held to maturity are evaluated for OTTI under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, “Investments-Debt and Equity Securities.”

In determining OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at the time of such determination.

When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the OTTI will be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the OTTI will be separated into the amount representing the credit-related portion of the impairment loss (“credit loss”) and the noncredit portion of the impairment loss (“noncredit portion”). The amount of the total OTTI related to the credit loss is determined based on the difference between the present value of cash flows expected to be collected and the amortized cost basis and such difference is recognized in earnings. The amount of the total OTTI related to the noncredit portion is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings will become the new amortized cost basis of the investment.

Management has the ability and intent to hold the securities classified as held-to-maturity until they mature, at which time the Company will receive full value for the securities. Furthermore, as of September 30, 2019, management does not have the intent to sell any of the securities classified as available for sale before a recovery of cost. In addition, management believes it is more likely than not that the Company will not be required to sell any of its investment securities before a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2019, management believes any impairment in the Company’s securities is temporary, and therefore no impairment loss has been recognized in the Company’s consolidated statement of income.

Securities with unrealized losses, segregated by length of time, that have been in a continuous loss position were as follows:

	September 30, 2019
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in thousands)
Available for Sale
Collateralized mortgage obligations	$	201,708	$	(419	)	$	78	$	(2	)	$	201,786	$	(421	)
Mortgage-backed securities		17,839		(399	)		4		—			17,843		(399	)
Total	$	219,547	$	(818	)	$	82	$	(2	)	$	219,629	$	(820	)
Held to Maturity
States and political subdivisions	$	31,717	$	(59	)	$	4,718	$	(9	)	$	36,435	$	(68	)
Mortgage-backed securities		506,878		(1,794	)		3,560,213		(34,641	)		4,067,091		(36,435	)
Total	$	538,595	$	(1,853	)	$	3,564,931	$	(34,650	)	$	4,103,526	$	(36,503	)

	December 31, 2018
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in thousands)
Available for Sale
Collateralized mortgage obligations	$	12	$	—		$	2,096	$	(37	)	$	2,108	$	(37	)
Mortgage-backed securities		50,950		(197	)		2,091		(3	)		53,041		(200	)
Total	$	50,962	$	(197	)	$	4,187	$	(40	)	$	55,149	$	(237	)
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	20,720	$	(76	)	$	4,957	$	(24	)	$	25,677	$	(100	)
States and political subdivisions		89,407		(328	)		58,262		(449	)		147,669		(777	)
Collateralized mortgage obligations		—		—			292		(2	)		292		(2	)
Mortgage-backed securities		1,003,089		(8,401	)		6,873,948		(243,534	)		7,877,037		(251,935	)
Total	$	1,113,216	$	(8,805	)	$	6,937,459	$	(244,009	)	$	8,050,675	$	(252,814	)

At September 30, 2019 and December 31, 2018, there were 158 securities and 731 securities, respectively, in an unrealized loss position for 12 months or more.

The amortized cost and fair value of investment securities at September 30, 2019, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations at any time with or without call or prepayment penalties.

	Held to Maturity				Available for Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	37,313	$	37,430	$	470	$	471
Due after one year through five years		117,760		121,632		—		—
Due after five years through ten years		43,321		45,507		—		—
Due after ten years		4,509		4,728		—		—
Subtotal		202,903		209,297		470		471
Mortgage-backed securities and collateralized mortgage obligations		7,993,935		8,008,304		297,849		297,897
Total	$	8,196,838	$	8,217,601	$	298,319	$	298,368

The Company recorded no gain or loss on the sale of securities for the three and nine months ended September 30, 2019 and for the three months ended September 30, 2018.  The Company recorded a $13 thousand loss on the sale of securities for the nine months ended September 30, 2018. As of September 30, 2019, the Company did not own any non-agency collateralized mortgage obligations.

At September 30, 2019 and December 31, 2018, the Company did not own securities of any one issuer (other than the U.S. government and its agencies) for which aggregate adjusted cost exceeded 10% of the consolidated shareholders’ equity at such respective dates.

Securities with an amortized cost of $5.16 billion and $6.04 billion and a fair value of $5.16 billion and $5.86 billion at September 30, 2019 and December 31, 2018, respectively, were pledged to collateralize public deposits and for other purposes required or permitted by law.

XML

Contractual Obligations and Off-Balance Sheet Items - Future Undiscounted Cash Payments Associated with its Operating Leases (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Leases [Abstract]
Remaining 2019	$ 1,282
2020	4,607
2021	3,588
2022	3,111
2023	2,550
2024	1,641
Thereafter	4,426
Total undiscounted lease payments	$ 21,205

XML

Goodwill and Core Deposit Intangibles - Estimated Aggregate Future Amortization Expense for Core Deposit Intangibles (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Goodwill And Intangible Assets Disclosure [Abstract]
Remaining 2019	$ 1,219
2020	4,483
2021	4,022
2022	3,664
2023	3,350
Thereafter	12,313
Total	$ 29,051	$ 32,883	$ 38,842

XML

Fair Value - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Fair Value Disclosures [Abstract]
Other real estate, additions	$ 59	$ 2,000
Real estate owned outstanding	59	1,700
Additions to impaired loans	12,500	42,900
Impaired loans outstanding	$ 12,500	$ 40,400

XML

Other Comprehensive Income - Activity in Accumulated Other Comprehensive Income Associated with Securities Available for Sale, Net of Tax (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Beginning balance, accumulated other comprehensive income			$ 310	$ (113)
Other comprehensive income (loss)	$ (1,235)	$ 118	(272)	576
Ending balance, accumulated other comprehensive income	38	463	38	463
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Beginning balance, accumulated other comprehensive income			310	(113)
Other comprehensive income (loss)			(272)	576
Ending balance, accumulated other comprehensive income	$ 38	$ 463	$ 38	$ 463

XML

Loans and Allowance for Credit Losses - Nonperforming Assets (Parenthetical) (Details) - USD ($) $ in Thousands		Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment		$ 10,653,061	$ 10,340,946	$ 10,264,821
Nonperforming Financial Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment		50,314	17,151
Nonperforming Financial Loans [Member] | Finance Receivable Nonaccrual Status [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment	[1]	49,973	13,147
Troubled Debt Restructuring [Member] | Nonperforming Financial Loans [Member] | Finance Receivable Nonaccrual Status [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment		$ 14,200	$ 51

[1] Includes troubled debt restructurings of $14.2 million and $51 thousand as of September 30, 2019 and December 31, 2018, respectively.

XML

Loans and Allowance for Credit Losses - Risk Grade and Category of Loan (Details) - USD ($) $ in Thousands		Sep. 30, 2019		Dec. 31, 2018
Financing Receivable Impaired [Line Items]
Loans		$ 10,673,345		$ 10,370,313
Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		729,585		729,501
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		1,764,648		1,622,289
Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans	[1]	2,723,682	[2]	2,706,909	[3]
Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		3,652,176		3,538,557
Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		1,460,415		1,483,571
Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		342,839		289,486
Grade 1 [Member]
Financing Receivable Impaired [Line Items]
Loans		100,905		112,839
Grade 1 [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		12,021		15,725
Grade 1 [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 1 [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		0	[2]	0	[3]
Grade 1 [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 1 [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		54,518		59,979
Grade 1 [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		34,366		37,135
Grade 2 [Member]
Financing Receivable Impaired [Line Items]
Loans		123,664		115,491
Grade 2 [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		3,400		3,974
Grade 2 [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		1,556		1,040
Grade 2 [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		12,430	[2]	21,465	[3]
Grade 2 [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		21,476		22,207
Grade 2 [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		20,448		11,003
Grade 2 [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		64,354		55,802
Grade 3 [Member]
Financing Receivable Impaired [Line Items]
Loans		9,156,070		8,974,366
Grade 3 [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		639,697		636,674
Grade 3 [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		1,596,753		1,509,532
Grade 3 [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		2,623,058	[2]	2,598,600	[3]
Grade 3 [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		3,032,835		2,974,474
Grade 3 [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		1,049,208		1,083,328
Grade 3 [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		214,519		171,758
Grade 4 [Member]
Financing Receivable Impaired [Line Items]
Loans		1,092,828		972,809
Grade 4 [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		69,282		66,650
Grade 4 [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		156,900		99,087
Grade 4 [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		58,596	[2]	61,430	[3]
Grade 4 [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		520,024		481,735
Grade 4 [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		264,851		243,743
Grade 4 [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		23,175		20,164
Grade 5 [Member]
Financing Receivable Impaired [Line Items]
Loans		109,862		120,781
Grade 5 [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		3,726		5,578
Grade 5 [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		3,233		3,673
Grade 5 [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		6,001	[2]	12,522	[3]
Grade 5 [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		42,720		37,942
Grade 5 [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		49,423		58,088
Grade 5 [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		4,759		2,978
Grade 6 [Member]
Financing Receivable Impaired [Line Items]
Loans		34,498		52,383
Grade 6 [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		850		282
Grade 6 [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		5,407		7,081
Grade 6 [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		2,406	[2]	4,332	[3]
Grade 6 [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		18,179		16,006
Grade 6 [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		6,029		23,081
Grade 6 [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		1,627		1,601
Grade 7 [Member]
Financing Receivable Impaired [Line Items]
Loans		47,760		12,975
Grade 7 [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		285		256
Grade 7 [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		390		1,384
Grade 7 [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		17,061	[2]	4,395	[3]
Grade 7 [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		14,179		2,727
Grade 7 [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		15,806		4,165
Grade 7 [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		39		48
Grade 8 [Member]
Financing Receivable Impaired [Line Items]
Loans		16		81
Grade 8 [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 8 [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 8 [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		0	[2]	48	[3]
Grade 8 [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 8 [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		16		33
Grade 8 [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 9 [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 9 [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 9 [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 9 [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		0	[2]	0	[3]
Grade 9 [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 9 [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
Grade 9 [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		0		0
PCI Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		7,742		8,588
PCI Loans [Member] | Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Loans		324		362
PCI Loans [Member] | Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Loans		409		492
PCI Loans [Member] | Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Loans		4,130	[2]	4,117	[3]
PCI Loans [Member] | Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Loans		2,763		3,466
PCI Loans [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Loans		116		151
PCI Loans [Member] | Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Loans		$ 0		$ 0

[1] Includes $20.3 million and $29.4 million of residential mortgage loans held for sale at September 30, 2019 and December 31, 2018, respectively.

[2] Includes $20.3 million of residential mortgage loans held for sale at September 30, 2019.

[3] Includes $29.4 million of residential mortgage loans held for sale at December 31, 2018.

XML

Fair Value - Fair Value Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Available for sale securities:
Available for sale securities, at fair value	$ 298,368	$ 84,155
Fair Value, Measurements, Recurring [Member]
Available for sale securities:
Available for sale securities, at fair value	298,368	84,155
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Available for sale securities:
Available for sale securities, at fair value	298,368	84,155
Fair Value, Measurements, Recurring [Member] | States and Political Subdivisions [Member]
Available for sale securities:
Available for sale securities, at fair value	471	1,166
Fair Value, Measurements, Recurring [Member] | States and Political Subdivisions [Member] | Level 2 [Member]
Available for sale securities:
Available for sale securities, at fair value	471	1,166
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member]
Available for sale securities:
Available for sale securities, at fair value	241,726	12,756
Fair Value, Measurements, Recurring [Member] | Collateralized Mortgage Obligations [Member] | Level 2 [Member]
Available for sale securities:
Available for sale securities, at fair value	241,726	12,756
Fair Value, Measurements, Recurring [Member] | Mortgage-backed Securities [Member]
Available for sale securities:
Available for sale securities, at fair value	56,171	70,233
Fair Value, Measurements, Recurring [Member] | Mortgage-backed Securities [Member] | Level 2 [Member]
Available for sale securities:
Available for sale securities, at fair value	$ 56,171	$ 70,233

XML

Income Per Common Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Net income	$ 81,758	$ 82,523	$ 246,418	$ 238,481
Basic, Weighted average shares outstanding (in shares)	68,738	69,838	69,463	69,815
Weighted average shares outstanding, per share amount	$ 1.19	$ 1.18	$ 3.55	$ 3.42
Diluted, Weighted average shares outstanding (in shares)	68,738	69,838	69,463	69,815
Diluted	$ 1.19	$ 1.18	$ 3.55	$ 3.42

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Cover [Abstract]
Entity Registrant Name	PROSPERITY BANCSHARES INC
Entity Central Index Key	0001068851
Trading Symbol	PB
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding (in shares)		68,396,378
Entity Current Reporting Status	Yes
Entity File Number	001-35388
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	74-2331986
Entity Address, Address Line One	Prosperity Bank Plaza
Entity Address, Address Line Two	4295 San Felipe
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77027
City Area Code	281
Local Phone Number	269-7199
Entity Shell Company	false
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common stock, par value $1.00 per share
Security Exchange Name	NYSE
Document Quarterly Report	true
Document Transition Report	false

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 81,758	$ 82,523	$ 246,418	$ 238,481
Securities available for sale:
Change in unrealized (losses) gains during the period	(1,563)	149	(344)	729
Total other comprehensive (loss) income	(1,563)	149	(344)	729
Deferred tax benefit (expense) related to other comprehensive (loss) income	328	(31)	72	(153)
Other comprehensive (loss) income, net of tax	(1,235)	118	(272)	576
Comprehensive income	$ 80,523	$ 82,641	$ 246,146	$ 239,057

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Assets and Liabilities Measured on Recurring Basis

The following tables present fair values for assets and liabilities measured at fair value on a recurring basis:

	As of  September 30, 2019
	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
Assets:
Available for sale securities:
States and political subdivisions	$	—	$	471	$	—	$	471
Collateralized mortgage obligations		—		241,726		—		241,726
Mortgage-backed securities		—		56,171		—		56,171
Total	$	—	$	298,368	$	—	$	298,368

	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
Assets:
Available for sale securities:
States and political subdivisions	$	—	$	1,166	$	—	$	1,166
Collateralized mortgage obligations		—		12,756		—		12,756
Mortgage-backed securities		—		70,233		—		70,233
Total	$	—	$	84,155	$	—	$	84,155

Summary of Carrying and Fair Value Information of Financial Instruments

The following tables present carrying and fair value information of financial instruments as of the dates indicated:

	As of  September 30, 2019
	Carrying		Estimated Fair Value
	Amount		Level 1		Level 2		Level 3		Total
Assets	(Dollars in thousands)
Cash and due from banks	$	420,359	$	420,359	$	—	$	—	$	420,359
Federal funds sold		521		521		—		—		521
Held to maturity securities		8,196,838		—		8,217,601		—		8,217,601
Loans held for sale		20,284		—		20,284		—		20,284
Loans held for investment, net of allowance		10,566,000		—		—		10,498,468		10,498,468
Other real estate owned		815		—		815		—		815
Liabilities
Deposits:
Noninterest-bearing	$	5,784,002	$	—	$	5,784,002	$	—	$	5,784,002
Interest-bearing		11,145,918		—		11,142,770		—		11,142,770
Other borrowings		600,795		—		600,833		—		600,833
Securities sold under repurchase agreements		311,404		—		311,411		—		311,411

	As of December 31, 2018
	Carrying		Estimated Fair Value
	Amount		Level 1		Level 2		Level 3		Total
Assets	(Dollars in thousands)
Cash and due from banks	$	410,575	$	410,575	$	—	$	—	$	410,575
Federal funds sold		552		552		—		—		552
Held to maturity securities		9,324,811		—		9,081,236		—		9,081,236
Loans held for sale		29,367		—		29,367		—		29,367
Loans held for investment, net of allowance		10,254,506		—		—		10,144,556		10,144,556
Other real estate owned		1,805		—		1,805		—		1,805
Liabilities
Deposits:
Noninterest-bearing	$	5,666,115	$	—	$	5,666,115	$	—	$	5,666,115
Interest-bearing		11,590,443		—		11,564,521		—		11,564,521
Other borrowings		1,031,126		—		1,031,161		—		1,031,161
Securities sold under repurchase agreements		284,720		—		284,685		—		284,685

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New Accounting Standards (Policies)

9 Months Ended

Sep. 30, 2019

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Accounting Standards Updates (''ASU'')

Accounting Standards Updates (“ASU”)

ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of current expected credit losses (“CECL”) is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Additionally, available for sale debt securities may realize value either through collection of contractual cash flows or through sale of the security at fair value. Therefore, the amendments limit the amount of the allowance for credit losses to the difference between amortized cost and fair value. ASU 2016-13 will be effective for the Company as of January 1, 2020. The Company’s implementation workgroup is comprised of individuals from various functional areas including credit, risk management, finance and information technology, among others, and meets periodically to discuss the latest developments and monitor implementation progress. During the third quarter of 2019, the Company had a third-party model validation completed and will continue running parallel processes during the fourth quarter of 2019. The Company continues to assess CECL disclosure requirements and developing appropriate internal controls around the CECL process. The Company continues to evaluate the potential impact of ASU 2016-13 on the Company’s financial statements. Based on the Company’s loan portfolio at September 30, 2019 and current expectation of future economic conditions, the allowance for credit losses as a percentage of total loans is expected to increase from 0.82% to between 1.00% and 1.10%. This estimate does not incorporate the anticipated impact of the merger with LegacyTexas Financial Group, Inc. (“LegacyTexas”), which was consummated on November 1, 2019. 

ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 requires that lessees recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The requirements for lessors under ASU 2016-02 are largely unchanged from existing guidance, however certain necessary changes have been made to align with specific changes to lessee accounting and key aspects of the revenue recognition guidance (Topic 606).

The Company’s leases relate primarily to office space and banking centers. The Company identified and reviewed existing leases applicable to ASU 2016-02 and elected certain optional practical expedients: 1) not to reassess whether any expired or existing contracts are or contain leases, 2) not to reassess the lease classification for any expired or existing lease, 3) not to reassess initial direct cost for any existing leases and 4) not to separately identify lease and non-lease components. Additionally, the Company elected the short-term lease exemption for lease terms less than 12 months. The Company adopted ASU 2016-02 on January 1, 2019 using a modified retrospective transition approach without adjusting comparative periods. With the adoption of the new standard, the Company recognized right-of-use assets and lease liabilities of $17.3 million as of January 1, 2019. See Note 9 “Contractual Obligations and Off-Balance Sheet Items — Contractual Obligations — Leases” for additional information.

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Basis of Presentation

9 Months Ended

Sep. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

PROSPERITY BANCSHARES, INC.® AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

(UNAUDITED)

1. BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Prosperity Bancshares, Inc.^® (“Bancshares”) and its wholly-owned subsidiary, Prosperity Bank^® (the “Bank,” and together with Bancshares, the “Company”). All intercompany transactions and balances have been eliminated.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis; and all such adjustments are of a normal recurring nature. These financial statements and the notes thereto should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Operating results for the nine-month period ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other period.

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Subsequent Events - Additional Information (Details) $ / shares in Units, $ in Thousands	Nov. 01, 2019 Location City $ / shares shares	Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Subsequent Event [Line Items]
Total assets		$ 22,092,817	$ 22,693,402
Total deposits		16,929,920	$ 17,256,558
LegacyTexas [Member]
Subsequent Event [Line Items]
Total assets		10,500,000
Total gross loans		9,100,000
Total deposits		$ 6,500,000
LegacyTexas [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Business acquisition, share consideration per share | shares	0.5280
Business acquisition, cash for each share | $ / shares	$ 6.28
LegacyTexas [Member] | North Texas [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Number of bank operating locations | Location	42
Number of bank operating cities | City	19

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Loans and Allowance for Credit Losses - Troubled Debt Restructurings (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($) contract	Sep. 30, 2018 USD ($) contract
Financing Receivable Modifications [Line Items]
Troubled debt restructurings, number of loans | contract	2	2
Troubled debt restructurings, pre-modification outstanding recorded investment	$ 14,993	$ 198
Troubled debt restructurings, post-modification outstanding recorded investment	$ 14,188	$ 72
Commercial and Industrial [Member]
Financing Receivable Modifications [Line Items]
Troubled debt restructurings, number of loans | contract	2	2
Troubled debt restructurings, pre-modification outstanding recorded investment	$ 14,993	$ 198
Troubled debt restructurings, post-modification outstanding recorded investment	$ 14,188	$ 72

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Loans and Allowance for Credit Losses - Nonperforming Assets (Details) - USD ($) $ in Thousands		Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment		$ 10,653,061	$ 10,340,946	$ 10,264,821
Other real estate owned		$ 815	$ 1,805
Nonperforming assets to total loans and other real estate		0.48%	0.18%
Nonperforming Financial Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment		$ 50,314	$ 17,151
Repossessed assets		28
Other real estate owned		815	1,805
Total nonperforming assets		51,157	18,956
Nonperforming Financial Loans [Member] | Finance Receivable Nonaccrual Status [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment	[1]	49,973	13,147
Nonperforming Financial Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment		$ 341	$ 4,004

[1] Includes troubled debt restructurings of $14.2 million and $51 thousand as of September 30, 2019 and December 31, 2018, respectively.

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Loans and Allowance for Credit Losses - Impaired Loans (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable Impaired [Line Items]
Impaired loans with no related allowance, recorded investment	$ 40,361	$ 11,071
Impaired loans with no related allowance, unpaid contractual principal balance	44,002	12,943
Impaired loans with no related allowance, average recorded investment	25,716	12,998
Impaired loans with related allowance, recorded investment	7,415	1,985
Impaired loans with related allowance, unpaid contractual principal balance	7,470	2,012
Impaired loans with related allowance, related allowance	1,596	685
Impaired loans with related allowance, average recorded investment	4,699	5,407
Impaired loans, recorded investment	47,776	13,056
Impaired loans, unpaid contractual principal balance	51,472	14,955
Impaired loans with an allowance recorded, related allowance	1,596	685
Impaired loans, average recorded investment	30,415	18,405
Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Financing Receivable Impaired [Line Items]
Impaired loans with no related allowance, recorded investment	147	256
Impaired loans with no related allowance, unpaid contractual principal balance	147	311
Impaired loans with no related allowance, average recorded investment	202	194
Impaired loans with related allowance, recorded investment	138
Impaired loans with related allowance, unpaid contractual principal balance	138
Impaired loans with related allowance, related allowance	14
Impaired loans with related allowance, average recorded investment	69
Impaired loans, recorded investment	285	256
Impaired loans, unpaid contractual principal balance	285	311
Impaired loans, average recorded investment	271	194
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans with no related allowance, recorded investment		993
Impaired loans with no related allowance, unpaid contractual principal balance		995
Impaired loans with no related allowance, average recorded investment	496	788
Impaired loans with related allowance, recorded investment	390	391
Impaired loans with related allowance, unpaid contractual principal balance	390	391
Impaired loans with related allowance, related allowance	58	58
Impaired loans with related allowance, average recorded investment	390	195
Impaired loans, recorded investment	390	1,384
Impaired loans, unpaid contractual principal balance	390	1,386
Impaired loans, average recorded investment	886	983
Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Financing Receivable Impaired [Line Items]
Impaired loans with no related allowance, recorded investment	11,825	4,177
Impaired loans with no related allowance, unpaid contractual principal balance	12,560	4,903
Impaired loans with no related allowance, average recorded investment	8,001	4,048
Impaired loans with related allowance, recorded investment	5,236	266
Impaired loans with related allowance, unpaid contractual principal balance	5,268	289
Impaired loans with related allowance, related allowance	1,067	56
Impaired loans with related allowance, average recorded investment	2,751	729
Impaired loans, recorded investment	17,061	4,443
Impaired loans, unpaid contractual principal balance	17,828	5,192
Impaired loans, average recorded investment	10,752	4,777
Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Financing Receivable Impaired [Line Items]
Impaired loans with no related allowance, recorded investment	13,206	2,727
Impaired loans with no related allowance, unpaid contractual principal balance	13,606	2,848
Impaired loans with no related allowance, average recorded investment	7,966	2,475
Impaired loans with related allowance, recorded investment	973
Impaired loans with related allowance, unpaid contractual principal balance	993
Impaired loans with related allowance, related allowance	283
Impaired loans with related allowance, average recorded investment	486	743
Impaired loans, recorded investment	14,179	2,727
Impaired loans, unpaid contractual principal balance	14,599	2,848
Impaired loans, average recorded investment	8,452	3,218
Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Impaired loans with no related allowance, recorded investment	15,144	2,870
Impaired loans with no related allowance, unpaid contractual principal balance	17,646	3,810
Impaired loans with no related allowance, average recorded investment	9,007	5,358
Impaired loans with related allowance, recorded investment	678	1,328
Impaired loans with related allowance, unpaid contractual principal balance	681	1,332
Impaired loans with related allowance, related allowance	174	571
Impaired loans with related allowance, average recorded investment	1,003	3,740
Impaired loans, recorded investment	15,822	4,198
Impaired loans, unpaid contractual principal balance	18,327	5,142
Impaired loans, average recorded investment	10,010	9,098
Consumer and Other [Member]
Financing Receivable Impaired [Line Items]
Impaired loans with no related allowance, recorded investment	39	48
Impaired loans with no related allowance, unpaid contractual principal balance	43	76
Impaired loans with no related allowance, average recorded investment	44	135
Impaired loans, recorded investment	39	48
Impaired loans, unpaid contractual principal balance	43	76
Impaired loans, average recorded investment	$ 44	$ 135

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Goodwill and Core Deposit Intangibles (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Core Deposit Intangibles

Changes in the carrying amount of the Company’s goodwill and core deposit intangibles for the nine months ended September 30, 2019 and the year ended December 31, 2018 were as follows: 

	Goodwill		Core Deposit Intangibles
	(Dollars in thousands)
Balance as of December 31, 2017	$	1,900,845	$	38,842
Less:
Amortization		—		(5,959	)
Balance as of December 31, 2018		1,900,845		32,883
Less:
Amortization		—		(3,832	)
Balance as of September 30, 2019	$	1,900,845	$	29,051

Estimated Aggregate Future Amortization Expense for Core Deposit Intangibles

The estimated aggregate future amortization expense for core deposit intangibles remaining as of September 30, 2019 is as follows (dollars in thousands):

Remaining 2019	$	1,219
2020		4,483
2021		4,022
2022		3,664
2023		3,350
Thereafter		12,313
Total	$	29,051

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Income Per Common Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table illustrates the computation of basic and diluted earnings per share:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
	Amount		Per Share Amount		Amount		Per Share Amount		Amount		Per Share Amount		Amount		Per Share Amount
	(Amounts in thousands, except per share data)
Net income	$	81,758			$	82,523			$	246,418			$	238,481
Basic:
Weighted average shares outstanding		68,738	$	1.19		69,838	$	1.18		69,463	$	3.55		69,815	$	3.42
Diluted:
Weighted average shares outstanding		68,738	$	1.19		69,838	$	1.18		69,463	$	3.55		69,815	$	3.42

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 246,418	$ 238,481
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and core deposit intangibles amortization	13,333	13,773
Provision for credit losses	2,600	15,350
Net amortization of premium on investments	22,223	24,276
Net (gain) loss on sale of other real estate and repossessed assets	(346)	130
Net loss on sale of investment securities	0	13
Net (gain) loss on sale of assets	(57)	40
Net accretion of discount on loans	(4,303)	(11,006)
Net amortization of premium on deposits		(106)
Gain on sale of loans	(2,355)	(2,590)
Proceeds from sale of loans held for sale	132,554	145,961
Originations of loans held for sale	(121,212)	(140,007)
Stock based compensation expense	7,643	7,906
Decrease (increase) in accrued interest receivable and other assets	13,860	(36,038)
Increase (decrease) in accrued interest payable and other liabilities	38,840	(29,975)
Net cash provided by operating activities	349,198	226,208
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and principal paydowns of held to maturity securities	1,328,559	1,341,650
Purchase of held to maturity securities	(222,906)	(1,322,082)
Proceeds from maturities and principal paydowns of available for sale securities	9,020,085	8,123,942
Purchase of available for sale securities	(9,234,545)	(7,999,686)
Net increase in loans held for investment	(312,461)	(278,155)
Purchase of bank premises and equipment	(16,253)	(10,491)
Proceeds from sale of bank premises, equipment and other real estate	4,531	12,362
Proceeds from insurance claims	3,637	2,463
Net cash provided by (used in) investing activities	570,647	(129,997)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in noninterest-bearing deposits	117,887	76,920
Net decrease in interest-bearing deposits	(444,525)	(1,164,510)
Net (repayments of) proceeds from other short-term borrowings	(430,000)	1,000,000
Repayments of other long-term borrowings	(331)	(4,016)
Net increase (decrease) in securities sold under repurchase agreements	26,684	(27,028)
Repurchase of common stock	(94,484)
Payments of cash dividends	(85,323)	(75,420)
Net cash used in financing activities	(910,092)	(194,054)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	9,753	(97,843)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	411,127	392,313
CASH AND CASH EQUIVALENTS, END OF PERIOD	420,880	294,470
NONCASH ACTIVITIES:
Acquisition of real estate through foreclosure of collateral	1,998	153
SUPPLEMENTAL INFORMATION:
Income taxes paid	63,250	114,960
Interest paid	$ 95,104	$ 66,861

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Income Per Common Share - Additional Information (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Number of options outstanding	0		0
Antidilutive Securities excluded from computation of earnings per share, amount	0	0	0	0

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Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
INTEREST INCOME:
Loans, including fees	$ 134,943	$ 128,645	$ 398,533	$ 373,336
Securities	50,872	55,705	160,464	165,739
Federal funds sold and other earning assets	363	326	1,083	940
Total interest income	186,178	184,676	560,080	540,015
INTEREST EXPENSE:
Deposits	26,939	19,208	78,629	49,741
Other borrowings	4,335	7,583	15,208	16,602
Securities sold under repurchase agreements	914	566	2,504	1,327
Total interest expense	32,188	27,357	96,341	67,670
NET INTEREST INCOME	153,990	157,319	463,739	472,345
PROVISION FOR CREDIT LOSSES	1,100	2,350	2,600	15,350
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES	152,890	154,969	461,139	456,995
NONINTEREST INCOME:
Nonsufficient funds (NSF) fees	8,835	8,606	24,624	24,261
Credit card, debit card and ATM card income	6,688	6,242	19,139	18,538
Service charges on deposit accounts	5,020	5,137	15,007	15,562
Trust income	2,492	2,692	7,645	7,671
Mortgage income	839	856	2,551	2,728
Brokerage income	522	784	1,736	2,096
Net (loss) gain on sale of assets	(3)	4	57	(40)
Net loss on sale of securities	0	0	0	(13)
Other	6,280	6,303	18,016	16,130
Total noninterest income	30,673	30,624	88,775	86,933
NONINTEREST EXPENSE:
Salaries and employee benefits	52,978	51,906	156,992	155,665
Net occupancy and equipment	5,607	5,808	16,565	17,109
Credit and debit card, data processing and software amortization	4,989	4,512	14,466	13,316
Regulatory assessments and FDIC insurance	1,814	3,347	6,513	10,497
Core deposit intangibles amortization	1,248	1,478	3,832	4,547
Depreciation	3,286	3,139	9,501	9,226
Communications	2,214	2,442	6,667	7,628
Other real estate expense, net	(47)	217	(75)	521
Other	8,610	8,911	25,630	26,907
Total noninterest expense	80,699	81,760	240,091	245,416
INCOME BEFORE INCOME TAXES	102,864	103,833	309,823	298,512
PROVISION FOR INCOME TAXES	21,106	21,310	63,405	60,031
NET INCOME	$ 81,758	$ 82,523	$ 246,418	$ 238,481
EARNINGS PER SHARE:
Basic	$ 1.19	$ 1.18	$ 3.55	$ 3.42
Diluted	$ 1.19	$ 1.18	$ 3.55	$ 3.42

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Loans and Allowance for Credit Losses - Aging Analysis of Past Due Loans (Details) - USD ($) $ in Thousands		Sep. 30, 2019		Dec. 31, 2018
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		$ 24,695		$ 38,278
Nonaccrual loans		49,973		13,147
Current loans		10,598,677		10,318,888
Total loans		10,673,345		10,370,313
Financing Receivables, 30 to 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		24,354		34,274
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		341		4,004
Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		1,289		705
Nonaccrual loans		285		256
Current loans		728,011		728,540
Total loans		729,585		729,501
Agriculture and Agriculture Real Estate (Includes Farmland) [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		1,289		705
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		4,686		7,151
Nonaccrual loans		390		1,386
Current loans		1,759,572		1,613,752
Total loans		1,764,648		1,622,289
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		4,686		6,363
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing				788
Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing	[1]	9,297		13,474
Nonaccrual loans	[1]	19,258		4,515
Current loans	[1]	2,695,127		2,688,920
Total loans	[1]	2,723,682	[2]	2,706,909	[3]
Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing	[1]	9,082		10,479
Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing	[1]	215		2,995
Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		4,670		9,063
Nonaccrual loans		14,179		2,727
Current loans		3,633,327		3,526,767
Total loans		3,652,176		3,538,557
Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		4,670		9,063
Commercial and Industrial [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		4,675		6,873
Nonaccrual loans		15,822		4,215
Current loans		1,439,918		1,472,483
Total loans		1,460,415		1,483,571
Commercial and Industrial [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		4,550		6,652
Commercial and Industrial [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		125		221
Consumer and Other [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		78		1,012
Nonaccrual loans		39		48
Current loans		342,722		288,426
Total loans		342,839		289,486
Consumer and Other [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		77		$ 1,012
Consumer and Other [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans past due and still accruing		$ 1

[1] Includes $20.3 million and $29.4 million of residential mortgage loans held for sale at September 30, 2019 and December 31, 2018, respectively.

[2] Includes $20.3 million of residential mortgage loans held for sale at September 30, 2019.

[3] Includes $29.4 million of residential mortgage loans held for sale at December 31, 2018.

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New Accounting Standards - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Allowance for credit losses as percentage of loans	0.82%		0.83%
Operating lease, right-of-use asset	$ 17.0
Operating lease, liability	$ 17.0
Accounting Standards Update 2016-02 [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Operating lease, right-of-use asset		$ 17.3
Operating lease, liability		$ 17.3
Minimum [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Allowance for credit losses as percentage of loans	1.00%
Maximum [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Allowance for credit losses as percentage of loans	1.10%

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Securities - Investment Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Investments Debt And Equity Securities [Abstract]
Held to Maturity, amortized cost, due in one year or less	$ 37,313
Held to Maturity, amortized cost, due after one year through five years	117,760
Held to Maturity, amortized cost, due after five years through ten years	43,321
Held to Maturity, amortized cost, due after ten years	4,509
Held to Maturity, amortized cost, subtotal	202,903
Held to Maturity, amortized cost, mortgage-backed securities and collateralized mortgage obligations	7,993,935
Held to Maturity, Amortized Cost	8,196,838	$ 9,324,811
Held to Maturity, fair value, due in one year or less	37,430
Held to Maturity, fair value, due after one year through five years	121,632
Held to Maturity, fair value, due after five years through ten years	45,507
Held to Maturity, fair value, due after ten years	4,728
Held to Maturity, fair value, subtotal	209,297
Held to Maturity, fair value, mortgage-backed securities and collateralized mortgage obligations	8,008,304
Held to Maturity, fair value, total	8,217,601	9,081,236
Available for Sale, amortized cost, due in one year or less	470
Available for Sale, amortized cost, subtotal	470
Available for Sale, amortized cost, mortgage-backed securities and collateralized mortgage obligations	297,849
Available for Sale, Amortized Cost	298,319	83,763
Available for Sale, fair value, due in one year or less	471
Available for Sale, fair value, subtotal	471
Available for Sale, fair value, mortgage-backed securities and collateralized mortgage obligations	297,897
Available for Sale securities, at fair value	$ 298,368	$ 84,155

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Contractual Obligations and Off-Balance Sheet Items

9 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Contractual Obligations and Off-Balance Sheet Items

9. CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ITEMS

Contractual Obligations

The Company’s contractual obligations and other commitments to make future payments as of September 30, 2019 (other than deposit obligations and securities sold under repurchase agreements) are summarized below.

Federal Home Loan Bank Borrowings

The Company’s future cash payments associated with its contractual obligations pursuant to its Federal Home Loan Bank (“FHLB”) advances and notes payable as of September 30, 2019 are summarized below. Payments for FHLB notes payable include interest of $64 thousand that will be paid over the future periods. The payments do not include pre-payment options that may be available to the Company.

	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)
Federal Home Loan Bank advances and notes payable	$	600,572	$	125	$	125	$	37	$	600,859

Leases

The Company’s leases relate primarily to operating leases for office space and banking centers. The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining lease terms of 1 to 13 years, which may include the option to extend the lease when it is reasonably certain for the Company to exercise that option. Operating lease right-of-use (ROU) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental collateralized borrowing rate to determine the present value of lease payments. Short-term leases and leases with variable lease costs are immaterial and the Company does not have any sublease arrangements. As of September 30, 2019, operating lease ROU assets and lease liabilities were approximately $17 million. ROU assets and lease liabilities were classified as other assets and other liabilities, respectively.

As of September 30, 2019, the weighted average remaining lease terms of the Company’s operating leases were 5.7 years. The weighted average discount rate used to determine the lease liabilities as of September 30, 2019 for the Company’s operating leases was 3.20%. Cash paid for the Company’s operating leases for the three and nine months ended September 30, 2019 was $1.4 million and $4.2 million, respectively.  The Company obtained $2.4 million in ROU assets in exchange for lease liabilities for two operating leases during the nine months ended September 30, 2019.

The Company’s future undiscounted cash payments associated with its operating leases as of September 30, 2019 are summarized below (dollars in thousands).

Remaining 2019	$	1,282
2020		4,607
2021		3,588
2022		3,111
2023		2,550
2024		1,641
Thereafter		4,426
Total undiscounted lease payments	$	21,205

The following table presents a summary of non-cancelable future operating lease commitments as of December 31, 2018 (dollars in thousands):

2019	$	4,897
2020		4,088
2021		3,013
2022		2,319
2023		2,025
Thereafter		3,597
Total non-cancelable lease payments	$	19,939

Off-Balance Sheet Items

In the normal course of business, the Company enters into various transactions that, in accordance with GAAP, are not included in its consolidated balance sheets. The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The Company’s commitments associated with outstanding standby letters of credit and commitments to extend credit expiring by period as of September 30, 2019 are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.

	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)
Standby letters of credit	$	62,393	$	5,663	$	1,932	$	—	$	69,988
Commitments to extend credit		1,169,623		357,578		102,431		1,050,959		2,680,591
Total	$	1,232,016	$	363,241	$	104,363	$	1,050,959	$	2,750,579

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Loans and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Loans and Allowance for Credit Losses

5. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The loan portfolio consists of various types of loans and is categorized by major type as follows:

	September 30, 2019		December 31, 2018
	(Dollars in thousands)
Residential mortgage loans held for sale	$	20,284	$	29,367
Commercial and industrial		1,460,415		1,483,571
Real estate:
Construction, land development and other land loans		1,764,648		1,622,289
1-4 family residential (includes home equity)		2,703,398		2,677,542
Commercial real estate (includes multi-family residential)		3,652,176		3,538,557
Farmland		536,895		545,373
Agriculture		192,690		184,128
Consumer and other		342,839		289,486
Total loans held for investment		10,653,061		10,340,946
Total	$	10,673,345	$	10,370,313

Concentrations of Credit. Most of the Company’s lending activity occurs within the states of Texas and Oklahoma. Commercial real estate loans, 1-4 family residential loans and construction, land development and other land loans make up 76.1% of the Company’s total loan portfolio at September 30, 2019. As of September 30, 2019 and December 31, 2018, there were no concentrations of loans related to any single industry in excess of 10% of total loans.

Related Party Loans. As of September 30, 2019 and December 31, 2018, loans outstanding to directors, officers and their affiliates totaled $1.7 million and $1.9 million, respectively. All transactions between the Company and such related parties are conducted in the ordinary course of business and made on the same terms and conditions as similar transactions with unaffiliated persons.

An analysis of activity with respect to these related party loans is as follows:

	As of and for the nine months ended September 30, 2019			As of and for the year ended December 31, 2018
	(Dollars in thousands)
Beginning balance on January 1	$	1,923		$	2,694
New loans		1			5
Repayments		(196	)		(776	)
Ending balance	$	1,728		$	1,923

Nonperforming Assets and Nonaccrual and Past Due Loans. The Company has several procedures in place to assist it in maintaining the overall quality of its loan portfolio. The Company has established underwriting guidelines to be followed by its officers, including requiring appraisals on loans collateralized by real estate. The Company also monitors its delinquency levels for any negative or adverse trends. Nevertheless, the Company’s loan portfolio could become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

The Company generally places a loan on nonaccrual status and ceases accruing interest when the payment of principal or interest is delinquent for 90 days, or earlier in some cases, unless the loan is in the process of collection and the underlying collateral fully supports the carrying value of the loan.

With respect to potential problem loans, an evaluation of the borrower’s overall financial condition is made to determine the need, if any, for possible writedowns or appropriate additions to the allowance for credit losses.

An aging analysis of past due loans, segregated by category of loan, is presented below:

	September 30, 2019
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total  Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	4,686	$	—	$	4,686	$	390	$	1,759,572	$	1,764,648
Agriculture and agriculture real estate (includes farmland)		1,289		—		1,289		285		728,011		729,585
1-4 family (includes home equity) (1)		9,082		215		9,297		19,258		2,695,127		2,723,682
Commercial real estate (includes multi-family residential)		4,670		—		4,670		14,179		3,633,327		3,652,176
Commercial and industrial		4,550		125		4,675		15,822		1,439,918		1,460,415
Consumer and other		77		1		78		39		342,722		342,839
Total	$	24,354	$	341	$	24,695	$	49,973	$	10,598,677	$	10,673,345

	December 31, 2018
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total  Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	6,363	$	788	$	7,151	$	1,386	$	1,613,752	$	1,622,289
Agriculture and agriculture real estate (includes farmland)		705		—		705		256		728,540		729,501
1-4 family (includes home equity) (1)		10,479		2,995		13,474		4,515		2,688,920		2,706,909
Commercial real estate (includes multi-family residential)		9,063		—		9,063		2,727		3,526,767		3,538,557
Commercial and industrial		6,652		221		6,873		4,215		1,472,483		1,483,571
Consumer and other		1,012		—		1,012		48		288,426		289,486
Total	$	34,274	$	4,004	$	38,278	$	13,147	$	10,318,888	$	10,370,313

(1) Includes $20.3 million and $29.4 million of residential mortgage loans held for sale at September 30, 2019 and December 31, 2018, respectively.

The following table presents information regarding nonperforming assets as of the dates indicated:

	September 30, 2019			December 31, 2018
	(Dollars in thousands)
Nonaccrual loans (1)	$	49,973		$	13,147
Accruing loans 90 or more days past due		341			4,004
Total nonperforming loans		50,314			17,151
Repossessed assets		28			—
Other real estate		815			1,805
Total nonperforming assets	$	51,157		$	18,956
Nonperforming assets to total loans and other real estate		0.48	%		0.18	%

(1) Includes troubled debt restructurings of $14.2 million and $51 thousand as of September 30, 2019 and December 31, 2018, respectively.

The Company had $51.2 million in nonperforming assets at September 30, 2019 compared with $19.0 million at December 31, 2018. Nonperforming assets were 0.48% of total loans and other real estate at September 30, 2019 compared with 0.18% of total loans and other real estate at December 31, 2018.

If interest on nonaccrual loans had been accrued under the original loan terms, approximately $2.2 million and $1.4 million would have been recorded as income for the nine months ended September 30, 2019 and 2018, respectively. The Company had $50.0 million in nonaccrual loans at September 30, 2019 compared with $13.4 million at September 30, 2018.

Acquired Loans.  Acquired loans were preliminarily recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, interest rates, projected default rates, loss given default, and recovery rates. During the valuation process, the Company identified Purchased Credit-Impaired (“PCI”) and Non-PCI loans in the acquired loan portfolios. Loans acquired with evidence of credit quality deterioration at acquisition for which it was probable that the Company would not be able to collect all contractual amounts due were accounted for as PCI. PCI loan identification considers the following factors: payment history and past due status, debt service coverage, loan grading, collateral values and other factors that may indicate deterioration of credit quality since origination. Non-PCI loan identification considers the following factors: account types, remaining terms, annual interest rates or coupons, current market rates, interest types, past delinquencies, timing of principal and interest payments, loan to value ratios, loss exposures and remaining balances. Accretion of purchased discounts on PCI loans will be based on estimated future cash flows, regardless of contractual maturities. Accretion of purchased discounts on Non-PCI loans will be recognized on a level-yield basis based on contractual maturity of individual loans.

PCI Loans.  The recorded investment in PCI loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of September 30, 2019 and December 31, 2018.

	September 30, 2019			December 31, 2018
	(Dollars in thousands)
PCI loans:
Outstanding balance	$	9,630		$	11,419
Discount		(1,888	)		(2,831	)
Recorded investment	$	7,742		$	8,588

Changes in the accretable yield for acquired PCI loans for the three and nine months ended September 30, 2019 and 2018 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Balance at beginning of period	$	904		$	3,969		$	1,534		$	8,121
Reclassifications from nonaccretable		26			181			62			486
Accretion		(277	)		(2,170	)		(943	)		(6,627	)
Balance at September 30,	$	653		$	1,980		$	653		$	1,980

Income recognition on PCI loans is subject to the Company’s ability to reasonably estimate both the timing and amount of future cash flows. PCI loans for which the Company is accruing interest income are not considered non-performing or impaired. The non-accretable difference represents contractual principal and interest the Company does not expect to collect.

Non-PCI Loans. The recorded investment in Non-PCI loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of September 30, 2019 and December 31, 2018.

	September 30, 2019			December 31, 2018
	(Dollars in thousands)
Non-PCI loans:
Outstanding balance	$	431,319		$	526,840
Discount		(11,473	)		(14,833	)
Recorded investment	$	419,846		$	512,007

Changes in the discount accretion for Non-PCI loans for the three and nine months ended September 30, 2019 and 2018 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Balance at beginning of period	$	12,479		$	17,431		$	14,833		$	20,533
Accretion charge-offs		—			(20	)		—			(30	)
Accretion		(1,006	)		(1,287	)		(3,360	)		(4,379	)
Balance at September 30,	$	11,473		$	16,124		$	11,473		$	16,124

Impaired Loans. Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Impaired loans are set forth in the following tables. No interest income was recognized on impaired loans subsequent to their classification as impaired. The average recorded investment presented in the tables below is reported on a year-to-date basis.

	September 30, 2019
	Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment
	(Dollars in thousands)
With no related allowance recorded:
Construction, land development and other land loans	$	—	$	—	$	—	$	496
Agriculture and agriculture real estate (includes farmland)		147		147		—		202
1-4 family (includes home equity)		11,825		12,560		—		8,001
Commercial real estate (includes multi-family residential)		13,206		13,606		—		7,966
Commercial and industrial		15,144		17,646		—		9,007
Consumer and other		39		43		—		44
Total		40,361		44,002		—		25,716
With an allowance recorded:
Construction, land development and other land loans		390		390		58		390
Agriculture and agriculture real estate (includes farmland)		138		138		14		69
1-4 family (includes home equity)		5,236		5,268		1,067		2,751
Commercial real estate (includes multi-family residential)		973		993		283		486
Commercial and industrial		678		681		174		1,003
Consumer and other		—		—		—		—
Total		7,415		7,470		1,596		4,699
Total:
Construction, land development and other land loans		390		390		58		886
Agriculture and agriculture real estate (includes farmland)		285		285		14		271
1-4 family (includes home equity)		17,061		17,828		1,067		10,752
Commercial real estate (includes multi-family residential)		14,179		14,599		283		8,452
Commercial and industrial		15,822		18,327		174		10,010
Consumer and other		39		43		—		44
	$	47,776	$	51,472	$	1,596	$	30,415

	December 31, 2018
	Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment
	(Dollars in thousands)
With no related allowance recorded:
Construction, land development and other land loans	$	993	$	995	$	—	$	788
Agriculture and agriculture real estate (includes farmland)		256		311		—		194
1-4 family (includes home equity)		4,177		4,903		—		4,048
Commercial real estate (includes multi-family residential)		2,727		2,848		—		2,475
Commercial and industrial		2,870		3,810		—		5,358
Consumer and other		48		76		—		135
Total		11,071		12,943		—		12,998
With an allowance recorded:
Construction, land development and other land loans		391		391		58		195
Agriculture and agriculture real estate (includes farmland)		—		—		—		—
1-4 family (includes home equity)		266		289		56		729
Commercial real estate (includes multi-family residential)		—		—		—		743
Commercial and industrial		1,328		1,332		571		3,740
Consumer and other		—		—		—		—
Total		1,985		2,012		685		5,407
Total:
Construction, land development and other land loans		1,384		1,386		58		983
Agriculture and agriculture real estate (includes farmland)		256		311		—		194
1-4 family (includes home equity)		4,443		5,192		56		4,777
Commercial real estate (includes multi-family residential)		2,727		2,848		—		3,218
Commercial and industrial		4,198		5,142		571		9,098
Consumer and other		48		76		—		135
	$	13,056	$	14,955	$	685	$	18,405

Credit Quality Indicators. As part of the on-going monitoring of the credit quality of the Company’s loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks loan grades to be used as credit quality indicators. The following is a general description of the loan grades used:

Grade 1—Credits in this category have risk potential that is virtually nonexistent.  These loans may be secured by insured certificates of deposit, insured savings accounts, U.S. Government securities and highly rated municipal bonds.

Grade 2—Credits in this category are of the highest quality.  These borrowers represent top rated companies and individuals with unquestionable financial standing with excellent global cash flow coverage, net worth, liquidity and collateral coverage.

Grade 3—Credits in this category are not immune from risk but are well protected by the collateral and paying capacity of the borrower. These loans may exhibit a minor unfavorable credit factor, but the overall credit is sufficiently strong to minimize the possibility of loss.

Grade 4—Credits in this category are considered to be of acceptable credit quality with moderately greater risk than Grade 3 and receiving closer monitoring.  Loans in this category have sources of repayment that remain sufficient to preclude a larger than normal probability of default and secondary sources are likewise currently of sufficient quantity, quality, and liquidity to protect the Company against loss of principal and interest.  These borrowers have specific risk factors, but the overall strength of the credit is acceptable based on other mitigating credit and/or collateral factors and can repay the debt in the normal course of business.

Grade 5—Credits in this category constitute an undue and unwarranted credit risk; however, the factors do not rise to a level of substandard.  These credits have potential weaknesses and/or declining trends that, if not corrected, could expose the Company to risk at a future date.  These loans are monitored on the Company’s internally-generated watch list and evaluated on a quarterly basis.

Grade 6—Credits in this category are considered “substandard” but “non-impaired” loans in accordance with regulatory guidelines.  Loans in this category have well-defined weakness that, if not corrected, could make default of principal and interest possible.  Loans in this category are still accruing interest and may be dependent upon secondary sources of repayment and/or collateral liquidation.

Grade 7—Credits in this category are deemed “substandard” and “impaired” pursuant to regulatory guidelines. As such, the Company has determined that it is probable that less than 100% of the contractual principal and interest will be collected. These loans are individually evaluated for a specific reserve and will typically have the accrual of interest stopped.

Grade 8—Credits in this category include “doubtful” loans in accordance with regulatory guidance. Such loans are no longer accruing interest and factors indicate a loss is imminent.  These loans are also deemed “impaired.” While a specific reserve may be in place while the loan and collateral is being evaluated, these loans are typically charged down to an amount the Company estimates is collectible.

Grade 9—Credits in this category are deemed a “loss” in accordance with regulatory guidelines and have been charged off or charged down. The Company may continue collection efforts and may have partial recovery in the future.

The following table presents loans by risk grade and category of loan at September 30, 2019. Impaired loans include loans in risk grades 7, 8 and 9, as well as any PCI loan that has a specific reserve allocated to it.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity) (1)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Grade 1	$	—	$	12,021	$	—	$	—	$	54,518	$	34,366	$	100,905
Grade 2		1,556		3,400		12,430		21,476		20,448		64,354		123,664
Grade 3		1,596,753		639,697		2,623,058		3,032,835		1,049,208		214,519		9,156,070
Grade 4		156,900		69,282		58,596		520,024		264,851		23,175		1,092,828
Grade 5		3,233		3,726		6,001		42,720		49,423		4,759		109,862
Grade 6		5,407		850		2,406		18,179		6,029		1,627		34,498
Grade 7		390		285		17,061		14,179		15,806		39		47,760
Grade 8		—		—		—		—		16		—		16
Grade 9		—		—		—		—		—		—		—
PCI Loans		409		324		4,130		2,763		116		—		7,742
Total	$	1,764,648	$	729,585	$	2,723,682	$	3,652,176	$	1,460,415	$	342,839	$	10,673,345

(1) Includes $20.3 million of residential mortgage loans held for sale at September 30, 2019.

The following table presents loans by risk grade and category of loan at December 31, 2018. Impaired loans include loans in risk grades 7, 8 and 9, as well as any PCI loan that has a specific reserve allocated to it.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity) (1)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Grade 1	$	—	$	15,725	$	—	$	—	$	59,979	$	37,135	$	112,839
Grade 2		1,040		3,974		21,465		22,207		11,003		55,802		115,491
Grade 3		1,509,532		636,674		2,598,600		2,974,474		1,083,328		171,758		8,974,366
Grade 4		99,087		66,650		61,430		481,735		243,743		20,164		972,809
Grade 5		3,673		5,578		12,522		37,942		58,088		2,978		120,781
Grade 6		7,081		282		4,332		16,006		23,081		1,601		52,383
Grade 7		1,384		256		4,395		2,727		4,165		48		12,975
Grade 8		—		—		48		—		33		—		81
Grade 9		—		—		—		—		—		—		—
PCI Loans		492		362		4,117		3,466		151		—		8,588
Total	$	1,622,289	$	729,501	$	2,706,909	$	3,538,557	$	1,483,571	$	289,486	$	10,370,313

(1) Includes $29.4 million of residential mortgage loans held for sale at December 31, 2018.

Allowance for Credit Losses. The allowance for credit losses is established through charges to earnings in the form of a provision for credit losses. Management has established an allowance for credit losses which it believes is adequate as of September 30, 2019 for estimated losses in the Company’s loan portfolio. The amount of the allowance for credit losses is affected by the following: (1) charge-offs of loans that occur when loans are deemed uncollectible and decrease the allowance, (2) recoveries on loans previously charged off that increase the allowance and (3) provisions for credit losses charged to earnings that increase the allowance. Based on an evaluation of the loan portfolio and consideration of the factors listed below, management presents a quarterly review of the allowance for credit losses to the Bank’s Board of Directors, indicating any change in the allowance since the last review and any recommendations as to adjustments in the allowance. Although management believes it uses the best information available to make determinations with respect to the allowance for credit losses, future adjustments may be necessary if economic conditions or the borrower’s performance differ from the assumptions used in making the initial determinations.

The Company’s allowance for credit losses consists of two components: (1) a specific valuation allowance based on probable losses on specifically identified loans and (2) a general valuation allowance based on historical loan loss experience, general economic conditions and other qualitative risk factors both internal and external to the Company.

In setting the specific valuation allowance, the Company follows a loan review program to evaluate the credit risk in the total loan portfolio and assigns risk grades to each loan. Through this loan review process, the Company maintains an internal list of impaired loans, which along with the delinquency list of loans, helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for credit losses. All loans that have been identified as impaired are reviewed on a quarterly basis in order to determine whether a specific reserve is required. For certain impaired loans, the Company allocates a specific loan loss reserve primarily based on the value of the collateral securing the impaired loan in accordance with ASC Topic 310-10, “Receivables.” The specific reserves are determined on an individual loan basis. Loans for which specific reserves are provided are excluded from the general valuation allowance described below.

In connection with this review of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements include:

• for 1-4 family residential mortgage loans, the borrower’s ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan to value ratio, and the age, condition and marketability of collateral;

• for commercial real estate loans and multifamily residential loans, the debt service coverage ratio (income from the property in excess of operating expenses compared to loan payment requirements), operating results of the owner in the

case of owner-occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type;

• for construction, land development and other land loans, the perceived feasibility of the project including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio;

• for commercial and industrial loans, the operating results of the commercial, industrial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral;

• for agriculture real estate loans, the experience and financial capability of the borrower, projected debt service coverage of the operations of the borrower and loan to value ratio; and

• for non-real estate agriculture loans, the operating results, experience and financial capability of the borrower, historical and expected market conditions and the value, nature and marketability of collateral.

In addition, for each category, the Company considers secondary sources of income and the financial strength and credit history of the borrower and any guarantors.

In determining the amount of the general valuation allowance, management considers factors such as historical loan loss experience, concentration risk of specific loan types, the volume, growth and composition of the Company’s loan portfolio, current economic conditions that may affect the borrower’s ability to pay and the value of collateral, the evaluation of the Company’s loan portfolio through its internal loan review process, general economic conditions, other qualitative risk factors both internal and external to the Company and other relevant factors in accordance with ASC Topic 450, “Contingencies.” Based on a review of these factors for each loan type, the Company applies an estimated percentage to the outstanding balance of each loan type, excluding any loan that has a specific reserve allocated to it. The Company uses this information to establish the amount of the general valuation allowance.  At September 30, 2019, the allowance for credit losses totaled $87.1 million or 0.82% of total loans, including acquired loans with discounts.  At December 31, 2018, the allowance for credit losses totaled $86.4 million or 0.83% of total loans, including acquired loans with discounts.

The following table details activity in the allowance for credit losses by category of loan for the three and nine months ended September 30, 2019 and 2018.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Construction, Land Development and Other Land Loans			Agriculture and Agriculture Real Estate (includes Farmland)			1-4 Family (includes Home Equity)			Commercial Real Estate (includes Multi-Family Residential)			Commercial and Industrial			Consumer and Other			Total
	(Dollars in thousands)
Allowance for credit losses:
Three Months Ended
Balance June 30, 2019	$	15,886		$	3,816		$	14,383		$	12,166		$	39,177		$	1,578		$	87,006
Provision for credit losses		(290	)		188			543			452			(763	)		970			1,100
Charge-offs		—			(294	)		—			—			(419	)		(1,024	)		(1,737	)
Recoveries		6			16			9			1			502			158			692
Net charge-offs		6			(278	)		9			1			83			(866	)		(1,045	)
Balance September 30, 2019	$	15,602		$	3,726		$	14,935		$	12,619		$	38,497		$	1,682		$	87,061
Nine Months Ended
Balance December 31, 2018	$	15,582		$	3,693		$	14,135		$	11,220		$	40,223		$	1,587		$	86,440
Provision for credit losses		21			(921	)		799			1,396			(918	)		2,223			2,600
Charge-offs		(63	)		(358	)		(22	)		—			(2,501	)		(2,821	)		(5,765	)
Recoveries		62			1,312			23			3			1,693			693			3,786
Net charge-offs		(1	)		954			1			3			(808	)		(2,128	)		(1,979	)
Balance September 30, 2019	$	15,602		$	3,726		$	14,935		$	12,619		$	38,497		$	1,682		$	87,061
Allowance for credit losses:
Three Months Ended
Balance June 30, 2018	$	14,450		$	3,756		$	13,353		$	10,616		$	41,454		$	1,335		$	84,964
Provision for credit losses		519			(158	)		593			411			(17	)		1,002			2,350
Charge-offs		—			(25	)		(17	)		—			(742	)		(978	)		(1,762	)
Recoveries		1			138			6			10			85			204			444
Net charge-offs		1			113			(11	)		10			(657	)		(774	)		(1,318	)
Balance September 30, 2018	$	14,970		$	3,711		$	13,935		$	11,037		$	40,780		$	1,563		$	85,996
Nine Months Ended
Balance December 31, 2017	$	14,815		$	3,772		$	14,490		$	10,628		$	38,810		$	1,526		$	84,041
Provision for credit losses		276			(280	)		(173	)		1,887			11,690			1,950			15,350
Charge-offs		(130	)		(25	)		(403	)		(1,489	)		(10,112	)		(2,889	)		(15,048	)
Recoveries		9			244			21			11			392			976			1,653
Net charge-offs		(121	)		219			(382	)		(1,478	)		(9,720	)		(1,913	)		(13,395	)
Balance September 30, 2018	$	14,970		$	3,711		$	13,935		$	11,037		$	40,780		$	1,563		$	85,996

The following table details the amount of the allowance for credit losses allocated to each category of loan as of September 30, 2019, December 31, 2018 and September 30, 2018, on the basis of the impairment methodology used to determine the allowance for credit losses.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Allowance for credit losses related to:
September 30, 2019
Individually evaluated for impairment	$	58	$	14	$	1,067	$	283	$	174	$	—	$	1,596
Collectively evaluated for impairment		15,544		3,712		13,868		12,336		38,323		1,682		85,465
PCI loans		—		—		—		—		—		—		—
Total allowance for credit losses	$	15,602	$	3,726	$	14,935	$	12,619	$	38,497	$	1,682	$	87,061
December 31, 2018
Individually evaluated for impairment	$	58	$	—	$	56	$	—	$	571	$	—	$	685
Collectively evaluated for impairment		15,524		3,693		14,079		11,220		39,652		1,587		85,755
PCI loans		—		—		—		—		—		—		—
Total allowance for credit losses	$	15,582	$	3,693	$	14,135	$	11,220	$	40,223	$	1,587	$	86,440
September 30, 2018
Individually evaluated for impairment	$	—	$	—	$	53	$	10	$	500	$	—	$	563
Collectively evaluated for impairment		14,970		3,711		13,882		11,027		40,280		1,563		85,433
PCI loans		—		—		—		—		—		—		—
Total allowance for credit losses	$	14,970	$	3,711	$	13,935	$	11,037	$	40,780	$	1,563	$	85,996

The following table details the recorded investment in loans by category of loan on the basis of the impairment methodology used to determine the allowance for credit losses as of September 30, 2019, December 31, 2018 and September 30, 2018, excluding $20.3 million, $29.4 million and $28.0 million, respectively, of residential mortgage loans held for sale.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Recorded investment in loans:
September 30, 2019
Individually evaluated for impairment	$	390	$	285	$	17,061	$	14,179	$	15,822	$	39	$	47,776
Collectively evaluated for impairment		1,763,849		728,976		2,682,207		3,635,234		1,444,477		342,800		10,597,543
PCI loans		409		324		4,130		2,763		116		—		7,742
Total loans evaluated for impairment	$	1,764,648	$	729,585	$	2,703,398	$	3,652,176	$	1,460,415	$	342,839	$	10,653,061
December 31, 2018
Individually evaluated for impairment	$	1,384	$	256	$	4,443	$	2,727	$	4,198	$	48	$	13,056
Collectively evaluated for impairment		1,620,413		728,883		2,668,982		3,532,364		1,479,222		289,438		10,319,302
PCI loans		492		362		4,117		3,466		151		—		8,588
Total loans evaluated for impairment	$	1,622,289	$	729,501	$	2,677,542	$	3,538,557	$	1,483,571	$	289,486	$	10,340,946
September 30, 2018
Individually evaluated for impairment	$	869	$	262	$	4,427	$	2,256	$	5,506	$	68	$	13,388
Collectively evaluated for impairment		1,558,632		705,113		2,677,237		3,500,651		1,519,196		281,044		10,241,873
PCI loans		641		375		4,076		4,316		152		—		9,560
Total loans evaluated for impairment	$	1,560,142	$	705,750	$	2,685,740	$	3,507,223	$	1,524,854	$	281,112	$	10,264,821

Troubled Debt Restructurings. The restructuring of a loan is considered a “troubled debt restructuring” if both (1) the borrower is experiencing financial difficulties and (2) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.  Under ASC Topic 310-40 “Receivables—Troubled Debt Restructurings by Creditors,” the Company evaluates all loan modifications to identify whether the restructuring constitutes a troubled debt restructuring.  As of September 30, 2019 and 2018, the Company had $14.2 million and $115 thousand, respectively, in outstanding troubled debt restructurings. The following table presents information regarding the recorded investment of loans modified as troubled debt restructurings during the nine months ended September 30, 2019 and 2018.

	Nine Months Ended
	September 30,
	2019						2018
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt Restructurings
Construction, land development and other land loans		—	$	—	$	—		—	$	—	$	—
Agriculture and agriculture real estate (includes farmland)		—		—		—		—		—		—
1-4 Family (includes home equity)		—		—		—		—		—		—
Commercial real estate (includes multi-family residential)		—		—		—		—		—		—
Commercial and industrial		2		14,993		14,188		2		198		72
Consumer and other		—		—		—		—		—		—
Total		2	$	14,993	$	14,188		2	$	198	$	72

As of September 30, 2019, there have been no defaults on any loans that were modified as troubled debt restructurings during the preceding twelve months. Default is determined at 90 or more days past due. For the nine months ended September 30, 2019, the Company added two loans totaling $15.0 million as new troubled debt restructurings, of which $14.2 million remained outstanding at September 30, 2019. For the nine months ended September 30, 2018, the Company added two loans totaling $198 thousand as new troubled debt restructurings, of which $72 thousand remained outstanding at September 30, 2018. The modifications generally related to extending the amortization periods of the loans, which includes loans modified during bankruptcy. The Company did not grant principal reductions on any restructured loans at the time of modification. These modifications did not have a material impact on the Company’s determination of the allowance for credit losses.

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Stock-Based Compensation - Additional Information (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) Plan shares	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) Plan shares	Sep. 30, 2018 USD ($)	Dec. 31, 2012 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of stock-based employee compensation plans | Plan	1		1
Total unrecognized compensation expense related to stock-based compensation arrangements | $	$ 12.8		$ 12.8
Weighted-average period of cost expected to be recognized			1 year 10 months 9 days
Number of shares outstanding	0		0
Restricted Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense | $	$ 2.5	$ 2.8	$ 7.6	$ 7.9
2012 Stock Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common shares authorized for issuance					1,250,000
Shares issued			346,500
Number of restricted shares granted			398,532

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Fair Value - Summary of Carrying and Fair Value Information of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets
Cash and due from banks	$ 420,359	$ 410,575
Federal funds sold	521	552
Held to maturity securities	8,217,601	9,081,236
Loans held for sale	20,284	29,367
Other real estate owned	815	1,805
Liabilities
Noninterest-bearing	5,784,002	5,666,115
Interest-bearing	11,145,918	11,590,443
Other borrowings	600,795	1,031,126
Securities sold under repurchase agreements	311,404	284,720
Carrying Amount [Member]
Assets
Cash and due from banks	420,359	410,575
Federal funds sold	521	552
Held to maturity securities	8,196,838	9,324,811
Loans held for sale	20,284	29,367
Loans held for investment, net of allowance	10,566,000	10,254,506
Other real estate owned	815	1,805
Liabilities
Noninterest-bearing	5,784,002	5,666,115
Interest-bearing	11,145,918	11,590,443
Other borrowings	600,795	1,031,126
Securities sold under repurchase agreements	311,404	284,720
Estimated Fair Value [Member]
Assets
Cash and due from banks	420,359	410,575
Federal funds sold	521	552
Held to maturity securities	8,217,601	9,081,236
Loans held for sale	20,284	29,367
Loans held for investment, net of allowance	10,498,468	10,144,556
Other real estate owned	815	1,805
Liabilities
Noninterest-bearing	5,784,002	5,666,115
Interest-bearing	11,142,770	11,564,521
Other borrowings	600,833	1,031,161
Securities sold under repurchase agreements	311,411	284,685
Estimated Fair Value [Member] | Level 1 [Member]
Assets
Cash and due from banks	420,359	410,575
Federal funds sold	521	552
Estimated Fair Value [Member] | Level 2 [Member]
Assets
Held to maturity securities	8,217,601	9,081,236
Loans held for sale	20,284	29,367
Other real estate owned	815	1,805
Liabilities
Noninterest-bearing	5,784,002	5,666,115
Interest-bearing	11,142,770	11,564,521
Other borrowings	600,833	1,031,161
Securities sold under repurchase agreements	311,411	284,685
Estimated Fair Value [Member] | Level 3 [Member]
Assets
Loans held for investment, net of allowance	$ 10,498,468	$ 10,144,556

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Contractual Obligations and Off-Balance Sheet Items - Summary of Non-Cancelable Future Operating Lease Commitments (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 4,897
2020	4,088
2021	3,013
2022	2,319
2023	2,025
Thereafter	3,597
Total non-cancelable lease payments	$ 19,939

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Loans and Allowance for Credit Losses - Recorded Investment and Outstanding Balance for Purchased Credit Impaired Loans and Non Purchased Credit Impaired Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Purchased And Non Purchased Credit Impaired Loans [Line Items]
Recorded investment	$ 7,742	$ 8,588	$ 9,560
PCI Loans [Member]
Purchased And Non Purchased Credit Impaired Loans [Line Items]
Outstanding balance	9,630	11,419
Discount	(1,888)	(2,831)
Recorded investment	7,742	8,588
Non PCI Loans [Member]
Purchased And Non Purchased Credit Impaired Loans [Line Items]
Outstanding balance	431,319	526,840
Discount	(11,473)	(14,833)
Recorded investment	$ 419,846	$ 512,007

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Loans and Allowance for Credit Losses - Risk Grade and Category of Loan (Parenthetical) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable Impaired [Line Items]
Loans held for sale	$ 20,284	$ 29,367
Residential Mortgage Loans [Member]
Financing Receivable Impaired [Line Items]
Loans held for sale	$ 20,284	$ 29,367

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Other Comprehensive Income - Tax Effects Allocated to Each Component of Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Equity [Abstract]
Change in unrealized gain during period, before tax amount	$ (1,563)	$ 149	$ (344)	$ 729
Change in unrealized gain during period, tax effect	328	(31)	72	(153)
Change in unrealized gain during period, net of tax amount	(1,235)	118	(272)	576
Total securities available for sale, before tax amount	(1,563)	149	(344)	729
Total securities available for sale, tax effect	328	(31)	72	(153)
Total securities available for sale, net of tax amount	(1,235)	118	(272)	576
Total other comprehensive (loss) income, before tax amount	(1,563)	149	(344)	729
Total other comprehensive (loss) income, tax effect	328	(31)	72	(153)
Other comprehensive (loss) income, net of tax	$ (1,235)	$ 118	$ (272)	$ 576

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Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Tax Effects Allocated to Each Component of Other Comprehensive Income

The tax effects allocated to each component of other comprehensive income were as follows:

	Three Months Ended September 30,
	2019								2018
	Before Tax Amount			Tax Effect		Net of Tax Amount			Before Tax Amount		Tax Effect			Net of Tax Amount
	(Dollars in thousands)
Other comprehensive (loss) income:
Securities available for sale:
Change in unrealized gain during period	$	(1,563	)	$	328	$	(1,235	)	$	149	$	(31	)	$	118
Total securities available for sale		(1,563	)		328		(1,235	)		149		(31	)		118
Total other comprehensive (loss) income	$	(1,563	)	$	328	$	(1,235	)	$	149	$	(31	)	$	118

	Nine Months Ended September 30,
	2019								2018
	Before Tax Amount			Tax Effect		Net of Tax Amount			Before Tax Amount		Tax Effect			Net of Tax Amount
	(Dollars in thousands)
Other comprehensive (loss) income:
Securities available for sale:
Change in unrealized gain during period	$	(344	)	$	72	$	(272	)	$	729	$	(153	)	$	576
Total securities available for sale		(344	)		72		(272	)		729		(153	)		576
Total other comprehensive (loss) income	$	(344	)	$	72	$	(272	)	$	729	$	(153	)	$	576

Activity in Accumulated Other Comprehensive Income Associated with Securities Available for Sale, Net of Tax

Activity in accumulated other comprehensive income associated with securities available for sale, net of tax, was as follows:

	Securities Available for Sale			Accumulated Other Comprehensive Income
	(Dollars in thousands)
Balance at December 31, 2018	$	310		$	310
Other comprehensive loss		(272	)		(272	)
Balance at September 30, 2019	$	38		$	38
Balance at December 31, 2017	$	(113	)	$	(113	)
Other comprehensive income		576			576
Balance at September 30, 2018	$	463		$	463

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Loans and Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Types of Loans in Loan Portfolio

The loan portfolio consists of various types of loans and is categorized by major type as follows:

	September 30, 2019		December 31, 2018
	(Dollars in thousands)
Residential mortgage loans held for sale	$	20,284	$	29,367
Commercial and industrial		1,460,415		1,483,571
Real estate:
Construction, land development and other land loans		1,764,648		1,622,289
1-4 family residential (includes home equity)		2,703,398		2,677,542
Commercial real estate (includes multi-family residential)		3,652,176		3,538,557
Farmland		536,895		545,373
Agriculture		192,690		184,128
Consumer and other		342,839		289,486
Total loans held for investment		10,653,061		10,340,946
Total	$	10,673,345	$	10,370,313

Related Party Loans

An analysis of activity with respect to these related party loans is as follows:

	As of and for the nine months ended September 30, 2019			As of and for the year ended December 31, 2018
	(Dollars in thousands)
Beginning balance on January 1	$	1,923		$	2,694
New loans		1			5
Repayments		(196	)		(776	)
Ending balance	$	1,728		$	1,923

Aging Analysis of Past Due Loans

An aging analysis of past due loans, segregated by category of loan, is presented below:

	September 30, 2019
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total  Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	4,686	$	—	$	4,686	$	390	$	1,759,572	$	1,764,648
Agriculture and agriculture real estate (includes farmland)		1,289		—		1,289		285		728,011		729,585
1-4 family (includes home equity) (1)		9,082		215		9,297		19,258		2,695,127		2,723,682
Commercial real estate (includes multi-family residential)		4,670		—		4,670		14,179		3,633,327		3,652,176
Commercial and industrial		4,550		125		4,675		15,822		1,439,918		1,460,415
Consumer and other		77		1		78		39		342,722		342,839
Total	$	24,354	$	341	$	24,695	$	49,973	$	10,598,677	$	10,673,345

	December 31, 2018
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total  Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	6,363	$	788	$	7,151	$	1,386	$	1,613,752	$	1,622,289
Agriculture and agriculture real estate (includes farmland)		705		—		705		256		728,540		729,501
1-4 family (includes home equity) (1)		10,479		2,995		13,474		4,515		2,688,920		2,706,909
Commercial real estate (includes multi-family residential)		9,063		—		9,063		2,727		3,526,767		3,538,557
Commercial and industrial		6,652		221		6,873		4,215		1,472,483		1,483,571
Consumer and other		1,012		—		1,012		48		288,426		289,486
Total	$	34,274	$	4,004	$	38,278	$	13,147	$	10,318,888	$	10,370,313

(1) Includes $20.3 million and $29.4 million of residential mortgage loans held for sale at September 30, 2019 and December 31, 2018, respectively.

Non-performing Assets

The following table presents information regarding nonperforming assets as of the dates indicated:

	September 30, 2019			December 31, 2018
	(Dollars in thousands)
Nonaccrual loans (1)	$	49,973		$	13,147
Accruing loans 90 or more days past due		341			4,004
Total nonperforming loans		50,314			17,151
Repossessed assets		28			—
Other real estate		815			1,805
Total nonperforming assets	$	51,157		$	18,956
Nonperforming assets to total loans and other real estate		0.48	%		0.18	%

(1) Includes troubled debt restructurings of $14.2 million and $51 thousand as of September 30, 2019 and December 31, 2018, respectively.

Recorded Investment and Outstanding Balance for Purchased Credit Impaired Loans and Non Purchased Credit Impaired Loans

The recorded investment in PCI loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of September 30, 2019 and December 31, 2018.

	September 30, 2019			December 31, 2018
	(Dollars in thousands)
PCI loans:
Outstanding balance	$	9,630		$	11,419
Discount		(1,888	)		(2,831	)
Recorded investment	$	7,742		$	8,588

The recorded investment in Non-PCI loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of September 30, 2019 and December 31, 2018.

	September 30, 2019			December 31, 2018
	(Dollars in thousands)
Non-PCI loans:
Outstanding balance	$	431,319		$	526,840
Discount		(11,473	)		(14,833	)
Recorded investment	$	419,846		$	512,007

Summary of Changes in Accretable Yields of Acquired Loans

Changes in the accretable yield for acquired PCI loans for the three and nine months ended September 30, 2019 and 2018 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Balance at beginning of period	$	904		$	3,969		$	1,534		$	8,121
Reclassifications from nonaccretable		26			181			62			486
Accretion		(277	)		(2,170	)		(943	)		(6,627	)
Balance at September 30,	$	653		$	1,980		$	653		$	1,980

Changes in the discount accretion for Non-PCI loans for the three and nine months ended September 30, 2019 and 2018 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Balance at beginning of period	$	12,479		$	17,431		$	14,833		$	20,533
Accretion charge-offs		—			(20	)		—			(30	)
Accretion		(1,006	)		(1,287	)		(3,360	)		(4,379	)
Balance at September 30,	$	11,473		$	16,124		$	11,473		$	16,124

Summary of Impaired Loans

Impaired loans are set forth in the following tables. No interest income was recognized on impaired loans subsequent to their classification as impaired. The average recorded investment presented in the tables below is reported on a year-to-date basis.

	September 30, 2019
	Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment
	(Dollars in thousands)
With no related allowance recorded:
Construction, land development and other land loans	$	—	$	—	$	—	$	496
Agriculture and agriculture real estate (includes farmland)		147		147		—		202
1-4 family (includes home equity)		11,825		12,560		—		8,001
Commercial real estate (includes multi-family residential)		13,206		13,606		—		7,966
Commercial and industrial		15,144		17,646		—		9,007
Consumer and other		39		43		—		44
Total		40,361		44,002		—		25,716
With an allowance recorded:
Construction, land development and other land loans		390		390		58		390
Agriculture and agriculture real estate (includes farmland)		138		138		14		69
1-4 family (includes home equity)		5,236		5,268		1,067		2,751
Commercial real estate (includes multi-family residential)		973		993		283		486
Commercial and industrial		678		681		174		1,003
Consumer and other		—		—		—		—
Total		7,415		7,470		1,596		4,699
Total:
Construction, land development and other land loans		390		390		58		886
Agriculture and agriculture real estate (includes farmland)		285		285		14		271
1-4 family (includes home equity)		17,061		17,828		1,067		10,752
Commercial real estate (includes multi-family residential)		14,179		14,599		283		8,452
Commercial and industrial		15,822		18,327		174		10,010
Consumer and other		39		43		—		44
	$	47,776	$	51,472	$	1,596	$	30,415

	December 31, 2018
	Recorded Investment		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment
	(Dollars in thousands)
With no related allowance recorded:
Construction, land development and other land loans	$	993	$	995	$	—	$	788
Agriculture and agriculture real estate (includes farmland)		256		311		—		194
1-4 family (includes home equity)		4,177		4,903		—		4,048
Commercial real estate (includes multi-family residential)		2,727		2,848		—		2,475
Commercial and industrial		2,870		3,810		—		5,358
Consumer and other		48		76		—		135
Total		11,071		12,943		—		12,998
With an allowance recorded:
Construction, land development and other land loans		391		391		58		195
Agriculture and agriculture real estate (includes farmland)		—		—		—		—
1-4 family (includes home equity)		266		289		56		729
Commercial real estate (includes multi-family residential)		—		—		—		743
Commercial and industrial		1,328		1,332		571		3,740
Consumer and other		—		—		—		—
Total		1,985		2,012		685		5,407
Total:
Construction, land development and other land loans		1,384		1,386		58		983
Agriculture and agriculture real estate (includes farmland)		256		311		—		194
1-4 family (includes home equity)		4,443		5,192		56		4,777
Commercial real estate (includes multi-family residential)		2,727		2,848		—		3,218
Commercial and industrial		4,198		5,142		571		9,098
Consumer and other		48		76		—		135
	$	13,056	$	14,955	$	685	$	18,405

Risk Grade and Category of Loan

The following table presents loans by risk grade and category of loan at September 30, 2019. Impaired loans include loans in risk grades 7, 8 and 9, as well as any PCI loan that has a specific reserve allocated to it.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity) (1)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Grade 1	$	—	$	12,021	$	—	$	—	$	54,518	$	34,366	$	100,905
Grade 2		1,556		3,400		12,430		21,476		20,448		64,354		123,664
Grade 3		1,596,753		639,697		2,623,058		3,032,835		1,049,208		214,519		9,156,070
Grade 4		156,900		69,282		58,596		520,024		264,851		23,175		1,092,828
Grade 5		3,233		3,726		6,001		42,720		49,423		4,759		109,862
Grade 6		5,407		850		2,406		18,179		6,029		1,627		34,498
Grade 7		390		285		17,061		14,179		15,806		39		47,760
Grade 8		—		—		—		—		16		—		16
Grade 9		—		—		—		—		—		—		—
PCI Loans		409		324		4,130		2,763		116		—		7,742
Total	$	1,764,648	$	729,585	$	2,723,682	$	3,652,176	$	1,460,415	$	342,839	$	10,673,345

(1) Includes $20.3 million of residential mortgage loans held for sale at September 30, 2019.

The following table presents loans by risk grade and category of loan at December 31, 2018. Impaired loans include loans in risk grades 7, 8 and 9, as well as any PCI loan that has a specific reserve allocated to it.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity) (1)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Grade 1	$	—	$	15,725	$	—	$	—	$	59,979	$	37,135	$	112,839
Grade 2		1,040		3,974		21,465		22,207		11,003		55,802		115,491
Grade 3		1,509,532		636,674		2,598,600		2,974,474		1,083,328		171,758		8,974,366
Grade 4		99,087		66,650		61,430		481,735		243,743		20,164		972,809
Grade 5		3,673		5,578		12,522		37,942		58,088		2,978		120,781
Grade 6		7,081		282		4,332		16,006		23,081		1,601		52,383
Grade 7		1,384		256		4,395		2,727		4,165		48		12,975
Grade 8		—		—		48		—		33		—		81
Grade 9		—		—		—		—		—		—		—
PCI Loans		492		362		4,117		3,466		151		—		8,588
Total	$	1,622,289	$	729,501	$	2,706,909	$	3,538,557	$	1,483,571	$	289,486	$	10,370,313

(1) Includes $29.4 million of residential mortgage loans held for sale at December 31, 2018.

Allowance for Credit Losses by Category of Loan

The following table details activity in the allowance for credit losses by category of loan for the three and nine months ended September 30, 2019 and 2018.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Construction, Land Development and Other Land Loans			Agriculture and Agriculture Real Estate (includes Farmland)			1-4 Family (includes Home Equity)			Commercial Real Estate (includes Multi-Family Residential)			Commercial and Industrial			Consumer and Other			Total
	(Dollars in thousands)
Allowance for credit losses:
Three Months Ended
Balance June 30, 2019	$	15,886		$	3,816		$	14,383		$	12,166		$	39,177		$	1,578		$	87,006
Provision for credit losses		(290	)		188			543			452			(763	)		970			1,100
Charge-offs		—			(294	)		—			—			(419	)		(1,024	)		(1,737	)
Recoveries		6			16			9			1			502			158			692
Net charge-offs		6			(278	)		9			1			83			(866	)		(1,045	)
Balance September 30, 2019	$	15,602		$	3,726		$	14,935		$	12,619		$	38,497		$	1,682		$	87,061
Nine Months Ended
Balance December 31, 2018	$	15,582		$	3,693		$	14,135		$	11,220		$	40,223		$	1,587		$	86,440
Provision for credit losses		21			(921	)		799			1,396			(918	)		2,223			2,600
Charge-offs		(63	)		(358	)		(22	)		—			(2,501	)		(2,821	)		(5,765	)
Recoveries		62			1,312			23			3			1,693			693			3,786
Net charge-offs		(1	)		954			1			3			(808	)		(2,128	)		(1,979	)
Balance September 30, 2019	$	15,602		$	3,726		$	14,935		$	12,619		$	38,497		$	1,682		$	87,061
Allowance for credit losses:
Three Months Ended
Balance June 30, 2018	$	14,450		$	3,756		$	13,353		$	10,616		$	41,454		$	1,335		$	84,964
Provision for credit losses		519			(158	)		593			411			(17	)		1,002			2,350
Charge-offs		—			(25	)		(17	)		—			(742	)		(978	)		(1,762	)
Recoveries		1			138			6			10			85			204			444
Net charge-offs		1			113			(11	)		10			(657	)		(774	)		(1,318	)
Balance September 30, 2018	$	14,970		$	3,711		$	13,935		$	11,037		$	40,780		$	1,563		$	85,996
Nine Months Ended
Balance December 31, 2017	$	14,815		$	3,772		$	14,490		$	10,628		$	38,810		$	1,526		$	84,041
Provision for credit losses		276			(280	)		(173	)		1,887			11,690			1,950			15,350
Charge-offs		(130	)		(25	)		(403	)		(1,489	)		(10,112	)		(2,889	)		(15,048	)
Recoveries		9			244			21			11			392			976			1,653
Net charge-offs		(121	)		219			(382	)		(1,478	)		(9,720	)		(1,913	)		(13,395	)
Balance September 30, 2018	$	14,970		$	3,711		$	13,935		$	11,037		$	40,780		$	1,563		$	85,996

The following table details the amount of the allowance for credit losses allocated to each category of loan as of September 30, 2019, December 31, 2018 and September 30, 2018, on the basis of the impairment methodology used to determine the allowance for credit losses.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Allowance for credit losses related to:
September 30, 2019
Individually evaluated for impairment	$	58	$	14	$	1,067	$	283	$	174	$	—	$	1,596
Collectively evaluated for impairment		15,544		3,712		13,868		12,336		38,323		1,682		85,465
PCI loans		—		—		—		—		—		—		—
Total allowance for credit losses	$	15,602	$	3,726	$	14,935	$	12,619	$	38,497	$	1,682	$	87,061
December 31, 2018
Individually evaluated for impairment	$	58	$	—	$	56	$	—	$	571	$	—	$	685
Collectively evaluated for impairment		15,524		3,693		14,079		11,220		39,652		1,587		85,755
PCI loans		—		—		—		—		—		—		—
Total allowance for credit losses	$	15,582	$	3,693	$	14,135	$	11,220	$	40,223	$	1,587	$	86,440
September 30, 2018
Individually evaluated for impairment	$	—	$	—	$	53	$	10	$	500	$	—	$	563
Collectively evaluated for impairment		14,970		3,711		13,882		11,027		40,280		1,563		85,433
PCI loans		—		—		—		—		—		—		—
Total allowance for credit losses	$	14,970	$	3,711	$	13,935	$	11,037	$	40,780	$	1,563	$	85,996

The following table details the recorded investment in loans by category of loan on the basis of the impairment methodology used to determine the allowance for credit losses as of September 30, 2019, December 31, 2018 and September 30, 2018, excluding $20.3 million, $29.4 million and $28.0 million, respectively, of residential mortgage loans held for sale.

	Construction, Land Development and Other Land Loans		Agriculture and Agriculture Real Estate (includes Farmland)		1-4 Family (includes Home Equity)		Commercial Real Estate (includes Multi-Family Residential)		Commercial and Industrial		Consumer and Other		Total
	(Dollars in thousands)
Recorded investment in loans:
September 30, 2019
Individually evaluated for impairment	$	390	$	285	$	17,061	$	14,179	$	15,822	$	39	$	47,776
Collectively evaluated for impairment		1,763,849		728,976		2,682,207		3,635,234		1,444,477		342,800		10,597,543
PCI loans		409		324		4,130		2,763		116		—		7,742
Total loans evaluated for impairment	$	1,764,648	$	729,585	$	2,703,398	$	3,652,176	$	1,460,415	$	342,839	$	10,653,061
December 31, 2018
Individually evaluated for impairment	$	1,384	$	256	$	4,443	$	2,727	$	4,198	$	48	$	13,056
Collectively evaluated for impairment		1,620,413		728,883		2,668,982		3,532,364		1,479,222		289,438		10,319,302
PCI loans		492		362		4,117		3,466		151		—		8,588
Total loans evaluated for impairment	$	1,622,289	$	729,501	$	2,677,542	$	3,538,557	$	1,483,571	$	289,486	$	10,340,946
September 30, 2018
Individually evaluated for impairment	$	869	$	262	$	4,427	$	2,256	$	5,506	$	68	$	13,388
Collectively evaluated for impairment		1,558,632		705,113		2,677,237		3,500,651		1,519,196		281,044		10,241,873
PCI loans		641		375		4,076		4,316		152		—		9,560
Total loans evaluated for impairment	$	1,560,142	$	705,750	$	2,685,740	$	3,507,223	$	1,524,854	$	281,112	$	10,264,821

Troubled Debt Restructurings

The following table presents information regarding the recorded investment of loans modified as troubled debt restructurings during the nine months ended September 30, 2019 and 2018.

	Nine Months Ended
	September 30,
	2019						2018
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt Restructurings
Construction, land development and other land loans		—	$	—	$	—		—	$	—	$	—
Agriculture and agriculture real estate (includes farmland)		—		—		—		—		—		—
1-4 Family (includes home equity)		—		—		—		—		—		—
Commercial real estate (includes multi-family residential)		—		—		—		—		—		—
Commercial and industrial		2		14,993		14,188		2		198		72
Consumer and other		—		—		—		—		—		—
Total		2	$	14,993	$	14,188		2	$	198	$	72

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Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
ASSETS
Cash and due from banks	$ 420,359	$ 410,575
Federal funds sold	521	552
Total cash and cash equivalents	420,880	411,127
Available for sale securities, at fair value	298,368	84,155
Held to maturity securities, at cost (fair value of $8,217,601 and $9,081,236, respectively)	8,196,838	9,324,811
Total securities	8,495,206	9,408,966
Loans held for sale	20,284	29,367
Loans held for investment	10,653,061	10,340,946
Total loans	10,673,345	10,370,313
Less: allowance for credit losses	(87,061)	(86,440)
Loans, net	10,586,284	10,283,873
Accrued interest receivable	53,789	56,532
Goodwill	1,900,845	1,900,845
Core deposit intangibles, net	29,051	32,883
Bank premises and equipment, net	263,703	257,046
Other real estate owned	815	1,805
Bank owned life insurance (BOLI)	262,381	260,335
Federal Home Loan Bank of Dallas stock	39,542	55,959
Other assets	40,321	24,031
TOTAL ASSETS	22,092,817	22,693,402
Deposits:
Noninterest-bearing	5,784,002	5,666,115
Interest-bearing	11,145,918	11,590,443
Total deposits	16,929,920	17,256,558
Other borrowings	600,795	1,031,126
Securities sold under repurchase agreements	311,404	284,720
Accrued interest payable	5,438	4,201
Other liabilities	118,454	63,973
Total liabilities	17,966,011	18,640,578
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred stock, $1 par value; 20,000,000 shares authorized; none issued or outstanding
Common stock, $1 par value; 200,000,000 shares authorized; 68,396,778 shares issued and outstanding at September 30, 2019; 69,846,825 shares issued and outstanding at December 31, 2018	68,397	69,847
Capital surplus	1,959,960	2,045,351
Retained earnings	2,098,411	1,937,316
Accumulated other comprehensive income —net unrealized gain on available for sale securities, net of tax expense of $10 and $82, respectively	38	310
Total shareholders’ equity	4,126,806	4,052,824
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 22,092,817	$ 22,693,402

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Capital Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
BALANCE at Dec. 31, 2017	$ 3,824,154	$ 69,491	$ 2,035,219	$ 1,719,557	$ (113)
BALANCE (in shares) at Dec. 31, 2017		69,490,910
Net income	238,481			238,481
Other comprehensive income (loss)	576				576
Common stock issued in connection with the issuance of restricted stock awards, net		$ 347	(347)
Common stock issued in connection with the issuance of restricted stock awards, net (in shares)		347,076
Stock based compensation expense	7,906		7,906
Cash dividends declared	(75,420)			(75,420)
BALANCE at Sep. 30, 2018	3,995,697	$ 69,838	2,042,778	1,882,618	463
BALANCE (in shares) at Sep. 30, 2018		69,837,986
BALANCE at Jun. 30, 2018	3,935,452	$ 69,838	2,040,032	1,825,237	345
BALANCE (in shares) at Jun. 30, 2018		69,838,186
Net income	82,523			82,523
Other comprehensive income (loss)	118				118
Common stock issued in connection with the issuance of restricted stock awards, net (in shares)		(200)
Stock based compensation expense	2,746		2,746
Cash dividends declared	(25,142)			(25,142)
BALANCE at Sep. 30, 2018	3,995,697	$ 69,838	2,042,778	1,882,618	463
BALANCE (in shares) at Sep. 30, 2018		69,837,986
BALANCE at Dec. 31, 2018	4,052,824	$ 69,847	2,045,351	1,937,316	310
BALANCE (in shares) at Dec. 31, 2018		69,846,825
Net income	246,418			246,418
Other comprehensive income (loss)	(272)				(272)
Common stock issued in connection with the issuance of restricted stock awards, net		$ 23	(23)
Common stock issued in connection with the issuance of restricted stock awards, net (in shares)		23,184
Common stock repurchase	(94,484)	$ (1,473)	(93,011)
Common stock repurchase (in shares)		(1,473,231)
Stock based compensation expense	7,643		7,643
Cash dividends declared	(85,323)			(85,323)
BALANCE at Sep. 30, 2019	4,126,806	$ 68,397	1,959,960	2,098,411	38
BALANCE (in shares) at Sep. 30, 2019		68,396,778
BALANCE at Jun. 30, 2019	4,127,895	$ 69,261	2,012,665	2,044,696	1,273
BALANCE (in shares) at Jun. 30, 2019		69,261,431
Net income	81,758			81,758
Other comprehensive income (loss)	(1,235)				(1,235)
Common stock issued in connection with the issuance of restricted stock awards, net		$ 10	(10)
Common stock issued in connection with the issuance of restricted stock awards, net (in shares)		9,750
Common stock repurchase	(56,063)	$ (874)	(55,189)
Common stock repurchase (in shares)		(874,403)
Stock based compensation expense	2,494		2,494
Cash dividends declared	(28,043)			(28,043)
BALANCE at Sep. 30, 2019	$ 4,126,806	$ 68,397	$ 1,959,960	$ 2,098,411	$ 38
BALANCE (in shares) at Sep. 30, 2019		68,396,778

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Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

11. SUBSEQUENT EVENTS

Merger with LegacyTexas Financial Group, Inc.—On November 1, 2019, the Company completed the merger with LegacyTexas and its wholly-owned subsidiary LegacyTexas Bank headquartered in Plano, Texas. LegacyTexas Bank operated 42 locations in 19 North Texas cities in and around the Dallas-Fort Worth area.  As of September 30, 2019, LegacyTexas, on a consolidated basis, reported total assets of $10.5 billion, total gross loans of $9.1 billion and total deposits of $6.5 billion.  In connection with the merger, each outstanding share of LegacyTexas common stock, including restricted stock awards, performance share awards and options, all of which were deemed vested immediately prior to the merger, subject to certain limited exceptions, was converted into the right to receive 0.5280 of a share of Prosperity common stock, with cash payable in lieu of any fractional share, and $6.28 in cash, in each case without interest. Additional disclosures required by ASC 805 have been omitted from this report due to the close proximity of the merger with the issue date of the accompanying consolidated financial statements.

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Goodwill and Core Deposit Intangibles

9 Months Ended

Sep. 30, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Core Deposit Intangibles

7. GOODWILL AND CORE DEPOSIT INTANGIBLES

Changes in the carrying amount of the Company’s goodwill and core deposit intangibles for the nine months ended September 30, 2019 and the year ended December 31, 2018 were as follows: 

	Goodwill		Core Deposit Intangibles
	(Dollars in thousands)
Balance as of December 31, 2017	$	1,900,845	$	38,842
Less:
Amortization		—		(5,959	)
Balance as of December 31, 2018		1,900,845		32,883
Less:
Amortization		—		(3,832	)
Balance as of September 30, 2019	$	1,900,845	$	29,051

Goodwill is recorded as of the acquisition date of each entity. The Company may record subsequent adjustments to goodwill for amounts undeterminable at acquisition date, such as deferred taxes and real estate valuations, and therefore the goodwill amounts may change accordingly. The Company initially records the total premium paid on acquisitions as goodwill. After finalizing the valuation, core deposit intangibles are identified and reclassified from goodwill to core deposit intangibles on the balance sheet. This reclassification has no effect on total assets, liabilities, shareholders’ equity, net income or cash flows. Management performs an evaluation annually, and more frequently if a triggering event occurs, of whether any impairment of the goodwill and core deposit intangibles has occurred. If any such impairment is determined, a write-down is recorded. As of September 30, 2019, there was no impairment recorded on goodwill and core deposit intangibles.

The measurement period for the Company to determine the fair value of acquired identifiable assets and assumed liabilities will be at the end of the earlier of (1) twelve months from the date of acquisition or (2) as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the date of acquisition.

Core deposit intangibles are being amortized on a non-pro rata basis over their estimated lives, which the Company believes is between 10 and 15 years. Amortization expense related to intangible assets totaled $1.2 million and $1.5 million for the three months ended September 30, 2019 and 2018, respectively, and $3.8 million and $4.5 million for the nine months ended September 30, 2019 and 2018, respectively. The estimated aggregate future amortization expense for core deposit intangibles remaining as of September 30, 2019 is as follows (dollars in thousands):

Remaining 2019	$	1,219
2020		4,483
2021		4,022
2022		3,664
2023		3,350
Thereafter		12,313
Total	$	29,051

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New Accounting Standards

9 Months Ended

Sep. 30, 2019

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

New Accounting Standards

3. NEW ACCOUNTING STANDARDS

Accounting Standards Updates (“ASU”)

ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of current expected credit losses (“CECL”) is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Additionally, available for sale debt securities may realize value either through collection of contractual cash flows or through sale of the security at fair value. Therefore, the amendments limit the amount of the allowance for credit losses to the difference between amortized cost and fair value. ASU 2016-13 will be effective for the Company as of January 1, 2020. The Company’s implementation workgroup is comprised of individuals from various functional areas including credit, risk management, finance and information technology, among others, and meets periodically to discuss the latest developments and monitor implementation progress. During the third quarter of 2019, the Company had a third-party model validation completed and will continue running parallel processes during the fourth quarter of 2019. The Company continues to assess CECL disclosure requirements and developing appropriate internal controls around the CECL process. The Company continues to evaluate the potential impact of ASU 2016-13 on the Company’s financial statements. Based on the Company’s loan portfolio at September 30, 2019 and current expectation of future economic conditions, the allowance for credit losses as a percentage of total loans is expected to increase from 0.82% to between 1.00% and 1.10%. This estimate does not incorporate the anticipated impact of the merger with LegacyTexas Financial Group, Inc. (“LegacyTexas”), which was consummated on November 1, 2019. 

ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 requires that lessees recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. The requirements for lessors under ASU 2016-02 are largely unchanged from existing guidance, however certain necessary changes have been made to align with specific changes to lessee accounting and key aspects of the revenue recognition guidance (Topic 606).

The Company’s leases relate primarily to office space and banking centers. The Company identified and reviewed existing leases applicable to ASU 2016-02 and elected certain optional practical expedients: 1) not to reassess whether any expired or existing contracts are or contain leases, 2) not to reassess the lease classification for any expired or existing lease, 3) not to reassess initial direct cost for any existing leases and 4) not to separately identify lease and non-lease components. Additionally, the Company elected the short-term lease exemption for lease terms less than 12 months. The Company adopted ASU 2016-02 on January 1, 2019 using a modified retrospective transition approach without adjusting comparative periods. With the adoption of the new standard, the Company recognized right-of-use assets and lease liabilities of $17.3 million as of January 1, 2019. See Note 9 “Contractual Obligations and Off-Balance Sheet Items — Contractual Obligations — Leases” for additional information.

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Securities - Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($) Security	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) Segment Security	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($) Security
Schedule Of Held To Maturity Securities [Line Items]
Number of Investment Securities Segments | Segment			2
Other than Temporary Impairment Losses, Investments			$ 0
Securities in Unrealized Loss Positions Qualitative Disclosure Number of Positions Greater Than or Equal to One Year | Security	158		158		731
Gain (loss) on sale of securities	$ 0	$ 0	$ 0	$ (13)
Available for sale securities, at fair value	298,368		298,368		$ 84,155
Collateralized Securities [Member]
Schedule Of Held To Maturity Securities [Line Items]
Available for Sale Securities, Amortized Cost Basis	5,160,000		5,160,000		6,040,000
Available for sale securities, at fair value	$ 5,160,000		$ 5,160,000		$ 5,860,000
Securities Concentration Risk [Member] | Stockholders' Equity, Total [Member]
Schedule Of Held To Maturity Securities [Line Items]
Concentration Risk, Percentage			10.00%		10.00%

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Loans and Allowance for Credit Losses - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($) contract	Sep. 30, 2018 USD ($) contract	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Accounts Notes And Loans Receivable [Line Items]
Percentage of Loans Related to Single Industry on Loans	10.00%		10.00%
Percentage of real estate loans aggregating to company loan portfolio	76.10%
Loans and Leases Receivable, Related Parties	$ 1,728		$ 1,923	$ 2,694
Loans held for investment	$ 10,653,061	$ 10,264,821	$ 10,340,946
Financing Receivable Ratio of Nonperforming Loans to All Loans and Other Real Estate	0.48%		0.18%
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	$ 2,200	1,400
Loans and leases receivable, nonaccrual loans	50,000	$ 13,400
Financing Receivable, Allowance for Credit Losses	$ 87,100		$ 86,400
Allowance for Credit Losses as Percentage of Loans	0.82%		0.83%
Nonaccrual loans	$ 49,973		$ 13,147
Troubled debt restructurings, number of loans | contract	2	2
Financing receivable, number of loans with default | contract	0
Financing receivable, modifications, recorded investment	$ 14,200	$ 72
Troubled debt restructurings, recorded investment at date of restructure	$ 14,993	198
Loan to be Considered as Payment Default in Period	90 days
Troubled Debt Restructuring [Member]
Accounts Notes And Loans Receivable [Line Items]
Nonaccrual loans	$ 14,200	115
Residential Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for sale	20,300	$ 28,000	29,400
Nonperforming Financial Instruments [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans held for investment	$ 51,200		$ 19,000

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Contractual Obligations and Off-Balance Sheet Items - Contractual Obligations and Other Commitments (Details) - Federal Home Loan Bank Advance And Notes Payable [Member] $ in Thousands	Sep. 30, 2019 USD ($)
Contractual Obligations And Off Balance Sheet Items [Line Items]
1 year or less	$ 600,572
More than 1 year but less than 3 years	125
3 years or more but less than 5 years	125
5 years or more	37
Total	$ 600,859

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Goodwill and Core Deposit Intangibles - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Schedule Of Intangible Assets And Goodwill [Line Items]
Impairment recorded on goodwill and core deposit intangibles			$ 0
Amortization expense related to intangible assets	$ 1,248,000	$ 1,478,000	$ 3,832,000	$ 4,547,000	$ 5,959,000
Minimum [Member]
Schedule Of Intangible Assets And Goodwill [Line Items]
Finite-lived intangible assets, useful life			10 years
Maximum [Member]
Schedule Of Intangible Assets And Goodwill [Line Items]
Finite-lived intangible assets, useful life			15 years

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Fair Value

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value

6. FAIR VALUE

The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair values represent the estimated price that would be received from selling an asset or paid to transfer a liability, otherwise known as an “exit price.”  Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record other assets at fair value on a nonrecurring basis such as certain loans including residential mortgage loans held for sale, goodwill and other intangible assets and other real estate owned. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write downs of individual assets.  ASC Topic 820 “Fair Value Measurements and Disclosures” establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Fair Value Hierarchy

The Company groups financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

• Level 1—Quoted prices in active markets for identical assets or liabilities.

• Level 2—Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities) or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability.

The fair value disclosures below represent the Company’s estimates based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding current economic conditions, risk characteristics of the various instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in the above methodologies and assumptions could significantly affect the estimates.

The following tables present fair values for assets and liabilities measured at fair value on a recurring basis:

	As of  September 30, 2019
	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
Assets:
Available for sale securities:
States and political subdivisions	$	—	$	471	$	—	$	471
Collateralized mortgage obligations		—		241,726		—		241,726
Mortgage-backed securities		—		56,171		—		56,171
Total	$	—	$	298,368	$	—	$	298,368

	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
Assets:
Available for sale securities:
States and political subdivisions	$	—	$	1,166	$	—	$	1,166
Collateralized mortgage obligations		—		12,756		—		12,756
Mortgage-backed securities		—		70,233		—		70,233
Total	$	—	$	84,155	$	—	$	84,155

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These instruments include other real estate owned, repossessed assets, held to maturity debt securities, loans held for sale and impaired loans, which are included as loans held for investment.  For the three and nine months ended September 30, 2019, the Company had additions to other real estate owned of $59 thousand and $2.0 million, respectively, of which $59 thousand and $1.7 million, respectively, were outstanding as of September 30, 2019. For the three and nine months ended September 30, 2019, the Company had additions to impaired loans of $12.5 million and $42.9 million, respectively, of which $12.5 million and $40.4 million, respectively, were outstanding as of September 30, 2019. The remaining financial assets and liabilities measured at fair value on a non-recurring basis that were recorded in 2019 and remained outstanding at September 30, 2019 were not significant.

The following tables present carrying and fair value information of financial instruments as of the dates indicated:

	As of  September 30, 2019
	Carrying		Estimated Fair Value
	Amount		Level 1		Level 2		Level 3		Total
Assets	(Dollars in thousands)
Cash and due from banks	$	420,359	$	420,359	$	—	$	—	$	420,359
Federal funds sold		521		521		—		—		521
Held to maturity securities		8,196,838		—		8,217,601		—		8,217,601
Loans held for sale		20,284		—		20,284		—		20,284
Loans held for investment, net of allowance		10,566,000		—		—		10,498,468		10,498,468
Other real estate owned		815		—		815		—		815
Liabilities
Deposits:
Noninterest-bearing	$	5,784,002	$	—	$	5,784,002	$	—	$	5,784,002
Interest-bearing		11,145,918		—		11,142,770		—		11,142,770
Other borrowings		600,795		—		600,833		—		600,833
Securities sold under repurchase agreements		311,404		—		311,411		—		311,411

	As of December 31, 2018
	Carrying		Estimated Fair Value
	Amount		Level 1		Level 2		Level 3		Total
Assets	(Dollars in thousands)
Cash and due from banks	$	410,575	$	410,575	$	—	$	—	$	410,575
Federal funds sold		552		552		—		—		552
Held to maturity securities		9,324,811		—		9,081,236		—		9,081,236
Loans held for sale		29,367		—		29,367		—		29,367
Loans held for investment, net of allowance		10,254,506		—		—		10,144,556		10,144,556
Other real estate owned		1,805		—		1,805		—		1,805
Liabilities
Deposits:
Noninterest-bearing	$	5,666,115	$	—	$	5,666,115	$	—	$	5,666,115
Interest-bearing		11,590,443		—		11,564,521		—		11,564,521
Other borrowings		1,031,126		—		1,031,161		—		1,031,161
Securities sold under repurchase agreements		284,720		—		284,685		—		284,685

The following is a description of the fair value estimates, methods and assumptions that are used by the Company in estimating the fair values of financial instruments.

Loans held for sale— Loans held for sale are carried at the lower of cost or estimated fair value. Fair value for consumer mortgages held for sale is based on commitments on hand from investors or prevailing market prices. As such, the Company classifies loans held for sale subjected to nonrecurring fair value adjustments as Level 2.

Loans held for investment— The Company does not record loans at fair value on a recurring basis. As such, valuation techniques discussed herein for loans are primarily for estimating fair value disclosures. The Company refined the calculation to estimate fair value for loans held for investment to be in accordance with ASU 2016-01. The refined discounted cash flow calculation to determine fair value considers internal and market-based information such as prepayment risk, cost of funds and liquidity.

From time to time, the Company records nonrecurring fair value adjustments to impaired loans to reflect (1) partial write downs that are based on the observable market price or current appraised value of the collateral, or (2) the full charge-off of the loan carrying value. Where appraisals are not available, estimated cash flows are discounted using a rate commensurate with the credit risk associated with those cash flows. Assumptions regarding credit risk, cash flows and discount rates are judgmentally determined using available market information and specific borrower information. The Company classifies the estimated fair value of loans held for investment as Level 3.

Other real estate owned— Other real estate owned is primarily foreclosed properties securing residential loans and commercial real estate. Foreclosed assets are adjusted to fair value less estimated costs to sell upon transfer of the loans to other real estate owned. Subsequently, these assets are carried at the lower of carrying value or fair value less estimated costs to sell. Other real estate carried at fair value based on an observable market price or a current appraised value is classified by the Company as Level 2. When management determines that the fair value of other real estate requires additional adjustments, either as a result of a non-current appraisal or when there is no observable market price, the Company classifies the other real estate as Level 3.

The fair value estimates presented herein are based on pertinent information available to management at September 30, 2019. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

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Income Per Common Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Income Per Common Share

2. INCOME PER COMMON SHARE

The following table illustrates the computation of basic and diluted earnings per share:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
	Amount		Per Share Amount		Amount		Per Share Amount		Amount		Per Share Amount		Amount		Per Share Amount
	(Amounts in thousands, except per share data)
Net income	$	81,758			$	82,523			$	246,418			$	238,481
Basic:
Weighted average shares outstanding		68,738	$	1.19		69,838	$	1.18		69,463	$	3.55		69,815	$	3.42
Diluted:
Weighted average shares outstanding		68,738	$	1.19		69,838	$	1.18		69,463	$	3.55		69,815	$	3.42

As of September 30, 2019, all stock options have been exercised and there are no options outstanding. There were no stock options exercisable during the three and nine months ended September 30, 2019 or 2018 that would have had an anti-dilutive effect on the above computation.

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Other Comprehensive Income

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Other Comprehensive Income

10. OTHER COMPREHENSIVE INCOME

The tax effects allocated to each component of other comprehensive income were as follows:

	Three Months Ended September 30,
	2019								2018
	Before Tax Amount			Tax Effect		Net of Tax Amount			Before Tax Amount		Tax Effect			Net of Tax Amount
	(Dollars in thousands)
Other comprehensive (loss) income:
Securities available for sale:
Change in unrealized gain during period	$	(1,563	)	$	328	$	(1,235	)	$	149	$	(31	)	$	118
Total securities available for sale		(1,563	)		328		(1,235	)		149		(31	)		118
Total other comprehensive (loss) income	$	(1,563	)	$	328	$	(1,235	)	$	149	$	(31	)	$	118

	Nine Months Ended September 30,
	2019								2018
	Before Tax Amount			Tax Effect		Net of Tax Amount			Before Tax Amount		Tax Effect			Net of Tax Amount
	(Dollars in thousands)
Other comprehensive (loss) income:
Securities available for sale:
Change in unrealized gain during period	$	(344	)	$	72	$	(272	)	$	729	$	(153	)	$	576
Total securities available for sale		(344	)		72		(272	)		729		(153	)		576
Total other comprehensive (loss) income	$	(344	)	$	72	$	(272	)	$	729	$	(153	)	$	576

Activity in accumulated other comprehensive income associated with securities available for sale, net of tax, was as follows:

	Securities Available for Sale			Accumulated Other Comprehensive Income
	(Dollars in thousands)
Balance at December 31, 2018	$	310		$	310
Other comprehensive loss		(272	)		(272	)
Balance at September 30, 2019	$	38		$	38
Balance at December 31, 2017	$	(113	)	$	(113	)
Other comprehensive income		576			576
Balance at September 30, 2018	$	463		$	463

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Securities - Securities in Continuous Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Available for Sale, Estimated Fair Value, Less than 12 Months	$ 219,547	$ 50,962
Available for Sale, Unrealized Losses, Less than 12 Months	(818)	(197)
Available for Sale, Estimated Fair Value, 12 Months or More	82	4,187
Available for Sale, Unrealized Losses, 12 Months or More	(2)	(40)
Available for Sale, Estimated Fair Value, Total	219,629	55,149
Available for Sale, Unrealized Losses, Total	(820)	(237)
Held to Maturity, Estimated Fair Value, Less than 12 Months	538,595	1,113,216
Held to Maturity, Unrealized Losses, Less than 12 Months	(1,853)	(8,805)
Held to Maturity, Estimated Fair Value, 12 Months or More	3,564,931	6,937,459
Held to Maturity, Unrealized Losses, 12 Months or More	(34,650)	(244,009)
Held to Maturity, Estimated Fair Value, Total	4,103,526	8,050,675
Held to Maturity, Unrealized Losses, Total	(36,503)	(252,814)
Collateralized Mortgage Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for Sale, Estimated Fair Value, Less than 12 Months	201,708	12
Available for Sale, Unrealized Losses, Less than 12 Months	(419)
Available for Sale, Estimated Fair Value, 12 Months or More	78	2,096
Available for Sale, Unrealized Losses, 12 Months or More	(2)	(37)
Available for Sale, Estimated Fair Value, Total	201,786	2,108
Available for Sale, Unrealized Losses, Total	(421)	(37)
Held to Maturity, Estimated Fair Value, 12 Months or More		292
Held to Maturity, Unrealized Losses, 12 Months or More		(2)
Held to Maturity, Estimated Fair Value, Total		292
Held to Maturity, Unrealized Losses, Total		(2)
Collateralized Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for Sale, Estimated Fair Value, Less than 12 Months	17,839	50,950
Available for Sale, Unrealized Losses, Less than 12 Months	(399)	(197)
Available for Sale, Estimated Fair Value, 12 Months or More	4	2,091
Available for Sale, Unrealized Losses, 12 Months or More		(3)
Available for Sale, Estimated Fair Value, Total	17,843	53,041
Available for Sale, Unrealized Losses, Total	(399)	(200)
Held to Maturity, Estimated Fair Value, Less than 12 Months	506,878	1,003,089
Held to Maturity, Unrealized Losses, Less than 12 Months	(1,794)	(8,401)
Held to Maturity, Estimated Fair Value, 12 Months or More	3,560,213	6,873,948
Held to Maturity, Unrealized Losses, 12 Months or More	(34,641)	(243,534)
Held to Maturity, Estimated Fair Value, Total	4,067,091	7,877,037
Held to Maturity, Unrealized Losses, Total	(36,435)	(251,935)
US States and Political Subdivisions [Member]
Schedule Of Available For Sale Securities [Line Items]
Held to Maturity, Estimated Fair Value, Less than 12 Months	31,717	89,407
Held to Maturity, Unrealized Losses, Less than 12 Months	(59)	(328)
Held to Maturity, Estimated Fair Value, 12 Months or More	4,718	58,262
Held to Maturity, Unrealized Losses, 12 Months or More	(9)	(449)
Held to Maturity, Estimated Fair Value, Total	36,435	147,669
Held to Maturity, Unrealized Losses, Total	$ (68)	(777)
U.S. Treasury Securities and Obligations of U.S. Government Agencies [Member]
Schedule Of Available For Sale Securities [Line Items]
Held to Maturity, Estimated Fair Value, Less than 12 Months		20,720
Held to Maturity, Unrealized Losses, Less than 12 Months		(76)
Held to Maturity, Estimated Fair Value, 12 Months or More		4,957
Held to Maturity, Unrealized Losses, 12 Months or More		(24)
Held to Maturity, Estimated Fair Value, Total		25,677
Held to Maturity, Unrealized Losses, Total		$ (100)

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Loans and Allowance for Credit Losses - Related Party Loans (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Receivables [Abstract]
Beginning balance on January 1	$ 1,923	$ 2,694
New loans	1	5
Repayments	(196)	(776)
Ending balance	$ 1,728	$ 1,923

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Contractual Obligations and Off-Balance Sheet Items - Additional Information (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Contractual Obligations And Off Balance Sheet Items [Line Items]
Operating lease, right-of-use asset	$ 17,000	$ 17,000
Operating lease, liability	$ 17,000	$ 17,000
Operating lease, weighted average remaining lease term	5 years 8 months 12 days	5 years 8 months 12 days
Operating lease weighted average discount rate, percent	3.20%	3.20%
Operating lease, payments	$ 1,400	$ 4,200
ROU assets in exchange for lease liabilities		$ 2,400
Minimum [Member]
Contractual Obligations And Off Balance Sheet Items [Line Items]
Lessee operating lease remaining lease term		1 year
Maximum [Member]
Contractual Obligations And Off Balance Sheet Items [Line Items]
Lessee operating lease remaining lease term		13 years
Federal Home Loan Bank Advance And Notes Payable [Member]
Contractual Obligations And Off Balance Sheet Items [Line Items]
Interest payable	$ 64	$ 64

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Goodwill and Core Deposit Intangibles - Goodwill and Core Deposit Intangibles (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill, Beginning balance			$ 1,900,845	$ 1,900,845	$ 1,900,845
Goodwill, Ending balance	$ 1,900,845		1,900,845		1,900,845
Core Deposit Intangibles, Beginning balance			32,883	38,842	38,842
Core Deposit Intangibles, Amortization	(1,248)	$ (1,478)	(3,832)	$ (4,547)	(5,959)
Core Deposit Intangibles, Ending balance	$ 29,051		$ 29,051		$ 32,883

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Loans and Allowance for Credit Losses - Summary of Changes in Accretable Yields of Acquired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
PCI Loans [Member]
Changes In Accretable Yield for PCI And Non PCI Loans [Line Items]
Balance at beginning of period	$ 904	$ 3,969	$ 1,534	$ 8,121
Reclassifications from nonaccretable	26	181	62	486
Accretion	(277)	(2,170)	(943)	(6,627)
Balance at September 30,	653	1,980	653	1,980
Non PCI Loans [Member]
Changes In Accretable Yield for PCI And Non PCI Loans [Line Items]
Balance at beginning of period	12,479	17,431	14,833	20,533
Accretion charge-offs		(20)		(30)
Accretion	(1,006)	(1,287)	(3,360)	(4,379)
Balance at September 30,	$ 11,473	$ 16,124	$ 11,473	$ 16,124

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Loans and Allowance for Credit Losses - Allowance for Credit Losses by Category of Loan (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Allowance for credit losses:
Allowance for credit losses, beginning balance	$ 87,006	$ 84,964	$ 86,440	$ 84,041
Provision for credit losses	1,100	2,350	2,600	15,350
Charge-offs	(1,737)	(1,762)	(5,765)	(15,048)
Recoveries	692	444	3,786	1,653
Net charge-offs	(1,045)	(1,318)	(1,979)	(13,395)
Allowance for credit losses, ending balance	87,061	85,996	87,061	85,996
Allowance for credit losses related to:
Allowance for credit losses, individually evaluated for impairment					$ 1,596	$ 685	$ 563
Allowance for credit losses, collectively evaluated for impairment					85,465	85,755	85,433
Total allowance for credit losses	87,061	84,964	87,061	85,996	87,061	86,440	85,996
Recorded investment in loans:
Loans, individually evaluated for impairment					47,776	13,056	13,388
Loans, collectively evaluated for impairment					10,597,543	10,319,302	10,241,873
PCI loans					7,742	8,588	9,560
Total loans evaluated for impairment					10,653,061	10,340,946	10,264,821
Agriculture and Agriculture Real Estate (Includes Farmland) [Member]
Allowance for credit losses:
Allowance for credit losses, beginning balance	3,816	3,756	3,693	3,772
Provision for credit losses	188	(158)	(921)	(280)
Charge-offs	(294)	(25)	(358)	(25)
Recoveries	16	138	1,312	244
Net charge-offs	(278)	113	954	219
Allowance for credit losses, ending balance	3,726	3,711	3,726	3,711
Allowance for credit losses related to:
Allowance for credit losses, individually evaluated for impairment					14
Allowance for credit losses, collectively evaluated for impairment					3,712	3,693	3,711
Total allowance for credit losses	3,816	3,756	3,726	3,711	3,726	3,693	3,711
Recorded investment in loans:
Loans, individually evaluated for impairment					285	256	262
Loans, collectively evaluated for impairment					728,976	728,883	705,113
PCI loans					324	362	375
Total loans evaluated for impairment					729,585	729,501	705,750
Real Estate [Member] | Construction, Land Development and Other Land Loans [Member]
Allowance for credit losses:
Allowance for credit losses, beginning balance	15,886	14,450	15,582	14,815
Provision for credit losses	(290)	519	21	276
Charge-offs			(63)	(130)
Recoveries	6	1	62	9
Net charge-offs	6	1	(1)	(121)
Allowance for credit losses, ending balance	15,602	14,970	15,602	14,970
Allowance for credit losses related to:
Allowance for credit losses, individually evaluated for impairment					58	58
Allowance for credit losses, collectively evaluated for impairment					15,544	15,524	14,970
Total allowance for credit losses	15,886	14,450	15,602	14,970	15,602	15,582	14,970
Recorded investment in loans:
Loans, individually evaluated for impairment					390	1,384	869
Loans, collectively evaluated for impairment					1,763,849	1,620,413	1,558,632
PCI loans					409	492	641
Total loans evaluated for impairment					1,764,648	1,622,289	1,560,142
Real Estate [Member] | 1-4 Family Residential (Includes Home Equity) [Member]
Allowance for credit losses:
Allowance for credit losses, beginning balance	14,383	13,353	14,135	14,490
Provision for credit losses	543	593	799	(173)
Charge-offs		(17)	(22)	(403)
Recoveries	9	6	23	21
Net charge-offs	9	(11)	1	(382)
Allowance for credit losses, ending balance	14,935	13,935	14,935	13,935
Allowance for credit losses related to:
Allowance for credit losses, individually evaluated for impairment					1,067	56	53
Allowance for credit losses, collectively evaluated for impairment					13,868	14,079	13,882
Total allowance for credit losses	14,383	13,353	14,935	13,935	14,935	14,135	13,935
Recorded investment in loans:
Loans, individually evaluated for impairment					17,061	4,443	4,427
Loans, collectively evaluated for impairment					2,682,207	2,668,982	2,677,237
PCI loans					4,130	4,117	4,076
Total loans evaluated for impairment					2,703,398	2,677,542	2,685,740
Real Estate [Member] | Commercial Real Estate (Includes Multi-Family Residential) [Member]
Allowance for credit losses:
Allowance for credit losses, beginning balance	12,166	10,616	11,220	10,628
Provision for credit losses	452	411	1,396	1,887
Charge-offs				(1,489)
Recoveries	1	10	3	11
Net charge-offs	1	10	3	(1,478)
Allowance for credit losses, ending balance	12,619	11,037	12,619	11,037
Allowance for credit losses related to:
Allowance for credit losses, individually evaluated for impairment					283		10
Allowance for credit losses, collectively evaluated for impairment					12,336	11,220	11,027
Total allowance for credit losses	12,166	10,616	12,619	11,037	12,619	11,220	11,037
Recorded investment in loans:
Loans, individually evaluated for impairment					14,179	2,727	2,256
Loans, collectively evaluated for impairment					3,635,234	3,532,364	3,500,651
PCI loans					2,763	3,466	4,316
Total loans evaluated for impairment					3,652,176	3,538,557	3,507,223
Commercial and Industrial [Member]
Allowance for credit losses:
Allowance for credit losses, beginning balance	39,177	41,454	40,223	38,810
Provision for credit losses	(763)	(17)	(918)	11,690
Charge-offs	(419)	(742)	(2,501)	(10,112)
Recoveries	502	85	1,693	392
Net charge-offs	83	(657)	(808)	(9,720)
Allowance for credit losses, ending balance	38,497	40,780	38,497	40,780
Allowance for credit losses related to:
Allowance for credit losses, individually evaluated for impairment					174	571	500
Allowance for credit losses, collectively evaluated for impairment					38,323	39,652	40,280
Total allowance for credit losses	39,177	41,454	38,497	40,780	38,497	40,223	40,780
Recorded investment in loans:
Loans, individually evaluated for impairment					15,822	4,198	5,506
Loans, collectively evaluated for impairment					1,444,477	1,479,222	1,519,196
PCI loans					116	151	152
Total loans evaluated for impairment					1,460,415	1,483,571	1,524,854
Consumer and Other [Member]
Allowance for credit losses:
Allowance for credit losses, beginning balance	1,578	1,335	1,587	1,526
Provision for credit losses	970	1,002	2,223	1,950
Charge-offs	(1,024)	(978)	(2,821)	(2,889)
Recoveries	158	204	693	976
Net charge-offs	(866)	(774)	(2,128)	(1,913)
Allowance for credit losses, ending balance	1,682	1,563	1,682	1,563
Allowance for credit losses related to:
Allowance for credit losses, collectively evaluated for impairment					1,682	1,587	1,563
Total allowance for credit losses	$ 1,578	$ 1,335	$ 1,682	$ 1,563	1,682	1,587	1,563
Recorded investment in loans:
Loans, individually evaluated for impairment					39	48	68
Loans, collectively evaluated for impairment					342,800	289,438	281,044
Total loans evaluated for impairment					$ 342,839	$ 289,486	$ 281,112

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Contractual Obligations and Off-Balance Sheet Items - Summary of Commitments Associated with Outstanding Standby Letters of Credit and Commitments to Extend Credit (Details) - Guarantee Obligations [Member] $ in Thousands	Sep. 30, 2019 USD ($)
Contractual Obligations And Off Balance Sheet Items [Line Items]
1 year or less	$ 1,232,016
More than 1 year but less than 3 years	363,241
3 years or more but less than 5 years	104,363
5 years or more	1,050,959
Total	2,750,579
Standby Letters of Credit [Member]
Contractual Obligations And Off Balance Sheet Items [Line Items]
1 year or less	62,393
More than 1 year but less than 3 years	5,663
3 years or more but less than 5 years	1,932
5 years or more	0
Total	69,988
Commitments to Extend Credit [Member]
Contractual Obligations And Off Balance Sheet Items [Line Items]
1 year or less	1,169,623
More than 1 year but less than 3 years	357,578
3 years or more but less than 5 years	102,431
5 years or more	1,050,959
Total	$ 2,680,591

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Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Held to maturity securities, fair value	$ 8,217,601	$ 9,081,236
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	68,396,778	69,846,825
Common stock, shares outstanding (in shares)	68,396,778	69,846,825
Accumulated other comprehensive income (loss)—net unrealized gain (loss) on available for sale securities, tax expense (benefit)	$ 10	$ 82

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Retained Earnings [Member]
Cash dividend declared, per share (in dollars per share)	$ 0.41	$ 0.36	$ 1.23	$ 1.08

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Contractual Obligations and Off-Balance Sheet Items (Tables)

9 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Schedule of Contractual Obligations and Other Commitments

The Company’s future cash payments associated with its contractual obligations pursuant to its Federal Home Loan Bank (“FHLB”) advances and notes payable as of September 30, 2019 are summarized below. 

	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)
Federal Home Loan Bank advances and notes payable	$	600,572	$	125	$	125	$	37	$	600,859

Future Undiscounted Cash Payments Associated with its Operating Leases

The Company’s future undiscounted cash payments associated with its operating leases as of September 30, 2019 are summarized below (dollars in thousands).

Remaining 2019	$	1,282
2020		4,607
2021		3,588
2022		3,111
2023		2,550
2024		1,641
Thereafter		4,426
Total undiscounted lease payments	$	21,205

Summary of Non-Cancelable Future Operating Lease Commitments

The following table presents a summary of non-cancelable future operating lease commitments as of December 31, 2018 (dollars in thousands):

2019	$	4,897
2020		4,088
2021		3,013
2022		2,319
2023		2,025
Thereafter		3,597
Total non-cancelable lease payments	$	19,939

Summary of Commitments Associated with Outstanding Standby Letters of Credit and Commitments to Extend Credit

The Company’s commitments associated with outstanding standby letters of credit and commitments to extend credit expiring by period as of September 30, 2019 are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements.

	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)
Standby letters of credit	$	62,393	$	5,663	$	1,932	$	—	$	69,988
Commitments to extend credit		1,169,623		357,578		102,431		1,050,959		2,680,591
Total	$	1,232,016	$	363,241	$	104,363	$	1,050,959	$	2,750,579

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Securities (Tables)

9 Months Ended

Sep. 30, 2019

Investments Debt And Equity Securities [Abstract]

Schedule of Amortized Cost and Fair Value of Investment Securities

The amortized cost and fair value of investment securities were as follows:

	September 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
States and political subdivisions	$	470	$	1	$	—		$	471
Collateralized mortgage obligations		242,013		134		(421	)		241,726
Mortgage-backed securities		55,836		734		(399	)		56,171
Total	$	298,319	$	869	$	(820	)	$	298,368
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	13,903	$	64	$	—		$	13,967
States and political subdivisions		189,000		6,398		(68	)		195,330
Collateralized mortgage obligations		435		5		—			440
Mortgage-backed securities		7,993,500		50,799		(36,435	)		8,007,864
Total	$	8,196,838	$	57,266	$	(36,503	)	$	8,217,601

	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for Sale
States and political subdivisions	$	1,159	$	7	$	—		$	1,166
Collateralized mortgage obligations		12,724		69		(37	)		12,756
Mortgage-backed securities		69,880		553		(200	)		70,233
Total	$	83,763	$	629	$	(237	)	$	84,155
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	25,778	$	—	$	(100	)	$	25,678
States and political subdivisions		253,198		3,440		(777	)		255,861
Collateralized mortgage obligations		509		1		(2	)		508
Mortgage-backed securities		9,045,326		5,798		(251,935	)		8,799,189
Total	$	9,324,811	$	9,239	$	(252,814	)	$	9,081,236

Securities in Continuous Loss Position

Securities with unrealized losses, segregated by length of time, that have been in a continuous loss position were as follows:

	September 30, 2019
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in thousands)
Available for Sale
Collateralized mortgage obligations	$	201,708	$	(419	)	$	78	$	(2	)	$	201,786	$	(421	)
Mortgage-backed securities		17,839		(399	)		4		—			17,843		(399	)
Total	$	219,547	$	(818	)	$	82	$	(2	)	$	219,629	$	(820	)
Held to Maturity
States and political subdivisions	$	31,717	$	(59	)	$	4,718	$	(9	)	$	36,435	$	(68	)
Mortgage-backed securities		506,878		(1,794	)		3,560,213		(34,641	)		4,067,091		(36,435	)
Total	$	538,595	$	(1,853	)	$	3,564,931	$	(34,650	)	$	4,103,526	$	(36,503	)

	December 31, 2018
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(Dollars in thousands)
Available for Sale
Collateralized mortgage obligations	$	12	$	—		$	2,096	$	(37	)	$	2,108	$	(37	)
Mortgage-backed securities		50,950		(197	)		2,091		(3	)		53,041		(200	)
Total	$	50,962	$	(197	)	$	4,187	$	(40	)	$	55,149	$	(237	)
Held to Maturity
U.S. Treasury securities and obligations of U.S. Government agencies	$	20,720	$	(76	)	$	4,957	$	(24	)	$	25,677	$	(100	)
States and political subdivisions		89,407		(328	)		58,262		(449	)		147,669		(777	)
Collateralized mortgage obligations		—		—			292		(2	)		292		(2	)
Mortgage-backed securities		1,003,089		(8,401	)		6,873,948		(243,534	)		7,877,037		(251,935	)
Total	$	1,113,216	$	(8,805	)	$	6,937,459	$	(244,009	)	$	8,050,675	$	(252,814	)

Investment Securities by Contractual Maturity

The amortized cost and fair value of investment securities at September 30, 2019, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations at any time with or without call or prepayment penalties.

	Held to Maturity				Available for Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	37,313	$	37,430	$	470	$	471
Due after one year through five years		117,760		121,632		—		—
Due after five years through ten years		43,321		45,507		—		—
Due after ten years		4,509		4,728		—		—
Subtotal		202,903		209,297		470		471
Mortgage-backed securities and collateralized mortgage obligations		7,993,935		8,008,304		297,849		297,897
Total	$	8,196,838	$	8,217,601	$	298,319	$	298,368