David Zalman, senior chairman and CEO, said he expects further loan growth this year: “During the fourth quarter of 2022, Prosperity continued to see growth in loans, which we expect will continue into 2023,” he said. “The growth comes from loans, as well as existing loans not paying off as fast as they did when rates were low and it was opportunistic for borrowers to repay or move the loans. Consumer spending remains strong, especially in the tourism, restaurant and hospitality sectors. Real estate sales and pricing have been affected by the increase in rates, but we expect that because of inventory levels and the population growth, the impact will be less in Texas and Oklahoma,” referring to the two states that are the company’s focus.
He predicted both states will outperform others for the foreseeable future, especially because of a robust influx of people moving in: “We believe that the economies in Texas and Oklahoma will outperform other states over the next several years as companies and individuals continue to move to the states because of lower tax rates and a business-friendly political environment. We expect that companies will need more infrastructure and buildings and consumers will need more housing and places to spend their money and both will need banks to finance the growth.”
Statistics affirm Zalman’s assessments. The Oklahoman newspaper reported this month that the state’s economy grew at the third-fastest rate in the US during the third quarter of last year, with oil and gas production boosting is gross domestic product. The US Bureau of Economic Analysis reported that the state’s real GDP had grown 5.5% at an annual rate from the second quarter to the third quarter, only behind Alaska (8.7%) and Texas (8.2%).
Meanwhile in Texas itself, the Lone Star State remains on a 14-month streak of record employment, the Texas Workforce Commission said in a report. Moreover, the state’s unemployment rate dropped to 3.9%, marking the first time it’s fallen below 4% since the COVID-19 pandemic that was marked by mass business closures.
Zalman voiced enthusiasm in alerting an upcoming merger: “We are excited about our pending merger with First Bancshares of Texas and Lone Star State Bancshares. The combined banks will add approximately $3 billion in assets and increase our market share in the West Texas areas of Lubbock, Midland and Odessa, as well as provide entry into new markets to us in Wichita Falls, Amarillo and the Horseshoe Bay, Marble Falls and Fredericksburg areas in Central Texas.”