About David Zalman
David Zalman, senior chairman and CEO of Prosperity Bancshares, discussed the bank's performance and outlook in several media appearances in 2024. In September, he stated that the bank had increased loans by about 12% for the year, though he attributed part of that growth to an acquisition. He said that rising interest rates had made borrowers more cautious, and he expected loan growth to be stronger in the second half of 2024 than the first half. In November, Zalman reflected on the bank's growth from about $40 million in assets and 10-15 employees to a $40 billion bank with about 4,000 people, describing his legacy as wanting to be known for working hard, being competitive, and helping people.
In earlier appearances, Zalman commented on broader banking and economic issues. In 2023, he characterized the stress on some banks as a "confidence issue" rather than a credit issue, and he advocated for temporary measures to address short-selling and deposit outflows. In 2020, he described the oil price war and the coronavirus pandemic as a "double whammy" for the bank, but noted that many of the bank's oil and gas customers were hedged. In 2018, he argued that mortgage rates of 5% or 6% would not kill the housing market, calling such rates a "normalization" after historically low levels.
Source: AI-verified profile updated from David Zalman's recent appearances.
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Transcript (10 segments)
I
Interviewer0:00
Prosperity shares a little bit lower today despite an earnings beat, taking a hit off of a couple of one-off charges which caught a lot of banks. By the way, the FDIC charges that I guess are traceable back to Silicon Valley Bank. That was a few cents off of earnings, wasn't it?
D
David Zalman0:15
Right. We posted earnings around $95 million. If you took out the FDIC assessment that we had to pay to cover the Silicon Valley Bank and the Signature Bank, that was about $19.9 million, so after tax it would have been about $11 million for the quarter.
I
Interviewer0:37
I'm very interested. You have like 285 full service banking operations, of which I guess 90% are in Texas. The Texas economy is doing pretty doggone good, isn't it? So your bank ought to be doing great.
D
David Zalman0:53
The economy is doing good. Obviously interest rates going up with the Fed raising the interest rates has impacted the loan volume a little bit. On the other hand, the economic activity and the job growth still remains extremely solid. So a very good economy, no question about it.
I
Interviewer1:14
So that was one of the things I wanted to point to. Is it loan volume, or is it either the number of loans or the amount of loans down a little bit, and you trace that back to rising interest rates and people being more cautious or not taking on as much debt?
D
David Zalman1:32
Well, if you look at our particular situation, we actually increased loans by about 12% for the year. But part of that increase came from an acquisition. If you took the acquisition part out, basically we would have had about a 4.9% increase in loans year-over-year. The third quarter we had a decrease, which was natural. But I think we told most people that we would hit about a single to mid-digit growth in loans for the year, and that's kind of what we ended up doing.
I
Interviewer2:08
I guess the number I was looking at was total loans down 1.2% quarter over quarter. Is that right?
D
David Zalman2:14
Yes, and that's in the third quarter. It goes back to what I was saying. I think that as interest rates increased, you did see borrowers be more hesitant, watch what they were borrowing. Even your commercial and industrial customers, where they had a lot of money in checking accounts instead of paying the higher rate, they elected a lot to pay these things down. But again, having said that, we still are looking for some growth next year. At the same time, for the first part of the year right now where we're at, we still see some growth. We think the growth will probably be more in the second half of the year than the first half.
I
Interviewer2:55
Prosperity has this rather muscular presence in Texas, as I mentioned a moment ago, also in Oklahoma. Where will the growth come from? Will you add stores in Texas, will you add them in Oklahoma, are you going to Louisiana? What?
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David Zalman3:10
You know, we really have with the 280-something stores that we have, I think that we have enough stores. We'll probably do two things. We do mergers and acquisitions, so that will always be part of our story. But the state of Texas is growing so much, Oklahoma, that just the growth from the people that are coming in, the job growth, and people having to have new homes and people starting new businesses, the infrastructure that you have to put in for all these people coming in, with the growth coming in it almost has a natural growth to itself because so many people are moving to the state.
