Exhibit 19.1
PROSPERITY BANCSHARES, INC.
INSIDE INFORMATION AND INSIDER
TRADING POLICY
Revised Effective January 21, 2025
The purpose of this Inside Information and Insider Trading Policy (this “Policy”) is to establish the policy of Prosperity Bancshares, Inc. regarding the protection of material, nonpublic and other confidential information, the stringent ethical and legal prohibitions against insider trading and tipping, and the expected standards of conduct of directors, officers and employees (collectively, “Company Associates”) of Prosperity Bancshares, Inc. and/or any of its subsidiaries, such as Prosperity Bank (collectively referred to herein as the “Company”), with respect to these highly sensitive matters.
In the normal course of business, Company Associates may become aware of material information that pertains to the Company or to any other company with which the Company is negotiating or that does business with the Company and has not been released to the general public. This information is inside information. It does not belong to the individual Company Associates who may be aware of it.
It is a violation of federal securities law and this Policy:
This Policy applies to all employees of the Company and all members of the respective Boards of Directors of Prosperity Bancshares, Inc. and Prosperity Bank. The Company may also determine that other persons should be subject to this Policy, such as contractors or consultants who have access to inside information. This Policy also applies to family members, other members of a person’s household and entities controlled by a person covered by this Policy, as described below.
Several rigidly enforced, complex laws and regulations are intended to prevent misuse of inside information by regulating the manner in which securities may be bought and sold. Due to the complexity of these statutes and regulations, it is often difficult to determine whether any particular information qualifies as inside information. Accordingly, this Policy does not serve as a comprehensive statement of the law of insider trading. If you are uncertain as to whether you possess inside information, you should obtain the advice and consent of the Company’s Insider Trading Compliance Officer (“ITC Officer”) before disclosing the information to someone else or buying or selling a security to which the information relates.
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It can sometimes be difficult to know whether information would be considered “material.” It is not just a formulaic calculation based on a percentage of income or assets. Information is material if an investor would consider it important in making a decision to buy, hold or sell securities. The determination of whether information is material is almost always made after the fact, when the effect of that information on the market can be quantified. Although you may have information about the Company that you do not consider to be material, federal regulators and others may conclude (with the benefit of hindsight) that such information was material. Therefore, trading in the Company’s Securities (as defined below) when you possess nonpublic information about the Company can be risky. When doubt exists, the information should be presumed to be material. If you are unsure whether information of which you are aware is material or non-public, you should consult with the Company’s ITC Officer. Ultimately, however, the responsibility for adhering to this Policy and avoiding unlawful transactions rests with the individual Company Associate.
“Designated Individuals,” for purposes of this Policy, means (a) directors of Prosperity Bancshares, Inc., (b) directors of Prosperity Bank, (c) executive officers of Prosperity Bancshares, Inc., (d) executive officers of Prosperity Bank, (e) members of Prosperity Bank’s management committee, (f) individuals with regular access to the Company’s financial results or who are involved in the Company’s financial reporting activities, (g) any individual with knowledge of the reason for an event-specific blackout and (h) any other individual that may be designated by the Committee as such.
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The following guidelines are established to help Company Associates comply with this Policy and avoid the penalties for violations of the insider trading laws, as well as the resulting criticism and embarrassment to the Company Associate and the Company.
In the handling of information obtained in connection with the Company Associate's services to the Company the following requirements and restrictions apply:
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It is often difficult to determine whether (i) a piece of information is material, non-public information or (ii) material, non-public information exists of which you may be unaware. As a result, if there is any question, it is advisable for you to consult with the Company’s ITC Officer to determine whether material non-public information exists at the time a trade is being considered. Ultimately, however, the responsibility for adhering to this Policy and avoiding unlawful transactions rests with the individual Company Associate.
The following are questions Company Associates should ask themselves before entering into a transaction involving Company Securities:
Company Associates (other than Designated Individuals) are not subject to quarterly trading windows. However, from time to time, certain Company Associates may be advised that no trading in Company Securities will be permitted until further notice.
Margin Accounts and Loan Pledges – Committee Approval Required
Securities held in a margin account may be sold by the broker without the customer's consent if the customer fails to meet a margin call. Similarly, securities pledged as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or a foreclosure sale may occur at a time when the pledgor is aware of material, non-public information or otherwise is not permitted to trade in Company Securities, any such sale could be viewed as a violation of law and this Policy, depending on the facts and circumstances surrounding the sale. Company Associates are cautioned that holding Company Securities in a margin account or pledging Company Securities as collateral for a loan may risk a violation of this Policy and law. Any Designated Individual wishing to borrow against Company Securities in a margin account or pledge Company Securities as collateral for a loan must first submit the proposed transaction for approval by the Committee.
Standing and Limit Orders – May be a Violation
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Standing and limit orders create heightened risks for insider trading violations similar to the use of margin accounts. There is no control over the timing of purchases or sales that result from standing instructions to a broker, and as a result, the broker could execute a transaction when a Company Associate is in possession of material, non-public information. Company Associates are cautioned that placing standing and limit orders in respect of Company Securities may risk a violation of this Policy and law.
Short Sales - Prohibited
Short sales of Company Securities (i.e., the sale of a security that the seller does not own) may evidence an expectation on the part of the seller that the securities will decline in value, and therefore have the potential to signal to the market that the seller lacks confidence in the Company’s prospects. In addition, short sales may reduce a seller’s incentive to seek to improve the Company’s performance. For these reasons, Company Associates are prohibited from engaging in short sales of Company Securities. In addition, Section 16(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), prohibits officers and directors from engaging in short sales. (Short sales arising from certain types of hedging transactions are governed by the paragraph below captioned “Hedging Transactions.”)
Short-Term Trading - Prohibited
Short-term trading of Company Securities may be distracting to the person and may unduly focus the person on the Company’s short-term stock market performance instead of the Company’s long-term business objectives. For these reasons, any Designated Individual who purchases Company Securities in the open market may not sell any Company Securities of the same class during the six months following the purchase (and vice versa), except with the consent of the ITC Officer.
Publicly-Traded Options –Prohibited
Given the relatively short term of publicly-traded options, transactions in options may create the appearance that a Company Associate is trading based on material, non-public information and focus a Company Associate’s attention on short-term performance at the expense of the Company’s long-term objectives. Accordingly, transactions in put options, call options or other derivative securities, on an exchange or in any other organized market, are prohibited by this Policy. (Option positions arising from certain types of hedging transactions are governed by the next paragraph below.)
Hedging Transactions - Prohibited
Hedging or monetization transactions can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. Such hedging transactions may permit a person to continue to own Company Securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership. When that occurs, the person may no longer have the same objectives as the Company’s other shareholders. Accordingly, this Policy prohibits Company Associates from engaging in hedging transactions.
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Bona fide gifts of Company Securities are not transactions subject to this Policy, unless:
Transactions in mutual funds that are invested in Company Securities are not transactions subject to this Policy.
Stock Option Exercises
This Policy does not apply to the exercise of an employee stock option. This Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
Restricted Stock
This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding right pursuant to which you elect to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. The Policy does apply, however, to any market sale of any restricted stock upon vesting.
401(k) Plan
This Policy does not apply to purchases of Company Securities in the Company’s 401(k) plan resulting from your periodic contribution of money to the plan pursuant to your payroll deduction election. This Policy does apply, however, to Company Associates for certain elections under the 401(k) plan, including:
Dividend Reinvestment Plan/Stock Purchase Plan
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This Policy does not apply to ongoing purchases of Company Securities under the Company's dividend reinvestment plan resulting from your prior election to have dividends paid on Company Securities automatically reinvested. It also does not apply to voluntary purchases of Company Securities through payroll deductions; provided, however, an employee cannot elect to participate in the voluntary purchase portion of the plan, or increase his or her level of participation in the plan, during a blackout period. This Policy does apply to your sale of any Company Securities purchased pursuant to the plan, and such a sale is treated as an open market sale under this Policy.
Transactions Requiring Prior Approval
The Designated Individuals are subject to these pre-clearance procedures and may not engage in any transaction (a “Share Transaction”) in Company Securities without first obtaining pre-clearance of the transaction from the Committee even if the proposed transaction is to take place outside of any blackout period. Without limiting the foregoing, Designated Individuals may not engage in the following transactions without pre-clearance from the Committee:
Designated Individuals are also prohibited from engaging in transactions involving any equity security of the Company acquired by the person in connection with his or her service or employment as a director or officer, during any blackout period under the Company's 401(k) plan. For this purpose, a “blackout period” means a period of more than three consecutive business days during which the ability of 50% or more of the participants in the 401(k) and other ERISA individual account plans to trade Company stock is suspended. This prohibition does not extend to securities acquired outside the director or officer relationship, such as those acquired in the open market.
Procedure for Approval
In the event any Designated Individual requires approval for a Share Transaction, the Insider Trading Authorization attached hereto as Exhibit A must be submitted for Committee approval at least two (2) business days in advance of the proposed transaction to:
Corporate Secretary
Email: corporate.secretary@prosperitybankusa.com
Upon submission of a Share Transaction request by a Designated Individual, any two (2) members of the Committee will review and either approve or prohibit such Share Transaction.
If a Designated Individual receives approval of a Share Transaction, that Designated Individual must engage in the transaction within twenty (20) calendar days thereafter (subject to unforeseen blackout days which may cause the authorization to be suspended). If the Share Transaction is not completed within twenty (20) calendar days (subject to unforeseen blackout days which may cause the authorization to be suspended), clearance must be obtained again before the Company Securities may be traded.
If a Designated Individual seeks pre-clearance and permission to engage in the transaction is denied, then he or she should refrain from initiating any transaction in Company Securities, and should
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not inform any other person of the restriction.
Quarterly Trading Restrictions
In addition to the requirements set forth above, the following requirements and restrictions apply to Designated Individuals:
Trading within the window period is still subject to the insider information restrictions set forth above.
Rule 10b5-1 Trading Plans
The trading restrictions do not apply to transactions under a pre-existing written plan, contract, instruction, or arrangement under Rule 10b5-1 under the Exchange Act (an “Approved 10b5-1 Plan”) that meets the following requirements:
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If a Designated Individual is considering entering into, modifying or terminating an Approved 10b5-1 Plan or has any questions regarding Approved Rule 10b5-1 Plans, he or she should contact the ITC. Designated Individuals should consult their own legal and tax advisors before entering into, or modifying or terminating, an Approved 10b5-1 Plan. A trading plan, contract, instruction or arrangement will not qualify as an Approved 10b5-1 Plan without the prior review and approval of the ITC as described above.
The Committee shall be appointed annually by the Board of Directors of Prosperity Bancshares, Inc. Only members of the Executive Committee of Prosperity Bank are eligible to be appointed to the Committee. The Company’s General Counsel shall be a standing member and serve as chairperson of the Committee.
The Company’s General Counsel is designated as its ITC Officer. The duties of the ITC Officer include the following:
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The Corporate Secretary is designated to assist the ITC Officer and perform the ITC Officer’s duties in the event that the ITC Officer is unable or unavailable to perform such duties.
Violation of the insider trading laws may result in civil, criminal and employment-related penalties to the individual violating such laws. The civil and criminal penalties include but are not limited to:
As for employment-related penalties, any action in violation of this Policy may be grounds for disciplinary action.
If you are aware of material, non-public information when your service as a Company Associate terminates, you may not trade in the Company Securities until that information has become public or is no longer material. In all other respects, the procedures set forth in this Policy will cease to apply to your transactions in Company Securities upon the expiration of any “blackout period” that is applicable to your transactions at the time of your termination of service.
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If you have any questions concerning any aspect of this Policy, please contact the Company’s
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ITC Officer before initiating any trade.
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