Prosperity Bancshares Acquires Stellar for $2 Billion

Prosperity Bancshares said in a press release on Jan. 28, 2026, that it agreed to acquire Stellar Bancorp in a cash-and-stock transaction, creating Texas’s second-largest bank by deposits and projecting 9.2% accretion to 2027 earnings per share (EPS).

Deal Terms, Market Impact, and Management Continuity

The companies signed a definitive merger agreement announced in a joint press release filed at 6:30 a.m. ET on Jan. 28, 2026. Prosperity will issue 0.3803 shares of its common stock and pay $11.36 in cash for each outstanding Stellar share. The exchange ratio is based on Prosperity’s Jan. 27 closing price of $72.90.

The combined entity will have more than 330 banking centers, making it the second-largest bank headquartered in Texas by deposits. Prosperity’s Houston deposit rank will rise from ninth to fifth, making it the largest Texas-headquartered bank in that market. The transaction also strengthens Prosperity’s presence in Houston and Beaumont.

Stellar reported total assets of $10.8 billion as of Dec. 31, 2025, including $7.3 billion in loans and $9.0 billion in deposits. It operates 52 banking offices across greater Houston, Beaumont, and Dallas. Stellar’s full-year 2025 net income was $103 million, with diluted EPS of $1.99.

The boards agreed to retain Stellar’s senior leadership. CEO Robert R. Franklin Jr. will join Prosperity as vice chairman, and President Ramon Vitulli will become Houston area chairman. Two Stellar directors, Franklin and Pat Parsons, will join Prosperity’s board. Prosperity described Stellar as “a well-run bank with similar credit discipline and an envious noninterest-bearing deposit mix.”

Financial Results, Outlook, and Approvals

Prosperity reported fourth-quarter 2025 net income of $140 million, a 7.6% year-over-year increase, and diluted EPS of $1.49, up 8.8%. Its net interest margin widened 25 basis points to 3.3%, and deposits grew by $700 million at a 10.1% annualized pace. For full-year 2025, Prosperity posted net income of $543 million and diluted EPS of $5.72. It authorized a 2026 share-repurchase program of up to 5% of outstanding common stock.

The companies’ filing projects 9.2% pro forma EPS accretion in 2027, attributing the increase to cost savings, interest-rate marks, and amortization adjustments.

Both boards unanimously approved the merger. The transaction remains subject to regulatory approvals, a Stellar shareholder vote, and customary closing conditions. Disclosure documents filed on Jan. 28 include Prosperity’s Form 8-K and Stellar’s Form 425.

The filings highlight risks including integration challenges, regulatory delays, possible shareholder-vote failure, dilution from the stock issuance, higher-than-expected costs, and business disruption. A shareholder-fairness investigation into the transaction was launched by Halper Sadeh LLC on Jan. 28.

The companies expect to close the deal in the second quarter of 2026, pending regulatory and shareholder approvals.