Prosperity-Stellar Merger Gets Green Light, Forging Texas Banking Giant

HOUSTON, TX – April 22, 2026 – Prosperity Bancshares has received all necessary regulatory approvals for its pending acquisition of Stellar Bancorp, clearing the final major hurdle for a transaction poised to create a new powerhouse in the Texas banking sector. The green light from federal and state regulators moves the approximately $2 billion deal significantly closer to its expected completion date of July 1, 2026.

In a joint announcement, the Houston-based parent companies of Prosperity Bank and Stellar Bank confirmed they had received a waiver from the Federal Reserve Bank of Dallas for the holding company merger. Concurrently, the Federal Deposit Insurance Corporation (FDIC) and the Texas Department of Banking have approved the subsequent merger of Stellar Bank into Prosperity Bank.

The path to finalization now leads to a special meeting of Stellar shareholders, scheduled for May 27, 2026, where they will vote on the merger agreement dated January 27, 2026. Assuming shareholder approval and the satisfaction of other customary closing conditions, the deal will combine two of the region's significant financial players.

A New Texas Banking Powerhouse

The merger is set to dramatically alter the competitive landscape, particularly in Texas. The combined entity will become the second-largest bank by deposits headquartered in the state, boasting approximately $54 billion in assets and operating over 330 banking centers across Texas and Oklahoma.

For Prosperity Bancshares, this acquisition is a continuation of a long-standing strategy of growth through acquisition, having successfully integrated over 30 financial institutions since its 1998 IPO. This deal significantly deepens its presence in key metropolitan markets. The combination is expected to elevate Prosperity's deposit market share ranking in the lucrative Houston area from ninth to fifth, giving it a more formidable competitive stance against larger national banks and regional peers.

Stellar Bancorp, with its $10.8 billion in assets and 52 branches concentrated in Houston, Dallas, and Beaumont, provides a valuable and complementary footprint. The deal is indicative of a broader trend of consolidation among U.S. regional lenders, who are seeking to gain scale, optimize balance sheets, and enhance lending capabilities to compete more effectively in a dynamic economic environment. By absorbing Stellar, Prosperity not only grows its asset base but also gains access to a strong noninterest-bearing deposit mix and a higher net interest margin, key drivers of bank profitability.

Dissecting the Landmark Deal

Under the terms of the agreement announced in January, Stellar shareholders will receive $11.36 in cash plus 0.3803 shares of Prosperity common stock for each Stellar share they hold. At the time of the announcement, this valued the transaction at approximately $2.002 billion, or $39.08 per Stellar share, representing a nearly 20% premium over Stellar's closing price the day before the deal was made public.

The initial market reaction was typical for such mergers, with Stellar's stock (STEL) jumping over 11% while Prosperity's stock (PB) saw a modest single-digit decline, reflecting the premium paid and the issuance of new shares. The deal is structured as approximately 70% stock and 30% cash, which allows Stellar shareholders to realize immediate cash value while also participating in the future growth of the combined company. Upon completion, former Stellar shareholders are expected to own approximately 16.1% of the new entity.

To ensure a smooth transition and retain institutional knowledge, the agreement includes provisions for leadership continuity. Stellar's CEO, Robert R. Franklin Jr., will join Prosperity Bank as Vice Chairman, and its President, Ramon Vitulli, will become the Houston Area Chairman. Two Stellar board members will also join Prosperity's boards, a move seen by analysts as crucial for integrating the two corporate cultures and retaining key commercial relationships.

The Impact on Main Street

While boardrooms and stock tickers tell one side of the story, the merger's true impact will also be felt by the thousands of customers and employees of Stellar Bank. As with any bank merger, customers can expect a period of transition. Over the coming months, Stellar customers will receive detailed communications regarding changes to account numbers, routing numbers, and online banking platforms as their accounts are migrated to Prosperity Bank's systems.

Branch networks will also be evaluated for overlap, which could lead to some consolidations. However, customers will also gain access to Prosperity's much larger network of over 300 branches and a wider array of services, including wealth management and more extensive mortgage and treasury management solutions. Fixed-rate products, such as certificates of deposit (CDs) and mortgages, will be honored under their original terms. The key challenge for Prosperity will be to execute a seamless transition that minimizes customer disruption and preserves the community banking relationships that Stellar cultivated.

For employees, the retention of top Stellar executives in senior roles offers a degree of stability. However, mergers inevitably create redundancies in back-office and administrative functions. The integration process will involve blending distinct corporate cultures, operational workflows, and technology platforms, a complex undertaking where retaining talent is a critical component of success.

The Path to Integration

With regulatory approval secured, the focus now shifts entirely to integration planning and execution. The process of combining two large banking systems is fraught with challenges, from data migration and core system conversion to harmonizing product offerings and internal processes. Technology integration is particularly critical and often represents the largest non-personnel expense in a merger, but also the area with the most significant potential for long-term cost synergies.

Prosperity Bancshares brings a wealth of experience to this task, having built its franchise on the foundation of successful acquisitions. Management is targeting a 2027 earnings per share of $7.34 for the combined company, a goal that hinges on a disciplined and efficient integration of Stellar's operations. The ability to realize projected cost savings, retain key staff and customers, and leverage the combined entity's enhanced scale will ultimately determine the long-term success of this transformative deal for Texas banking.