Prosperity Bancshares to Acquire Stellar Bancorp
On January 28, Prosperity Bancshares announced plans to acquire rival Stellar Bancorp. This merger, valued at $2 billion, will combine two Texas-focused lenders and reflects ongoing consolidation among regional banks in the U.S.
In 2025, interbank trading in the U.S. hit its highest level in four years as banks aimed to bolster their balance sheets and seize opportunities from regulatory changes.
Prosperity is offering 0.3803 shares of its stock and $11.36 in cash for each share of Stellar, which places a value of $39.08 per share on the latter—about a 19.8% premium compared to its latest closing price.
Shares for Stellar increased by 11.2%, while Prosperity’s shares dropped by 8.5% following the announcement.
This merger is expected to enhance Prosperity’s footprint in key areas like Houston, Beaumont, and Dallas, making it the second-largest bank in Texas with over 330 banking centers.
“This acquisition presents a special chance to expand our presence in Houston, which has a diverse economy that’s attracting investment and growing,” said Prosperity’s CEO, David Zalman.
Zalman noted Stellar’s solid management and comparable credit practices, along with a favorable deposit structure.
While some analysts commented that Prosperity is paying a steep price, they recognized the synergy between the two banks’ deposit franchises. RBC analyst Jon Erfstrom described it as an expensive but beneficial move, adding density to the growing Texas market.
Back in 1998, when Prosperity became publicly traded, it was merely a small community bank with assets under $500 million. Since then, it has expanded through more than 30 acquisitions and now boasts $38.5 billion in assets as of December 31.
Stellar is projected to have approximately $10.8 billion in assets by the end of 2025. Following the merger, Prosperity CEO Robert Franklin will transition to the role of vice chairman.
The deal is anticipated to close in the second quarter of the year, with Keefe, Bruyette and Woods offering advisory services to Stellar on this transaction.
