Prosperity Bancshares will buy rival Stellar Bancorp in a $2 billion cash-and-stock deal, the banks said on Wednesday, creating a mega Texas-focused lender and highlighting rapid consolidation among U.S. regional lenders.
Dealmaking activity between U.S. banks in 2025 hit the highest levels in four years as boardrooms looked to strengthen balance sheets and also take advantage of easier regulations.
Prosperity has offered 0.3803 of its shares and $11.36 in cash for each Stellar share held. The deal values Stellar at $39.08 per share, implying a 19.8% premium to the stock’s last close.
Shares of Stellar jumped 11.2%, while Prosperity slipped 8.5%.
The deal beefs up Prosperity’s presence in greater Houston, Beaumont and Dallas and creates the second largest Texas-headquartered bank by deposits with over 330 banking centers, the companies said.
“This is a rare opportunity to significantly enhance our presence in the Houston area, a market with a diverse economy that is continually attracting investment and has a growing population,” Prosperity CEO David Zalman said in a statement.
“Stellar is a well-run bank with similar credit discipline and an envious non-interest-bearing deposit mix,” Zalman told analysts.
Analysts said Prosperity was paying a hefty price for Stellar but highlighted that the deal brings together two strong deposit franchises.
“This is an expensive acquisition for Prosperity, but the deal enhances density in the sought-after and faster-growing Texas markets,” RBC analyst Jon Arfstrom said.
When Prosperity went public in 1998, it was a small community bank in rural Texas with less than $500 million in assets. It has since bulked up through over 30 acquisitions and had $38.5 billion in assets, as of December 31.
Stellar had $10.8 billion in assets as of the end of 2025. Its CEO Robert Franklin will join Prosperity as vice chairman.
The transaction is expected to close in the second quarter. Keefe, Bruyette & Woods advised Stellar on the deal.
Source: Reuters.com