PROSPERITY BANCSHARES INC 8-K

What Happened

• Prosperity Bancshares, Inc. announced on January 27, 2026 that it entered into an Agreement and Plan of Merger to combine with Stellar Bancorp, Inc. Under the deal Stellar will merge into Prosperity, and Stellar Bank will merge into Prosperity Bank, with Prosperity and Prosperity Bank surviving. The Merger was unanimously approved by both companies’ boards.

Key Details

• Per-share consideration: each outstanding Stellar common share will be converted into 0.3803 shares of Prosperity common stock plus $11.36 in cash; fractional shares will be paid in cash.
• Treatment of Stellar equity awards: in-the-money Stellar options will be cashed out for their intrinsic value (options at or above the computed merger value are canceled for no consideration); restricted stock will vest and be converted into the merger consideration; performance units will vest and be paid in cash based on the defined Per Share Merger Consideration Value (target achievement treated at 100%, except certain 2024 awards at 200%).
• Governance and support: Prosperity will add two directors to both its corporate and bank boards, designated by Stellar (subject to approval); contemporaneous voting agreements cover Stellar directors holding ~8.8% of Stellar shares, and director support agreements include two‑year non-solicit/confidentiality restrictions.
• Conditions and protections: closing is subject to Stellar shareholder approval, required regulatory approvals (including the Federal Reserve, FDIC and Texas Department of Banking), NYSE listing authorization, effectiveness of a Form S-4 registration statement, customary closing conditions, and a $78 million termination fee payable by Stellar in certain circumstances.

Why It Matters

• The deal is a cash-plus-stock acquisition that gives Stellar shareholders immediate cash plus an ownership stake in the combined company—important for investors assessing near-term cash received vs. ongoing exposure to Prosperity stock and potential dilution.
• The merger requires shareholder and regulatory approvals and a Form S-4/proxy filing, so closing is not guaranteed and timing will depend on those processes. The $78M termination fee and voting/support agreements indicate both parties intend to push the transaction to closing, but regulatory and integration risks remain.
• Treatment of Stellar equity awards and board changes affect management incentives and governance at closing, which can influence integration and the expected benefits of the acquisition for Prosperity shareholders.