Prosperity Bancshares has announced it will acquire Stellar Bancorp in a USD 2 billion cash-and-stock transaction, highlighting the ongoing consolidation trend among US regional lenders.
In 2025, mergers and acquisitions among US banks reached their highest levels in four years, as boards sought stronger balance sheets and leveraged relaxed regulatory conditions. Prosperity is offering 0.3803 of its shares plus USD 11.36 in cash for each Stellar share, valuing Stellar at USD 39.08 per share. This represents a 19.8% premium over Stellar’s previous closing price. Following the announcement, Stellar’s shares jumped 11.2%, while Prosperity’s shares declined 8.5%.
The acquisition strengthens Prosperity’s footprint in key Texas markets, including Houston, Beaumont, and Dallas. Once the deal closes, Prosperity will operate over 330 banking centers and become the second-largest Texas-headquartered bank by deposits. The combined entity will significantly expand access to both urban and suburban markets, positioning the bank to benefit from the state’s growing population and business investment trends.
Data-driven growth in Texas banking
Prosperity has grown substantially since its IPO in 1998, when it operated as a small community bank in rural Texas with less than USD 500 million in assets. Over the years, the bank has completed more than 30 acquisitions, reaching USD 38.5 billion in assets as of December 31, 2025. Stellar, meanwhile, held USD 10.8 billion in assets at the end of 2025, contributing a strong portfolio of non-interest-bearing deposits.
The merger also brings leadership continuity, with Stellar CEO Robert Franklin joining Prosperity as vice chairman. Analysts note that while the purchase price is high, the strategic benefits could outweigh the cost by combining two well-managed deposit franchises and enhancing market density in faster-growing Texas regions.
Industry analysts point to the growing appeal of Texas markets for banks. Houston alone has seen a 5% population increase in the past three years and ranks among the top US metro areas for corporate relocation and capital investment. By strengthening its presence in such regions, Prosperity positions itself to capture both retail and commercial banking opportunities, while benefiting from a diversified economy that spans energy, healthcare, and technology sectors.
The deal is expected to close in the second quarter of 2026. Stellar was advised by Keefe, Bruyette & Woods, an investment bank specialising in regional bank transactions. The acquisition underscores the broader trend of US regional banks merging to achieve scale, optimise deposits, and improve lending capabilities in competitive markets.
With a combined asset base exceeding USD 49 billion and more than 330 locations, the merged bank will be well-positioned to compete with both regional and national banks in the dynamic Texas banking landscape.
