PROSPERITY BANCSHARES INC 8-K

What Happened

• Prosperity Bancshares, Inc. announced on July 1, 2026 that it completed its previously disclosed merger with Stellar Bancorp, Inc., and the related merger of Stellar Bank into Prosperity Bank. The transaction closed under the Agreement and Plan of Merger dated January 27, 2026.
• Consideration paid to Stellar shareholders was 0.3803 shares of Prosperity common stock plus $11.36 in cash per Stellar share (plus cash for fractional shares). That combination produced a Per Share Merger Consideration Value of about $38.53 per Stellar share. Total aggregate consideration was approximately $590 million in cash and ~19 million shares of Prosperity common stock. The related S-4 registration was declared effective April 21, 2026.

Key Details

• Closing date: July 1, 2026. Exchange Ratio: 0.3803 Prosperity shares per Stellar share; Per‑share cash: $11.36; implied per‑share value ≈ $38.53.
• Total deal consideration: ≈ $590 million cash and ~19 million Prosperity shares.
• Prosperity assumed Stellar Bank’s obligations with respect to about $2.17 billion of Federal Home Loan Bank of Dallas borrowings (new direct financial obligation).
• Board and executive changes: Board expanded to 16 directors; former Stellar directors Robert R. Franklin, Jr. and Joseph B. Swinbank were added. Mr. Franklin was named Vice Chairman and entered a 3‑year employment agreement (base salary $1,120,187; target bonus 175% of base; $3.0M signing bonus; grant of 25,000 restricted shares vesting in 3 years, with certain severance and vesting protections).

Additional corporate actions: Stellar stock options and equity awards were settled per the merger agreement — in-the-money options received cash based on the excess of the Merger Consideration Value over exercise price; out-of-the-money options were canceled for no consideration; service‑based restricted stock vested and converted to the merger consideration; performance units vested and were cashed out at the Merger Consideration Value (performance treated as achieved at target or at applicable specified levels).

Why It Matters

• This completed merger increases Prosperity’s scale and adds Stellar’s franchise to Prosperity Bank, funded by a mix of cash and newly issued Prosperity shares. Investors should note the deal’s dilutive element (≈19M new shares) and the cash outlay (~$590M).
• Prosperity also assumed roughly $2.17B of FHLB borrowings, which increases on‑balance‑sheet borrowings/liquidity obligations and could affect funding mix and capital metrics until integrated.
• Leadership continuity and integration plans are signaled by appointment of two former Stellar directors and a multi‑year employment package for Robert Franklin, which may support operational integration but also adds compensation commitments to Prosperity’s expenses.