📰 What This Document Is

This document is a proxy statement/prospectus, which is a required legal filing designed to inform the owners of Stellar Bancorp, Inc. (Stellar) about a major, complex corporate action: a proposed merger. Essentially, it’s a detailed instruction manual explaining how Stellar's stock will change hands as the company merges with Prosperity Bancshares, Inc. (Prosperity).

👉 Why it matters: Since the merger is not automatic, the document informs you that your vote is required. The board of directors unanimously recommends voting "FOR" the merger proposal to make the transaction happen.

🏦 The Merging Banks and Companies

This section introduces the two corporations involved in the merger and establishes their scale, which helps readers understand the economic weight of the transaction.

Prosperity Bancshares, Inc. (Prosperity): Prosperity is a Texas corporation and registered financial holding company. It derives nearly all of its revenue and income from its subsidiary, Prosperity Bank. Prosperity Bank is a major regional bank, operating a wide array of financial products and services across Texas and Oklahoma.

• Scale: As of December 31, 2025, Prosperity had total assets of $38.46 billion, total loans of $21.81 billion, and total deposits of $28.48 billion.
• Growth: Prosperity recently completed major acquisitions, including American Bank Holding Corporation (effective January 1, 2026) and Southwest Bancshares, Inc. (effective February 1, 2026).
• 👉 Why it matters: The sheer size and recent acquisitions of Prosperity suggest it is a major, growing player, giving it the financial muscle to absorb a company like Stellar.

Stellar Bancorp, Inc. (Stellar): Stellar is also a Texas corporation and registered bank holding company, headquartered in Houston. It primarily services small- to medium-sized businesses, professionals, and individual customers through its subsidiary, Stellar Bank.

• Scale: As of December 31, 2025, Stellar had total assets of $10.81 billion, total loans of $7.30 billion, and total deposits of $9.02 billion.
• Operations: Stellar Bank operates 52 banking centers, with the largest concentration (35 centers) in the Houston metropolitan area.
• 👉 Why it matters: Stellar has been primarily serving the local and regional market, making the merger a way for it to scale up and operate within a much larger network (Prosperity).

📜 The Merger Mechanics and Consideration

This section explains what the merger is and how much each Stellar shareholder will receive. The structure is a critical point: Stellar will be absorbed entirely by Prosperity.

The Core Deal: The merger is structured so that Stellar will merge with and into Prosperity, meaning Prosperity will be the surviving corporation. Immediately after the main merger, Stellar's bank subsidiary (Stellar Bank) will merge into Prosperity's bank subsidiary (Prosperity Bank), with Prosperity Bank remaining the surviving bank.

What You Receive (The Consideration): Each holder of Stellar common stock will receive a fixed consideration for every share owned:

• Cash: $11.36 (the "per share cash consideration").
• Stock: 0.3803 shares (the "exchange ratio") of Prosperity common stock.
• 👉 Why it matters: This is the core value proposition. While the cash and share ratio are fixed, the total value of the stock portion can change dramatically if the stock price fluctuates before the merger closes.

Calculating the Value Fluctuation: The value of the total consideration changes depending on the closing price of Prosperity stock.

• On January 27, 2026 (the last day before the announcement), the merger consideration was worth approximately $39.08 per Stellar share.
• On April 15, 2026 (the date of the proxy), the consideration was valued at approximately $37.65 per Stellar share.
• ⚠️ Warning: The proxy states that the final value of the merger consideration could be greater than, less than, or the same as the values calculated on these two dates.

📅 The Timeline and Meeting Details

Corporate actions happen on specific dates, and missing a date means missing a vote. This section provides the crucial schedule information for Stellar shareholders.

Key Dates:

• Record Date (To Vote): The close of business on April 10, 2026. Only Stellar shareholders on this date are entitled to vote.
• Special Meeting: Scheduled for May 27, 2026, at 10:00 a.m., Central Time, at Stellar's headquarters in Houston, Texas.
• Expected Completion: Prosperity and Stellar expect the merger to close in the second quarter of 2026.

The Vote Requirements: Holders of Stellar common stock must vote on three proposals:

1. Merger Proposal: Approving the main merger agreement. This requires the affirmative vote of at least two-thirds of all outstanding Stellar shares entitled to vote.
2. Merger Compensation Proposal: Approving compensation for Stellar's named executives. This vote is non-binding (advisory), but the company is legally required to seek it.
3. Adjournment Proposal: Approving a post-meeting postponement to gather more votes if needed.

👉 Crucial Action Item: The Stellar Board strongly recommends voting “FOR” all three proposals. If you do not vote, it is noted that your vote counts as "AGAINST" the merger proposal.

🏛️ Governance and Shareholder Rights

This section covers the procedural rules, shareholder protections, and who has interests that might affect the merger.

Shareholder Protection (Dissenters’ Rights): Under Texas law, shareholders who vote against the merger proposal have the right to dissent. They can obtain cash payment equal to the appraised fair value of their shares. This process requires following strict steps, including written objection prior to the meeting, voting against the agreement, and filing a written demand with Prosperity within twenty (20) days after receiving notice of the merger completion.

• ⚠️ Warning: The appraised fair value may be more or less than the merger consideration you would otherwise receive.

Management and Director Conflicts: Shareholders are explicitly warned that the directors and executive officers of Stellar have financial interests in the merger that may be different from those of the general shareholder body. These interests include potential employment with Prosperity, rights to severance, and the vesting of Stellar equity awards.

• 👉 Why it matters: This disclosure is designed to ensure the board is transparent about any potential conflicts of interest before you cast your vote.

Tax Implications: The merger is designed to qualify as a "reorganization" for U.S. federal income tax purposes. However, this is not a guarantee. U.S. holders should consult a personal tax advisor, as the tax consequences will depend entirely on their personal financial situation.

💰 How Stellar Equity Awards Are Handled

The merger dictates that all types of existing employee compensation awards must be converted into cash or Prosperity stock consideration.

• Stock Options:
  • "In-the-Money Options" (where the merger value exceeds the exercise price) will be canceled, and the holder receives a cash payment equal to the difference.
  • Any option that is not "in-the-money" will be canceled with no compensation.
• Restricted Stock Awards: These awards will fully vest and convert into the right to receive the per share merger consideration.
• Performance Units: These units will be canceled and converted into a cash payment. This calculation is based on the unit's value multiplied by the number of earned shares (with a requirement to assume 100% or 200% performance achievement).

⚠️ Risks and Conditions to Completion

Every large merger comes with hurdles. This section outlines the risks and the specific conditions that must be met for the deal to successfully close.

Conditions to Completion: The merger is subject to numerous conditions, including:

• The required regulatory approvals (e.g., from the Federal Reserve Board, FDIC).
• The successful passage of the merger proposal by Stellar shareholders.
• The accuracy of representations and warranties made by both companies.
• Legal Opinion: Receipt of a legal opinion confirming the merger qualifies as a "reorganization."

Termination Risk: The merger agreement includes termination rights for both companies. If the merger does not complete, Stellar shareholders will not receive any merger consideration. If the agreement is terminated under certain circumstances, Stellar may owe Prosperity a termination fee of $78,000,000.

📞 Key Contacts and Next Steps

If you have questions, the filing provides several resources and official contacts.

Need More Information:

• Primary Source: The comprehensive proxy statement/prospectus is the ultimate source for all details.
• For Questions (General): Stellar’s Investor Relations can be contacted at (713) 210-7600 or by email at [email protected].
• For Voting Assistance: Stellar’s proxy solicitor, Georgeson LLC, can be reached toll-free at (877) 811-4522 or non-toll free at (267) 281-9853.

🧠 The Analogy

Think of this merger like selling your house (Stellar) to a much bigger developer (Prosperity). You aren't just getting cash; you're getting a mix of cash and a stake in the developer's new, larger development. The developer’s stock gives you a claim on future profits, but its value might change before you officially close the sale. To make sure the deal can close, your vote (and the government's permission) is required, and you must be prepared for the process to take time and involve lots of paperwork.

🧩 Final Takeaway

The merger is a massive, multi-step transition where Stellar is being absorbed into Prosperity. Shareholders must vote to approve this plan, understand the fluctuating value of their total compensation package, and be aware that the process is subject to numerous legal, regulatory, and market risks.