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DEFM14ASEC Filing

Stellar Bancorp merger proposal with Prosperity requires shareholder vote

STEL
April 21, 2026 at 12:00 AM

📜 What This Document Is 📣

This document is a Definitive Proxy Statement (a DEFM14A), which is a highly formal legal filing. It means that Stellar Bancorp, Inc. is proposing a major, mandatory change to its corporate structure: a merger with a much larger bank, Prosperity Bancshares, Inc. 🏦 The purpose of the statement is to inform Stellar’s shareholders about the proposed merger and ask them to vote "FOR" the deal at a special meeting.

👉 Why this matters: If you are a Stellar shareholder, your vote is critical. The deal requires the affirmative vote of at least two-thirds of outstanding Stellar common stock to proceed.

🏢 What Stellar and Prosperity Do 🏦

To understand the merger, it’s important to know the size and scope of the two companies involved. Stellar is a Texas bank holding company, while Prosperity is a large, multi-state financial holding company.

🌟 Stellar Bancorp, Inc. (STEL):

  • What they do: They provide a diversified range of commercial banking services, primarily to small- to medium-sized businesses, professionals, and individual customers.
  • Scale (as of Dec 31, 2025): Stellar's total assets were $10.81 billion, with total loans of $7.30 billion, total deposits of $9.02 billion, and total shareholders’ equity of $1.67 billion.
  • Footprint: Stellar Bank operated 52 banking centers, with the largest cluster (35 centers) located in the Houston metropolitan area.

🌟 Prosperity Bancshares, Inc. (Prosperity):

  • What they do: They are a registered financial holding company that derives substantially all of its revenue and income from its bank subsidiary, Prosperity Bank. They provide a wide array of financial products and services across Texas and Oklahoma.
  • Scale (as of Dec 31, 2025): Prosperity is significantly larger, with total assets of $38.46 billion, total loans of $21.81 billion, total deposits of $28.48 billion, and total shareholders’ equity of $7.62 billion.
  • Footprint: Prosperity Bank operates 312 full-service banking locations across multiple areas, including the Houston, Dallas/Fort Worth, and South Texas areas.

👉 The takeaway: Stellar is merging with a much larger entity (Prosperity), making the combined company substantially bigger, stronger, and with a much wider operational footprint.

🤝 The Mechanics of the Merger 🔄

The merger is planned to be a combination where Stellar merges into Prosperity. This means Stellar will cease to exist, but Prosperity will continue as the surviving company.

  • The Process:

    1. Stellar merges with and into Prosperity.
    2. Immediately after that, Stellar’s bank subsidiary (Stellar Bank) will merge with and into Prosperity’s bank subsidiary (Prosperity Bank).
    3. Prosperity Bank will be the surviving bank.

  • The Consideration (What you receive): Each Stellar shareholder will receive a fixed payment package for every share they own. This includes:

    • (i) $11.36 in cash (the "per share cash consideration").
    • (ii) 0.3803 shares of Prosperity common stock (the "exchange ratio").

  • Post-Merger Ownership: Based on the share counts as of April 15, 2026, the ownership split will be:

    • Former Stellar shareholders will own approximately 16.1% of the combined company.
    • Existing Prosperity shareholders will retain and own approximately 83.9% of the combined company.

👉 The takeaway: You are getting cash plus a specific number of new shares from the surviving company, Prosperity.

💰 Financial Value of the Deal 💹

The total value of the consideration depends on the stock market, but the document provides specific historical values to give context to the deal's worth.

  • Estimated Merger Value: Based on the closing price of Prosperity common stock on January 27, 2026 ($72.90), the per share merger consideration was approximately $39.08 per Stellar share, translating to about $2.0 billion on an aggregate basis.
  • Latest Estimated Value: Using the closing price on April 15, 2026 ($69.12), the per share merger consideration is estimated at $37.65 per Stellar share.
  • Financial Commitment: To complete the merger, Prosperity expects to issue approximately 19,361,338 shares of Prosperity common stock and pay approximately $578,345,529 in cash.

How the value can change: The actual market price of Prosperity common stock ("PB") on the completion date could be higher or lower than the prices used for these estimates.

👉 The takeaway: While the formulas are fixed, the dollar value of the total consideration you receive could fluctuate based on the stock market between now and the merger closing.

📅 Key Dates and Meeting Logistics 🕰️

The special meeting is where Stellar shareholders must gather (or vote by proxy) to approve the merger. These dates are critical for participation.

  • The Special Meeting:

    • Date: Wednesday, May 27, 2026.
    • Time: 10:00 a.m., Central Time.
    • Location: Stellar’s corporate headquarters in Houston, Texas.

  • Key Dates for Shareholders:

    • Record Date: The close of business on April 10, 2026. Only Stellar holders of record on this date are entitled to vote.
    • Action: Shareholders are urged to vote as soon as possible, whether or not they plan to attend, to ensure their shares are represented.

  • Three Proposals to Vote On: At the meeting, shareholders must vote on three distinct proposals:

    1. The Merger Proposal: Approving the core merger agreement. (Requires a supermajority vote: $\geq 2/3$).
    2. Merger Compensation Proposal: Approving (on an advisory basis) compensation for Stellar’s named executive officers related to the deal.
    3. Adjournment Proposal: Approving a postponement of the meeting if enough votes are needed for the merger.

👉 The takeaway: Missing the deadline or failing to vote means your shares will be counted as a vote "AGAINST" the merger proposal.

🏛️ Corporate Governance and Committee Opinions 🧑‍⚖️

The board of directors and external financial experts have weighed in on the proposed merger. These opinions provide reassurance regarding the process and the value of the deal.

  • Stellar Board Recommendation: The Stellar Board of Directors unanimously recommends that shareholders vote “FOR” all three proposals (the merger, the compensation, and the adjournment).
  • Financial Advisor Opinion: Stellar’s financial advisor, Keefe, Bruyette & Woods, Inc. (KBW), provided a written opinion on January 27, 2026. KBW found the per share merger consideration to be "fair, from a financial point of view" as of that date.
  • Officer Conflicts: Shareholders must be aware that Stellar directors and executive officers may have personal interests in the merger—such as employment with Prosperity post-merger or potential vesting of Stellar equity awards. The Stellar Board considered these conflicts when making its recommendation.

👉 The takeaway: Management and the board are strongly recommending approval, citing both financial fairness and belief in the long-term benefits for shareholders.

⚠️ Shareholder Rights and Legal Protection ⚖️

The proxy statement outlines rights for minority shareholders and details what happens if the deal falls through.

  • Dissenters’ Rights (Texas Law): As a Stellar shareholder, you have the right under Texas law to dissent from the merger and receive cash payment based on the "appraised fair value" of your shares, even if that value is different from the per share merger consideration.
    • How to exercise: This requires following strict procedural steps, including providing a written objection prior to the meeting and filing a written demand with Prosperity within 20 days after notice of completion.
  • Tax Consequences: The merger is designed to qualify as a "reorganization" for U.S. federal income tax purposes (Section 368(a)). This means the gain realized by U.S. holders will generally be limited to the lesser of: 1) the value received minus their adjusted tax basis; OR 2) the amount of cash received.
  • If the Merger Fails: If the merger is not completed, Stellar remains an independent company, and the merger consideration will not be paid.

👉 The takeaway: If you disagree with the merger, there are specific, complex legal procedures (Texas law) you must follow to protect your value.

📜 Regulatory and Legal Conditions 🚧

A massive deal like this is not guaranteed. It is subject to many conditions that must be met before the transaction can close.

  • Necessary Approvals: Stellar and Prosperity must obtain multiple approvals from government bodies, including the Federal Reserve Board and the FDIC.
    • Status Update: The initial regulatory applications were filed on February 26, 2026. A crucial step was the waiver of prior approval by the Federal Reserve Bank of Dallas, obtained on March 17, 2026.
  • Closing Conditions: The merger completion is entirely dependent on satisfying numerous listed conditions, such as:
    • The approval of the merger proposal by the Stellar shareholders.
    • All required regulatory approvals remaining in full force.
    • The accurate representation and warranty statements made by both companies.
  • Termination: The merger agreement provides mechanisms for termination if key conditions fail to materialize. For example, if the merger hasn't closed by January 27, 2027, the "initial termination date," specific procedures exist to extend the window.

👉 The takeaway: Even if you vote "FOR" the merger, there are many external, governmental, and legal hurdles that could prevent it from closing as planned.

📧 Key Contacts and Next Steps 📞

It is vital to know who to call and when to submit your vote.

  • For Stellar Shareholders (Voting/Questions):
    • Proxy Solicitor (Georgeson LLC): Toll-free at (877) 811-4522, or non-toll free at (267) 281-9853.
    • Stellar Investor Relations: 9 Greenway Plaza, Suite 110 Houston, Texas 77046 (713) 210-7600, or email: [email protected].
  • Prosperity Investor Relations:
    • Address: Prosperity Bank Plaza 4295 San Felipe Houston, Texas 77027
    • Phone: (281) 269-7199
  • Processing Documents: Any questions about the proxy statement/prospectus or assistance with voting should be directed to Georgeson LLC, the Stellar proxy solicitor, using the contacts listed above.

🧠 The Analogy 🏞️

Think of this merger like two separate rivers flowing toward a confluence. Stellar is a smaller, powerful stream, and Prosperity is a massive, established river. For the two to join, they can't just run into each other—they need a signed legal treaty (the Merger Agreement). This treaty dictates exactly how the smaller river's water (Stellar's value) is converted into both cash and the dominant river's existing water (Prosperity's stock) to ensure the downstream ecosystem (the combined company) can continue flowing smoothly and successfully.

🧩 Final Takeaway 🧭

This is a massive corporate transaction requiring shareholder approval, making your vote crucial. You should read the entire proxy statement for details on your rights, the exact merger terms, and the risks, as the transaction is subject to both regulatory hurdles and supermajority shareholder approval.