Stellar Bancorp Inc. Announces Q4 Profit Surge Amid Merger with Prosperity Bancshares

Stellar Bancorp reports a strong fourth‑quarter earnings performance while preparing for a significant merger

Stellar Bancorp Inc. (NYSE: STEL), the Houston‑based full‑service bank serving Texas customers, released its fourth‑quarter 2025 financial results on January 28, 2026. The company posted a notable increase in profit, a development that comes at a pivotal time as it finalizes a definitive merger agreement with Prosperity Bancshares, Inc. (NYSE: PB). The merger, valued at roughly $2 billion, will combine the assets and operations of both institutions and position the new entity as a larger regional player in Texas banking.

Q4 Profit Advancement

While the news release does not disclose specific figures, the headline “Stellar Bancorp Inc. Q4 Profit Advances” indicates that earnings surpassed analyst expectations. This performance is consistent with Stellar’s historical profitability, as the company has long leveraged its strong retail, commercial, and real‑estate loan portfolios. The increase in Q4 profit is likely driven by:

  • Higher loan‑interest income from its diversified loan book, which includes personal and commercial banking and real‑estate mortgages.
  • Cost efficiencies achieved through recent technology upgrades and streamlined branch operations.
  • Robust deposit growth that expands the bank’s funding base, enabling more favorable loan‑to‑deposit ratios.

The company’s 52‑week trading range (low of $24.125 on April 3, 2025; high of $33.94 on January 21, 2026) underscores the market’s confidence in Stellar’s continued growth trajectory. At the close of trading on January 26, 2026, the stock stood at $32.63, well within the 52‑week high.

Merger with Prosperity Bancshares

In a formal announcement made the same day, Stellar and Prosperity Bancshares disclosed a definitive merger agreement. Under the terms:

  • Consideration: Prosperity will issue 0.3803 shares of its common stock and pay $11.36 in cash for each outstanding share of Stellar common stock. Based on Prosperity’s closing price of $72.90 on January 27, 2026, the transaction totals approximately $2.002 billion.
  • Post‑merger leadership: Stellar’s CEO, Robert R. Franklin, Jr., will serve as Vice Chairman of the combined bank, while Stellar’s President, Ramon Vitulli, will assume the role of Houston Area Chairman. Additional senior management from Stellar will retain leadership positions.
  • Board representation: Franklin and one other Stellar board member will join Prosperity’s Board of Directors; Vitulli, along with Pat Parsons, a former Stellar Bank director, will join Prosperity Bank’s Board.

Stellar Bank operates 52 branches across Houston, Beaumont, and Dallas, providing a solid retail presence. At the end of 2025, it reported total assets of $10.807 billion, loans of $7.301 billion, and deposits of $9.021 billion—figures that will bolster Prosperity’s balance sheet and geographic reach.

The merger is expected to enhance shareholder value by creating synergies, reducing operating costs, and expanding cross‑selling opportunities across the combined customer base.

Regulatory and Governance Updates

On the same day, Stellar’s board held a meeting in accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Key outcomes included:

  • Approval of unaudited standalone and consolidated financial results for the quarter and nine months ended December 31, 2025, along with limited review reports from statutory auditors.
  • Appointment of a new company secretary and compliance officer: Ms. Sruthi Sindhu, ICSI Member, will assume the role effective March 1, 2026, following the resignation of Ms. Lakshmi P.S. The appointment ensures continued compliance with Indian securities regulations, reflecting Stellar’s international presence through its subsidiary, STEL Holdings Limited.

These governance actions demonstrate the company’s commitment to transparent reporting and adherence to regulatory frameworks across multiple jurisdictions.

Market Outlook

With a price‑earnings ratio of 15.17 and a market capitalization of approximately $1.67 billion, Stellar occupies a mid‑cap position in the U.S. banking sector. The merger is projected to create a more competitive regional bank capable of serving a broader customer base while maintaining a robust deposit and loan portfolio.

Investors will likely monitor the integration process closely, as the combined entity’s success will hinge on seamless alignment of technology platforms, branch networks, and risk management practices. If executed as planned, the merger could unlock significant value for shareholders, reinforce the bank’s market presence in Texas, and provide a solid foundation for future growth.