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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report:
(Date of earliest event reported)
January 27, 2026
STELLAR BANCORP, INC.
(Exact name of registrant as specified in its
charter)
| Texas |
001-38280 |
20-8339782 |
|
(State or other jurisdiction
of incorporation) |
(Commission
File Number) |
(IRS Employer
Identification No.) |
| |
|
|
|
9 Greenway Plaza, Suite 110
Houston, Texas |
|
77046 |
| (Address of principal executive offices) |
|
(Zip Code) |
(713) 210-7600
(Registrant’s telephone number, including
area code)
Not Applicable
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.
below):
| x |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
|
Trading
Symbol(s) |
|
Name of each exchange
on which registered |
| Common Stock, par value $0.01 per share |
|
STEL |
|
New York Stock Exchange
NYSE Texas |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ¨
| Item 1.01 |
Entry into a Material Definitive Agreement. |
Merger Agreement
On January 27, 2026, Stellar Bancorp, Inc.,
a Texas corporation (“Stellar”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Prosperity
Bancshares, Inc., a Texas corporation (“Prosperity”). The Merger Agreement provides that, upon the terms and subject
to the conditions set forth therein, Stellar will merge with and into Prosperity (the “Merger”), with Prosperity continuing
as the surviving corporation in the Merger (the “Surviving Corporation”). Immediately following the Merger, Stellar’s
wholly owned banking subsidiary, Stellar Bank, will merge with and into Prosperity’s wholly owned banking subsidiary, Prosperity
Bank (the “Bank Merger”), which will continue as the surviving bank in the Bank Merger. The Merger Agreement was unanimously
approved by the Board of Directors of each of Prosperity and Stellar.
Upon the terms and subject to the conditions set
forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, par
value $0.01 per share, of Stellar (“Stellar Common Stock”) outstanding immediately prior to the Effective Time, other than
certain shares held by Prosperity or Stellar and shares held by a holder of Stellar Common Stock who has properly exercised applicable
dissenters’ rights in respect of such share, will be converted into the right to receive (i) 0.3803 shares of common stock
(the “Exchange Ratio”), par value $1.00 per share, of Prosperity (“Prosperity Common Stock”) and (ii) an
amount in cash equal to $11.36 (the “Per Share Cash Merger Consideration”) ((i) and (ii) together, the “Per
Share Merger Consideration”). Holders of Stellar Common Stock will receive cash in lieu of fractional shares.
At the Effective Time, each outstanding Stellar
equity award will be treated as follows:
| · | Stellar Stock Options: Each Stellar stock
option with a per-share exercise price that is less than the Per Share Merger Consideration Value will be cancelled and the holder of
such cancelled option will be entitled to receive (without interest) an amount in cash equal to the product of (i) the excess of
the Per Share Merger Consideration Value over the option’s per-share exercise price, multiplied by (ii) the number of
shares of Stellar Common Stock subject to such stock option immediately prior to the Effective Time. Any Stellar stock option with a per-share
exercise price that is equal to or greater than the Per Share Merger Consideration Value will be cancelled for no consideration. “Per
Share Merger Consideration Value” refers to the sum of (1) the Per Share Cash Consideration plus (2) the product
of (x) the Exchange Ratio multiplied by (y) the average of the closing sale prices of Prosperity Common Stock on the
New York Stock Exchange as reported by The Wall Street Journal for the ten consecutive full trading days ending on and including
the fifth trading day immediately preceding the closing date. |
| · | Stellar Restricted Stock Awards. Each
outstanding restricted stock award in respect of Stellar Common Stock subject solely to service-based vesting, repurchase or other lapse
restriction will vest and be converted into the right to receive (without interest) the Per Share Merger Consideration. |
| · | Stellar Performance Unit Awards. Each
outstanding restricted unit award in respect of Stellar Common Stock subject to performance-based vesting will vest and be converted into
the right to receive (without interest) a cash payment equal to the product of (a) the Per Share Merger Consideration Value multiplied
by (b) the number of shares of Stellar Common Stock subject to such performance unit award, with achievement of applicable performance
metrics determined to be equal to 100% of the target level (or, in the case of the performance units granted in 2024, 200% of the target
level). |
The Merger Agreement
also provides that Prosperity will take all necessary corporate action so that, as of the Effective Time, the size of the Board of Directors
of Prosperity (the “Prosperity Board”) and the Board of Directors of Prosperity Bank (the “Prosperity Bank Board”)
will each be increased by two members. The Merger Agreement provides that, as of the Effective Time, two current directors of Stellar
or Stellar Bank will be appointed to the Prosperity Board, and as of the effective time of the Bank Merger, two current directors of Stellar
or Stellar Bank will be appointed to the Prosperity Bank Board (such individuals, the “Additional Directors”). Each of the
Additional Directors will be designated by Stellar, subject to the approval of the Prosperity Board and the Prosperity Bank Board (not
to be unreasonably withheld).
The Merger Agreement contains customary representations
and warranties from both Prosperity and Stellar, and each party has agreed to customary covenants, including, among others, covenants
relating to (1) the conduct of its business or the taking of certain extraordinary actions during the interim period between the
execution of the Merger Agreement and the Effective Time and (2) Stellar’s obligation to call a meeting of its shareholders
to approve the Merger and the Merger Agreement, and, subject to certain exceptions, to recommend that its shareholders approve the Merger
and the Merger Agreement. Stellar has also agreed to certain non-solicitation obligations related to alternative business combination
proposals.
The completion of the Merger is subject to customary
conditions, including (1) approval of the Merger Agreement by Stellar’s shareholders, (2) authorization for listing on
the New York Stock Exchange of the shares of Prosperity Common Stock to be issued in the Merger, subject to official notice of issuance,
(3) the receipt of required regulatory approvals, including the approval or waiver of prior approval of the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance Corporation and the Texas Department of Banking, (4) effectiveness of the
registration statement on Form S-4 for the Prosperity Common Stock to be issued in the Merger, and (5) the absence of any order,
injunction, decree or other legal restraint preventing the completion of the Merger, the Bank Merger or any of the other transactions
contemplated by the Merger Agreement or making the completion of the Merger, the Bank Merger or any of the other transactions contemplated
by the Merger Agreement illegal. Each party’s obligation to complete the Merger is also subject to certain additional customary
conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (ii) performance
in all material respects by the other party of its obligations under the Merger Agreement and (iii) receipt by such party of an opinion
from counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended.
The Merger Agreement provides certain termination
rights for both Prosperity and Stellar and further provides that a termination fee of $78 million will be payable by Stellar upon termination
of the Merger Agreement under certain circumstances.
The foregoing description of the Merger Agreement
does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached
hereto as Exhibit 2.1 and is incorporated herein by reference.
The representations, warranties and covenants
of each party set forth in the Merger Agreement have been made only for the purposes of, and were and are solely for the benefit of the
parties to, the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these
matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors.
Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other
time, and investors should not rely on them as statements of fact. In addition, such representations and warranties (1) will not
survive consummation of the Merger, and (2) were made only as of the date of the Merger Agreement or such other date as is specified
in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the
date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures.
Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of the Merger
Agreement, and not to provide investors with any factual information regarding Prosperity or Stellar, their respective affiliates or their
respective businesses. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information
regarding Prosperity, Stellar, their respective affiliates or their respective businesses, the Merger Agreement and the Merger that will
be contained in, or incorporated by reference into, the registration statement on Form S-4 to be filed by Prosperity that will include
a proxy statement of Stellar and also constitute a prospectus of Prosperity, as well as in the Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and other filings that each of Prosperity and Stellar make with the Securities and Exchange Commission (the
“SEC”).
Voting Agreements
Concurrently with the execution and delivery of
the Merger Agreement, Prosperity entered into a voting agreement (each, a “Voting Agreement”) with each member of the Board
of Directors of Stellar, who collectively hold the power to vote approximately 8.8% of the issued and outstanding Stellar Common Stock.
Pursuant to the Voting Agreement, each such director has agreed, among other things and subject to the terms of the Voting Agreement,
to (a) vote the shares of Stellar Common Stock of which he or she holds and has the power to vote or direct the voting (the “Subject
Shares”) in favor of the approval of the Merger Agreement and (b) not transfer his or her Subject Shares, with certain limited
exceptions. Each Voting Agreement will terminate upon the earlier of (i) termination of the Merger Agreement or (ii) the Effective
Time.
The foregoing description of the Voting Agreements
does not purport to be complete and is qualified in its entirety by reference to the full text of the Voting Agreements, the form of which
is attached hereto as Exhibit 10.1 and incorporated by reference herein.
Director Support Agreements
Concurrently with the execution and delivery of
the Merger Agreement, Prosperity entered into a director support agreement (each, a “Support Agreement”) with members of the
Board of Directors of Stellar. Pursuant to the Support Agreement, each such director has agreed, among other things and subject to the
terms of the Support Agreement and limited exceptions therein, for a period of two years after the date of the Effective Time, not to
(i) disclose or use confidential information of Prosperity, Prosperity Bank, Stellar, Stellar Bank, or any of their respective subsidiaries
and affiliates (each a “Covered Entity”), (ii) solicit customers of a Covered Entity or (iii) solicit certain employees
of a Covered Entity.
The foregoing description of the Support Agreements
does not purport to be complete and is qualified in its entirety by reference to the full text of the Support Agreements, the form of
which is attached hereto as Exhibit 10.2 and incorporated by reference herein.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
|
Description of Exhibit |
| |
|
|
| 2.1 |
|
Agreement and Plan of Merger, dated as of January 27, 2026, by and between Prosperity Bancshares, Inc. and Stellar Bancorp, Inc.* |
| |
|
|
| 10.1 |
|
Form of Voting Agreement, dated as of January 27, 2026, by and between Prosperity Bancshares, Inc. and each director of Stellar Bancorp, Inc. |
| |
|
|
| 10.2 |
|
Form of Director Support Agreement, dated as of January 27, 2026, by and among Prosperity Bancshares, Inc., Prosperity Bank, Stellar Bancorp, Inc., Stellar Bank, and directors of Stellar Bancorp, Inc. |
| |
|
|
| 104 |
|
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
*Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules
and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment
to the SEC upon request.
Cautionary Notes on Forward Looking Statements
This Current Report on Form 8-K contains
statements regarding the proposed transaction between Prosperity and Stellar; future financial and operating results; benefits and synergies
of the proposed transaction; future opportunities for Prosperity; the issuance of common stock of Prosperity contemplated by the Merger
Agreement; the expected filing by Prosperity with the Securities and Exchange Commission (the “SEC”) of a registration statement
on Form S-4 (the “Registration Statement”) and a prospectus of Prosperity and a proxy statement of Stellar to be included
therein (the “Proxy Statement/Prospectus”); the expected timing of the closing of the proposed transaction; the ability of
the parties to complete the proposed transaction considering the various closing conditions and any other statements about future expectations
that constitute forward-looking statements within the meaning of the federal securities laws, including the meaning of the Private Securities
Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),
and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, oral or written forward-looking statements
may also be included in other information released to the public. Such forward-looking statements are typically, but not exclusively,
identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “believe,”
“estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,”
“is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,”
“will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will
impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will
result,” “would be,” variations of such words or phrases (including where the word “could,” “may,”
or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the
statement addresses some future result, occurrence, plan or objective. Forward-looking statements include all statements other than statements
of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates, and projections about
Prosperity, Stellar and their respective subsidiaries or related to the proposed transaction between Prosperity and Stellar and are subject
to significant risks and uncertainties that could cause actual results to differ materially from the results expressed in such statements.
These forward-looking statements may include information
about Prosperity’s and Stellar’s possible or assumed future economic performance or future results of operations, including
future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows
and Prosperity’s and Stellar’s future capital expenditures and dividends, future financial condition and changes therein,
including changes in Prosperity’s and Stellar’s loan portfolio and allowance for loan losses, future capital structure or
changes therein, as well as the plans and objectives of management for Prosperity’s and Stellar’s future operations, future
or proposed acquisitions, the future or expected effect of acquisitions on Prosperity’s and Stellar’s operations, results
of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction,
and statements about the assumptions underlying any such statement.
These forward-looking statements are not guarantees
of future performance and are based on expectations and assumptions Prosperity and Stellar currently believe to be valid. Because forward-looking
statements relate to future results and occurrences, many of which are outside of the control of Prosperity and Stellar, they are subject
to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Many possible events or factors could adversely
affect the future financial results and performance of Prosperity, Stellar or the combined company and could cause those results or performance
to differ materially from those expressed in or implied by the forward-looking statements. Such risks and uncertainties include, among
others: (1) the risk that the cost savings and synergies from the proposed transaction may not be fully realized or may take longer
than anticipated to be realized, (2) disruption to Prosperity’s and Stellar’s businesses as a result of the announcements
and pendency of the proposed transaction, (3) the risk that the integration of Stellar’s businesses and operations into Prosperity
will be materially delayed or will be more costly or difficult than expected, or that Prosperity is otherwise unable to successfully integrate
Stellar’s business into its own, including as a result of unexpected factors or events, (4) the failure to obtain the necessary
approval by the shareholders of Stellar, (5) the ability by Prosperity and/or Stellar to obtain required governmental approvals of
the proposed transaction on the timeline expected, or at all, and the risk that such approvals may result in the imposition of conditions
that could adversely affect Prosperity after the closing of the proposed transaction or adversely affect the expected benefits of the
proposed transaction, (6) reputational risk and the reaction of each company’s customers, suppliers, employees or other business
partners to the proposed transaction, (7) the failure of the closing conditions in the Merger Agreement to be satisfied, or any unexpected
delay in closing the proposed transaction or the occurrence of any event, change or other circumstances that could give rise to the termination
of the Merger Agreement, (8) the dilution caused by the issuances of additional shares of Prosperity’s common stock in the
proposed transaction, (9) the possibility that the proposed transaction may be more expensive to complete than anticipated, including
as a result of unexpected factors or events, (10) the outcome of any legal or regulatory proceedings that may be currently pending
or later instituted against Prosperity before or after the proposed transaction, or against Stellar, (11) diversion of management’s
attention from ongoing business operations and (12) general competitive, economic, political and market conditions and other factors that
may affect future results of Prosperity and Stellar. Prosperity and Stellar disclaim any obligation to update such factors or to publicly
announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.
These and various other risks, uncertainties, assumptions, and factors are discussed in the Annual Reports on Form 10-K for the year
ended December 31, 2024, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed by Prosperity or Stellar
and in other filings made by Prosperity and Stellar with the SEC from time to time.
Additional Information about the Transaction
and Where to Find It
Prosperity intends to file with the SEC the Registration
Statement on Form S-4 to register the shares of Prosperity common stock to be issued to the shareholders of Stellar in connection
with the proposed transaction. The Registration Statement will include the Proxy Statement/Prospectus which will be sent to the shareholders
of Stellar in connection with the proposed transaction. This communication is not a substitute for the Registration Statement, the Proxy
Statement/Prospectus or any other document that may be filed by Prosperity or Stellar with the SEC. INVESTORS AND SECURITY HOLDERS ARE
URGED TO READ THE REGISTRATION STATEMENT, THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN
CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE INTO THE PROXY/STATEMENT PROSPECTUS, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors
and security holders will be able to obtain the Registration Statement and the Proxy Statement/Prospectus (when available) and other documents
that are filed with the SEC by Prosperity or Stellar, as applicable, free of charge from the SEC’s website at https://www.sec.gov
or through the investor relations section of Prosperity’s website at https://www.prosperitybankusa.com/investor-relations/ or Stellar’s
website at https://ir.stellar.bank.
Participants in the Solicitation
Prosperity, Stellar and certain of their directors
and executive officers and other employees may be deemed to be participants in the solicitation of proxies from Stellar’s shareholders
in connection with the proposed transaction. Information about the directors and executive officers of Prosperity and their ownership
of Prosperity common stock is contained in the definitive proxy statement for Prosperity’s 2025 annual meeting of shareholders (the
“Prosperity Annual Meeting Proxy Statement”), which was filed with the SEC on March 13, 2025, including under the headings
“Item 1. Election of Directors,” “Corporate Governance,” “Executive Compensation and Other Matters,”
“Item 3. Advisory Vote on Executive Compensation,” and “Beneficial Ownership of Common Stock by Management of the Company
and Principal Shareholders.” Information about the directors and executive officers of Stellar and their ownership of Stellar common
stock is contained in the definitive proxy statement for Stellar’s 2025 annual meeting of shareholders (the “Stellar Annual
Meeting Proxy Statement”), which was filed with the SEC on April 10, 2025, including under the headings “Proposal 1:
Election of Directors,” “Certain Corporate Governance Matters,” “Executive Compensation and Other Matters,”
“Executive Compensation Payments and Awards,” “Proposal 4: Advisory Vote on the Compensation of the Company’s
Named Executive Officers (“Say-on-Pay Resolution”),” and “Beneficial Ownership of the Company’s Common Stock
by Management and Principal Shareholders of the Company.” Additional information regarding the persons who may, under the rules of
the SEC, be deemed participants in the solicitation of the shareholders of Stellar in connection with the proposed transaction, including
a description of their direct or indirect interests, by security holdings or otherwise, will be included in the Proxy Statement/Prospectus
relating to the proposed transaction when it is filed with the SEC. To the extent holdings of securities by potential participants (or
the identity of such participants) have changed since the information printed in the Prosperity Annual Meeting Proxy Statement or the
Stellar Annual Meeting Proxy Statement, such information has been or will be reflected on Statements of Change in Ownership on Forms 3
and 4 filed with the SEC, as applicable. Free copies of the Proxy Statement/Prospectus relating to the proposed transaction and free copies
of the other SEC filings to which reference is made in this paragraph may be obtained from the SEC’s website at https://www.sec.gov
or through the investor relations section of Prosperity’s website at https://www.prosperitybankusa.com/investor-relations/ or Stellar’s
website at https://ir.stellar.bank.
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or
sell, or the solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or
a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction
in which such offer, invitation, sale or solicitation would be unlawful prior to registration or qualification under the securities laws
of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10
of the Securities Act, and otherwise in accordance with applicable law.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
STELLAR BANCORP, INC. |
| Dated: January 29, 2026 |
|
| |
|
| |
By: |
/s/
Paul P. Egge |
| |
|
Paul P. Egge |
| |
|
Chief Financial Officer |
