Prosperity Bancshares reported fourth-quarter net income of $187.4 million, or $1.10 per diluted share, exceeding the consensus estimate of $1.02 by 7.8%. Net interest income rose 14.9% year-over-year to $345.2 million, driven by a 27-basis-point expansion in the net interest margin to 3.52%. Total loan balances increased 8.1% to $28.3 billion, while deposits grew 5.4% to $32.7 billion. The efficiency ratio improved to 54.3% from 56.9% a year ago, reflecting disciplined expense management and higher fee income, which rose 6.2% to $112.5 million.

Shares of Prosperity Bancshares declined 7.9% following the announcement of a $2.0 billion all-stock and cash deal to acquire Houston-based Stellar Bancorp. Under the terms, Prosperity will issue approximately 10.5 million new shares and pay $800 million in cash, funding the transaction with available liquidity and existing debt capacity. Stellar’s network of 23 Texas branches and $4.1 billion in loans will boost Prosperity’s market share in key Gulf Coast markets. Management expects the deal to be 5% accretive to earnings per share in the first full year, with pro forma tangible book value dilution of 2.1%, and anticipates closing by late third quarter 2026, subject to regulatory and shareholder approval.