Prosperity Bancshares (NYSE:PB) reported a double-digit surge in annual profits Wednesday, paired with a massive acquisition that fundamentally alters the competitive landscape of Texas banking.
The Houston-based lender posted full-year 2025 net income of $542.8 million, a 13.2% increase over the prior year, while fourth-quarter earnings of $1.49 per share topped analyst expectations.
The financial results served as a backdrop for the announcement of a definitive merger agreement with Stellar Bancorp, in a deal valued at approximately $2.02 billion.
The stock-and-cash transaction will add Stellar's $10.8 billion in assets to Prosperity’s portfolio, catapulting the combined entity to the position of the second-largest Texas-based bank by deposits.
Operational metrics for the year underscored a high-performing "fortress" balance sheet.
Net interest margin expanded by 25 basis points to 3.30%, fueled by higher yields on loans and a disciplined approach to deposit pricing.
Despite industry-wide pressures on liquidity, Prosperity saw deposits grow by $700.4 million in the fourth quarter alone—a 10.1% annualized growth rate.
The bank also confirmed it officially completed its merger with American Bank on January 1, 2026, adding 18 banking offices across South and Central Texas.
The integration of American Bank, combined with the pending Stellar and Southwest Bancshares acquisitions, is expected to drive significant cost synergies and fee income growth through 2027.