STELHIGH SIGNALRISK10-K

Stellar Bancorp has entered into a definitive merger agreement to be acquired by Prosperity Bancshares while experiencing a substantial decline in cash reserves.

The pending merger with Prosperity Bancshares represents a significant corporate event that will eliminate Stellar as an independent entity, fundamentally changing the investment thesis for current shareholders. The removal of references to the prior Allegiance merger suggests the company is repositioning its narrative around this new transaction, which typically signals management's focus has shifted entirely to deal completion rather than standalone operations.

Comparing 2026-02-26 vs 2025-03-03View on EDGAR →
FINANCIAL ANALYSIS

Stellar's financial position shows meaningful stress with cash and equivalents declining substantially from $911.2M to $419.5M, representing a material reduction in liquidity. Operating cash flow generation also weakened notably, falling from $132.6M to $97.0M, while net income declined modestly from $115.0M to $102.9M. The combination of reduced cash generation and the substantial cash position decline suggests potential capital deployment challenges or operational headwinds that may have contributed to management's decision to pursue a sale.

FINANCIAL STATEMENT CHANGES
Cash & Equivalents
Balance Sheet
-54%
$911.2M$419.5M

Cash declined 54% — significant cash burn or deployment; verify adequacy of remaining liquidity runway.

Operating Cash Flow
Cash Flow
-26.9%
$132.6M$97.0M

Operating cash flow softened — monitor whether temporary working capital timing or structural deterioration.

Net Income
P&L
-10.5%
$115.0M$102.9M

Net income declined 10.5% — review whether driven by operations, interest costs, or non-recurring items.

LANGUAGE CHANGES
NEW — 2026-02-26
PRIOR — 2025-03-03
ADDED
See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
As of February 24, 2026, there were 50,772,216 shares of the registrant s common stock, $0.01 par value, outstanding.
Changes in and Disagreements w ith Accountants on Accounting and Financial Disclosure 66 Item 9A.
Form 10-K Summary 70 Signatures 71 PART I Except where the context otherwise requires or where otherwise indicated in this Annual Report on Form 10-K the term Stellar refers to Stellar Bancorp, Inc., the terms we, us, our, Company and our business refer to Stellar Bancorp, Inc.
On January 27, 2026, the Company 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, the Company will merge with and into Prosperity (the Merger ), with Prosperity continuing as the surviving corporation in the Merger.
Immediately following the Merger, Stellar Bank will merge with and into Prosperity s wholly owned banking subsidiary, Prosperity Bank (the Bank Merger ).
Prosperity Bank will continue as the surviving bank in the Bank Merger.
The closing of the Merger is expected to occur in the second quarter of 2026, subject to customary conditions, including approval of the Company s shareholders and regulatory approvals.
See Part I, Item 1A, Risk Factors, Part II, Item 7, Management s Discussion and Analysis of Financial Condition and Results of Operations, and Note 18 Subsequent Events in the accompanying notes to the consolidated financial statements.
REMOVED
As of February 27, 2025, there were 52,950,142 shares of the registrant's common stock, $0.01 par value, outstanding.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 64 Item 9A.
Merger of Equals On October 1, 2022, Allegiance Bancshares, Inc.
At the effective time of the Merger, each outstanding share of Allegiance common stock was converted into the right to receive 1.4184 shares of common stock of the Company.
The Company s results of operations for the year ended December 31, 2022 reflect Allegiance s results for the first nine months of 2022 and the Company' for the fourth quarter of 2022, after the Merger on October 1, 2022.
The Merger had a significant impact on all aspects of the Company s financial statements and, as a result, financial results for periods after the Merger are not comparable to financial results for periods prior to the Merger.
See Note 2 Acquisitions in the accompanying notes to the consolidated financial statements for the impact of the Merger.
As of December 31, 2024, we operated 54 full-service banking centers, wi th 37 banking centers in the Houston MSA, 16 banking centers in the Beaumont MSA and one banking center in Dallas, Texas.
Through its wholly-owned subsidiary, Stellar Bank, the Company provides a diversified range of commercial banking services primarily to small- to medium-sized businesses, professionals and individual customers within our markets.
As of December 31, 2024, we had total assets of $10.91 billion, total loans of $7.44 billion, total deposits of $9.13 billion and total shareholders equity of $1.61 billion.
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