Stellar Bancorp Reports $102.9 Million Net Income for Fiscal Year 2025, Announces Merger with Prosperity Bancshares

Stellar Bancorp, Inc. reported a net income of $102.9 million, or $1.99 per diluted share, for the fiscal year ending December 31, 2025, reflecting a decrease of 10.5% from the previous year's net income of $115.0 million, or $2.15 per diluted share. The decline in profitability was attributed to a $13.0 million increase in the provision for credit losses, a $6.4 million decrease in net interest income, and a $1.3 million drop in noninterest income. However, these were partially offset by a $3.5 million reduction in noninterest expenses and a $5.0 million decrease in the provision for income taxes. The company's return on average equity was 6.34%, down from 7.34% in 2024, while the return on average assets decreased from 1.08% to 0.97%.

In terms of operational changes, Stellar Bancorp is in the process of merging with Prosperity Bancshares, Inc., with the merger expected to close in the second quarter of 2026. Under the terms of the merger agreement, each share of Stellar common stock will be converted into 0.3803 shares of Prosperity common stock and $11.36 in cash. This strategic move aims to enhance the company's market position and operational scale. As of December 31, 2025, Stellar operated 52 banking centers, with a significant presence in the Houston and Beaumont metropolitan areas.

The company’s total assets stood at $10.81 billion, with total loans of $7.30 billion and total deposits of $9.02 billion. The loan portfolio saw a slight decrease of 1.9% compared to the previous year, primarily due to declines in commercial real estate and construction loans. The allowance for credit losses on loans increased to $83.6 million, representing 1.15% of total loans, compared to 1.09% in 2024. Nonperforming assets rose to $60.0 million, or 0.56% of total assets, up from $38.9 million, indicating a need for continued vigilance in credit risk management.

Stellar Bancorp's workforce comprised 1,053 employees as of December 31, 2025, with a focus on enhancing employee engagement and development through various training programs. The company reported a diverse workforce, with 50% identifying as non-white and 70% as women. Looking ahead, Stellar aims to leverage its community banking strategy to foster growth, enhance customer relationships, and expand its market share, while also navigating the challenges posed by economic conditions and regulatory requirements. The company remains committed to maintaining a strong capital position, with a total shareholders' equity of $1.67 billion as of the end of 2025.