8-K
Stellar Bancorp, Inc. (STEL)
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): July 26, 2024
Stellar Bancorp, Inc.
(Exact Name of Registrant as Specified in Charter)
| Texas | 001-38280 | 20-8339782 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
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)
(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:
| £ | 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<br><br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.01 per share | STEL | New York Stock Exchange |
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 2.02. Results of Operations and Financial Condition.
On July 26, 2024, Stellar Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter of 2024. A copy of the press release, as well as a copy of the accompanying earnings presentation, are furnished as Exhibit 99.1 and Exhibit 99.2 hereto, respectively, and incorporated herein by reference.
In accordance with General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02, Exhibit 99.1 and Exhibit 99.2 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, (the ”Securities Act”), except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure
On Friday, July 26, 2024, at 8:00 a.m., Central Time, the Company will host an investor conference call and webcast to review its second quarter financial results. The webcast will include a presentation that consists of information regarding the Company’s financial results. The presentation materials will be posted on the Company’s website before the open of the market on Friday, July 26, 2024. The presentation materials are attached hereto as Exhibit 99.2 and are incorporated herein by reference.
In accordance with General Instruction B.2 to Form 8-K, the information furnished in this Item 7.01, including Exhibit 99.2, of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act or the
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following are furnished as exhibits to this Current Report on Form 8-K:
| Exhibit Number | Description of Exhibit |
|---|---|
| 99.1 | Press Release issued datedJuly26, 2024 |
| 99.2 | Q22024 Earnings Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, the Company does not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning the Company’s plans, objectives, strategies, expectations, intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “building,” “continue,” “could,” “drive,” “estimates,” “expects,” “extent,” “focus,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “position,” “probable,” “progressing,” “projects,” “prudent,” “seeks,” “should,” “target,” “view,” “will” or “would” or the negative of these words and phrases or similar words or phrases. For a list of factors that could cause actual results to differ materially from those set forth in the forward-looking statements, see the risk factors described in the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.
SIGNATURE
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. | ||
|---|---|---|
| Date: July 26, 2024 | By: | /s/ Paul P. Egge |
| Paul P. Egge | ||
| Chief Financial Officer |
Document
Exhibit 99.1
PRESS RELEASE
STELLAR BANCORP, INC. REPORTS
SECOND QUARTER 2024 RESULTS
HOUSTON, July 26, 2024 - Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $29.8 million, or diluted earnings per share of $0.56, for the second quarter of 2024 compared to net income of $26.1 million, or diluted earnings per share of $0.49, for the first quarter of 2024.
“We are pleased to announce our second quarter 2024 results,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer. “Our disciplined focus on capital, credit and liquidity gives us strength and optionality as we move into the back half of the year. Although many anticipate lower interest rates in September, we are prepared if that does not come to pass,” said Mr. Franklin. “Stellar Bank is well-positioned for either outcome.”
“In addition to building capital, we have reduced our commercial real estate exposure and are pursuing a more balanced approach to our lending through new additions to our team to help us build our commercial and industrial portfolio. Our credit quality remains steady as the economy in our markets remains solid. We operate in some of, if not the best, markets in the country and they have shown resilience throughout this tightening cycle,” Mr. Franklin continued.
“Our focus on capital, credit and liquidity will not change. We will continue to monitor effects of higher interest rates and the contentious presidential election on our markets. We believe that building and maintaining a strong balance sheet, positions us to take advantage of opportunities that arise from this economic cycle. Our focus remains on building long-term shareholder value as we embark on the second half of 2024 and the future is bright,” concluded Mr. Franklin.
Second Quarter 2024 Financial Highlights
•Solid Profitability: Second quarter 2024 net income of $29.8 million, or diluted earnings per share of $0.56, translated into an annualized return on average assets of 1.13%, an annualized return on average equity of 7.78% and an annualized return on average tangible equity of 12.82%(1).
•Meaningful Regulatory Capital Build: Total risk-based capital ratio increased to 15.34% at June 30, 2024 from 14.62% at March 31, 2024 and Tier 1 leverage ratio increased to 10.93% at June 30, 2024 from 10.55% at March 31, 2024.
•Strong Net Interest Margin: Tax equivalent net interest margin was 4.24% for the second quarter of 2024 compared to 4.26% for the first quarter of 2024. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.82%(1) for the second quarter of 2024 compared to 3.91%(1) for the first quarter of 2024.
•Stable Credit Performance: Net charge-offs of $715 thousand, or 0.02%, for the year-to-date 2024.
Second Quarter 2024 Results
Net interest income in the second quarter of 2024 decreased $708 thousand, or 0.7%, to $101.4 million from $102.1 million for the first quarter of 2024. The net interest margin on a tax equivalent basis decreased 2 basis points to 4.24% for the second quarter of 2024 from 4.26% for the first quarter of 2024. The decrease in the net interest margin from the prior quarter was primarily due to the impact of increased interest rates on our cost of funding only partially offset by increased income on interest earning assets. Net interest income for the second quarter of 2024 benefited from $10.1 million of income from purchase accounting adjustments compared to $8.6 million in the first quarter of 2024. Excluding purchase accounting adjustments, net interest income (tax equivalent) for the second quarter 2024 would have been $91.4 million(1) and the tax equivalent net interest margin would have been 3.82%(1).
_____________________
(1) Refer to page 10 of this earnings release for the calculation of this non-GAAP financial measure.
Noninterest income for the second quarter of 2024 was $5.4 million, a decrease of $880 thousand, or 14.0%, compared to $6.3 million for the first quarter of 2024. Noninterest income decreased in the second quarter of 2024 compared to the first quarter of 2024 primarily due to
a decrease in gains on sales of assets in the second quarter of 2024 compared to the first quarter of 2024.
Noninterest expense for the second quarter of 2024 decreased $194 thousand, or 0.3%, to $71.2 million compared to $71.4 million for the first quarter of 2024. The decrease in noninterest expense in the second quarter of 2024 compared to the first quarter of 2024 was primarily due to a $2.3 million decrease in salaries and employee benefits and a $1.0 million decrease in professional fees partially offset by other expenses.
The efficiency ratio was 66.63% for the second quarter of 2024 compared to 66.18% for the first quarter of 2024. Annualized returns on average assets, average equity and average tangible equity were 1.13%, 7.78% and 12.82%(1) for the second quarter of 2024, respectively, compared to 0.98%, 6.88% and 11.47%(1), respectively, for the first quarter of 2024.
Financial Condition
Total loans at June 30, 2024 decreased $194.2 million to $7.71 billion compared to $7.91 billion at March 31, 2024. At June 30, 2024, the remaining balance of the purchase accounting adjustments on loans was $87.4 million.
Total deposits at June 30, 2024 decreased $69.4 million to $8.73 billion compared to $8.79 billion at March 31, 2024, due to decreases in certificates and other time deposits, noninterest-bearing deposits and interest-bearing demand deposits, partially offset by increases in money market and savings deposits. Shifts in the deposit mix were primarily driven by the current interest rate environment and an intensely competitive market for deposits. Estimated uninsured deposits totaled $4.79 billion and estimated uninsured deposits net of collateralized deposits of $1.01 billion were $3.78 billion, or 43.3%, of total deposits at June 30, 2024.
Total assets at June 30, 2024 were $10.72 billion, a decrease of $5.6 million, compared to $10.73 billion at March 31, 2024.
Asset Quality
Nonperforming assets totaled $53.4 million, or 0.50% of total assets, at June 30, 2024, compared to $57.1 million, or 0.53% of total assets, at March 31, 2024. The allowance for credit losses on loans as a percentage of total loans was 1.23% at June 30, 2024 and 1.22% at March 31, 2024.
The second quarter of 2024 included a reversal of provision for credit losses expenses of $1.9 million compared to a $4.1 million provision for credit losses recorded during the first quarter of 2024. Net charge-offs for the second quarter of 2024 were $1 thousand, or 0.00% (annualized) of average loans, compared to net charge-offs of $714 thousand, or 0.04% (annualized) of average loans, for the first quarter of 2024.
GAAP Reconciliation of Non-GAAP Financial Measures
Stellar’s management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures on page 10 of this earnings release for a reconciliation of these non-GAAP financial measures.
Conference Call
Stellar’s management team will host a conference call and webcast on Friday, July 26, 2024 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its results for the second quarter of 2024. Participants may register for the conference call at https://registrations.events/direct/Q4I635860 to receive the dial-in numbers and unique PIN to access the call. If you need assistance in obtaining a dial-in number, please contact IR@stellar.bank. A simultaneous audio-only webcast may be accessed at https://events.q4inc.com/attendee/232230638. If you are unable to participate during the live webcast, the webcast will be accessible via the Investor Relations section of the Company’s website at ir.stellar.bank.
About Stellar Bancorp, Inc.
Stellar Bancorp, Inc. is a bank holding company headquartered in Houston, Texas. Stellar’s principal banking subsidiary, Stellar Bank, provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers across the Houston, Dallas, Beaumont and surrounding communities in Texas.
Investor Relations
IR@stellar.bank
Forward-Looking Statements
Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements about the benefits of the Company’s merger with Allegiance Bancshares, Inc. (the “Merger”), including future financial performance and operating results, the Company’s plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “scheduled,” “plans,” “intends,” “projects,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” “would,” or “continue” or negatives of such terms or other comparable terminology.
All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Stellar to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others: the risk that the cost savings and any revenue synergies from the Merger may not be fully realized or may take longer than anticipated to be realized; disruption to our business as a result of the Merger; the risk that the integration of operations will be materially delayed or will be more costly or difficult than we expected or that we are otherwise unable to successfully integrate our legacy businesses; the amount of the costs, fees, expenses and charges related to the Merger; reputational risk and the reaction of our customers, suppliers, employees or other business partners to the Merger; changes in the interest rate environment, the value of Stellar’s assets and obligations and the availability of capital and liquidity; general competitive, economic, political and market conditions; and other factors that may affect future results of Stellar including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; disruptions to the economy and the U.S. banking system caused by recent bank failures, risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in the cost of our deposit insurance assessments and other actions of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking and legislative and regulatory actions and reforms.
Additional factors which could affect the Company’s future results can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC’s website at https://www.sec.gov. We disclaim any obligation and do not intend to update or revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| 2024 | 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30 | March 31 | December 31 | September 30 | June 30 | ||||||
| (Dollars in thousands) | ||||||||||
| ASSETS | ||||||||||
| Cash and due from banks | $ | 110,341 | $ | 74,663 | $ | 121,004 | $ | 94,970 | $ | 105,913 |
| Interest-bearing deposits at other financial institutions | 379,909 | 325,079 | 278,233 | 207,302 | 198,176 | |||||
| Total cash and cash equivalents | 490,250 | 399,742 | 399,237 | 302,272 | 304,089 | |||||
| Available for sale securities, at fair value | 1,630,971 | 1,523,100 | 1,395,680 | 1,414,952 | 1,478,222 | |||||
| Loans held for investment | 7,713,897 | 7,908,111 | 7,925,133 | 8,004,528 | 8,068,718 | |||||
| Less: allowance for credit losses on loans | (94,772) | (96,285) | (91,684) | (93,575) | (100,195) | |||||
| Loans, net | 7,619,125 | 7,811,826 | 7,833,449 | 7,910,953 | 7,968,523 | |||||
| Accrued interest receivable | 43,348 | 45,466 | 44,244 | 43,536 | 42,051 | |||||
| Premises and equipment, net | 113,984 | 115,698 | 118,683 | 119,332 | 119,142 | |||||
| Federal Home Loan Bank stock | 15,089 | 16,050 | 25,051 | 29,022 | 24,478 | |||||
| Bank-owned life insurance | 106,262 | 105,671 | 105,084 | 104,699 | 104,148 | |||||
| Goodwill | 497,318 | 497,318 | 497,318 | 497,318 | 497,260 | |||||
| Core deposit intangibles, net | 104,315 | 110,513 | 116,712 | 122,944 | 129,805 | |||||
| Other assets | 103,001 | 103,838 | 111,681 | 120,432 | 110,633 | |||||
| Total assets | $ | 10,723,663 | $ | 10,729,222 | $ | 10,647,139 | $ | 10,665,460 | $ | 10,778,351 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| LIABILITIES: | ||||||||||
| Deposits: | ||||||||||
| Noninterest-bearing | $ | 3,308,441 | $ | 3,323,149 | $ | 3,546,815 | $ | 3,656,288 | $ | 3,713,536 |
| Interest-bearing | ||||||||||
| Demand | 1,564,405 | 1,576,261 | 1,659,999 | 1,397,492 | 1,437,509 | |||||
| Money market and savings | 2,213,031 | 2,203,767 | 2,136,777 | 2,128,950 | 2,174,073 | |||||
| Certificates and other time | 1,639,426 | 1,691,539 | 1,529,876 | 1,503,891 | 1,441,251 | |||||
| Total interest-bearing deposits | 5,416,862 | 5,471,567 | 5,326,652 | 5,030,333 | 5,052,833 | |||||
| Total deposits | 8,725,303 | 8,794,716 | 8,873,467 | 8,686,621 | 8,766,369 | |||||
| Accrued interest payable | 12,327 | 12,227 | 11,288 | 7,612 | 4,555 | |||||
| Borrowed funds | 240,000 | 215,000 | 50,000 | 323,981 | 369,963 | |||||
| Subordinated debt | 109,964 | 109,864 | 109,765 | 109,665 | 109,566 | |||||
| Other liabilities | 70,274 | 66,717 | 81,601 | 76,735 | 69,218 | |||||
| Total liabilities | 9,157,868 | 9,198,524 | 9,126,121 | 9,204,614 | 9,319,671 | |||||
| SHAREHOLDERS’ EQUITY: | ||||||||||
| Common stock | 536 | 536 | 533 | 533 | 533 | |||||
| Capital surplus | 1,238,477 | 1,235,221 | 1,232,627 | 1,231,686 | 1,228,532 | |||||
| Retained earnings | 447,948 | 425,130 | 405,945 | 385,600 | 361,619 | |||||
| Accumulated other comprehensive loss | (121,166) | (130,189) | (118,087) | (156,973) | (132,004) | |||||
| Total shareholders’ equity | 1,565,795 | 1,530,698 | 1,521,018 | 1,460,846 | 1,458,680 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 10,723,663 | $ | 10,729,222 | $ | 10,647,139 | $ | 10,665,460 | $ | 10,778,351 |
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | June 30 | June 30 | ||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||
| INTEREST INCOME: | ||||||||||||||
| Loans, including fees | $ | 135,885 | $ | 134,685 | $ | 139,114 | $ | 138,948 | $ | 133,931 | $ | 270,570 | $ | 259,660 |
| Securities: | ||||||||||||||
| Taxable | 11,923 | 9,293 | 9,622 | 9,493 | 9,726 | 21,216 | 19,379 | |||||||
| Tax-exempt | 816 | 818 | 418 | 437 | 436 | 1,634 | 1,698 | |||||||
| Deposits in other financial institutions | 3,555 | 3,627 | 3,021 | 2,391 | 2,865 | 7,182 | 6,636 | |||||||
| Total interest income | 152,179 | 148,423 | 152,175 | 151,269 | 146,958 | 300,602 | 287,373 | |||||||
| INTEREST EXPENSE: | ||||||||||||||
| Demand, money market and savings deposits | 28,399 | 27,530 | 25,033 | 23,557 | 20,708 | 55,929 | 38,745 | |||||||
| Certificates and other time deposits | 18,758 | 15,084 | 15,075 | 13,282 | 9,622 | 33,842 | 12,929 | |||||||
| Borrowed funds | 1,700 | 1,774 | 4,154 | 5,801 | 6,535 | 3,474 | 7,852 | |||||||
| Subordinated debt | 1,912 | 1,917 | 1,983 | 1,908 | 1,812 | 3,829 | 3,739 | |||||||
| Total interest expense | 50,769 | 46,305 | 46,245 | 44,548 | 38,677 | 97,074 | 63,265 | |||||||
| NET INTEREST INCOME | 101,410 | 102,118 | 105,930 | 106,721 | 108,281 | 203,528 | 224,108 | |||||||
| (Reversal of) provision for credit losses | (1,935) | 4,098 | 1,047 | 2,315 | 1,915 | 2,163 | 5,581 | |||||||
| Net interest income after provision for credit losses | 103,345 | 98,020 | 104,883 | 104,406 | 106,366 | 201,365 | 218,527 | |||||||
| NONINTEREST INCOME: | ||||||||||||||
| Service charges on deposit accounts | 1,648 | 1,598 | 1,520 | 1,620 | 1,575 | 3,246 | 2,924 | |||||||
| (Loss) gain on sale of assets | (64) | 513 | 198 | — | (6) | 449 | 192 | |||||||
| Bank-owned life insurance | 591 | 587 | 573 | 551 | 532 | 1,178 | 1,054 | |||||||
| Debit card and ATM income | 543 | 527 | 542 | 935 | 1,821 | 1,070 | 3,519 | |||||||
| Other | 2,698 | 3,071 | 4,053 | 1,589 | 1,561 | 5,769 | 5,292 | |||||||
| Total noninterest income | 5,416 | 6,296 | 6,886 | 4,695 | 5,483 | 11,712 | 12,981 | |||||||
| NONINTEREST EXPENSE: | ||||||||||||||
| Salaries and employee benefits | 39,061 | 41,376 | 40,464 | 39,495 | 37,300 | 80,437 | 77,075 | |||||||
| Net occupancy and equipment | 4,503 | 4,390 | 4,572 | 4,455 | 3,817 | 8,893 | 7,905 | |||||||
| Depreciation | 1,948 | 1,964 | 1,955 | 1,952 | 1,841 | 3,912 | 3,677 | |||||||
| Data processing and software amortization | 5,501 | 4,894 | 5,000 | 4,798 | 4,674 | 10,395 | 9,728 | |||||||
| Professional fees | 1,620 | 2,662 | 3,867 | 997 | 1,564 | 4,282 | 3,091 | |||||||
| Regulatory assessments and FDIC insurance | 2,299 | 1,854 | 5,169 | 1,814 | 2,755 | 4,153 | 4,049 | |||||||
| Amortization of intangibles | 6,215 | 6,212 | 6,247 | 6,876 | 6,881 | 12,427 | 13,760 | |||||||
| Communications | 847 | 937 | 743 | 663 | 689 | 1,784 | 1,390 | |||||||
| Advertising | 891 | 765 | 1,004 | 877 | 907 | 1,656 | 1,746 | |||||||
| Acquisition and merger-related expenses | — | — | 3,072 | 3,421 | 2,897 | — | 9,062 | |||||||
| Other | 8,331 | 6,356 | 5,848 | 5,400 | 5,882 | 14,687 | 10,322 | |||||||
| Total noninterest expense | 71,216 | 71,410 | 77,941 | 70,748 | 69,207 | 142,626 | 141,805 | |||||||
| INCOME BEFORE INCOME TAXES | 37,545 | 32,906 | 33,828 | 38,353 | 42,642 | 70,451 | 89,703 | |||||||
| Provision for income taxes | 7,792 | 6,759 | 6,562 | 7,445 | 7,467 | 14,551 | 17,380 | |||||||
| NET INCOME | $ | 29,753 | $ | 26,147 | $ | 27,266 | $ | 30,908 | $ | 35,175 | $ | 55,900 | $ | 72,323 |
| EARNINGS PER SHARE | ||||||||||||||
| Basic | $ | 0.56 | $ | 0.49 | $ | 0.51 | $ | 0.58 | $ | 0.66 | $ | 1.05 | $ | 1.36 |
| Diluted | $ | 0.56 | $ | 0.49 | $ | 0.51 | $ | 0.58 | $ | 0.66 | $ | 1.04 | $ | 1.36 |
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | June 30 | June 30 | |||||||||||||||
| (Dollars and share amounts in thousands, except per share data) | |||||||||||||||||||||
| Net income | $ | 29,753 | $ | 26,147 | $ | 27,266 | $ | 30,908 | $ | 35,175 | $ | 55,900 | $ | 72,323 | |||||||
| Earnings per share, basic | $ | 0.56 | $ | 0.49 | $ | 0.51 | $ | 0.58 | $ | 0.66 | $ | 1.05 | $ | 1.36 | |||||||
| Earnings per share, diluted | $ | 0.56 | $ | 0.49 | $ | 0.51 | $ | 0.58 | $ | 0.66 | $ | 1.04 | $ | 1.36 | |||||||
| Dividends per share | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.26 | $ | 0.26 | |||||||
| Return on average assets(A) | 1.13 | % | 0.98 | % | 1.02 | % | 1.14 | % | 1.31 | % | 1.06 | % | 1.35 | % | |||||||
| Return on average equity(A) | 7.78 | % | 6.88 | % | 7.33 | % | 8.34 | % | 9.67 | % | 7.33 | % | 10.14 | % | |||||||
| Return on average tangible equity(A)(B) | 12.82 | % | 11.47 | % | 12.61 | % | 14.47 | % | 17.05 | % | 12.15 | % | 18.14 | % | |||||||
| Net interest margin (tax equivalent)(A)(C) | 4.24 | % | 4.26 | % | 4.40 | % | 4.37 | % | 4.49 | % | 4.25 | % | 4.64 | % | |||||||
| Net interest margin (tax equivalent) excluding PAA(A)(B)(C) | 3.82 | % | 3.91 | % | 3.91 | % | 3.87 | % | 3.97 | % | 3.86 | % | 4.18 | % | |||||||
| Efficiency ratio(D) | 66.63 | % | 66.18 | % | 69.21 | % | 63.50 | % | 60.83 | % | 66.40 | % | 59.86 | % | |||||||
| Capital Ratios | |||||||||||||||||||||
| Stellar Bancorp, Inc. (Consolidated) | |||||||||||||||||||||
| Equity to assets | 14.60 | % | 14.27 | % | 14.29 | % | 13.70 | % | 13.53 | % | 14.60 | % | 13.53 | % | |||||||
| Tangible equity to tangible assets(B) | 9.53 | % | 9.12 | % | 9.04 | % | 8.37 | % | 8.19 | % | 9.53 | % | 8.19 | % | |||||||
| Estimated Total capital ratio (to risk-weighted assets) | 15.34 | % | 14.62 | % | 14.02 | % | 13.61 | % | 13.21 | % | 15.34 | % | 13.21 | % | |||||||
| Estimated Common equity Tier 1 capital (to risk weighted assets) | 12.98 | % | 12.29 | % | 11.77 | % | 11.30 | % | 10.83 | % | 12.98 | % | 10.83 | % | |||||||
| Estimated Tier 1 capital (to risk-weighted assets) | 13.10 | % | 12.41 | % | 11.89 | % | 11.41 | % | 10.94 | % | 13.10 | % | 10.94 | % | |||||||
| Estimated Tier 1 leverage (to average tangible assets) | 10.93 | % | 10.55 | % | 10.18 | % | 9.82 | % | 9.51 | % | 10.93 | % | 9.51 | % | |||||||
| Stellar Bank | |||||||||||||||||||||
| Estimated Total capital ratio (to risk-weighted assets) | 14.65 | % | 14.13 | % | 13.65 | % | 13.32 | % | 12.98 | % | 14.65 | % | 12.98 | % | |||||||
| Estimated Common equity Tier 1 capital (to risk-weighted assets) | 13.12 | % | 12.61 | % | 12.20 | % | 11.80 | % | 11.38 | % | 13.12 | % | 11.38 | % | |||||||
| Estimated Tier 1 capital (to risk-weighted assets) | 13.12 | % | 12.61 | % | 12.20 | % | 11.80 | % | 11.38 | % | 13.12 | % | 11.38 | % | |||||||
| Estimated Tier 1 leverage (to average tangible assets) | 10.94 | % | 10.72 | % | 10.44 | % | 10.15 | % | 9.89 | % | 10.94 | % | 9.89 | % | |||||||
| Other Data | |||||||||||||||||||||
| Weighted average shares: | |||||||||||||||||||||
| Basic | 53,572 | 53,343 | 53,282 | 53,313 | 53,297 | 53,457 | 53,160 | ||||||||||||||
| Diluted | 53,608 | 53,406 | 53,350 | 53,380 | 53,375 | 53,506 | 53,261 | ||||||||||||||
| Period end shares outstanding | 53,564 | 53,551 | 53,291 | 53,322 | 53,303 | 53,564 | 53,303 | ||||||||||||||
| Book value per share | $ | 29.23 | $ | 28.58 | $ | 28.54 | $ | 27.40 | $ | 27.37 | $ | 29.23 | $ | 27.37 | |||||||
| Tangible book value per share(B) | $ | 18.00 | $ | 17.23 | $ | 17.02 | $ | 15.76 | $ | 15.60 | $ | 18.00 | $ | 15.60 | |||||||
| Employees - full-time equivalents | 1,045 | 1,007 | 998 | 1,008 | 1,004 | 1,045 | 1,004 |
(A)Interim periods annualized.
(B)Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 10 of this Earnings Release.
(C)Net interest margin represents net interest income divided by average interest-earning assets.
(D)Represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of loans, securities and assets. Additionally, taxes and provision for credit losses are not part of this calculation.
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2024 | March 31, 2024 | June 30, 2023 | ||||||||||||||||
| Average Balance | Interest Earned/ <br>Interest Paid | Average Yield/Rate | Average Balance | Interest Earned/ <br>Interest Paid | Average Yield/Rate | Average Balance | Interest Earned/<br>Interest Paid | Average Yield/Rate | ||||||||||
| (Dollars in thousands) | ||||||||||||||||||
| Assets | ||||||||||||||||||
| Interest-Earning Assets: | ||||||||||||||||||
| Loans | $ | 7,808,320 | $ | 135,885 | 7.00 | % | $ | 7,938,824 | $ | 134,685 | 6.82 | % | $ | 7,980,856 | $ | 133,931 | 6.73 | % |
| Securities | 1,549,638 | 12,739 | 3.31 | % | 1,441,814 | 10,111 | 2.82 | % | 1,502,949 | 10,162 | 2.71 | % | ||||||
| Deposits in other financial institutions | 258,916 | 3,555 | 5.52 | % | 264,906 | 3,627 | 5.51 | % | 209,722 | 2,865 | 5.48 | % | ||||||
| Total interest-earning assets | 9,616,874 | $ | 152,179 | 6.36 | % | 9,645,544 | $ | 148,423 | 6.19 | % | 9,693,527 | $ | 146,958 | 6.08 | % | |||
| Allowance for credit losses on loans | (96,306) | (91,612) | (96,414) | |||||||||||||||
| Noninterest-earning assets | 1,103,297 | 1,132,857 | 1,143,025 | |||||||||||||||
| Total assets | $ | 10,623,865 | $ | 10,686,789 | $ | 10,740,138 | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||
| Interest-bearing demand deposits | $ | 1,545,096 | $ | 12,213 | 3.18 | % | $ | 1,697,211 | $ | 12,278 | 2.91 | % | $ | 1,387,604 | $ | 9,343 | 2.70 | % |
| Money market and savings deposits | 2,227,393 | 16,186 | 2.92 | % | 2,150,805 | 15,252 | 2.85 | % | 2,220,827 | 11,365 | 2.05 | % | ||||||
| Certificates and other time deposits | 1,694,536 | 18,758 | 4.45 | % | 1,444,048 | 15,084 | 4.20 | % | 1,225,834 | 9,622 | 3.15 | % | ||||||
| Borrowed funds | 112,187 | 1,700 | 6.09 | % | 134,400 | 1,774 | 5.31 | % | 479,896 | 6,535 | 5.46 | % | ||||||
| Subordinated debt | 109,910 | 1,912 | 7.00 | % | 109,808 | 1,917 | 7.02 | % | 109,499 | 1,812 | 6.64 | % | ||||||
| Total interest-bearing liabilities | 5,689,122 | $ | 50,769 | 3.59 | % | 5,536,272 | $ | 46,305 | 3.36 | % | 5,423,660 | $ | 38,677 | 2.86 | % | |||
| Noninterest-Bearing Liabilities: | ||||||||||||||||||
| Noninterest-bearing demand deposits | 3,308,633 | 3,525,758 | 3,779,594 | |||||||||||||||
| Other liabilities | 87,986 | 96,461 | 78,411 | |||||||||||||||
| Total liabilities | 9,085,741 | 9,158,491 | 9,281,665 | |||||||||||||||
| Shareholders’ equity | 1,538,124 | 1,528,298 | 1,458,473 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 10,623,865 | $ | 10,686,789 | $ | 10,740,138 | ||||||||||||
| Net interest rate spread | 2.77 | % | 2.83 | % | 3.22 | % | ||||||||||||
| Net interest income and margin | $ | 101,410 | 4.24 | % | $ | 102,118 | 4.26 | % | $ | 108,281 | 4.48 | % | ||||||
| Net interest income and net interest margin (tax equivalent) | $ | 101,482 | 4.24 | % | $ | 102,207 | 4.26 | % | $ | 108,509 | 4.49 | % | ||||||
| Cost of funds | 2.27 | % | 2.06 | % | 1.69 | % | ||||||||||||
| Cost of deposits | 2.16 | % | 1.94 | % | 1.41 | % |
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Six Months Ended June 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||||||||
| Average Balance | Interest Earned/ <br>Interest Paid | Average Yield/Rate | Average Balance | Interest Earned/ <br>Interest Paid | Average Yield/Rate | |||||||
| (Dollars in thousands) | ||||||||||||
| Assets | ||||||||||||
| Interest-Earning Assets: | ||||||||||||
| Loans | $ | 7,873,572 | $ | 270,570 | 6.91 | % | $ | 7,914,303 | $ | 259,660 | 6.62 | % |
| Securities | 1,495,726 | 22,850 | 3.07 | % | 1,553,200 | 21,077 | 2.74 | % | ||||
| Deposits in other financial institutions | 261,911 | 7,182 | 5.52 | % | 286,823 | 6,636 | 4.67 | % | ||||
| Total interest-earning assets | 9,631,209 | $ | 300,602 | 6.28 | % | 9,754,326 | $ | 287,373 | 5.94 | % | ||
| Allowance for credit losses on loans | (93,959) | (94,881) | ||||||||||
| Noninterest-earning assets | 1,118,077 | 1,151,497 | ||||||||||
| Total assets | $ | 10,655,327 | $ | 10,810,942 | ||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||
| Interest-bearing demand deposits | $ | 1,621,154 | $ | 24,491 | 3.04 | % | $ | 1,518,213 | $ | 17,725 | 2.35 | % |
| Money market and savings deposits | 2,189,099 | 31,438 | 2.89 | % | 2,355,112 | 21,020 | 1.80 | % | ||||
| Certificates and other time deposits | 1,569,292 | 33,842 | 4.34 | % | 1,044,721 | 12,929 | 2.50 | % | ||||
| Borrowed funds | 123,293 | 3,474 | 5.67 | % | 293,578 | 7,852 | 5.39 | % | ||||
| Subordinated debt | 109,859 | 3,829 | 7.01 | % | 109,458 | 3,739 | 6.89 | % | ||||
| Total interest-bearing liabilities | 5,612,697 | $ | 97,074 | 3.48 | % | 5,321,082 | $ | 63,265 | 2.40 | % | ||
| Noninterest-Bearing Liabilities: | ||||||||||||
| Noninterest-bearing demand deposits | 3,417,196 | 3,971,862 | ||||||||||
| Other liabilities | 92,223 | 79,609 | ||||||||||
| Total liabilities | 9,122,116 | 9,372,553 | ||||||||||
| Shareholders’ equity | 1,533,211 | 1,438,389 | ||||||||||
| Total liabilities and shareholders' equity | $ | 10,655,327 | $ | 10,810,942 | ||||||||
| Net interest rate spread | 2.80 | % | 3.54 | % | ||||||||
| Net interest income and margin | $ | 203,528 | 4.25 | % | $ | 224,108 | 4.63 | % | ||||
| Net interest income and net interest margin (tax equivalent) | $ | 203,688 | 4.25 | % | $ | 224,628 | 4.64 | % | ||||
| Cost of funds | 2.16 | % | 1.37 | % | ||||||||
| Cost of deposits | 2.05 | % | 1.17 | % |
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | ||||||||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | |||||||||||
| (Dollars in thousands) | |||||||||||||||
| Period-end Loan Portfolio: | |||||||||||||||
| Commercial and industrial | $ | 1,392,435 | $ | 1,451,462 | $ | 1,409,002 | $ | 1,474,600 | $ | 1,512,476 | |||||
| Paycheck Protection Program (PPP) | 3,629 | 4,293 | 5,100 | 5,968 | 8,027 | ||||||||||
| Real estate: | |||||||||||||||
| Commercial real estate (including multi-family residential) | 4,029,671 | 4,049,885 | 4,071,807 | 4,076,606 | 4,038,487 | ||||||||||
| Commercial real estate construction and land development | 922,805 | 1,039,443 | 1,060,406 | 1,078,265 | 1,136,124 | ||||||||||
| 1-4 family residential (including home equity) | 1,098,681 | 1,049,316 | 1,047,174 | 1,024,945 | 1,009,439 | ||||||||||
| Residential construction | 200,134 | 252,573 | 267,357 | 289,553 | 311,208 | ||||||||||
| Consumer and other | 66,542 | 61,139 | 64,287 | 54,591 | 52,957 | ||||||||||
| Total loans held for investment | $ | 7,713,897 | $ | 7,908,111 | $ | 7,925,133 | $ | 8,004,528 | $ | 8,068,718 | |||||
| Deposits: | |||||||||||||||
| Noninterest-bearing | $ | 3,308,441 | $ | 3,323,149 | $ | 3,546,815 | $ | 3,656,288 | $ | 3,713,536 | |||||
| Interest-bearing | |||||||||||||||
| Demand | 1,564,405 | 1,576,261 | 1,659,999 | 1,397,492 | 1,437,509 | ||||||||||
| Money market and savings | 2,213,031 | 2,203,767 | 2,136,777 | 2,128,950 | 2,174,073 | ||||||||||
| Certificates and other time | 1,639,426 | 1,691,539 | 1,529,876 | 1,503,891 | 1,441,251 | ||||||||||
| Total interest-bearing deposits | 5,416,862 | 5,471,567 | 5,326,652 | 5,030,333 | 5,052,833 | ||||||||||
| Total deposits | $ | 8,725,303 | $ | 8,794,716 | $ | 8,873,467 | $ | 8,686,621 | $ | 8,766,369 | |||||
| Asset Quality: | |||||||||||||||
| Nonaccrual loans | $ | 50,906 | $ | 57,129 | $ | 39,191 | $ | 38,291 | $ | 43,349 | |||||
| Accruing loans 90 or more days past due | — | — | — | — | — | ||||||||||
| Total nonperforming loans | 50,906 | 57,129 | 39,191 | 38,291 | 43,349 | ||||||||||
| Other real estate | 2,548 | — | — | — | — | ||||||||||
| Total nonperforming assets | $ | 53,454 | $ | 57,129 | $ | 39,191 | $ | 38,291 | $ | 43,349 | |||||
| Net (recoveries) charge-offs | $ | (1) | $ | 714 | $ | 2,577 | $ | 8,116 | $ | 236 | |||||
| Nonaccrual loans: | |||||||||||||||
| Commercial and industrial | $ | 18,451 | $ | 15,465 | $ | 5,048 | $ | 14,991 | $ | 22,968 | |||||
| Real estate: | |||||||||||||||
| Commercial real estate (including multi-family residential) | 18,094 | 21,268 | 16,699 | 13,563 | 8,221 | ||||||||||
| Commercial real estate construction and land development | 1,641 | 8,406 | 5,043 | 170 | 388 | ||||||||||
| 1-4 family residential (including home equity) | 12,454 | 10,368 | 8,874 | 8,442 | 10,880 | ||||||||||
| Residential construction | 155 | 1,410 | 3,288 | 635 | 665 | ||||||||||
| Consumer and other | 111 | 212 | 239 | 490 | 227 | ||||||||||
| Total nonaccrual loans | $ | 50,906 | $ | 57,129 | $ | 39,191 | $ | 38,291 | $ | 43,349 | |||||
| Asset Quality Ratios: | |||||||||||||||
| Nonperforming assets to total assets | 0.50 | % | 0.53 | % | 0.37 | % | 0.36 | % | 0.40 | % | |||||
| Nonperforming loans to total loans | 0.66 | % | 0.72 | % | 0.49 | % | 0.48 | % | 0.54 | % | |||||
| Allowance for credit losses on loans to nonperforming loans | 186.17 | % | 168.54 | % | 233.94 | % | 244.38 | % | 231.14 | % | |||||
| Allowance for credit losses on loans to total loans | 1.23 | % | 1.22 | % | 1.16 | % | 1.17 | % | 1.24 | % | |||||
| Net charge-offs to average loans (annualized) | 0.00 | % | 0.04 | % | 0.13 | % | 0.40 | % | 0.01 | % |
Stellar Bancorp, Inc.
GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures
(Unaudited)
Stellar’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Stellar believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing Stellar’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, Stellar reviews pre-tax, pre-provision income, pre-tax pre-provision ROAA, tangible book value per share, return on average tangible equity, tangible equity to tangible assets and net interest margin (tax equivalent) excluding PAA for internal planning and forecasting purposes. Stellar has included in this earnings release information relating to these non-GAAP financial measures for the applicable periods presented. These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Stellar calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | June 30 | June 30 | |||||||||||||||
| (Dollars and share amounts in thousands, except per share data) | |||||||||||||||||||||
| Net income | $ | 29,753 | $ | 26,147 | $ | 27,266 | $ | 30,908 | $ | 35,175 | $ | 55,900 | $ | 72,323 | |||||||
| Add: Provision for credit losses | (1,935) | 4,098 | 1,047 | 2,315 | 1,915 | 2,163 | 5,581 | ||||||||||||||
| Add: Provision for income taxes | 7,792 | 6,759 | 6,562 | 7,445 | 7,467 | 14,551 | 17,380 | ||||||||||||||
| Pre-tax, pre-provision income | $ | 35,610 | $ | 37,004 | $ | 34,875 | $ | 40,668 | $ | 44,557 | $ | 72,614 | $ | 95,284 | |||||||
| Total average assets | $ | 10,623,865 | $ | 10,686,789 | $ | 10,626,373 | $ | 10,741,295 | $ | 10,740,138 | $ | 10,655,327 | $ | 10,810,942 | |||||||
| Pre-tax, pre-provision return on average assets(B) | 1.35 | % | 1.39 | % | 1.30 | % | 1.50 | % | 1.66 | % | 1.37 | % | 1.78 | % | |||||||
| Total shareholders’ equity | $ | 1,565,795 | $ | 1,530,698 | $ | 1,521,018 | $ | 1,460,846 | $ | 1,458,680 | $ | 1,565,795 | $ | 1,458,680 | |||||||
| Less: Goodwill and core deposit intangibles, net | 601,633 | 607,831 | 614,030 | 620,262 | 627,065 | 601,633 | 627,065 | ||||||||||||||
| Tangible shareholders’ equity | $ | 964,162 | $ | 922,867 | $ | 906,988 | $ | 840,584 | $ | 831,615 | $ | 964,162 | $ | 831,615 | |||||||
| Shares outstanding at end of period | 53,564 | 53,551 | 53,291 | 53,322 | 53,303 | 53,564 | 53,303 | ||||||||||||||
| Tangible book value per share | $ | 18.00 | $ | 17.23 | $ | 17.02 | $ | 15.76 | $ | 15.60 | $ | 18.00 | $ | 15.60 | |||||||
| Average shareholders’ equity | $ | 1,538,124 | $ | 1,528,298 | $ | 1,475,377 | $ | 1,471,009 | $ | 1,458,473 | $ | 1,533,211 | $ | 1,438,389 | |||||||
| Less: Average goodwill and core deposit intangibles, net | 604,722 | 611,149 | 617,236 | 623,864 | 630,854 | 607,935 | 634,462 | ||||||||||||||
| Average tangible shareholders’ equity | $ | 933,402 | $ | 917,149 | $ | 858,141 | $ | 847,145 | $ | 827,619 | $ | 925,276 | $ | 803,927 | |||||||
| Return on average tangible equity(B) | 12.82 | % | 11.47 | % | 12.61 | % | 14.47 | % | 17.05 | % | 12.15 | % | 18.14 | % | |||||||
| Total assets | $ | 10,723,663 | $ | 10,729,222 | $ | 10,647,139 | $ | 10,665,460 | $ | 10,778,351 | $ | 10,723,663 | $ | 10,778,351 | |||||||
| Less: Goodwill and core deposit intangibles, net | 601,633 | 607,831 | 614,030 | 620,262 | 627,065 | 601,633 | 627,065 | ||||||||||||||
| Tangible assets | $ | 10,122,030 | $ | 10,121,391 | $ | 10,033,109 | $ | 10,045,198 | $ | 10,151,286 | $ | 10,122,030 | $ | 10,151,286 | |||||||
| Tangible equity to tangible assets | 9.53 | % | 9.12 | % | 9.04 | % | 8.37 | % | 8.19 | % | 9.53 | % | 8.19 | % | |||||||
| Net interest income (tax equivalent) | $ | 101,482 | $ | 102,207 | $ | 106,121 | $ | 106,919 | $ | 108,509 | $ | 203,688 | $ | 224,628 | |||||||
| Less: Purchase accounting accretion | 10,098 | 8,551 | 11,726 | 12,400 | 12,572 | 18,649 | 22,676 | ||||||||||||||
| Adjusted net interest income (tax equivalent) | $ | 91,384 | $ | 93,656 | $ | 94,395 | $ | 94,519 | $ | 95,937 | $ | 185,039 | $ | 201,952 | |||||||
| Average earning assets | $ | 9,616,874 | $ | 9,645,544 | $ | 9,576,927 | $ | 9,697,553 | $ | 9,693,527 | $ | 9,631,209 | $ | 9,754,326 | |||||||
| Net interest margin (tax equivalent) excluding PAA | 3.82 | % | 3.91 | % | 3.91 | % | 3.87 | % | 3.97 | % | 3.86 | % | 4.18 | % |
(A)Represents total noninterest expense, excluding acquisition and merger-related expenses, core deposit intangibles amortization and write-downs on assets moved to held for sale, divided by the sum of net interest income, excluding purchase accounting adjustments plus noninterest income, excluding gains and losses on the sale of assets. Additionally, taxes and provision for credit losses are not part of this calculation.
(B)Interim periods annualized.
10
stel2024q2earningspresen
Second Quarter 2024 Earnings Presentation Exhibit 99.2
Forward-Looking Statements and Non-GAAP Financial Measures 2 Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements about the benefits of the Company’s merger with Allegiance Bancshares, Inc. and CBTX, Inc. (the “Merger”) which became effective on October 1, 2022, including future financial performance and operating results, the Company’s plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “scheduled,” “plans,” “intends,” “projects,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” “would,” or “continue” or negatives of such terms or other comparable terminology. All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Stellar Bancorp, Inc. (“Stellar”) to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others: the risk that the cost savings and any revenue synergies from the Merger may not be fully realized or may take longer than anticipated to be realized; disruption to our business as a result of the Merger; the risk that the integration of operations will be materially delayed or will be more costly or difficult than we expected or that we are otherwise unable to successfully integrate our legacy businesses; the amount of the costs, fees, expenses and charges related to the Merger; reputational risk and the reaction of our customers, suppliers, employees or other business partners to the Merger; changes in the interest rate environment, the value of Stellar’s assets and obligations and the availability of capital and liquidity; general competitive, economic, political and market conditions; and other factors that may affect future results of Stellar including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; disruptions to the economy and the U.S. banking system caused by recent bank failures, risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in the cost of our deposit insurance assessments and other actions of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking and legislative and regulatory actions and reforms. Additional factors which could affect the Company’s future results can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC’s website at https://www.sec.gov. We disclaim any obligation and do not intend to update or revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. GAAP Reconciliation of Non-GAAP Financial Measures The Company’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. The Company believes that these non- GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, the Company reviews pre-tax, pre-provision income; pre-tax pre-provision ROAA, the ratio of tangible equity to tangible assets; net interest margin (tax equivalent) excluding purchase accounting adjustments; and loan yield excluding accretion for internal planning and forecasting purposes. The Company has included in this presentation information relating to these non-GAAP financial measures for the applicable periods presented. These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Stellar calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.
3 (1) Refer to the calculation of this non-GAAP financial measure and a reconciliation to its most directly comparable GAAP financial measure in the appendix. Houston’s Largest Regionally Focused Bank Principal banking subsidiary renamed Stellar Bank upon successful system conversion in February 2023 Combination delivered scale, growth opportunities, and talent depth Merger-of-equals between CBTX, Inc. and Allegiance Bancshares, Inc. became effective October 1, 2022 (NYSE: STEL) Valuable franchise in one of the best markets in the U.S. Banking Centers Strong core earnings power and capital position Banking Centers Free-standing ATM 6/30/2024 3/31/2024 Total assets 10,723,663$ 10,729,222$ Total loans 7,713,897 7,908,111 Total deposits 8,725,303 8,794,716 Total loans to total deposits 88.41% 89.92% Equity to assets 14.60% 14.27% Tangible equity to tangible assets (1) 9.53% 9.12% (Dollars in thousands)
$1.9 $1.9 $2.1 $2.5 $2.6 $3.0 $3.1 $5.5 $5.7 $6.7 $7.6 $7.8 $8.6 $10.2 $12.0 $27.2 $29.8 $157.3 Texas Independent BOK Regions Texas Capital Truist Comerica Third Coast Woodforest Prosperity Capital One Frost Cadence Stellar PNC Zions BofA Wells Fargo JPMorgan Focused on Serving the Houston Region 4 Note: Deposit market share based on FDIC data as of June 30, 2023. 1) Houston Region defined as the Houston-Pasadena-The Woodlands and Beaumont-Port Arthur MSAs; Excludes non-retail branches. Source: S&P Capital IQ Pro; Excludes non-retail branches Stel Houston Region Market Share(1) Deposits (dollars in billions) Houston Percent of Houston T otal Assets Region Com pany Region Market Nam e ($B) Deposits ($B) Deposits (%) Share (%) JPMorgan 3,868 157.3 6.6 48.2 Wells Fargo 1,876 29.8 2.2 9.1 BofA 3,123 27.2 1.4 8.3 Zions 87.2 12.0 16.2 3.7 PNC 558 10.2 2.4 3.1 Stellar 10.8 8.6 97.7 2.6 Cadence 48.8 7.8 20.1 2.4 Frost 48.6 7.6 18.8 2.3 Capital One 468 6.7 1.9 2.0 Prosperity 39.9 5.7 20.9 1.8 Woodforest 9.6 5.5 69.7 1.7 Third Coast 4.0 3.1 90.9 0.9 Comerica 91.0 3.0 4.5 0.9 Truist 555 2.6 0.6 0.8 Texas Capital 29.0 2.5 10.7 0.8 Regions 156 2.1 1.6 0.6 BOK 49.2 1.9 5.7 0.6 Texas Independent 2.2 1.9 100.0 0.6 (1)
5 Second Quarter 2024 Highlights (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix. (2) Interim periods annualized. Solid Profitability: Second quarter 2024 net income of $29.8 million, or diluted earnings per share of $0.56, translated into an annualized return on average assets of 1.13%, an annualized return on average equity of 7.78% and an annualized return on average tangible equity of 12.82%(1). Meaningful Regulatory Capital Build: Total risk-based capital ratio increased to 15.34% at June 30, 2024 from 14.62% at March 31, 2024 and tier 1 leverage ratio increased to 10.93% at June 30, 2024 from 10.55% at March 31, 2024 Strong Net Interest Margin: Tax equivalent net interest margin was 4.24% for the second quarter of 2024 compared to 4.26% for the first quarter of 2024. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.82%(1) for the second quarter of 2024 compared to 3.91%(1) for the first quarter of 2024. Stable Credit Performance: Net charge-offs of $715 thousand, or 0.02%, for the year-to-date 2024. Tangible Book Value Per Share(1) Total Capital Ratio $14.02 $17.02 $18.00 12/31/2022 12/31/2023 6/30/2024 12.39% 14.02% 15.34% 12/31/2022 12/31/2023 6/30/2024
Deposit Summary 6 Deposit Portfolio Composition Deposits (in millions) Maintaining Discipline Navigating Competitive Deposit Market As of June 30, 2024: • Estimated uninsured deposits, net of collateralized deposits: 43.3% • Average account size: $78 thousand, excluding collateralized and brokered deposits • Loan to deposit ratio: 88.4% • Noninterest-bearing deposits to total deposits: 37.9% • Brokered deposits: $741.3 million at June 30, 2024 from $786.6 million at March 31, 2024 . (1) NIB 37.9% IB Demand 17.9% MMDA & Sav. 25.4% CD's 18.8% Q2 2024 Q1 2024 Noninterest-bearing ("NIB") 3,308,441$ 3,323,149$ Interest-bearing demand ("IB Demand") 1,564,405 1,576,261 Money market and savings ("MMDA & Sav.") 2,213,031 2,203,767 Certificates and other time ("CD's") 1,639,426 1,691,539 Total deposits 8,725,303$ 8,794,716$ (Dollars in thousands)
Loan Summary 7 (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix. . Loan Portfolio Composition (1) (1) 1-4 Family 14.2% MF 5.4% Resi. C&D 2.6% CRE C&D 12.0% NOO CRE 22.0% OO CRE 24.8% C&I 18.1% Other 0.9% Q2 2024 Q1 2024 Commercial and Industrial (“C&I”) 1,396,064$ 1,455,755$ Nonowner-occupied Commercial Real Estate (“NOO CRE”) 1,694,022 1,711,089 Owner-occupied CRE (“OO CRE”) 1,912,387 1,886,641 Multifamily Real Estate (“MF”) 423,262 452,155 Total Commercial Real Estate 4,029,671 4,049,885 CRE Construction & Development (“CRE C&D”) 922,805 1,039,443 1-4 Family Residential (“1-4 Family”) 1,098,681 1,049,316 Residential Construction (“Resi. C&D”) 200,134 252,573 Consumer and other ("Other") 66,542 61,139 Total 7,713,897$ 7,908,111$ (In thousands) Average Yield Excl. PAA(1) Average Yield Excl. PAA(1) Interest-earning Assets: Loans 7,808,320$ 135,885$ 7.00% 6.48% 7,938,824$ 134,685$ 6.82% 6.39% Securities 1,549,638 12,739 3.31% 1,441,814 10,111 2.82% Deposits in other financial institutions 258,916 3,555 5.52% 264,906 3,627 5.51% Total interest-earning assets 9,616,874$ 152,179$ 6.36% 5.94% 9,645,544$ 148,423$ 6.19% 5.83% (Dollars in thousands) Q2 2024 Q1 2024 Average Outstanding Balance Interest Earned Average Outstanding Balance Interest Earned
CRE and Office Detail: Q2 2024 8 (1) (1) CRE (incl. multifamily) by Property Type CRE - Office Retail 16.9% Office 10.8% Warehouse 14.1% Multi-family 10.5% C-Store 11.1%Hotel/ Motel 4.2% Industrial 4.1% Restaurant/Bar 4.1% Auto Sales/ Repair 4.0% Church 3.1% Healthcare 3.0% Other 14.1% Owner- occupied 41.2% Non-owner occupied 58.8% Retail 679,626$ 1,273$ 16.9% Warehouse 566,759 728 14.1% Convenience Store (C-Store) 445,643 1,315 11.1% Office 433,486 810 10.8% Multi-family 423,262 1,856 10.5% Hotel / Motel 170,425 4,058 4.2% Industrial 166,575 1,501 4.1% Restaurant / Bar 165,879 987 4.1% Auto Sales / Repair 159,516 715 4.0% Church 124,605 865 3.1% Healthcare 122,076 1,110 3.0% Other 571,819 728 14.1% Total 4,029,671$ 1,094 100.0% Property Type Balance Average Loan Size % of Total (Dollars In thousands) Flex Office Space 75 53,556$ 714$ 12.4% Multi-Story Office Building 135 241,453 1,789 55.7% Single Story Office Building 325 138,477 426 31.9% Total 535 433,486$ 810 100.0% 0 - 12 months 99 58,843$ 594$ 13.5% 13 - 24 months 75 46,162 615 10.7% 25 - 36 months 77 84,075 1,092 19.4% 37 - 48 months 55 54,703 995 12.6% 49 + months 229 189,703 828 43.8% 535 433,486$ 810 100.0% (Dollars in thousands) (Dollars in thousands) Maturity % of Total Average Loan SizeNumber BalanceCollateral Type Average Loan Size % of TotalNumber Balance
CRE Construction and Development: Q2 2024 9 (1) (1) • Total committed exposure for CRE construction loans was $1.23 billion at June 30, 2024 and $1.44 billion at March 31, 2024 • The largest category of CRE construction loans was Land – Commercial at $365.1 million outstanding, or 39.6%, of CRE construction loans at June 30, 2024 • Owner-occupied CRE construction loans were 13.4% of CRE construction loans at June 30, 2024 (1) Multi-family community development loans (“CD”). CRE Construction Lending Highlights Land - Commercial 39.6% Warehouse 12.8% Multi-family - CD 13.8% Multi-family - Market Rate 4.7% Land - Residential Lot 7.5% Retail 4.0% C-Store 2.4% Residential Subdivision 5.2% Other 10.0% Number Balance Number Balance Land - Commercial 464 365,110$ 787$ 487 380,878$ 782$ Warehouse 29 118,566 4,088 41 127,041 3,099 Multi-family - CD(1) 14 127,298 9,093 14 120,297 8,593 Land - Residential Lot 265 68,751 259 284 82,845 292 Retail 26 37,072 1,426 35 52,575 1,502 Convenience Store (C-Store) 12 22,233 1,853 23 47,319 2,057 Residential Subdivision 8 48,178 6,022 9 40,122 4,458 Multi-family - Market Rate 8 43,615 5,452 11 39,440 3,585 Other 79 91,982 1,164 113 148,926 1,318 Total 905 922,805$ 1,020 1,017 1,039,443 1,022 (Dollars in thousand) (Dollars in thousand) Loan Type Q2 2024 Q1 2024 Average Loan Size Average Loan Size
Asset Quality Summary 10 Nonperforming Loans by Type (1) Combined represents the simple addition of legacy balances for 2022; estimated. Allowance for credit losses on loans: • $94.8 million, or 1.23% of total loans, at June 30, 2024, compared to $96.3 million, or 1.22% of total loans, as of March 31, 2024 Allowance for credit losses on loans to nonperforming loans: • 186.17% at June 30, 2024 compared to 168.54% as of March 31, 2024 C&I 36.3% Other 0.5% CRE 12.1% OO CRE 21.4% Multifamily RE 2.0% CRE C&D 3.2% 1-4 Family 24.5% Nonaccrual Loans with No Related Allowance Nonaccrual Loans with Related Allowance Total Nonaccrual Loans Commercial and industrial 1,030$ 17,421$ 18,451$ Commercial real estate (including multi-family residential) 13,842 4,252 18,094 Commercial real estate construction and land development 899 742 1,641 1-4 family residential (including equity) 8,068 4,386 12,454 Residential construction 155 — 155 Consumer and other 28 83 111 24,022$ 26,884$ 50,906$ (In thousands) Q2 2024 Q1 2024 Total nonperforming loans 50,906$ 57,129$ Nonperforming loans to total loans 0.66% 0.72% Total nonperforming assets 53,454$ 57,129$ 0.50% 0.53% Net (recoveries) charge-offs (1)$ 714$ 0.00% 0.04% (Dollars in thousands) Nonperforming assets to total assets Net charge-offs to average loans (annualized)
Regulatory Capital Ratios 11 (1) Refer to the calculation of this non-GAAP financial measure and a reconciliation to its most directly comparable GAAP financial measure in the appendix. Minimum Required Plus Capital Conservation Buffer Consolidated Capital Ratios Estimated Total Capital Ratio (to risk-weighted assets) 15.34% 14.62% 10.50% Estimated Common Equity Tier 1 Capital Ratio (to risk-weighted assets) 12.98% 12.29% 7.00% Estimated Tier 1 Capital Ratio (to risk-weighted assets) 13.10% 12.41% 8.50% Estimated Tier 1 Leverage Ratio (to average tangible assets) 10.93% 10.55% 4.00% Estimated Tangible Equity to Tangible Assets (1) 9.53% 9.12% N/A Bank Capital Ratios Estimated Total Capital Ratio (to risk-weighted assets) 14.65% 14.13% 10.50% Estimated Common Equity Tier 1 Capital Ratio (to risk-weighted assets) 13.12% 12.61% 7.00% Estimated Tier 1 Capital Ratio (to risk-weighted assets) 13.12% 12.61% 8.50% Estimated Tier 1 Leverage Ratio (to average tangible assets) 10.94% 10.72% 4.00% June 30, 2024 March 31, 2024
12 Liquidity Profile Stellar is well-positioned to manage through the current environment Sources of Liquidity at June 30, 2024 Sources of Liquidity Estimated Uninsured Deposits at June 30, 2024 (1) Brokered deposit capacity is governed by internal policy limits. (Dollars in millions) Total deposits 8,725$ Estimated uninsured deposits 4,786 (1,009) Estimated uninsured, net of collateralized deposits 3,777$ Percent of total deposits 43.3% Less: collateralized deposits (Dollars in millions) Cash 490$ Unpledged securities 1,018 Total on-balance sheet 1,508 FHLB available capacity 1,858 Discount window available capacity 772 Total immediate available liquidity 4,138 Available brokered deposit capacity(1) 1,014 Total available liquidity 5,152$ 109.6% 136.4% Immediate available liquidity coverage of estimated uninsured deposits, net of collateralized deposits Total available liquidity coverage of estimated uninsured deposits, net of collateralized deposits
13 Key Takeaways Excellent core funding profile Strong earnings power and franchise value in one of the best markets in the U.S. Key success factors: Credit performance and risk management Significant financial flexibility Positioned for rapid capital-build to continue
29.8 27.2 12.0 10.2 8.6 7.8 7.6 6.7 5.7 JP Morgan Wells Fargo BofA Zions PNC Stellar Cadence Frost Capital One Prosperity Diverse and Strong Markets of Operation 14 Houston is Diverse, with Significant Economic TailwindsGreater Houston Market Top 10 Bank by Deposits in Houston Region(1) ($B) Note: Deposit market share based on FDIC data as of June 30, 2023. 1) Houston Region defined as the Houston-Pasadena-The Woodlands and Beaumont-Port Arthur MSAs; Excludes non-retail branches. Source: S&P Capital IQ Pro, Houston.org, Texas Medical Center, and Wallet Hub. $157 Est. Population Growth ’24-’29 Est. Number of Households Growth ’24-’29 Population Change (’19-’24) Median Household Income (’24) Significant Deposit Share Houston MSA: 6.0% Texas: 5.9% / U.S: 2.1% Houston MSA: $75,557 Texas: $73,203 / U.S: $75,874 Stellar has over $8.6 billion in deposits in the Houston region(1) Houston HQ Bank Houston is the #4 most diverse city in the U.S. based on socioeconomic factors, according to Wallet Hub Houston added nearly 140,000 residents in ’23, 2nd among U.S. metros in population growth. The increase equates to a new resident every 3.8 minutes 25th largest economy in the world – if ranked as a country − 14th largest population in the U.S – if ranked as a state Port Houston is the busiest Gulf Coast container port, the Houston Ship Channel is #1 ranked U.S. port in total foreign and domestic waterborne tonnage Houston is home to the Texas Medical Center, the world's largest medical complex, which has 10 million annual patient encounters Business friendly: #3 among U.S. metro areas in Fortune 500 headquarters (26) Major business clusters in Beaumont-Port Arthur area include chemical and petroleum manufacturing, materials manufacturing and transportation 4.9% 4.7% 2.4% Houston MSA Texas USA 5.1% 5.1% 2.7% Houston MSA Texas USA
Diversified and Growing Economy 15 1) Data is preliminary as of February 2024, from the U.S. Bureau of Labor Statistics Source: U.S. Bureau of Labor Statistics Houston vs. U.S. Job Change by Industry (Feb ‘23 – Feb. ‘24)(1) Diversified Economy by Job Sector(1) Commentary Houston’s economy has become much more diversified over the years, while remaining the energy capital of the United States Most of Houston's job sectors are growing at a faster rate than U.S. Transportation, warehousing, and utility services showed a large gain over the last year versus the United States United States Houston MSA Professional and Business Services 16% Education and Health Services 14% Government 13% Leisure and Hospitality 10% Retail Trade 9% Manufacturing 7% Construction 7% Transportation, Warehousing, and Utilities 6% Financial Activities 5% Wholesale Trade 5% Other Services 4% Mining and Logging 2% Information 1% (0.7)% 5.3% 0.1% 1.9% 1.6% (2.4)% 1.9% 2.5% 4.4% 2.4% 3.3% 0.5% 0.0% 4.8% Mining and Logging Private Education and Health Services Financial Activities Leisure and Hospitality Professional and Business Services Information Wholesale Trade Transportation, Warehousing, and Utilities Government Total Nonfarm Manufacturing Construction Retail Trade Other Services
2.0 3.0 4.0 5.0 6.0 7.0 2.0 2.5 3.0 3.5 2007 2009 2011 2013 2015 2017 2019 2021 2023 Houston is a Resilient Market 16 Since the Great Recession, Houston has proven its resiliency, weathering economic cycles and natural disasters − Houston welcomed 2.1 million new residents and created over 965 thousand jobs since 2007 Population (M ) O il Pr ic e D ec lin e G re at R ec es si on Ik e H ar ve y C O VI D -1 9 Em pl oy m en t( M ) Employment Population1) Data is preliminary as of February 2024, from the U.S. Bureau of Labor Statistics Source: U.S. Bureau of Labor Statistics, Texas Workforce Commission
92,198 (150,000) (100,000) (50,000) 0 50,000 100,000 150,000 D al la s H ou st on Ta m pa At la nt a Ph oe ni x M ia m i D en ve r W as hi ng to n Bo st on M in ne ap ol is R iv er si de Se at tle Ba lti m or e Ph ila de lp hi a D et ro it Sa n D ie go Sa n Fr an ci sc o C hi ca go Lo s An ge le s N ew Y or k Houston’s Growth Projected to Continue 17 Source: S&P Capital IQ Pro; U.S. Census Bureau. 2010-2024 Population Change (%) Houston had the second highest net migration in 2023 20 most populated metros 3.93% 0.31% -0.48% 27.64% 27.00% 21.95% 8.88% New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. • Houston has seen tremendous growth over the past ten years, aided by the relocation of multiple Fortune 500 companies • The continued growth of the Houston metro will strengthen and diversify the greater economy, benefiting the businesses and constituents Houston added over 90,000 people by net migration in 2023, second only to Dallas
$92,406 $89,429 $85,119 $82,998 $75,557 $73,203 $75,874 New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. $800,000 $982,500 $363,500 $450,000 $339,000 $344,800 $420,357 New York Los Angeles Chicago Dallas Houston Texas U.S. 8.7x 11.0x 4.3x 5.4x 4.5x 4.7x 5.5x New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. Housing Market and Cost of Living 18 • Cost of living in Houston is 5.9% less than that of the U.S. market average while the median household income is in line with U.S. median • Houston is #1 in U.S. annual new home construction 20 24 M ed ia n H ou se ho ld In co m e 20 24 M ed ia n H om e Pr ic e (1 ) M ed ia n H om e Pr ic e to H H I R at io (1) Home price shown for each respective city Source: S&P Capital IQ Pro; Redfin (March 2024); Houston.org
Appendix: Non-GAAP Reconciliation(1) 19 (1) See the disclosure under the heading “GAAP Reconciliation of Non-GAAP Financial Measures” on slide 2 regarding the use of non-GAAP financial measures. (2) Interim periods annualized. Total shareholders’ equity $ 1,565,795 $ 1,530,698 Less: Goodw ill and core deposit intangibles, net 601,633 607,831 Tangible shareholders’ equity $ 964,162 $ 922,867 Shares outstanding at end of period 53,564 53,551 Tangible book value per share $ 18.00 $ 17.23 Total assets $ 10,723,663 $ 10,729,222 Less: Goodw ill and core deposit intangibles, net 601,633 607,831 Tangible assets $ 10,122,030 $ 10,121,391 Tangible equity to tangible assets 9.53% 9.12% Net interest income (tax equivalent) $ 101,482 $ 102,207 Less: Purchase accounting accretion 10,098 8,551 Adjusted net interest income (tax equivalent) $ 91,384 $ 93,656 Average earning assets $ 9,616,874 $ 9,645,544 Net interest margin (tax equivalent)(2) 4.24% 4.26% Net interest margin (tax equivalent) excluding PAA(2) 3.82% 3.91% Interest on loans, as reported $ 135,885 $ 134,685 Less: Purchase accounting accretion 10,098 8,551 Interest on loans w ithout loan accretion $ 125,787 $ 126,134 Average loans $ 7,808,320 $ 7,938,824 Loan yield, as reported 7.00% 6.82% Loan yield, w ithout loan accretion 6.48% 6.39% Interest on interest-earning assets, as reported $ 152,179 $ 148,423 Less: Purchase accounting accretion 10,098 8,551 Interest on interest-earnings assets w ithout loan accretion $ 142,081 $ 139,872 Average interest-earnings assets $ 9,616,874 $ 9,645,544 Yield on interest-earnings assets, as reported 6.36% 6.19% Yield on interest-earnings assets, w ithout loan accretion 5.94% 5.83% (Dollars in thousands) Q2 2024 Q1 2024
20 NYSE: STEL