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): April 25, 2025
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 April 25, 2025 Stellar Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of 2025. 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 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, April 25, 2025, at 8:00 a.m., Central Time, the Company will host an investor conference call and webcast to review its first quarter 2025 financial results. The earnings release and earnings presentation will be posted on the Company’s website. The earnings release and presentation materials are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, 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 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 Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
Exhibits. The following are furnished as exhibits to this Current Report on Form 8-K:
| Exhibit Number | Description of Exhibit |
|---|---|
| 99.1 | Q12025Earnings Release |
| 99.2 | Q12025Earnings 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: April 25, 2025 | By: | /s/ Paul P. Egge |
| Paul P. Egge | ||
| Chief Financial Officer |
Document
Exhibit 99.1
PRESS RELEASE
STELLAR BANCORP, INC. REPORTS
FIRST QUARTER 2025 RESULTS
HOUSTON, April 25, 2025 - Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $24.7 million or diluted earnings per share of $0.46, for the first quarter of 2025, compared to net income of $25.2 million, or diluted earnings per share of $0.47, for the fourth quarter of 2024.
“We are pleased with the great work our team is doing as we turn our efforts from building our foundation to growing our bank,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer. “We are seeing our pipelines build while experiencing payoffs as commercial real estate is sold or refinanced. This follows our expectations as interest rates begin to stabilize and we stabilize our position under regulatory guidance,” Mr. Franklin continued.
“We cannot ignore the uncertainty that has been introduced by the administration through tariffs. We will continue to monitor the effects on the economy in general and specifically our customer base. We continue to believe that we operate in one of the most dynamic markets in the country and will continue to deliver opportunities for Stellar Bank. However, we will remain cautious around credit as we build our pipelines,” commented Mr. Franklin.
“Given the uncertainty caused in the first quarter, we expect most of our growth to come in the second half of the year, but what we have seen so far this year is encouraging. Thank you to the great Stellar Team as we build Stellar into the bank of choice in our markets,” Mr. Franklin concluded.
Financial Highlights
•Solid Profitability: Net income for the first quarter of 2025 was $24.7 million, or diluted earnings per share of $0.46, which translated into an annualized return on average assets of 0.94%, an annualized return on average equity of 6.21% and an annualized return on average tangible equity of 11.48%(1).
•Strong Net Interest Margin: Tax equivalent net interest margin for the first quarter of 2025 was 4.20% compared to 4.25% for the fourth quarter of 2024. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.97%(1) for the first quarter of 2025 compared to 3.94%(1) for the fourth quarter of 2024.
•Strong Capital Position and Book Value Build: Total risk-based capital ratio increased to 15.94% at March 31, 2025, while book value per share increased to $30.89 at March 31, 2025 from $30.09 at December 31, 2024 and tangible book value per share increased to $19.69(1) at March 31, 2025 from $19.05(1) at December 31, 2024.
•Repurchase of Shares: Repurchased 1.4 million shares at a weighted average price per share of $27.99 during the first quarter of 2025 and 679 thousand shares at a weighted average price of $25.83 per share since the end of the first quarter of 2025. On April 23, 2025, the Board of Directors authorized of new share repurchase program under which the Company may repurchase up to $65 million of common stock through May 31, 2026.
First Quarter 2025 Results
Net interest income in the first quarter of 2025 decreased $3.7 million, or 3.6%, to $99.3 million from $103.0 million for the fourth quarter of 2024. The net interest margin on a tax equivalent basis decreased 5 basis points to 4.20% for the first quarter of 2025 from 4.25% for the fourth quarter of 2024. The decrease in the net interest margin from the prior quarter was primarily due to the impact of lower rates on interest-earnings assets and decreased average interest-earnings assets partially offset by lower rates on interest-bearing liabilities. Net interest income for the first quarter of 2025 benefited from $5.4 million of income from PAA compared to $7.6 million in the fourth quarter of 2024. Excluding PAA, net interest income (tax equivalent) for the first quarter of 2025 would have been $94.0 million(1) and the tax equivalent net interest margin would have been 3.97%(1).
_____________________
(1) Refer to the calculation of this non-GAAP financial measure on page 9 of this earnings release. The calculation of return on average tangible equity has been adjusted from prior period disclosures.
Noninterest income for the first quarter of 2025 was $5.5 million, an increase of $473 thousand, or 9.4%, compared to $5.0 million for the fourth quarter of 2024. Noninterest income increased in the first quarter of 2025 compared to the fourth quarter of 2024 primarily due to
a gain on sales of assets during the first quarter of 2025.
Noninterest expense for the first quarter of 2025 decreased $5.1 million, or 6.8%, to $70.2 million compared to $75.3 million for the fourth quarter of 2024. The decrease in noninterest expense in the first quarter of 2025 compared to the fourth quarter of 2024 was primarily due to a decrease in salaries and employee benefits of $2.0 million, a decrease in professional fees of $1.6 million and an $811 thousand decrease in advertising expense.
The efficiency ratio was 61.93% for the first quarter of 2025 compared to 64.46% for the fourth quarter of 2024. Annualized returns on average assets, average equity and average tangible equity were 0.94%, 6.21% and 11.48%(1) for the first quarter of 2025, respectively, compared to 0.94%, 6.21% and 11.53%(1) for the fourth quarter of 2024, respectively.
Financial Condition
Total assets at March 31, 2025 were $10.43 billion, a decrease of $470.9 million compared to $10.91 billion at December 31, 2024. The decrease in total assets was largely due to seasonality in government deposits.
Total loans at March 31, 2025 decreased $156.7 million to $7.28 billion compared to $7.44 billion at December 31, 2024. At March 31, 2025, the remaining balance of the purchase accounting accretion on loans was $68.2 million.
Total deposits at March 31, 2025 decreased $565.7 million to $8.56 billion compared to $9.13 billion at December 31, 2024 primarily due to decreases in noninterest-bearing and certificates and other time deposits. Noninterest-bearing deposits largely decreased due to the aforementioned seasonality in government deposits while certificates and other time deposits decreased primarily due to the reduction in brokered deposits. Shifts in the deposit mix were primarily driven by the current interest rate environment and an intensely competitive market for deposits.
Asset Quality
Nonperforming assets totaled $59.7 million, or 0.57% of total assets, at March 31, 2025, compared to $38.9 million, or 0.36% of total assets, at December 31, 2024. The allowance for credit losses on loans as a percentage of total loans was 1.15% at March 31, 2025 compared to 1.09% at December 31, 2024.
The provision for credit losses was $3.6 million for the first quarter of 2025, compared to $942 thousand for the fourth quarter of 2024 primarily due to the increase in nonperforming loans. Net charge-offs for the first quarter of 2025 were $163 thousand, or 0.01% (annualized) of average loans, compared to net charge-offs of $2.0 million, or 0.11% (annualized) of average loans, for the fourth 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 9 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, April 25, 2025 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its results for the first quarter of 2025. Participants may register for the conference call at https://registrations.events/direct/Q4I635868 conference ID 63586 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 webcast is available at https://registrations.events/direct/Q4I635868 and requires pre-registration. 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, 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: 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; risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators; legislative changes, executive orders, regulatory actions and reforms of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking.
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)
| 2025 | 2024 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31 | December 31 | September 30 | June 30 | March 31 | ||||||
| (Dollars in thousands) | ||||||||||
| ASSETS: | ||||||||||
| Cash and due from banks | $ | 130,932 | $ | 419,967 | $ | 103,735 | $ | 110,341 | $ | 74,663 |
| Interest-bearing deposits at other financial institutions | 429,643 | 491,249 | 412,482 | 379,909 | 325,079 | |||||
| Total cash and cash equivalents | 560,575 | 911,216 | 516,217 | 490,250 | 399,742 | |||||
| Available for sale securities, at fair value | 1,719,371 | 1,673,016 | 1,691,752 | 1,630,971 | 1,523,100 | |||||
| Loans held for investment | 7,283,133 | 7,439,854 | 7,551,124 | 7,713,897 | 7,908,111 | |||||
| Less: allowance for credit losses on loans | (83,746) | (81,058) | (84,501) | (94,772) | (96,285) | |||||
| Loans, net | 7,199,387 | 7,358,796 | 7,466,623 | 7,619,125 | 7,811,826 | |||||
| Accrued interest receivable | 37,669 | 37,884 | 39,473 | 43,348 | 45,466 | |||||
| Premises and equipment, net | 109,750 | 111,856 | 113,742 | 113,984 | 115,698 | |||||
| Federal Home Loan Bank stock | 20,902 | 8,209 | 20,123 | 15,089 | 16,050 | |||||
| Bank-owned life insurance | 108,108 | 107,498 | 106,876 | 106,262 | 105,671 | |||||
| Goodwill | 497,318 | 497,318 | 497,318 | 497,318 | 497,318 | |||||
| Core deposit intangibles, net | 87,007 | 92,546 | 98,116 | 104,315 | 110,513 | |||||
| Other assets | 94,800 | 107,451 | 79,537 | 103,001 | 103,838 | |||||
| Total assets | $ | 10,434,887 | $ | 10,905,790 | $ | 10,629,777 | $ | 10,723,663 | $ | 10,729,222 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| LIABILITIES: | ||||||||||
| Deposits: | ||||||||||
| Noninterest-bearing | $ | 3,205,619 | $ | 3,576,206 | $ | 3,303,048 | $ | 3,308,441 | $ | 3,323,149 |
| Interest-bearing | ||||||||||
| Demand | 1,863,752 | 1,845,749 | 1,571,504 | 1,564,405 | 1,576,261 | |||||
| Money market and savings | 2,248,616 | 2,253,193 | 2,280,651 | 2,213,031 | 2,203,767 | |||||
| Certificates and other time | 1,244,726 | 1,453,236 | 1,587,398 | 1,639,426 | 1,691,539 | |||||
| Total interest-bearing deposits | 5,357,094 | 5,552,178 | 5,439,553 | 5,416,862 | 5,471,567 | |||||
| Total deposits | 8,562,713 | 9,128,384 | 8,742,601 | 8,725,303 | 8,794,716 | |||||
| Accrued interest payable | 9,856 | 17,052 | 16,915 | 12,327 | 12,227 | |||||
| Borrowed funds | 119,923 | — | 60,000 | 240,000 | 215,000 | |||||
| Subordinated debt | 70,135 | 70,105 | 110,064 | 109,964 | 109,864 | |||||
| Other liabilities | 61,428 | 82,389 | 74,074 | 70,274 | 66,717 | |||||
| Total liabilities | 8,824,055 | 9,297,930 | 9,003,654 | 9,157,868 | 9,198,524 | |||||
| SHAREHOLDERS’ EQUITY: | ||||||||||
| Common stock | 521 | 534 | 535 | 536 | 536 | |||||
| Capital surplus | 1,202,628 | 1,240,050 | 1,238,619 | 1,238,477 | 1,235,221 | |||||
| Retained earnings | 510,072 | 492,640 | 474,905 | 447,948 | 425,130 | |||||
| Accumulated other comprehensive loss | (102,389) | (125,364) | (87,936) | (121,166) | (130,189) | |||||
| Total shareholders’ equity | 1,610,832 | 1,607,860 | 1,626,123 | 1,565,795 | 1,530,698 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 10,434,887 | $ | 10,905,790 | $ | 10,629,777 | $ | 10,723,663 | $ | 10,729,222 |
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | ||||||
| (Dollars in thousands, except per share data) | ||||||||||
| INTEREST INCOME: | ||||||||||
| Loans, including fees | $ | 120,640 | $ | 128,738 | $ | 132,372 | $ | 135,885 | $ | 134,685 |
| Securities: | ||||||||||
| Taxable | 16,148 | 14,789 | 13,898 | 11,923 | 9,293 | |||||
| Tax-exempt | 812 | 814 | 814 | 816 | 818 | |||||
| Deposits in other financial institutions | 4,720 | 5,681 | 4,692 | 3,555 | 3,627 | |||||
| Total interest income | 142,320 | 150,022 | 151,776 | 152,179 | 148,423 | |||||
| INTEREST EXPENSE: | ||||||||||
| Demand, money market and savings deposits | 27,574 | 27,877 | 29,440 | 28,399 | 27,530 | |||||
| Certificates and other time deposits | 13,527 | 16,830 | 18,073 | 18,758 | 15,084 | |||||
| Borrowed funds | 517 | 235 | 840 | 1,700 | 1,774 | |||||
| Subordinated debt | 1,444 | 2,123 | 1,916 | 1,912 | 1,917 | |||||
| Total interest expense | 43,062 | 47,065 | 50,269 | 50,769 | 46,305 | |||||
| NET INTEREST INCOME | 99,258 | 102,957 | 101,507 | 101,410 | 102,118 | |||||
| Provision for (reversal of) credit losses | 3,632 | 942 | (5,985) | (1,935) | 4,098 | |||||
| Net interest income after provision for credit losses | 95,626 | 102,015 | 107,492 | 103,345 | 98,020 | |||||
| NONINTEREST INCOME: | ||||||||||
| Service charges on deposit accounts | 1,584 | 1,590 | 1,594 | 1,648 | 1,598 | |||||
| Gain (loss) on sale of assets | 417 | (112) | 432 | (64) | 513 | |||||
| Bank-owned life insurance | 610 | 622 | 614 | 591 | 587 | |||||
| Debit card and interchange income | 520 | 570 | 551 | 543 | 527 | |||||
| Other | 2,374 | 2,362 | 3,111 | 2,698 | 3,071 | |||||
| Total noninterest income | 5,505 | 5,032 | 6,302 | 5,416 | 6,296 | |||||
| NONINTEREST EXPENSE: | ||||||||||
| Salaries and employee benefits | 41,792 | 43,797 | 41,123 | 39,061 | 41,376 | |||||
| Net occupancy and equipment | 3,926 | 4,401 | 4,570 | 4,503 | 4,390 | |||||
| Depreciation | 1,995 | 1,984 | 1,911 | 1,948 | 1,964 | |||||
| Data processing and software amortization | 5,682 | 5,551 | 5,706 | 5,501 | 4,894 | |||||
| Professional fees | 1,786 | 3,428 | 1,714 | 1,620 | 2,662 | |||||
| Regulatory assessments and FDIC insurance | 1,733 | 1,636 | 1,779 | 2,299 | 1,854 | |||||
| Amortization of intangibles | 5,548 | 5,581 | 6,212 | 6,215 | 6,212 | |||||
| Communications | 847 | 807 | 827 | 847 | 937 | |||||
| Advertising | 782 | 1,593 | 878 | 891 | 765 | |||||
| Other | 6,075 | 6,488 | 6,346 | 8,331 | 6,356 | |||||
| Total noninterest expense | 70,166 | 75,266 | 71,066 | 71,216 | 71,410 | |||||
| INCOME BEFORE INCOME TAXES | 30,965 | 31,781 | 42,728 | 37,545 | 32,906 | |||||
| Provision for income taxes | 6,263 | 6,569 | 8,837 | 7,792 | 6,759 | |||||
| NET INCOME | $ | 24,702 | $ | 25,212 | $ | 33,891 | $ | 29,753 | $ | 26,147 |
| EARNINGS PER SHARE | ||||||||||
| Basic | $ | 0.46 | $ | 0.47 | $ | 0.63 | $ | 0.56 | $ | 0.49 |
| Diluted | $ | 0.46 | $ | 0.47 | $ | 0.63 | $ | 0.56 | $ | 0.49 |
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | ||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |||||||||||
| (Dollars and share amounts in thousands, except per share data) | |||||||||||||||
| Net income | $ | 24,702 | $ | 25,212 | $ | 33,891 | $ | 29,753 | $ | 26,147 | |||||
| Earnings per share, basic | $ | 0.46 | $ | 0.47 | $ | 0.63 | $ | 0.56 | $ | 0.49 | |||||
| Earnings per share, diluted | $ | 0.46 | $ | 0.47 | $ | 0.63 | $ | 0.56 | $ | 0.49 | |||||
| Dividends per share | $ | 0.14 | $ | 0.14 | $ | 0.13 | $ | 0.13 | $ | 0.13 | |||||
| Return on average assets(A) | 0.94 | % | 0.94 | % | 1.27 | % | 1.13 | % | 0.98 | % | |||||
| Return on average equity(A) | 6.21 | % | 6.21 | % | 8.49 | % | 7.78 | % | 6.88 | % | |||||
| Return on average tangible equity(A)(B)(D) | 11.48 | % | 11.53 | % | 15.61 | % | 14.94 | % | 13.62 | % | |||||
| Net interest margin (tax equivalent)(A)(C) | 4.20 | % | 4.25 | % | 4.19 | % | 4.24 | % | 4.26 | % | |||||
| Net interest margin (tax equivalent) excluding PAA(A)(B)(C) | 3.97 | % | 3.94 | % | 3.91 | % | 3.82 | % | 3.91 | % | |||||
| Efficiency ratio(B)(E) | 61.93 | % | 64.46 | % | 60.40 | % | 60.81 | % | 60.42 | % | |||||
| Capital Ratios | |||||||||||||||
| Stellar Bancorp, Inc. (Consolidated) | |||||||||||||||
| Equity to assets | 15.44 | % | 14.74 | % | 15.30 | % | 14.60 | % | 14.27 | % | |||||
| Tangible equity to tangible assets(B)(E) | 10.42 | % | 9.87 | % | 10.27 | % | 9.53 | % | 9.12 | % | |||||
| Estimated Total capital ratio (to risk-weighted assets) | 15.94 | % | 16.00 | % | 15.85 | % | 15.30 | % | 14.62 | % | |||||
| Estimated Common equity Tier 1 capital (to risk weighted assets) | 14.03 | % | 14.14 | % | 13.57 | % | 12.95 | % | 12.29 | % | |||||
| Estimated Tier 1 capital (to risk-weighted assets) | 14.15 | % | 14.26 | % | 13.69 | % | 13.06 | % | 12.41 | % | |||||
| Estimated Tier 1 leverage (to average tangible assets) | 11.20 | % | 11.31 | % | 11.10 | % | 10.77 | % | 10.55 | % | |||||
| Stellar Bank | |||||||||||||||
| Estimated Total capital ratio (to risk-weighted assets) | 15.38 | % | 15.28 | % | 15.02 | % | 14.61 | % | 14.13 | % | |||||
| Estimated Common equity Tier 1 capital (to risk-weighted assets) | 14.18 | % | 14.13 | % | 13.58 | % | 13.08 | % | 12.61 | % | |||||
| Estimated Tier 1 capital (to risk-weighted assets) | 14.18 | % | 14.13 | % | 13.58 | % | 13.08 | % | 12.61 | % | |||||
| Estimated Tier 1 leverage (to average tangible assets) | 11.22 | % | 11.21 | % | 11.01 | % | 10.78 | % | 10.72 | % | |||||
| Other Data | |||||||||||||||
| Weighted average shares: | |||||||||||||||
| Basic | 53,146 | 53,422 | 53,541 | 53,572 | 53,343 | ||||||||||
| Diluted | 53,197 | 53,471 | 53,580 | 53,608 | 53,406 | ||||||||||
| Period end shares outstanding | 52,141 | 53,429 | 53,446 | 53,564 | 53,551 | ||||||||||
| Book value per share | $ | 30.89 | $ | 30.09 | $ | 30.43 | $ | 29.23 | $ | 28.58 | |||||
| Tangible book value per share(B) | $ | 19.69 | $ | 19.05 | $ | 19.28 | $ | 18.00 | $ | 17.23 | |||||
| Employees - full-time equivalents | 1,054 | 1,037 | 1,040 | 1,045 | 1,007 |
(A)Interim periods annualized.
(B)Refer to the calculation of these non-GAAP financial measures on page 9 of this Earnings Release.
(C)Net interest margin represents net interest income divided by average interest-earning assets.
(D)The calculation of return on average tangible equity has been adjusted from prior period disclosures. All periods presented above have been recalculated and disclosed under the same calculation.
(E)The calculation of the efficiency ratio has been adjusted from prior period disclosures. All periods presented above have been recalculated and disclosed under the same calculation.
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2025 | December 31, 2024 | March 31, 2024 | ||||||||||||||||
| 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 | $ | 7,344,298 | $ | 120,640 | 6.66 | % | $ | 7,477,332 | $ | 128,738 | 6.85 | % | $ | 7,938,824 | $ | 134,685 | 6.82 | % |
| Securities | 1,817,286 | 16,960 | 3.78 | % | 1,702,111 | 15,603 | 3.65 | % | 1,441,814 | 10,111 | 2.82 | % | ||||||
| Deposits in other financial institutions | 430,621 | 4,720 | 4.45 | % | 473,719 | 5,681 | 4.77 | % | 264,906 | 3,627 | 5.51 | % | ||||||
| Total interest-earning assets | 9,592,205 | $ | 142,320 | 6.02 | % | 9,653,162 | $ | 150,022 | 6.18 | % | 9,645,544 | $ | 148,423 | 6.19 | % | |||
| Allowance for credit losses on loans | (81,166) | (84,423) | (91,612) | |||||||||||||||
| Noninterest-earning assets | 1,100,652 | 1,080,436 | 1,132,857 | |||||||||||||||
| Total assets | $ | 10,611,691 | $ | 10,649,175 | $ | 10,686,789 | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||
| Interest-bearing demand deposits | $ | 1,911,625 | $ | 12,392 | 2.63 | % | $ | 1,623,867 | $ | 11,341 | 2.78 | % | $ | 1,697,211 | $ | 12,278 | 2.91 | % |
| Money market and savings deposits | 2,234,571 | 15,182 | 2.76 | % | 2,312,711 | 16,536 | 2.84 | % | 2,150,805 | 15,252 | 2.85 | % | ||||||
| Certificates and other time deposits | 1,296,972 | 13,527 | 4.23 | % | 1,538,785 | 16,830 | 4.35 | % | 1,444,048 | 15,084 | 4.20 | % | ||||||
| Borrowed funds | 45,795 | 517 | 4.58 | % | 15,978 | 235 | 5.85 | % | 134,400 | 1,774 | 5.31 | % | ||||||
| Subordinated debt | 70,121 | 1,444 | 8.35 | % | 101,394 | 2,123 | 8.33 | % | 109,808 | 1,917 | 7.02 | % | ||||||
| Total interest-bearing liabilities | 5,559,084 | $ | 43,062 | 3.14 | % | 5,592,735 | $ | 47,065 | 3.35 | % | 5,536,272 | $ | 46,305 | 3.36 | % | |||
| Noninterest-Bearing Liabilities: | ||||||||||||||||||
| Noninterest-bearing demand deposits | 3,346,066 | 3,342,636 | 3,525,758 | |||||||||||||||
| Other liabilities | 92,299 | 99,041 | 96,461 | |||||||||||||||
| Total liabilities | 8,997,449 | 9,034,413 | 9,158,491 | |||||||||||||||
| Shareholders’ equity | 1,614,242 | 1,614,762 | 1,528,298 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 10,611,691 | $ | 10,649,175 | $ | 10,686,789 | ||||||||||||
| Net interest rate spread | 2.88 | % | 2.83 | % | 2.83 | % | ||||||||||||
| Net interest income and margin | $ | 99,258 | 4.20 | % | $ | 102,957 | 4.24 | % | $ | 102,118 | 4.26 | % | ||||||
| Net interest income and margin (tax equivalent) | $ | 99,353 | 4.20 | % | $ | 103,039 | 4.25 | % | $ | 102,207 | 4.26 | % | ||||||
| Cost of funds | 1.96 | % | 2.10 | % | 2.06 | % | ||||||||||||
| Cost of deposits | 1.90 | % | 2.02 | % | 1.94 | % |
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | ||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |||||||||||
| (Dollars in thousands) | |||||||||||||||
| Period-end Loan Portfolio: | |||||||||||||||
| Commercial and industrial | $ | 1,362,266 | $ | 1,362,260 | $ | 1,350,753 | $ | 1,396,064 | $ | 1,455,755 | |||||
| Real estate: | |||||||||||||||
| Commercial real estate (including multi-family residential) | 3,854,607 | 3,868,218 | 3,976,296 | 4,029,671 | 4,049,885 | ||||||||||
| Commercial real estate construction and land development | 721,488 | 845,494 | 890,316 | 922,805 | 1,039,443 | ||||||||||
| 1-4 family residential (including home equity) | 1,125,837 | 1,115,484 | 1,112,235 | 1,098,681 | 1,049,316 | ||||||||||
| Residential construction | 141,283 | 157,977 | 161,494 | 200,134 | 252,573 | ||||||||||
| Consumer and other | 77,652 | 90,421 | 60,030 | 66,542 | 61,139 | ||||||||||
| Total loans held for investment | $ | 7,283,133 | $ | 7,439,854 | $ | 7,551,124 | $ | 7,713,897 | $ | 7,908,111 | |||||
| Deposits: | |||||||||||||||
| Noninterest-bearing | $ | 3,205,619 | $ | 3,576,206 | $ | 3,303,048 | $ | 3,308,441 | $ | 3,323,149 | |||||
| Interest-bearing | |||||||||||||||
| Demand | 1,863,752 | 1,845,749 | 1,571,504 | 1,564,405 | 1,576,261 | ||||||||||
| Money market and savings | 2,248,616 | 2,253,193 | 2,280,651 | 2,213,031 | 2,203,767 | ||||||||||
| Certificates and other time | 1,244,726 | 1,453,236 | 1,587,398 | 1,639,426 | 1,691,539 | ||||||||||
| Total interest-bearing deposits | 5,357,094 | 5,552,178 | 5,439,553 | 5,416,862 | 5,471,567 | ||||||||||
| Total deposits | $ | 8,562,713 | $ | 9,128,384 | $ | 8,742,601 | $ | 8,725,303 | $ | 8,794,716 | |||||
| Asset Quality: | |||||||||||||||
| Nonaccrual loans | $ | 54,518 | $ | 37,212 | $ | 32,140 | $ | 50,906 | $ | 57,129 | |||||
| Accruing loans 90 or more days past due | — | — | — | — | — | ||||||||||
| Total nonperforming loans | 54,518 | 37,212 | 32,140 | 50,906 | 57,129 | ||||||||||
| Foreclosed assets | 5,154 | 1,708 | 2,984 | 2,548 | — | ||||||||||
| Total nonperforming assets | $ | 59,672 | $ | 38,920 | $ | 35,124 | $ | 53,454 | $ | 57,129 | |||||
| Net charge-offs (recoveries) | $ | 163 | $ | 2,016 | $ | 3,933 | $ | (1) | $ | 714 | |||||
| Nonaccrual loans: | |||||||||||||||
| Commercial and industrial | $ | 11,471 | $ | 8,500 | $ | 9,718 | $ | 18,451 | $ | 15,465 | |||||
| Real estate: | |||||||||||||||
| Commercial real estate (including multi-family residential) | 26,383 | 16,459 | 10,695 | 18,094 | 21,268 | ||||||||||
| Commercial real estate construction and land development | 2,027 | 3,061 | 4,183 | 1,641 | 8,406 | ||||||||||
| 1-4 family residential (including home equity) | 14,550 | 9,056 | 7,259 | 12,454 | 10,368 | ||||||||||
| Residential construction | — | — | 121 | 155 | 1,410 | ||||||||||
| Consumer and other | 87 | 136 | 164 | 111 | 212 | ||||||||||
| Total nonaccrual loans | $ | 54,518 | $ | 37,212 | $ | 32,140 | $ | 50,906 | $ | 57,129 | |||||
| Asset Quality Ratios: | |||||||||||||||
| Nonperforming assets to total assets | 0.57 | % | 0.36 | % | 0.33 | % | 0.50 | % | 0.53 | % | |||||
| Nonperforming loans to total loans | 0.75 | % | 0.50 | % | 0.43 | % | 0.66 | % | 0.72 | % | |||||
| Allowance for credit losses on loans to nonperforming loans | 153.61 | % | 217.83 | % | 262.92 | % | 186.17 | % | 168.54 | % | |||||
| Allowance for credit losses on loans to total loans | 1.15 | % | 1.09 | % | 1.12 | % | 1.23 | % | 1.22 | % | |||||
| Net charge-offs to average loans (annualized) | 0.01 | % | 0.11 | % | 0.21 | % | 0.00 | % | 0.04 | % |
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 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | ||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |||||||||||
| (Dollars and share amounts in thousands, except per share data) | |||||||||||||||
| Net income | $ | 24,702 | $ | 25,212 | $ | 33,891 | $ | 29,753 | $ | 26,147 | |||||
| Add: Provision for (reversal of) credit losses | 3,632 | 942 | (5,985) | (1,935) | 4,098 | ||||||||||
| Add: Provision for income taxes | 6,263 | 6,569 | 8,837 | 7,792 | 6,759 | ||||||||||
| Pre-tax, pre-provision income | $ | 34,597 | $ | 32,723 | $ | 36,743 | $ | 35,610 | $ | 37,004 | |||||
| Total average assets | $ | 10,611,691 | $ | 10,649,175 | $ | 10,626,266 | $ | 10,623,865 | $ | 10,686,789 | |||||
| Pre-tax, pre-provision return on average assets(A) | 1.32 | % | 1.22 | % | 1.38 | % | 1.35 | % | 1.39 | % | |||||
| Total shareholders’ equity | $ | 1,610,832 | $ | 1,607,860 | $ | 1,626,123 | $ | 1,565,795 | $ | 1,530,698 | |||||
| Less: Goodwill and core deposit intangibles, net | 584,325 | 589,864 | 595,434 | 601,633 | 607,831 | ||||||||||
| Tangible shareholders’ equity | $ | 1,026,507 | $ | 1,017,996 | $ | 1,030,689 | $ | 964,162 | $ | 922,867 | |||||
| Shares outstanding at end of period | 52,141 | 53,429 | 53,446 | 53,564 | 53,551 | ||||||||||
| Tangible book value per share | $ | 19.69 | $ | 19.05 | $ | 19.28 | $ | 18.00 | $ | 17.23 | |||||
| Average shareholders’ equity | $ | 1,614,242 | $ | 1,614,762 | $ | 1,587,918 | $ | 1,538,124 | $ | 1,528,298 | |||||
| Less: Average goodwill and core deposit intangibles, net | 586,895 | 592,471 | 598,866 | 604,722 | 611,149 | ||||||||||
| Average tangible shareholders’ equity | $ | 1,027,347 | $ | 1,022,291 | $ | 989,052 | $ | 933,402 | $ | 917,149 | |||||
| Net income | $ | 24,702 | $ | 25,212 | $ | 33,891 | $ | 29,753 | $ | 26,147 | |||||
| Add: Core deposit intangibles amortization, net of tax | 4,383 | 4,409 | 4,907 | 4,910 | 4,907 | ||||||||||
| Adjusted net income | $ | 29,085 | $ | 29,621 | $ | 38,798 | $ | 34,663 | $ | 31,054 | |||||
| Return on average tangible equity(A)(B) | 11.48 | % | 11.53 | % | 15.61 | % | 14.94 | % | 13.62 | % | |||||
| Total assets | $ | 10,434,887 | $ | 10,905,790 | $ | 10,629,777 | $ | 10,723,663 | $ | 10,729,222 | |||||
| Less: Goodwill and core deposit intangibles, net | 584,325 | 589,864 | 595,434 | 601,633 | 607,831 | ||||||||||
| Tangible assets | $ | 9,850,562 | $ | 10,315,926 | $ | 10,034,343 | $ | 10,122,030 | $ | 10,121,391 | |||||
| Tangible equity to tangible assets | 10.42 | % | 9.87 | % | 10.27 | % | 9.53 | % | 9.12 | % | |||||
| Net interest income (tax equivalent) | $ | 99,353 | $ | 103,039 | $ | 101,578 | $ | 101,482 | $ | 102,207 | |||||
| Less: Purchase accounting accretion | 5,397 | 7,555 | 6,795 | 10,098 | 8,551 | ||||||||||
| Adjusted net interest income (tax equivalent) | $ | 93,956 | $ | 95,484 | $ | 94,783 | $ | 91,384 | $ | 93,656 | |||||
| Average earning assets | $ | 9,592,205 | $ | 9,653,162 | $ | 9,643,629 | $ | 9,616,874 | $ | 9,645,544 | |||||
| Net interest margin (tax equivalent) excluding PAA(A) | 3.97 | % | 3.94 | % | 3.91 | % | 3.82 | % | 3.91 | % | |||||
| Noninterest expense | $ | 70,166 | $ | 75,266 | $ | 71,066 | $ | 71,216 | $ | 71,410 | |||||
| Less: Core deposit intangibles amortization | 5,548 | 5,581 | 6,212 | 6,215 | 6,212 | ||||||||||
| Adjusted noninterest expense | $ | 64,618 | $ | 69,685 | $ | 64,854 | $ | 65,001 | $ | 65,198 | |||||
| Net interest income | $ | 99,258 | $ | 102,957 | $ | 101,507 | $ | 101,410 | $ | 102,118 | |||||
| Noninterest income | 5,505 | 5,032 | 6,302 | 5,416 | 6,296 | ||||||||||
| Less: Gain (loss) on sale of assets | 417 | (112) | 432 | (64) | 513 | ||||||||||
| Adjusted noninterest income | $ | 5,088 | $ | 5,144 | $ | 5,870 | $ | 5,480 | $ | 5,783 | |||||
| Net interest income plus adjusted noninterest income | $ | 104,346 | $ | 108,101 | $ | 107,377 | $ | 106,890 | $ | 107,901 | |||||
| Efficiency ratio(C) | 61.93 | % | 64.46 | % | 60.40 | % | 60.81 | % | 60.42 | % |
(A)Interim periods annualized.
(B)The calculation of return on average tangible equity has been adjusted from prior period disclosures. All periods presented above have been recalculated and disclosed under the same calculation.
(C)The calculation of the efficiency ratio has been adjusted from prior period disclosures. All periods presented above have been recalculated and disclosed under the same calculation.
9
ex992q12025earningsprese
First Quarter 2025 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 future financial performance of Stellar Bancorp, Inc. (the “Company”), operating results, 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 the Company. Such factors include, among others: 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; risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators; legislative changes, executive orders, regulatory actions and reforms of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking. 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 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.
3 (1) Deposit market share based on FDIC data as of June 30, 2024. (2) Houston Region defined as the Houston-Pasadena-The Woodlands and Beaumont-Port Arthur MSAs; Excludes non-retail branches. (3) 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 Valuable franchise in one of the best markets in the U.S. • 6th in deposit market share for Houston region(1)(2) • 1st in deposit market share for Texas-based banks in the Houston region(1)(2) • 10th in deposit market share for Texas-based banks in the State of Texas(1) • Noninterest-bearing deposits to total deposits of 37.4% at March 31, 2025 Strong core earnings power and capital position for first quarter 2025 • Net interest margin (tax equivalent) of 4.20% • Net interest margin (tax equivalent) excluding purchase accounting adjustments of 3.97%(3) • Total capital ratio (to risk weighted-assets) of 15.94% Banking Centers Banking Centers Free-standing ATM 3/31/2025 12/31/2024 10,434,887$ 10,905,790$ 7,283,133 7,439,854 8,562,713 9,128,384 4.20% 4.25% 3.97% 3.94% 37.44% 39.18% 15.94% 16.00% (Dollars in thousands) Total assets Total loans Total deposits Estimated Total capital ratio (to risk-weighted assets Net interest margin (tax equivalent) Net interest margin (tax equivalent) excluding PAA(3) Noninterest-bearing deposits to total deposits
$30.1 $25.3 $13.2 $9.0 $8.6 $7.8 $5.7 $5.7 $5.7 $5.3 $3.4 $3.0 $2.6 $2.4 $2.3 $2.1 $1.9 JPMorgan Wells Fargo BofA Zions PNC Frost Prosperity Cadence Woodforest Capital One Third Coast Comerica Truist BOK Regions Texas Capital Texas Independent Focused on Serving the Houston Region 4 Note: Deposit market share based on FDIC data as of June 30, 2024. 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 Stellar Houston Region Market Share(1) Deposits (dollars in billions) $150.8 Houston Percent of Houston Total Assets Region(1) Company Region Market Name ($B) Deposits ($B) Deposits (%) Share (%) JPMorgan 4,143 150.8 7.5 47.4 Wells Fargo 1,940 30.1 2.1 9.5 BofA 3,258 25.3 1.3 7.9 Zions 88 13.2 17.8 4.1 PNC 557 9.0 2.1 2.8 Stellar 11 8.6 97.6 2.7 Frost 49 7.8 19.1 2.4 Prosperity 40 5.7 20.5 1.8 Cadence 48 5.7 15.1 1.8 Woodforest 10 5.7 70.9 1.8 Capital One 480 5.3 1.4 1.7 Third Coast 4 3.4 87.4 1.1 Comerica 80 3.0 4.8 1.0 Truist 520 2.6 0.7 0.8 BOK 50 2.4 6.5 0.8 Regions 154 2.3 1.8 0.7 Texas Capital 30 2.1 8.7 0.7 Texas Independent 2 1.9 100 0.6
5 Q1 2025 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. The calculation of return on average tangible equity has been adjusted from prior period disclosures. Solid Profitability: Net income for the first quarter of 2025 was $24.7 million, or diluted earnings per share of $0.46, which translated into an annualized return on average assets of 0.94%, an annualized return on average equity of 6.21% and an annualized return on average tangible equity of 11.48%(1). Strong Net Interest Margin: Tax equivalent net interest margin for the first quarter of 2025 was 4.20% compared to 4.25% for the fourth quarter of 2024. The tax equivalent net interest margin, excluding PAA, was 3.97%(1) for the first quarter of 2025 compared to 3.94%(1) for the fourth quarter of 2024. Strong Capital Position and Book Value Build: Total risk-based capital ratio increased to 15.94% at March 31, 2025, while book value per share increased to $30.89 at March 31, 2025 from $30.09 at December 31, 2024 and tangible book value per share increased to $19.69(1) at March 31, 2025 from $19.05(1) at December 31, 2024. Repurchase of Shares: Repurchased 1.4 million shares at a weighted average price per share of $27.99 during the first quarter of 2025 and 679 thousand shares at a weighted average price of $25.83 per share since the end of the first quarter of 2025. On April 23, 2025, the Board of Directors authorized of new share repurchase program under which the Company may repurchase up to $65 million of common stock through May 31, 2026. Tangible Book Value Per Share(1) Total Capital Ratio $14.02 $17.02 $19.05 $19.69 12/31/2022 12/31/2023 12/31/2024 3/31/2025 12.39% 14.02% 16.00% 15.94% 12/31/2022 12/31/2023 12/31/2024 3/31/2025
Deposit Summary 6 Deposit Portfolio Composition Deposits (in millions)(1) Maintaining Discipline Navigating Competitive Deposit Market As of March 31, 2025: • Noninterest-bearing deposits to total deposits: 37.4% • Cost of deposits: 1.90% • Cost of funds: 1.96% • Loan to deposit ratio: 85.1% • Brokered deposits: $365.1 million at March 31, 2025 from $481.8 million at December 31, 2024 . (1) (1) Other includes changes in IB Demand and MMDA & Sav. deposits. Q1 2025 Q4 2024 Noninterest-bearing ("NIB") 3,205,619$ 3,576,206$ Interest-bearing demand ("IB Demand") 1,863,752 1,845,749 Money market and savings ("MMDA & Sav.") 2,248,616 2,253,193 Certificates and other time ("CD's") 1,244,726 1,453,236 Total deposits 8,562,713$ 9,128,384$ (Dollars in thousands) NIB 37.4% IB Demand 21.8% MMDA & Sav. 26.3% CD's 14.5%
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 15.5% MF 6.1% Resi. C&D 1.9% Other 1.1% CRE C&D 9.9% NOO CRE 21.8% OO CRE 25.0% C&I 18.7% Average Yield Excl. PAA(1) Average Yield Excl. PAA(1) Interest-Earning Assets: Loans 7,344,298$ 120,640$ 6.66% 6.36% 7,477,332$ 128,738$ 6.85% 6.45% Securities 1,817,286 16,960 3.78% 1,702,111 15,603 3.65% Deposits in other financial institutions 430,621 4,720 4.45% 473,719 5,681 4.77% Total interest-earning assets 9,592,205$ 142,320$ 6.02% 5.79% 9,653,162$ 150,022$ 6.18% 5.87% Q1 2025 Q4 2024 (Dollars in thousands) Average Outstanding Balance Interest Earned Average Outstanding Balance Interest Earned Q1 2025 Q4 2024 Commercial and Industrial (“C&I”) 1,362,266$ 1,362,260$ Nonowner-occupied Commercial Real Estate (“NOO CRE”) 1,587,456 1,623,373 Owner-occupied CRE (“OO CRE”) 1,823,044 1,834,354 Multifamily Real Estate (“MF”) 444,107 410,491 Total Commercial Real Estate 3,854,607 3,868,218 CRE Construction & Development (“CRE C&D”) 721,488 845,494 1-4 Family Residential (“1-4 Family”) 1,125,837 1,115,484 Residential Construction (“Resi. C&D”) 141,283 157,977 Consumer and other ("Other") 77,652 90,421 Total 7,283,133$ 7,439,854$ (In thousands)
CRE and Office Detail: Q1 2025 8 (1) (1) CRE (incl. multifamily) by Property Type CRE - Office Retail 16.3% Office 10.3% Warehouse 14.9% C-Store 11.1% Multi-family 11.5% Industrial 4.1% Hotel / Motel 3.3% Restaurant / Bar 3.9% Auto Sales / Repair 3.4% Church 3.4% Healthcare 2.9% Other 14.9% Owner- occupied 41.1% Non- owner occupied 58.9% Retail 626,461$ 1,266$ 16.3% Warehouse 572,832 766 14.9% Multi-family 444,107 2,056 11.5% Convenience Store ("C-Store") 428,732 1,331 11.1% Office 397,610 807 10.3% Industrial 159,946 1,481 4.1% Restaurant / Bar 148,899 1,048 3.9% Auto Sales / Repair 131,855 680 3.4% Church 130,947 949 3.4% Hotel / Motel 127,477 3,541 3.3% Healthcare 110,736 1,130 2.9% Other 575,005 767 14.9% Total 3,854,607$ 1,116 100.0% (Dollars in thousands) Property Type Balance Average Loan Size % of Total Multi-Story Office Building 128 223,060$ 56.1% 1,743$ Single Story Office Building 294 128,816 32.4% 438 Flex Office Space 71 45,734 11.5% 644 Total 493 397,610$ 100.0% 807 0 - 12 months 85 60,356$ 15.2% 710$ 13 - 24 months 89 84,343 21.2% 948 25 - 36 months 65 66,069 16.6% 1,016 37 - 48 months 22 9,713 2.4% 442 49 + months 232 177,129 44.6% 763 Total 493 397,610$ 100.0% 807 Average Loan Size (Dollars in thousands) (Dollars in thousands) CRE - Office - Maturity Number BalanceCRE - Office - Collateral Type Number Balance % of Total % of Total Average Loan Size
9 Loans – Repricing and Maturity: Q1 2025 Floating-21% WA Rate-8.64% Variable-26% WA Rate-6.41% Fixed-53% WA Rate-6.07% (1) Rates do not include purchase accounting accretion or fee income on loans. Total Loans in thousands Commercial and industrial 681,459$ 121,601$ 248,077$ 229,235$ 55,928$ 25,965$ -$ 1,362,267$ Real Estate: Commercial real estate construction 897,369 446,429 1,669,770 456,827 221,165 123,243 39,804 3,854,607 and land development Commercial real estate (including 403,229 60,278 181,933 59,313 6,076 10,659 - 721,488 multi-family residential) 1-4 family residential (including 104,375 110,910 257,778 274,525 94,963 24,260 259,026 1,125,837 home equity) Residential construction 79,126 19,318 3,368 12,440 26,266 764 - 141,283 Consumer and other 40,375 14,903 9,658 11,247 1,459 - 10 77,652 Total Loans 2,205,933$ 773,440$ 2,370,584$ 1,043,588$ 405,857$ 184,891$ 298,840$ 7,283,133$ % Total Loans 30% 11% 33% 14% 6% 3% 4% 100% Wtg Avg Rate 8.29% 6.55% 5.39% 7.46% 5.56% 5.38% 5.40% 6.29% Repricing Term TotalOver 15 Years1-3 Years 3-5 Years 5-10 Years 10-15 Years3 Months or Less 3-12 Months Rate Structure
CRE Construction and Development: Q1 2025 10 (1) (1) • Total committed exposure for CRE construction loans was $1.05 billion at March 31, 2025 and $1.18 billion at December 31, 2024. • The largest category of CRE construction loans was Land – Commercial at $283.5 million outstanding, or 39.3%, of CRE construction loans at March 31, 2025. • Owner-occupied CRE construction loans were 11.2% of CRE construction loans at March 31, 2025. (1) Includes loans that are secured by commercial properties that are in some stage of construction, land with improvements but valued as and only with intent to remove and construct new structures in the future and raw land. (2) Multi-family community development loans (“CD”). CRE Construction Lending Highlights Number Balance Number Balance Land - Commercial(1) 406 283,521$ 698$ 429 312,902$ 729$ Multi-family - CD(2) 14 115,190 8,228 15 147,974 9,865 Other 82 70,154 856 82 89,102 1,087 Multi-family - Market Rate 7 67,873 9,696 7 60,761 8,680 Warehouse 24 66,466 2,769 24 82,665 3,444 Land - Residential Lot 220 49,188 224 238 56,926 239 Retail 13 35,798 2,754 22 34,807 1,582 Commercial Development 5 10,874 2,175 6 34,389 5,732 Residential Subdivision 8 22,424 2,803 8 25,968 3,246 Total 779 721,488$ 926 831 845,494$ 1,017 (Dollars in thousands) (Dollars in thousands) Loan Type Q1 2025 Q4 2024 Average Loan Size Average Loan Size Land - Commercial 39.3% Warehouse 9.2% Multi-family - CD 16.0% Multi-family - Market Rate 9.4% Residential Subdivision 3.1% Land - Residential Lot 6.8% Commercial Development 1.5% Retail 5.0% Other 9.7%
Asset Quality Summary 11 Nonperforming Loans by Type (1) Combined represents the simple addition of legacy balances for 2022; estimated. Nonperforming loans to total loans: • 0.75% at March 31, 2025 compared to 0.50% as of December 31, 2024 Allowance for credit losses on loans to nonperforming loans: • 153.61% at March 31, 2025 compared to 217.83% as of December 31, 2024 Allowance for credit losses on loans: • $83.7 million, or 1.15% of total loans, at March 31, 2025, compared to $81.1 million, or 1.09% of total loans, as of December 31, 2024 Q1 2025 Q4 2024 Total nonperforming loans 54,518$ 37,212$ Nonperforming loans to total loans 0.75% 0.50% Total nonperforming assets 59,672$ 38,920$ 0.57% 0.36% Net charge-offs (recoveries) 163$ 2,016$ 0.01% 0.11% (Dollars in thousands) Nonperforming assets to total assets Net charge-offs to average loans (annualized) C&I 21.0% Other 0.2% CRE 48.4% CRE C&D 3.7% 1-4 Family 26.7% Nonaccrual Loans with No Related Allowance Nonaccrual Loans with Related Allowance Total Nonaccrual Loans Commercial and industrial 4,082$ 7,389$ 11,471$ Commercial real estate (including multi-family residential) 11,491 14,892 26,383 Commercial real estate construction and land development 1,164 863 2,027 1-4 family residential (including equity) 10,488 4,061 14,549 Residential construction — — — Consumer and other — 87 87 Total 27,225$ 27,292$ 54,517$ (In thousands)
Regulatory Capital Ratios 12 (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) 15.94% 16.00% 10.50% Estimated Common Equity Tier 1 Capital Ratio (to risk-weighted assets) 14.03% 14.14% 7.00% Estimated Tier 1 Capital Ratio (to risk-weighted assets) 14.15% 14.26% 8.50% Estimated Tier 1 Leverage Ratio (to average tangible assets) 11.20% 11.31% 4.00% Tangible Equity to Tangible Assets (1) 10.42% 9.87% N/A Bank Capital Ratios Estimated Total Capital Ratio (to risk-weighted assets) 15.38% 15.28% 10.50% Estimated Common Equity Tier 1 Capital Ratio (to risk-weighted assets) 14.18% 14.13% 7.00% Estimated Tier 1 Capital Ratio (to risk-weighted assets) 14.18% 14.13% 8.50% Estimated Tier 1 Leverage Ratio (to average tangible assets) 11.22% 11.21% 4.00% March 31, 2025 December 31, 2024
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 continued strong internal capital generation
$5.7 $5.7 $5.7 $7.8 $8.6 $9.0 $13.2 $25.3 $30.1 $151 Woodforest Cadence Prosperity Frost Stellar PNC Zions BofA Wells Fargo JP Morgan 6.1% 5.6% 2.4% Houston MSA Texas USA 6.4% 6.0% 2.7% Houston MSA Texas USA Diverse and Strong Markets of Operation 14 Houston is Diverse, with Significant Economic TailwindsGreater Houston Market Houston’s 25.1% GDP growth from ’21 to ’23 ranked first out of the 20 most populus U.S. metro areas Houston has the 3rd lowest cost of living out of the top 20 most populous U.S. metro areas 23rd largest economy in the world – if ranked as a country − 14th largest population in the U.S – if ranked as a state Port Houston is the busiest Gulf Coast container port, the Houston Ship Channel is #1 ranked U.S. port in total foreign and domestic waterborne tonnage Houston is home to the Texas Medical Center, the world's largest medical complex, which has 10 million annual patient encounters Business friendly: #3 among U.S. metro areas in Fortune 500 headquarters (24) Major business clusters in Beaumont-Port Arthur area include chemical and petroleum manufacturing, materials manufacturing and transportation Top 10 Bank by Deposits in Houston Region(1) ($B) Note: Deposit market share based on FDIC data as of June 30, 2024 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, IMF, and Texas Medical Center Est. Population Growth ’25-’30 Est. Number of Households Growth ’25-’30 Population Change (’20-’25) Median Household Income (’25) Significant Deposit Share Houston MSA: 7.7% Texas: 7.2% / U.S: 1.9% Houston MSA: $78,845 Texas: $76,585 / U.S: $78,770 Stellar has over $8.6 billion in deposits in the Houston region(1) Houston HQ Bank
4.2% 2.1% (0.2)% 1.5% 2.0% (4.9)% 2.2% 1.4% 1.5% 1.7% 1.4% 1.8% 0.2% 6.6% 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 Professional and Business Services 16% Education and Health Services 13% 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% Diversified and Growing Economy 15 1) Data is preliminary as of January 2025 not seasonally adjusted, from the U.S. Bureau of Labor Statistics. Source: U.S. Bureau of Labor Statistics Houston vs. U.S. Job Change by Industry (Jan ‘24 – Jan ‘25)(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 Houston's largest job sector, professional and business services, recovered faster than U.S. and continues to show outsized sector growth Mining and logging, wholesale trade, and other services showed a large gain over the last year versus the United States United States Houston MSA
2.0 3.0 4.0 5.0 6.0 7.0 2.0 2.5 3.0 3.5 4.0 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 2.2 million new residents and created over one million jobs since 2007 P op u lation (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 V ID -1 9 E m p lo ym en t ( M ) Employment Population1) Data is preliminary as of January 2025 not seasonally adjusted, from the U.S. Bureau of Labor Statistics. Source: U.S. Bureau of Labor Statistics, Texas Workforce Commission
197,171 0 50,000 100,000 150,000 200,000 250,000 N ew Y or k H ou st on D al la s M ia m i W as hi ng to n Ph oe ni x O rla nd o At la nt a C hi ca go Se at tle Houston’s Growth Projected to Continue 17 Source: S&P Capital IQ Pro; U.S. Census Bureau 2010-2025 Population Change (%) Houston had the second highest net migration in 2024 10 most populated metros 2.44% -0.43% -2.55% 31.40% 30.06% 24.26% 9.36% 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 ~198,000 people by net migration in 2024, second only to New York
$94,960 $91,380 $86,627 $88,783 $78,845 $76,585 $78,770 New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. $850,000 $1,072,000 $350,000 $395,000 $314,900 $334,900 $418,284 New York Los Angeles Chicago Dallas Houston Texas U.S. 9.0x 11.7x 4.0x 4.4x 4.0x 4.4x 5.3x 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 5.3% 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 25 M ed ia n H ou se ho ld In co m e 20 25 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 2025); 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. (3) The calculation of return on average tangible equity has been adjusted from prior period disclosures. The periods presented above have been recalculated and disclosed under the same calculation. Total shareholders’ equity $ 1,610,832 $ 1,607,860 Less: Goodw ill and core deposit intangibles, net 584,325 589,864 Tangible shareholders’ equity $ 1,026,507 $ 1,017,996 Shares outstanding at end of period 52,141 53,429 Tangible book value per share $ 19.69 $ 19.05 Average shareholders’equity $ 1,614,242 $ 1,614,762 Less: Average goodw ill and core deposit intangibles, net 586,895 592,471 Average tangible shareholders’equity $ 1,027,347 $ 1,022,291 Net income $ 24,702 $ 25,212 Add:Core deposit amortization, net of tax 4,383 4,409 Adjusted net income $ 29,085 $ 29,621 Return on average tangible equity(2)(3) 11.48% 11.53% Total assets $ 10,434,887 $ 10,905,790 Less: Goodw ill and core deposit intangibles, net 584,325 589,864 Tangible assets $ 9,850,562 $ 10,315,926 Tangible equity to tangible assets 10.42% 9.87% Net interest income (tax equivalent) $ 99,353 $ 103,039 Less: Purchase accounting accretion 5,397 7,555 Adjusted net interest income (tax equivalent) $ 93,956 $ 95,484 Average earning assets $ 9,592,205 $ 9,653,162 Net interest margin (tax equivalent)(2) 4.20% 4.25% Net interest margin (tax equivalent) excluding PAA(2) 3.97% 3.94% Interest on loans, as reported $ 120,640 $ 128,738 Less: Purchase accounting accretion 5,397 7,555 Interest on loans w ithout loan accretion $ 115,243 $ 121,183 Average loans $ 7,344,298 $ 7,477,332 Loan yield, as reported 6.66% 6.85% Loan yield, w ithout loan accretion 6.36% 6.45% Interest on interest-earning assets, as reported $ 142,320 $ 150,022 Less: Purchase accounting accretion 5,397 7,555 Interest on interest-earnings assets w ithout loan accretion $ 136,923 $ 142,467 Average interest-earning assets $ 9,592,205 $ 9,653,162 Yield on interest-earnings assets, as reported 6.02% 6.18% Yield on interest-earnings assets, w ithout loan accretion 5.79% 5.87% Q1 2025 Q4 2024 (Dollars in thousands)
20 NYSE: STEL