Stellar Bancorp, Inc. Reports Third Quarter 2025 Results
HOUSTON--( BUSINESS WIRE)--Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $25.7 million, or diluted earnings per share of $0.50, for the third quarter of 2025, compared to net income of $26.4 million, or diluted earnings per share of $0.51, for the second quarter of 2025.
“We are pleased to report strong third quarter results for 2025, highlighted by improved net interest income and margin. We also saw growth in deposits and tangible book value, which further strengthened our balance sheet to support our future,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer.
“Our team has continued to reposition the loan portfolio, reducing our exposure to non-relationship real estate commitments and moving toward a more balanced mix of C&I and real estate loans. Our real estate portfolio remains within regulatory guidance, and we intend to stay within those parameters. While loan payoffs persisted during the quarter, we believe this strategic portfolio shift will help moderate payoff activity over the longer term,” Mr. Franklin continued.
“Credit quality remains good, and the Texas markets we serve continue to perform well. Stellar is increasingly recognized as a strong, locally-managed bank focused on serving small-to-medium sized businesses, and we are well-positioned to capitalize on merger-related disruption in our markets. We remain confident in our ability to deepen customer relationships and deliver long-term value for our shareholders,” Mr. Franklin concluded.
Financial Highlights
Third Quarter 2025 Results
Net interest income in the third quarter of 2025 increased $2.3 million, or 2.3%, to $100.6 million from $98.3 million for the second quarter of 2025. The net interest margin on a tax equivalent basis increased to 4.20% for the third quarter of 2025 from 4.18% for the second quarter of 2025. The increase in net interest income from the prior quarter was primarily due to the increase in average securities, average yield on securities and deposits in other financial institutions. Net interest income for the third quarter of 2025 benefited from $4.8 million of income from PAA compared to $5.3 million in the second quarter of 2025. Excluding PAA, net interest income (tax equivalent) for the third quarter of 2025 would have been $95.9 million (1) and the tax equivalent net interest margin would have been 4.00% (1).
Noninterest income for the third quarter of 2025 was $5.0 million, a decrease of $805 thousand, or 13.9%, compared to $5.8 million for the second quarter of 2025. Noninterest income decreased in the third quarter of 2025 compared to the second quarter of 2025 primarily due to losses on sales and write-downs on foreclosed assets recorded during the third quarter.
Noninterest expense for the third quarter of 2025 increased $3.1 million, or 4.5%, to $73.1 million compared to $70.0 million for the second quarter of 2025. The increase in noninterest expense during the third quarter of 2025 compared to the second quarter of 2025 was primarily due to an increase in salaries and employee benefits of $2.2 million, an increase in professional fees of $314 thousand and a $258 thousand increase in advertising expense. Salaries and benefits during the third quarter of 2025 included $464 thousand in severance expense related to planned upcoming branch closures.
The efficiency ratio was 63.69% (1) for the third quarter of 2025 compared to 61.87% (1) for the second quarter of 2025. Annualized returns on average assets, average equity and average tangible equity were 0.97%, 6.30% and 11.45% (1) for the third quarter of 2025, respectively, compared to 1.01%, 6.62% and 12.16% (1) for the second quarter of 2025, respectively.
Financial Condition
Total assets at September 30, 2025 were $10.63 billion, an increase of $135 million compared to $10.49 billion at June 30, 2025. The increase in total assets was largely due to an increase in interest-bearing deposits at other financial institutions and securities, all of which were funded largely by core deposit growth, partially offset by a decrease in loans.
Total loans at September 30, 2025 decreased $119.5 million to $7.17 billion compared to $7.29 billion at June 30, 2025. At September 30, 2025, the remaining balance of the PAA on loans was $58.1 million.
Total deposits at September 30, 2025 increased $143.8 million to $8.82 billion compared to $8.67 billion at June 30, 2025 primarily due to increases in money market and savings deposits.
Asset Quality
Nonperforming assets totaled $54.2 million, or 0.51% of total assets, at September 30, 2025, compared to $58.2 million, or 0.55% of total assets, at June 30, 2025. The allowance for credit losses on loans as a percentage of total loans was 1.10% at September 30, 2025 compared to 1.14% at June 30, 2025.
The provision for credit losses was $305 thousand for the third quarter of 2025 compared to $1.1 million for the second quarter of 2025. Net charge-offs for the third quarter of 2025 were $3.3 million, or 0.18% (annualized) of average loans, compared to net charge-offs of $206 thousand, or 0.01% (annualized) of average loans, for the second quarter of 2025.
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, October 24, 2025 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its results for the third quarter of 2025. Participants may register for the conference call at https://registrations.events/direct/Q4I6358688 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/Q4I6358688 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 Houston, Dallas, Beaumont and surrounding communities in Texas.
____________
(1) Refer to the calculation of this non-GAAP financial measure on page 10 of this earnings release. The calculation of returns on average tangible equity and the efficiency ratio have been adjusted from prior period disclosures.
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 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
September 30
June 30
March 31
December 31
September 30
(Dollars in thousands)
ASSETS:
Cash and due from banks
$
99,407
$
136,060
$
130,932
$
419,967
$
103,735
Interest-bearing deposits at other financial institutions
629,042
442,044
429,643
491,249
412,482
Total cash and cash equivalents
728,449
578,104
560,575
911,216
516,217
Available for sale securities, at fair value
1,842,268
1,729,684
1,719,371
1,673,016
1,691,752
Loans held for investment
7,167,857
7,287,347
7,283,133
7,439,854
7,551,124
Less: allowance for credit losses on loans
(78,924
)
(83,165
)
(83,746
)
(81,058
)
(84,501
)
Loans, net
7,088,933
7,204,182
7,199,387
7,358,796
7,466,623
Accrued interest receivable
34,865
35,537
37,669
37,884
39,473
Premises and equipment, net
107,803
108,615
109,750
111,856
113,742
Federal Reserve Bank and Federal Home Loan Bank stock
45,437
47,099
20,902
8,209
20,123
Bank-owned life insurance
109,358
108,726
108,108
107,498
106,876
Goodwill
497,318
497,318
497,318
497,318
497,318
Core deposit intangibles, net
75,929
81,468
87,007
92,546
98,116
Other assets
97,753
102,277
94,800
107,451
79,537
Total assets
$
10,628,113
$
10,493,010
$
10,434,887
$
10,905,790
$
10,629,777
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing
$
3,210,948
$
3,183,693
$
3,205,619
$
3,576,206
$
3,303,048
Interest-bearing
Demand
1,960,857
1,941,156
1,863,752
1,845,749
1,571,504
Money market and savings
2,489,169
2,393,767
2,248,616
2,253,193
2,280,651
Certificates and other time
1,156,489
1,154,998
1,244,726
1,453,236
1,587,398
Total interest-bearing deposits
5,606,515
5,489,921
5,357,094
5,552,178
5,439,553
Total deposits
8,817,463
8,673,614
8,562,713
9,128,384
8,742,601
Accrued interest payable
9,429
7,607
9,856
17,052
16,915
Borrowed funds
—
69,925
119,923
—
60,000
Subordinated debt
70,196
70,165
70,135
70,105
110,064
Other liabilities
77,887
67,865
61,428
82,389
74,074
Total liabilities
8,974,975
8,889,176
8,824,055
9,297,930
9,003,654
SHAREHOLDERS’ EQUITY:
Common stock
512
514
521
534
535
Capital surplus
1,182,781
1,185,048
1,202,628
1,240,050
1,238,619
Retained earnings
547,717
529,216
510,072
492,640
474,905
Accumulated other comprehensive loss
(77,872
)
(110,944
)
(102,389
)
(125,364
)
(87,936
)
Total shareholders’ equity
1,653,138
1,603,834
1,610,832
1,607,860
1,626,123
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
10,628,113
$
10,493,010
$
10,434,887
$
10,905,790
$
10,629,777
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months Ended
Nine Months Ended
2025
2024
2025
2024
September 30
June 30
March 31
December 31
September 30
September 30
September 30
(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees
$
122,557
$
121,814
$
120,640
$
128,738
$
132,372
$
365,011
$
402,942
Securities:
Taxable
16,278
15,293
16,148
14,789
13,898
47,719
35,114
Tax-exempt
808
810
812
814
814
2,430
2,448
Deposits in other financial institutions
5,770
4,782
4,720
5,681
4,692
15,272
11,874
Total interest income
145,413
142,699
142,320
150,022
151,776
430,432
452,378
INTEREST EXPENSE:
Demand, money market and savings deposits
32,376
31,097
27,574
27,877
29,440
91,047
85,369
Certificates and other time deposits
10,920
11,459
13,527
16,830
18,073
35,906
51,915
Borrowed funds
56
407
517
235
840
980
4,314
Subordinated debt
1,417
1,401
1,444
2,123
1,916
4,262
5,745
Total interest expense
44,769
44,364
43,062
47,065
50,269
132,195
147,343
NET INTEREST INCOME
100,644
98,335
99,258
102,957
101,507
298,237
305,035
Provision for (reversal of) credit losses
305
1,090
3,632
942
(5,985
)
5,027
(3,822
)
Net interest income after provision for credit losses
100,339
97,245
95,626
102,015
107,492
293,210
308,857
NONINTEREST INCOME:
Service charges on deposit accounts
1,545
1,561
1,584
1,590
1,594
4,690
4,840
(Loss) gain on sale/write-down of assets
(491
)
(57
)
417
(112
)
432
(131
)
881
Bank-owned life insurance
632
618
610
622
614
1,860
1,792
Debit card and interchange income
572
566
520
570
551
1,658
1,621
Other
2,728
3,103
2,374
2,362
3,111
8,205
8,880
Total noninterest income
4,986
5,791
5,505
5,032
6,302
16,282
18,014
NONINTEREST EXPENSE:
Salaries and employee benefits
43,175
40,927
41,792
43,797
41,123
125,894
121,560
Net occupancy and equipment
4,518
4,399
3,926
4,401
4,570
12,843
13,463
Depreciation
2,015
1,992
1,995
1,984
1,911
6,002
5,823
Data processing and software amortization
5,882
5,620
5,682
5,551
5,706
17,184
16,101
Professional fees
1,601
1,287
1,786
3,428
1,714
4,674
5,996
Regulatory assessments and FDIC insurance
1,688
1,561
1,733
1,636
1,779
4,982
5,932
Amortization of intangibles
5,554
5,548
5,548
5,581
6,212
16,650
18,639
Communications
855
861
847
807
827
2,563
2,611
Advertising
1,425
1,167
782
1,593
878
3,374
2,534
Other
6,429
6,642
6,075
6,488
6,346
19,146
21,033
Total noninterest expense
73,142
70,004
70,166
75,266
71,066
213,312
213,692
INCOME BEFORE INCOME TAXES
32,183
33,032
30,965
31,781
42,728
96,180
113,179
Provision for income taxes
6,513
6,680
6,263
6,569
8,837
19,456
23,388
NET INCOME
$
25,670
$
26,352
$
24,702
$
25,212
$
33,891
$
76,724
$
89,791
EARNINGS PER SHARE
Basic
$
0.50
$
0.51
$
0.46
$
0.47
$
0.63
$
1.48
$
1.68
Diluted
$
0.50
$
0.51
$
0.46
$
0.47
$
0.63
$
1.47
$
1.68
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months Ended
Nine Months Ended
2025
2024
2025
2024
September 30
June 30
March 31
December 31
September 30
September 30
September 30
(Dollars and share amounts in thousands, except per share data)
Net income
$
25,670
$
26,352
$
24,702
$
25,212
$
33,891
$
76,724
$
89,791
Earnings per share, basic
$
0.50
$
0.51
$
0.46
$
0.47
$
0.63
$
1.48
$
1.68
Earnings per share, diluted
$
0.50
$
0.51
$
0.46
$
0.47
$
0.63
$
1.47
$
1.68
Dividends per share
$
0.14
$
0.14
$
0.14
$
0.14
$
0.13
$
0.42
$
0.39
Return on average assets (A)
0.97
%
1.01
%
0.94
%
0.94
%
1.27
%
0.97
%
1.13
%
Return on average equity (A)
6.30
%
6.62
%
6.21
%
6.21
%
8.49
%
6.37
%
7.73
%
Return on average tangible equity (A)(B)(D)
11.45
%
12.16
%
11.48
%
11.53
%
15.61
%
11.69
%
14.75
%
Net interest margin (tax equivalent) (A)(C)
4.20
%
4.18
%
4.20
%
4.25
%
4.19
%
4.19
%
4.23
%
Net interest margin (tax equivalent) excluding PAA (A)(B)(C)
4.00
%
3.95
%
3.97
%
3.94
%
3.91
%
3.97
%
3.88
%
Efficiency ratio (B)(E)
63.69
%
61.87
%
61.93
%
64.46
%
60.40
%
62.50
%
60.54
%
Capital Ratios
Stellar Bancorp, Inc. (Consolidated)
Equity to assets
15.55
%
15.28
%
15.44
%
14.74
%
15.30
%
15.55
%
15.30
%
Tangible equity to tangible assets (B)(E)
10.74
%
10.34
%
10.42
%
9.87
%
10.27
%
10.74
%
10.27
%
Estimated Total capital ratio (to risk-weighted assets)
16.33
%
15.98
%
15.97
%
16.00
%
15.85
%
16.33
%
15.85
%
Estimated Common equity Tier 1 capital (to risk weighted assets)
14.43
%
14.06
%
14.05
%
14.14
%
13.57
%
14.43
%
13.57
%
Estimated Tier 1 capital (to risk-weighted assets)
14.55
%
14.18
%
14.17
%
14.26
%
13.69
%
14.55
%
13.69
%
Estimated Tier 1 leverage (to average tangible assets)
11.60
%
11.44
%
11.20
%
11.31
%
11.10
%
11.60
%
11.10
%
Stellar Bank
Estimated Total capital ratio (to risk-weighted assets)
15.45
%
15.39
%
15.40
%
15.28
%
15.02
%
15.45
%
15.02
%
Estimated Common equity Tier 1 capital (to risk-weighted assets)
14.27
%
14.18
%
14.20
%
14.13
%
13.58
%
14.27
%
13.58
%
Estimated Tier 1 capital (to risk-weighted assets)
14.27
%
14.18
%
14.20
%
14.13
%
13.58
%
14.27
%
13.58
%
Estimated Tier 1 leverage (to average tangible assets)
11.37
%
11.44
%
11.22
%
11.21
%
11.01
%
11.37
%
11.01
%
Other Data
Weighted average shares:
Basic
51,283
51,529
53,146
53,422
53,541
51,979
53,485
Diluted
51,356
51,569
53,197
53,471
53,580
52,027
53,531
Period end shares outstanding
51,228
51,398
52,141
53,429
53,446
51,228
53,446
Book value per share
$
32.27
$
31.20
$
30.89
$
30.09
$
30.43
$
32.27
$
30.43
Tangible book value per share (B)
$
21.08
$
19.94
$
19.69
$
19.05
$
19.28
$
21.08
$
19.28
Employees - full-time equivalents
1,065
1,062
1,054
1,037
1,040
1,065
1,040
Interim periods annualized.
Refer to the calculation of these non-GAAP financial measures on page 10 of this Earnings Release.
Net interest margin represents net interest income divided by average interest-earning assets.
The calculation of return on average tangible equity has been adjusted from prior period disclosures and all periods presented above have been recalculated and disclosed under the same calculation.
The calculation of the efficiency ratio represents total noninterest expense less amortization of core deposits, divided by the sum of net interest income and noninterest income, excluding net gains and losses on the sale/write-down of assets. This calculation has been adjusted from prior period disclosures and all periods presented above have been recalculated and disclosed under the same calculation.
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months Ended
September 30, 2025
June 30, 2025
September 30, 2024
Average
Balance
Interest
Earned/
Interest
Paid
Average
Yield/Rate
Average
Balance
Interest
Earned/
Interest
Paid
Average
Yield/Rate
Average
Balance
Interest
Earned/
Interest
Paid
Average
Yield/Rate
(Dollars in thousands)
Assets
Interest-earning assets:
Loans
$
7,228,778
$
122,557
6.73
%
$
7,282,609
$
121,814
6.71
%
$
7,627,522
$
132,372
6.90
%
Securities
1,790,897
17,086
3.79
%
1,729,384
16,103
3.73
%
1,676,614
14,712
3.49
%
Deposits in other financial institutions
505,342
5,770
4.53
%
436,596
4,782
4.39
%
339,493
4,692
5.50
%
Total interest-earning assets
9,525,017
$
145,413
6.06
%
9,448,589
$
142,699
6.06
%
9,643,629
$
151,776
6.26
%
Allowance for credit losses on loans
(82,983
)
(83,700
)
(94,785
)
Noninterest-earning assets
1,076,831
1,099,268
1,077,422
Total assets
$
10,518,865
$
10,464,157
$
10,626,266
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
1,935,203
$
14,356
2.94
%
$
1,952,004
$
14,399
2.96
%
$
1,606,736
$
12,458
3.08
%
Money market and savings deposits
2,475,306
18,020
2.89
%
2,371,221
16,698
2.82
%
2,254,767
16,982
3.00
%
Certificates and other time deposits
1,162,461
10,920
3.73
%
1,201,903
11,459
3.82
%
1,620,908
18,073
4.44
%
Borrowed funds
3,156
56
7.04
%
34,427
407
4.74
%
49,077
840
6.81
%
Subordinated debt
70,181
1,417
8.01
%
70,151
1,401
8.01
%
110,007
1,916
6.93
%
Total interest-bearing liabilities
5,646,307
$
44,769
3.15
%
5,629,706
$
44,364
3.16
%
5,641,495
$
50,269
3.54
%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits
3,172,054
3,160,791
3,303,726
Other liabilities
82,993
78,120
93,127
Total liabilities
8,901,354
8,868,617
9,038,348
Shareholders’ equity
1,617,511
1,595,540
1,587,918
Total liabilities and shareholders’ equity
$
10,518,865
$
10,464,157
$
10,626,266
Net interest rate spread
2.91
%
2.90
%
2.72
%
Net interest income and margin
$
100,644
4.19
%
$
98,335
4.17
%
$
101,507
4.19
%
Net interest income and margin (tax equivalent)
$
100,739
4.20
%
$
98,427
4.18
%
$
101,578
4.19
%
Cost of funds
2.01
%
2.02
%
2.24
%
Cost of deposits
1.96
%
1.97
%
2.15
%
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Nine Months Ended September 30,
2025
2024
Average
Balance
Interest
Earned/
Interest
Paid
Average
Yield/Rate
Average
Balance
Interest
Earned/
Interest
Paid
Average
Yield/Rate
(Dollars in thousands)
Assets
Interest-earning assets:
Loans
$
7,284,805
$
365,011
6.70
%
$
7,790,957
$
402,942
6.91
%
Securities
1,779,093
50,149
3.77
%
1,556,462
37,562
3.22
%
Deposits in other financial institutions
457,794
15,272
4.46
%
287,960
11,874
5.51
%
Total interest-earning assets
9,521,692
$
430,432
6.04
%
9,635,379
$
452,378
6.27
%
Allowance for credit losses on loans
(82,623
)
(94,236
)
Noninterest-earning assets
1,092,163
1,104,426
Total assets
$
10,531,232
$
10,645,569
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits
$
1,933,030
$
41,148
2.85
%
$
1,616,313
$
36,949
3.05
%
Money market and savings deposits
2,361,247
49,899
2.83
%
2,211,148
48,420
2.93
%
Certificates and other time deposits
1,219,953
35,906
3.94
%
1,586,623
51,915
4.37
%
Borrowed funds
27,687
980
4.73
%
98,374
4,314
5.86
%
Subordinated debt
70,151
4,262
8.12
%
109,909
5,745
6.98
%
Total interest-bearing liabilities
5,612,068
$
132,195
3.15
%
5,622,367
$
147,343
3.50
%
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits
3,225,666
3,379,096
Other liabilities
84,388
92,527
Total liabilities
8,922,122
9,093,990
Shareholders' equity
1,609,110
1,551,579
Total liabilities and shareholders' equity
$
10,531,232
$
10,645,569
Net interest rate spread
2.89
%
2.77
%
Net interest income and margin
$
298,237
4.19
%
$
305,035
4.23
%
Net interest income and margin (tax equivalent)
$
298,519
4.19
%
$
305,266
4.23
%
Cost of funds
2.00
%
2.19
%
Cost of deposits
1.94
%
2.09
%
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months Ended
2025
2024
September 30
June 30
March 31
December 31
September 30
(Dollars in thousands)
Loan Portfolio:
Commercial and industrial
$
1,332,795
$
1,346,744
$
1,362,266
$
1,362,260
$
1,350,753
Real estate:
Commercial real estate (including multi-family residential)
3,733,293
3,840,981
3,854,607
3,868,218
3,976,296
Commercial real estate construction and land development
753,381
762,911
721,488
845,494
890,316
1-4 family residential (including home equity)
1,142,614
1,126,523
1,125,837
1,115,484
1,112,235
Residential construction
121,197
137,855
141,283
157,977
161,494
Consumer and other
84,577
72,333
77,652
90,421
60,030
Total loans held for investment
$
7,167,857
$
7,287,347
$
7,283,133
$
7,439,854
$
7,551,124
Deposits:
Noninterest-bearing
$
3,210,948
$
3,183,693
$
3,205,619
$
3,576,206
$
3,303,048
Interest-bearing
Demand
1,960,857
1,941,156
1,863,752
1,845,749
1,571,504
Money market and savings
2,489,169
2,393,767
2,248,616
2,253,193
2,280,651
Certificates and other time
1,156,489
1,154,998
1,244,726
1,453,236
1,587,398
Total interest-bearing deposits
5,606,515
5,489,921
5,357,094
5,552,178
5,439,553
Total deposits
$
8,817,463
$
8,673,614
$
8,562,713
$
9,128,384
$
8,742,601
Asset Quality:
Nonaccrual loans
$
46,250
$
50,505
$
54,518
$
37,212
$
32,140
Accruing loans 90 or more days past due
—
—
—
—
—
Total nonperforming loans
46,250
50,505
54,518
37,212
32,140
Foreclosed assets
7,939
7,652
5,154
1,734
2,984
Total nonperforming assets
$
54,189
$
58,157
$
59,672
$
38,946
$
35,124
Net charge-offs (recoveries)
$
3,323
$
206
$
163
$
2,016
$
3,933
Nonaccrual loans:
Commercial and industrial
$
5,594
$
13,395
$
11,471
$
8,500
$
9,718
Real estate:
Commercial real estate (including multi-family residential)
25,156
23,359
26,383
16,459
10,695
Commercial real estate construction and land development
2,899
3,412
2,027
3,061
4,183
1-4 family residential (including home equity)
12,083
9,965
14,550
9,056
7,259
Residential construction
457
176
—
—
121
Consumer and other
61
198
87
136
164
Total nonaccrual loans
$
46,250
$
50,505
$
54,518
$
37,212
$
32,140
Asset Quality Ratios:
Nonperforming assets to total assets
0.51
%
0.55
%
0.57
%
0.36
%
0.33
%
Nonperforming loans to total loans
0.65
%
0.69
%
0.75
%
0.50
%
0.43
%
Allowance for credit losses on loans to nonperforming loans
170.65
%
164.67
%
153.61
%
217.83
%
262.92
%
Allowance for credit losses on loans to total loans
1.10
%
1.14
%
1.15
%
1.09
%
1.12
%
Net charge-offs to average loans (annualized)
0.18
%
0.01
%
0.01
%
0.11
%
0.21
%
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
Nine Months Ended
2025
2024
2025
2024
September 30
June 30
March 31
December 31
September 30
September 30
September 30
(Dollars and share amounts in thousands, except per share data)
Net income
$
25,670
$
26,352
$
24,702
$
25,212
$
33,891
$
76,724
$
89,791
Add: Provision for (reversal of) credit losses
305
1,090
3,632
942
(5,985
)
5,027
(3,822
)
Add: Provision for income taxes
6,513
6,680
6,263
6,569
8,837
19,456
23,388
Pre-tax, pre-provision income
$
32,488
$
34,122
$
34,597
$
32,723
$
36,743
$
101,207
$
109,357
Total average assets
$
10,518,865
$
10,464,157
$
10,611,691
$
10,649,175
$
10,626,266
$
10,531,232
$
10,645,569
Pre-tax, pre-provision return on average assets (A)
1.23
%
1.31
%
1.32
%
1.22
%
1.38
%
1.28
%
1.37
%
Total shareholders’ equity
$
1,653,138
$
1,603,834
$
1,610,832
$
1,607,860
$
1,626,123
$
1,653,138
$
1,626,123
Less: Goodwill and core deposit intangibles, net
573,247
578,786
584,325
589,864
595,434
573,247
595,434
Tangible shareholders’ equity
$
1,079,891
$
1,025,048
$
1,026,507
$
1,017,996
$
1,030,689
$
1,079,891
$
1,030,689
Shares outstanding at end of period
51,228
51,398
52,141
53,429
53,446
51,228
53,446
Tangible book value per share
$
21.08
$
19.94
$
19.69
$
19.05
$
19.28
$
21.08
$
19.28
Average shareholders’ equity
$
1,617,511
$
1,595,540
$
1,614,242
$
1,614,762
$
1,587,918
$
1,609,110
$
1,551,579
Less: Average goodwill and core deposit intangibles, net
575,836
581,438
586,895
592,471
598,866
581,349
604,890
Average tangible shareholders’ equity
$
1,041,675
$
1,014,102
$
1,027,347
$
1,022,291
$
989,052
$
1,027,761
$
946,689
Net income
$
25,670
$
26,352
$
24,702
$
25,212
$
33,891
$
76,724
$
89,791
Add: Core deposit intangibles amortization, net of tax
4,388
4,383
4,383
4,409
4,907
13,154
14,725
Adjusted net income
$
30,058
$
30,735
$
29,085
$
29,621
$
38,798
$
89,878
$
104,516
Return on average tangible equity (A)(B)
11.45
%
12.16
%
11.48
%
11.53
%
15.61
%
11.69
%
14.75
%
Total assets
$
10,628,113
$
10,493,010
$
10,434,887
$
10,905,790
$
10,629,777
$
10,628,113
$
10,629,777
Less: Goodwill and core deposit intangibles, net
573,247
578,786
584,325
589,864
595,434
573,247
595,434
Tangible assets
$
10,054,866
$
9,914,224
$
9,850,562
$
10,315,926
$
10,034,343
$
10,054,866
$
10,034,343
Tangible equity to tangible assets
10.74
%
10.34
%
10.42
%
9.87
%
10.27
%
10.74
%
10.27
%
Net interest income (tax equivalent)
$
100,739
$
98,427
$
99,353
$
103,039
$
101,578
$
298,519
$
305,266
Less: Purchase accounting accretion
4,800
5,344
5,397
7,555
6,795
15,541
25,444
Adjusted net interest income (tax equivalent)
$
95,939
$
93,083
$
93,956
$
95,484
$
94,783
$
282,978
$
279,822
Average earning assets
$
9,525,017
$
9,448,589
$
9,592,205
$
9,653,162
$
9,643,629
$
9,521,692
$
9,635,379
Net interest margin (tax equivalent) excluding PAA (A)
4.00
%
3.95
%
3.97
%
3.94
%
3.91
%
3.97
%
3.88
%
Noninterest expense
$
73,142
$
70,004
$
70,166
$
75,266
$
71,066
$
213,312
$
213,692
Less: Core deposit intangibles amortization
5,554
5,548
5,548
5,581
6,212
16,650
18,639
Adjusted noninterest expense
$
67,588
$
64,456
$
64,618
$
69,685
$
64,854
$
196,662
$
195,053
Net interest income
$
100,644
$
98,335
$
99,258
$
102,957
$
101,507
$
298,237
$
305,035
Noninterest income
4,986
5,791
5,505
5,032
6,302
16,282
18,014
Less: (Loss) gain on sale of assets
(491
)
(57
)
417
(112
)
432
(131
)
881
Adjusted noninterest income
5,477
5,848
5,088
5,144
5,870
16,413
17,133
Net interest income plus adjusted noninterest income
$
106,121
$
104,183
$
104,346
$
108,101
$
107,377
$
314,650
$
322,168
Efficiency ratio (C)
63.69
%
61.87
%
61.93
%
64.46
%
60.40
%
62.50
%
60.54
%
(A)
Interim periods annualized.
(B)
The calculation of return on average tangible equity has been adjusted from prior period disclosures and 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 and all periods presented above have been recalculated and disclosed under the same calculation.