HOUSTON, April 25, 2025--(BUSINESS WIRE)--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.

Story Continues

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 [email protected]. 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.

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/

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 $ 7,344,298   $ 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.

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