Earnings release
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NEWS RELEASE Stellar Bancorp, Inc. Reports Third Quarter 2025 Results 2025-10-24 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 O cer. “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 payo s persisted during the quarter, we believe this strategic portfolio shift will help moderate payo 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 con dent in our ability to deepen customer relationships and deliver long-term value for our shareholders,” Mr. Franklin concluded. Financial Highlights Strong Net Interest Margin: Tax equivalent net interest margin for the third quarter of 2025 was 4.20% compared to 4.18% for the second quarter of 2025. The tax equivalent net interest margin, excluding 1
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purchase accounting accretion (“PAA”), was 4.00% for the third quarter of 2025 compared to 3.95% for the second quarter of 2025. Solid Pro tability: Net income for the third quarter of 2025 was $25.7 million, or diluted earnings per share of $0.50, which translated into an annualized return on average assets of 0.97%, an annualized return on average equity of 6.30% and an annualized return on average tangible equity of 11.45% . Strong Capital Position and Book Value Build: Total risk-based capital ratio increased to 16.33% at September 30, 2025 from 15.98% at June 30, 2025, while book value per share increased to $32.27 at September 30, 2025 from $31.20 at June 30, 2025 and tangible book value per share increased to $21.08 at September 30, 2025 from $19.94 at June 30, 2025. Paydown of Subordinated Debt: On October 1, 2025, the Company completed the previously announced redemption of $30 million of its $60 million of subordinated debt outstanding as of September 30, 2025. 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 nancial institutions. Net interest income for the third quarter of 2025 bene ted 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 and the tax equivalent net interest margin would have been 4.00%. 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 bene ts of $2.2 million, an increase in professional fees of $314 thousand and a $258 thousand increase in advertising expense. Salaries and bene ts during the third quarter of 2025 included $464 thousand in severance expense related to planned upcoming branch closures. The e ciency ratio was 63.69% for the third quarter of 2025 compared to 61.87% for the second quarter of (1) (1) (1) (1) (1) (1) (1) (1) (1) 2
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2025. Annualized returns on average assets, average equity and average tangible equity were 0.97%, 6.30% and 11.45% for the third quarter of 2025, respectively, compared to 1.01%, 6.62% and 12.16% 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 nancial institutions and securities, all of which were funded largely by core deposit growth, partially o set 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-o s for the third quarter of 2025 were $3.3 million, or 0.18% (annualized) of average loans, compared to net charge-o s 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 nancial 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 nancial 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 (1) (1) 3
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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 diversi ed range of commercial banking services primarily to small- to medium- sized businesses and individual customers across Houston, Dallas, Beaumont and surrounding communities in Texas. ____________ Refer to the calculation of this non-GAAP nancial measure on page 10 of this earnings release. The calculation of returns on average tangibleequity and the e ciency 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 identi ed 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 nancial 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 identi ed 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 di er 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 a ect future results of Stellar including changes in asset quality and credit risk; the inability to sustain revenue and earnings (1) 4
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growth; changes in interest rates and capital markets; in ation; 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 a ect 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 led 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 signi cant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. Stellar Bancorp, Inc.Financial Highlights(Unaudited)2025 2024 September30 June 30March 31December 31September30 (Dollars in thousands) ASSETS:Cash and due from banks$ 99,407$ 136,060$ 130,932$ 419,967$ 103,735Interest-bearing deposits at other nancialinstitutions 629,042442,044429,643491,249412,482 Total cash and cash equivalents728,449578,104560,575911,216516,217 Available for sale securities, at fair value1,842,2681,729,6841,719,3711,673,0161,691,752Loans held for investment7,167,8577,287,3477,283,1337,439,8547,551,124Less: allowance for credit losses on loans(78,924) (83,165) (83,746) (81,058) (84,501) Loans, net 7,088,9337,204,1827,199,3877,358,7967,466,623 Accrued interest receivable34,865 35,537 37,669 37,884 39,473Premises and equipment, net107,803108,615109,750111,856113,742Federal Reserve Bank and Federal Home Loan Bankstock 45,437 47,099 20,902 8,209 20,123Bank-owned life insurance109,358108,726108,108107,498106,876Goodwill 497,318497,318497,318497,318497,318Core deposit intangibles, net75,929 81,468 87,007 92,546 98,116 Other assets 97,753102,27794,800107,45179,537 Total assets $ 10,628,113$ 10,493,010$ 10,434,887$ 10,905,790$ 10,629,777 LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES:Deposits:Noninterest-bearing$ 3,210,948$ 3,183,693$ 3,205,619$ 3,576,206$ 3,303,048Interest-bearingDemand 1,960,8571,941,1561,863,7521,845,7491,571,504Money market and savings2,489,1692,393,7672,248,6162,253,1932,280,651Certi cates and other time1,156,4891,154,9981,244,7261,453,2361,587,398 Total interest-bearing deposits5,606,5155,489,9215,357,0945,552,1785,439,553 Total deposits 8,817,4638,673,6148,562,7139,128,3848,742,601 Accrued interest payable9,429 7,607 9,856 17,052 16,915Borrowed funds — 69,925119,923 — 60,000Subordinated debt 70,196 70,165 70,135 70,105110,06477887 67865 61428 82389 74074 5
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Other liabilities 77,887 67,865 61,428 82,389 74,074 Total liabilities 8,974,9758,889,1768,824,0559,297,9309,003,654 SHAREHOLDERS’ EQUITY:Common stock 512 514 521 534 535Capital surplus 1,182,7811,185,0481,202,6281,240,0501,238,619Retained earnings 547,717529,216510,072492,640474,905 Accumulated other comprehensive loss(77,872) (110,944) (102,389) (125,364) (87,936) Total shareholders’ equity1,653,1381,603,8341,610,8321,607,8601,626,123 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 EndedNine Months Ended 2025 2024 20252024 September30 June 30March 31December31 September30 September30 September30 (Dollars in thousands, except per share data) INTEREST INCOME:Loans, including fees$ 122,557$ 121,814$ 120,640$ 128,738$ 132,372$ 365,011$ 402,942Securities:Taxable 16,27815,29316,14814,78913,89847,71935,114Tax-exempt 808 810 812 814 814 2,430 2,448Deposits in other nancialinstitutions 5,770 4,782 4,7205,681 4,69215,27211,874 Total interest income145,413142,699142,320150,022151,776430,432452,378 INTEREST EXPENSE:Demand, money market andsavings deposits32,37631,09727,57427,87729,44091,04785,369Certi cates and other timedeposits 10,92011,45913,52716,83018,07335,90651,915Borrowed funds56 407 517 235 840 980 4,314 Subordinated debt1,417 1,401 1,4442,123 1,916 4,262 5,745 Total interest expense44,76944,36443,06247,06550,269132,195147,343 NET INTEREST INCOME100,64498,33599,258102,957101,507298,237305,035Provision for (reversal of) creditlosses 305 1,090 3,632 942 (5,985) 5,027 (3,822) Net interest income afterprovision for credit losses100,33997,24595,626102,015107,492293,210308,857 NONINTEREST INCOME:Service charges on depositaccounts 1,545 1,561 1,5841,590 1,594 4,690 4,840(Loss) gain on sale/write-downof assets (491) (57) 417 (112) 432 (131) 881Bank-owned life insurance632 618 610 622 614 1,860 1,792Debit card and interchangeincome 572 566 520 570 551 1,658 1,621 Other 2,728 3,103 2,3742,362 3,111 8,205 8,880 Total noninterest income4,986 5,791 5,5055,032 6,30216,28218,014 NONINTEREST EXPENSE:Salaries and employee bene ts43,17540,92741,79243,79741,123125,894121,560Net occupancy and equipment4,518 4,399 3,9264,401 4,57012,84313,463Depreciation 2,015 1,992 1,9951,984 1,911 6,002 5,823Data processing and softwareamortization 5,882 5,620 5,6825,551 5,70617,18416,101Professional fees1,601 1,287 1,7863,428 1,714 4,674 5,996Regulatory assessments andFDIC insurance1,688 1,561 1,7331,636 1,779 4,982 5,932Amortization of intangibles5,554 5,548 5,5485,581 6,21216,65018,639Communications855 861 847 807 827 2,563 2,611Advertising 1,425 1,167 782 1,593 878 3,374 2,534 Other 6,429 6,642 6,0756,488 6,34619,14621,033 Total noninterest expense73,14270,00470,16675,26671,066213,312213,692 INCOME BEFORE INCOME TAXES32,18333,03230,96531,78142,72896,180113,179 Provision for income taxes6,513 6,680 6,2636,569 8,83719,45623,388 NET INCOME $ 25,670$ 26,352$ 24,702$ 25,212$ 33,891$ 76,724$ 89,791 EARNINGS PER SHAREBasic $ 0.50$ 0.51$ 0.46$ 0.47$ 0.63$ 1.48$ 1.68Diltd $ 050$ 051$ 046$ 047$ 063$ 147$ 168 6
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Diluted $ 0.50$ 0.51$ 0.46$ 0.47$ 0.63$ 1.47$ 1.68 Stellar Bancorp, Inc.Financial Highlights(Unaudited)Three Months EndedNine Months Ended 2025 2024 20252024 September30 June 30March 31December31 September30 September30 September30 (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$ 1.68Earnings per share, diluted$ 0.50$ 0.51$ 0.46$ 0.47$ 0.63$ 1.47$ 1.68Dividends per share$ 0.14$ 0.14$ 0.14$ 0.14$ 0.13$ 0.42$ 0.39Return on average assets0.97% 1.01% 0.94% 0.94% 1.27% 0.97% 1.13%Return on average equity6.30% 6.62% 6.21% 6.21% 8.49% 6.37% 7.73%Return on average tangible equity11.45% 12.16% 11.48% 11.53% 15.61% 11.69% 14.75%Net interest margin (tax equivalent)4.20% 4.18% 4.20% 4.25% 4.19% 4.19% 4.23%Net interest margin (tax equivalent)excluding PAA 4.00% 3.95% 3.97% 3.94% 3.91% 3.97% 3.88%E ciency ratio 63.69% 61.87% 61.93% 64.46% 60.40% 62.50% 60.54% Capital Ratios Stellar Bancorp, Inc. (Consolidated)Equity to assets15.55% 15.28% 15.44% 14.74% 15.30% 15.55% 15.30%Tangible equity to tangibleassets 10.74% 10.34% 10.42% 9.87% 10.27% 10.74% 10.27%Estimated Total capital ratio (torisk-weighted assets)16.33% 15.98% 15.97% 16.00% 15.85% 16.33% 15.85%Estimated Common equity Tier 1capital (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 (toaverage tangible assets)11.60% 11.44% 11.20% 11.31% 11.10% 11.60% 11.10%Stellar BankEstimated Total capital ratio (torisk-weighted assets)15.45% 15.39% 15.40% 15.28% 15.02% 15.45% 15.02%Estimated Common equity Tier 1capital (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 (toaverage tangible assets)11.37% 11.44% 11.22% 11.21% 11.01% 11.37% 11.01% Other Data Weighted average shares:Basic 51,28351,52953,14653,42253,54151,97953,485Diluted 51,35651,56953,19753,47153,58052,02753,531Period end shares outstanding51,22851,39852,14153,42953,44651,22853,446Book value per share$ 32.27$ 31.20$ 30.89$ 30.09$ 30.43$ 32.27$ 30.43Tangible book value per share$ 21.08$ 19.94$ 19.69$ 19.05$ 19.28$ 21.08$ 19.28Employees - full-time equivalents1,065 1,062 1,054 1,037 1,040 1,065 1,040 (A)Interim periods annualized.(B)Refer to the calculation of these non-GAAP nancial measures on page 10 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 and all periods presented above have beenrecalculated and disclosed under the same calculation.(E)The calculation of the e ciency ratio represents total noninterest expense less amortization of core deposits, divided by the sum of net interestincome and noninterest income, excluding net gains and losses on the sale/write-down of assets. This calculation has been adjusted from priorperiod disclosures and all periods presented above have been recalculated and disclosed under the same calculation. (A) (A) (A)(B)(D) (A)(C) (A)(B)(C) (B)(E) (B)(E) (B) 7
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Stellar Bancorp, Inc.Financial Highlights(Unaudited)Three Months Ended September 30, 2025June 30, 2025September 30, 2024 Average Balance Interest Earned/ Interest PaidAverage Yield/RateAverage Balance Interest Earned/ Interest PaidAverage Yield/RateAverage Balance Interest Earned/ Interest PaidAverage Yield/Rate (Dollars in thousands)Assets Interest-earning assets:Loans $7,228,778$122,5576.73%$7,282,609$121,8146.71%$7,627,522$132,3726.90%Securities 1,790,89717,0863.79% 1,729,38416,1033.73% 1,676,61414,7123.49%Deposits in other nancialinstitutions 505,3425,7704.53% 436,5964,7824.39% 339,4934,6925.50%Total interest-earningassets 9,525,017$145,4136.06% 9,448,589$142,6996.06% 9,643,629$151,7766.26%Allowance for credit losseson loans (82,983) (83,700) (94,785)Noninterest-earning assets1,076,831 1,099,268 1,077,422 Total assets$10,518,865 $10,464,157 $10,626,266 Liabilities andShareholders' Equity Interest-bearing liabilities:Interest-bearing demanddeposits $1,935,203$ 14,3562.94%$1,952,004$ 14,3992.96%$1,606,736$ 12,4583.08%Money market and savingsdeposits 2,475,30618,0202.89% 2,371,22116,6982.82% 2,254,76716,9823.00%Certi cates and other timedeposits 1,162,46110,9203.73% 1,201,90311,4593.82% 1,620,90818,0734.44%Borrowed funds3,156 56 7.04% 34,4274074.74% 49,0778406.81%Subordinated debt70,1811,4178.01% 70,1511,4018.01% 110,0071,9166.93%Total interest-bearingliabilities 5,646,307$ 44,7693.15% 5,629,706$ 44,3643.16% 5,641,495$ 50,2693.54% Noninterest-bearingliabilities:Noninterest-bearingdemand deposits3,172,054 3,160,791 3,303,726Other liabilities82,993 78,120 93,127 Total liabilities8,901,354 8,868,617 9,038,348Shareholders’ equity1,617,511 1,595,540 1,587,918 Total liabilities andshareholders’ equity$10,518,865 $10,464,157 $10,626,266 Net interest rate spread2.91% 2.90% 2.72%Net interest income andmargin $100,6444.19% $ 98,3354.17% $101,5074.19% Net interest income andmargin (tax equivalent)$100,7394.20% $ 98,4274.18% $101,5784.19% 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 PaidAverage Yield/RateAverage Balance Interest Earned/ Interest PaidAverage Yield/Rate (Dollars in thousands)Assets Interest-earning assets:Loans $7,284,805$ 365,0116.70%$7,790,957$ 402,9426.91%Securities 1,779,09350,1493.77% 1,556,46237,5623.22%D iti th ili titti 457794 15272 287960 11874 8
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Deposits in other nancial institutions457,79415,2724.46% 287,96011,8745.51%Total interest-earning assets9,521,692$ 430,4326.04% 9,635,379$ 452,3786.27%Allowance for credit losses on loans(82,623) (94,236)Noninterest-earning assets1,092,163 1,104,426 Total assets $10,531,232 $10,645,569 Liabilities and Shareholders' Equity Interest-bearing liabilities:Interest-bearing demand deposits$1,933,030$ 41,1482.85%$1,616,313$ 36,9493.05%Money market and savings deposits2,361,24749,8992.83% 2,211,14848,4202.93%Certi cates and other time deposits1,219,95335,9063.94% 1,586,62351,9154.37%Borrowed funds 27,687 9804.73% 98,3744,3145.86%Subordinated debt 70,1514,2628.12% 109,9095,7456.98% Total interest-bearing liabilities5,612,068$ 132,1953.15% 5,622,367$ 147,3433.50% Noninterest-bearing liabilities:Noninterest-bearing demand deposits3,225,666 3,379,096Other liabilities 84,388 92,527 Total liabilities 8,922,122 9,093,990Shareholders' equity 1,609,110 1,551,579 Total liabilities and shareholders' equity$10,531,232 $10,645,569 Net interest rate spread 2.89% 2.77%Net interest income and margin$ 298,2374.19% $ 305,0354.23% Net interest income and margin (tax equivalent)$ 298,5194.19% $ 305,2664.23% 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 September30 June 30March 31December 31September30 (Dollars in thousands)Loan Portfolio: Commercial and industrial$ 1,332,795$ 1,346,744$ 1,362,266$ 1,362,260$ 1,350,753Real estate:Commercial real estate (including multi-familyresidential) 3,733,2933,840,9813,854,6073,868,2183,976,296Commercial real estate construction and landdevelopment 753,381762,911721,488845,494890,3161-4 family residential (including home equity)1,142,6141,126,5231,125,8371,115,4841,112,235Residential construction121,197137,855141,283157,977161,494 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$ 3,303,048Interest-bearingDemand 1,960,8571,941,1561,863,7521,845,7491,571,504Money market and savings2,489,1692,393,7672,248,6162,253,1932,280,651 Certi cates and other time1,156,4891,154,9981,244,7261,453,2361,587,398 Total interest-bearing deposits5,606,5155,489,9215,357,0945,552,1785,439,553 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 loans46,250 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-o s (recoveries)$ 3,323$ 206$ 163$ 2,016$ 3,933Nonaccrual loans:Commercial and industrial$ 5,594$ 13,395$ 11,471$ 8,500$ 9,718Real estate:Commercial real estate (including multi-family idtil) 25156 23359 26383 16459 10695 9
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residential) 25,156 23,359 26,383 16,459 10,695Commercial real estate construction and landdevelopment 2,899 3,412 2,027 3,061 4,1831-4 family residential (including home equity)12,083 9,965 14,550 9,056 7,259Residential construction457 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 assets0.51% 0.55% 0.57% 0.36% 0.33%Nonperforming loans to total loans0.65% 0.69% 0.75% 0.50% 0.43%Allowance for credit losses on loans to nonperformingloans 170.65% 164.67% 153.61% 217.83% 262.92%Allowance for credit losses on loans to total loans1.10% 1.14% 1.15% 1.09% 1.12%Net charge-o s 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) nancial measures to evaluate its performance. Stellarbelieves that these non-GAAP nancial measures provide meaningful supplemental information regarding its performance and that management andinvestors bene t from referring to these non-GAAP nancial measures in assessing Stellar’s performance and when planning, forecasting, analyzingand comparing past, present and future periods. Speci cally, Stellar reviews pre-tax, pre-provision income, pre-tax pre-provision ROAA, tangible bookvalue per share, return on average tangible equity, tangible equity to tangible assets and net interest margin (tax equivalent) excluding PAA forinternal planning and forecasting purposes. Stellar has included in this earnings release information relating to these non-GAAP nancial measures forthe applicable periods presented. These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparableor other nancial measures calculated in accordance with GAAP. Moreover, the manner in which Stellar calculates the non-GAAP nancial measuresmay di er from that of other companies reporting measures with similar names. Three Months EndedNine Months Ended 2025 2024 20252024 September30 June 30March 31December31 September30 September30 September30 (Dollars and share amounts in thousands, except per share data) Net income$ 25,670$ 26,352$ 24,702$ 25,212$ 33,891$ 76,724$ 89,791Add: Provision for (reversalof) credit losses305 1,090 3,632 942 (5,985) 5,027 (3,822)Add: Provision for incometaxes 6,513 6,680 6,263 6,569 8,837 19,45623,388 Pre-tax, pre-provisionincome $ 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-provisionreturn on averageassets 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$1,626,123Less: Goodwill and coredeposit intangibles, net573,247578,786584,325589,864595,434573,247595,434 Tangibleshareholders’ equity$1,079,891$1,025,048$1,026,507$1,017,996$1,030,689$1,079,891$1,030,689 Shares outstanding at endof period 51,22851,39852,14153,42953,44651,22853,446 Tangible book valueper share$ 21.08$ 19.94$ 19.69$ 19.05$ 19.28$ 21.08$ 19.28Average shareholders’equity $1,617,511$1,595,540$1,614,242$1,614,762$1,587,918$1,609,110$1,551,579Less: Average goodwill andcore deposit intangibles,net 575,836581,438586,895592,471598,866581,349604,890 Average tangibleshareholders’ 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$ 89,791Add: Core depositintangibles amortization,net of tax 4,388 4,383 4,383 4,409 4,907 13,15414,725 Adjusted net income$ 30,058$ 30,735$ 29,085$ 29,621$ 38,798$ 89,878$ 104,516 Return on averagetangible equity11.45% 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$10,629,777Less: Goodwill and coredeposit intangibles, net573,247578,786584,325589,864595,434573,247595,434 $10054866$9914224$9850562$10315926$10034343$10054866$10034343 (A) (A)(B) 10
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Tangible assets$10,054,866$9,914,224$9,850,562$10,315,926$10,034,343$10,054,866$10,034,343 Tangible equity totangible assets10.74% 10.34% 10.42% 9.87% 10.27% 10.74% 10.27%Net interest income (taxequivalent)$ 100,739$ 98,427$ 99,353$ 103,039$ 101,578$ 298,519$ 305,266Less: Purchase accountingaccretion 4,800 5,344 5,397 7,555 6,795 15,54125,444 Adjusted net interestincome (taxequivalent)$ 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$9,635,379 Net interest margin(tax equivalent)excluding PAA4.00% 3.95% 3.97% 3.94% 3.91% 3.97% 3.88%Noninterest expense$ 73,142$ 70,004$ 70,166$ 75,266$ 71,066$ 213,312$ 213,692Less: Core depositintangibles amortization5,554 5,548 5,548 5,581 6,212 16,65018,639 Adjusted noninterestexpense $ 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$ 305,035Noninterest income4,986 5,791 5,505 5,032 6,302 16,28218,014Less: (Loss) gain on sale ofassets (491) (57) 417 (112) 432 (131) 881 Adjusted noninterestincome 5,477 5,848 5,088 5,144 5,870 16,41317,133 Net interest income plusadjusted noninterestincome $ 106,121$ 104,183$ 104,346$ 108,101$ 107,377$ 314,650$ 322,168 E ciency ratio63.69% 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 beenrecalculated and disclosed under the same calculation.(C)The calculation of the e ciency ratio has been adjusted from prior period disclosures and all periods presented above have been recalculated anddisclosed under the same calculation. Investor Relations ir@stellar.bank Source: Stellar Bancorp, Inc. (A) (C) 11