0001473844FALSE00014738442025-01-302025-01-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________
Form 8-K
____________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): January 30, 2025
Stellar Bancorp, Inc.
(Exact Name of Registrant as Specified in Charter)
Texas001-3828020-8339782
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)
9 Greenway Plaza, Suite 110  
Houston, Texas 77046
(Address of Principal Executive Offices) (Zip Code)
(713) 210-7600
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
£Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
£Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per shareSTEL New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company £
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £



Item 2.02. Results of Operations and Financial Condition.

On January 30, 2025 Stellar Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter of 2024. A copy of the press release, as well as a copy of the accompanying earnings presentation, are furnished as Exhibit 99.1 and Exhibit 99.2 hereto, respectively, and incorporated herein by reference.

In accordance with General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02, Exhibit 99.1 and Exhibit 99.2 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, (the ”Securities Act”), except as shall be expressly set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure

On Friday, January 31, 2025, at 8:00 a.m., Central Time, the Company will host an investor conference call and webcast to review its fourth quarter financial results. The earnings release and earnings presentation will be posted on the Company’s website. The earnings release and presentation materials are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.
In accordance with General Instruction B.2 to Form 8-K, the information furnished in this Item 7.01, including Exhibit 99.2 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.

Exhibits. The following are furnished as exhibits to this Current Report on Form 8-K:
Exhibit NumberDescription of Exhibit
99.1
99.2
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements anticipated in such statements. Forward-looking statements speak only as of the date they are made and, except as required by law, the Company does not assume any duty to update forward-looking statements. Such forward-looking statements include, but are not limited to, statements concerning the Company’s plans, objectives, strategies, expectations, intentions and other statements that are not statements of historical fact, and may be identified by words such as “anticipates,” “believes,” “building,” “continue,” “could,” “drive,” “estimates,” “expects,” “extent,” “focus,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plan,” “position,” “probable,” “progressing,” “projects,” “prudent,” “seeks,” “should,” “target,” “view,” “will” or “would” or the negative of these words and phrases or similar words or phrases. For a list of factors that could cause actual results to differ materially from those set forth in the forward-looking statements, see the risk factors described in the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other reports that are filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement.


SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
STELLAR BANCORP, INC.
Date: January 30, 2025By:/s/ Paul P. Egge
Paul P. Egge
Chief Financial Officer



Exhibit 99.1
image.jpg
PRESS RELEASE                    
STELLAR BANCORP, INC. REPORTS
FOURTH QUARTER AND FULL YEAR 2024 RESULTS

HOUSTON, January 30, 2025 - Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $27.8 million, or diluted earnings per share of $0.52, for the fourth quarter of 2024 and net income of $117.6 million, or diluted earnings per share of $2.20, for the full year 2024.

“We are proud of our team and their work establishing the foundation of Stellar Bank,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer. “Our strong foundation is a testament to their significant efforts over the past two years and they have prepared us for the year ahead. We intend to turn towards growth at a more normalized organic pattern while we keep an eye towards opportunities with downstream partners that would increase our operating leverage,” Mr. Franklin continued.

“We remain focused on core fundamentals as we enter 2025 and are encouraged by the economic activity in our markets. We are excited about the future ahead of us,” Mr. Franklin concluded.

2024 Financial Highlights

•Solid Profitability: Net income for the full year 2024 was $117.6 million, or diluted earnings per share of $2.20, which translated into a return on average assets of 1.10%, a return on average equity of 7.50% and a return on average tangible equity of 12.18%(1). Net income for the fourth quarter of 2024 was $27.8 million, or diluted earnings per share of $0.52, which translated into an annualized return on average assets of 1.04%, an annualized return on average equity of 6.85% and an annualized return on average tangible equity of 10.82%(1).

•Strong Net Interest Margin: Tax equivalent net interest margin was 4.24% for the year 2024 compared to 4.51% for 2023. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.89%(1) for 2024 compared to 4.03%(1) for 2023. Tax equivalent net interest margin for the fourth quarter of 2024 was 4.25% compared to 4.19% for the third quarter of 2024. The tax equivalent net interest margin, excluding PAA, was 3.94%(1) for the fourth quarter of 2024 compared to 3.91%(1) for the third quarter of 2024.

•Meaningful Capital and Book Value Build: Total risk-based capital ratio increased to 16.06% at December 31, 2024 from 14.02% at December 31, 2023, book value per share increased to $30.14 from $28.54 at December 31, 2023 and tangible book value per share increased to $19.10(1) from $17.02(1) at December 31, 2023.

•Credit Metrics: Nonperforming loans decreased $2.0 million to $37.2 million at December 31, 2024 from $39.2 million at December 31, 2023.

Year 2024 Results

Net interest income for 2024 decreased $28.8 million, or 6.6%, to $408.0 million from $436.8 million for 2023. The net interest margin on a tax equivalent basis decreased 27 basis points to 4.24% for the full year 2024 from 4.51% for the full year 2023. The decrease in the net interest margin from the prior year was primarily due to the impact of increased average interest-bearing liabilities and increased rates on interest-bearing liabilities, partially offset by increased rates on interest-earning assets. Net interest income for the year 2024 benefited from $33.0 million of income from purchase accounting accretion compared to $46.8 million for the year 2023. Excluding purchase accounting accretion, net interest income (tax equivalent) for the year 2024 would have been $375.3 million(1) and the tax equivalent net interest margin would have been 3.89%(1).

Noninterest income for the year 2024 was $23.0 million, an increase of $1.5 million, or 6.2%, compared to $24.6 million for the year 2023. Noninterest income decreased in 2024 compared to 2023 primarily due to a decrease in debit card and ATM income, partially offset by the increase in gains on sales of assets and Small Business Investment Company income recognized in 2024 compared to 2023.
_____________________
(1) Refer to page 10 of this earnings release for the calculation of this non-GAAP financial measure


1

Noninterest expense for the year 2024 decreased $4.8 million, or 1.7%, to $285.7 million compared to $290.5 million for the year 2023. The decrease in noninterest expense in 2024 compared to 2023 was primarily due to $15.6 million of acquisition and merger-related expenses recognized in 2023, a $3.5 million decrease in regulatory assessments and a $2.7 million decrease in amortization of intangibles, partially offset by a $5.0 million increase in salaries and employee benefits.

The efficiency ratio was 66.39% for the year ended December 31, 2024 compared to 63.02% for the year ended December 31, 2023. Returns on average assets, average equity and average tangible equity were 1.10%, 7.50% and 12.18%(1) for 2024, respectively, compared to 1.21%, 8.96% and 15.75%(1) for 2023, respectively.

Fourth Quarter 2024 Results

Net interest income in the fourth quarter of 2024 increased $1.5 million, or 1.4%, to $103.0 million from $101.5 million for the third quarter of 2024. The net interest margin on a tax equivalent basis increased 6 basis points to 4.25% for the fourth quarter of 2024 from 4.19% for the third quarter of 2024. The increase in the net interest margin from the prior quarter was primarily due to the impact of decreased rates on interest-bearing liabilities. Net interest income for the fourth quarter of 2024 benefited from $7.6 million of income from purchase accounting accretion compared to $6.8 million in the third quarter of 2024. Excluding purchase accounting accretion, net interest income (tax equivalent) for the fourth quarter of 2024 would have been $95.5 million(1) and the tax equivalent net interest margin would have been 3.94%(1).

Noninterest income for the fourth quarter of 2024 was $5.0 million, a decrease of $1.3 million, or 20.2%, compared to $6.3 million for the third quarter of 2024. Noninterest income decreased in the fourth quarter of 2024 compared to the third quarter of 2024 primarily due to
a loss on sales of assets in the fourth quarter of 2024 and Small Business Investment Company income recognized in the third quarter of 2024.

Noninterest expense for the fourth quarter of 2024 increased $915 thousand, or 1.3%, to $72.0 million compared to $71.1 million for the third quarter of 2024. The increase in noninterest expense in the fourth quarter of 2024 compared to the third quarter of 2024 was primarily due to an increase of $1.7 million in professional fees and a $715 thousand increase in advertising expense, partially offset by a $611 thousand decrease in salaries and employee benefits and a $631 thousand decrease in amortization of intangibles.

The efficiency ratio was 66.59% for the fourth quarter of 2024 compared to 66.18% for the third quarter of 2024. Annualized returns on average assets, average equity and average tangible equity were 1.04%, 6.85% and 10.82%(1) for the fourth quarter of 2024, respectively, compared to 1.27%, 8.49% and 13.63%(1) for the third quarter of 2024, respectively.

Financial Condition

Total assets at December 31, 2024 were $10.91 billion, an increase of $275.3 million, compared to $10.63 billion at September 30, 2024.

Total loans at December 31, 2024 decreased $111.3 million to $7.44 billion compared to $7.55 billion at September 30, 2024. At December 31, 2024, the remaining balance of the purchase accounting accretion on loans was $73.7 million.

Total deposits at December 31, 2024 increased $385.8 million to $9.13 billion compared to $8.74 billion at September 30, 2024, due to increases in interest-bearing and noninterest-bearing demand deposits, partially offset by decreases in certificates and other time deposits and money-market and savings accounts. 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 $38.9 million, or 0.36% of total assets, at December 31, 2024, compared to $35.1 million, or 0.33% of total assets, at September 30, 2024 and $39.2 million at December 31, 2023. The allowance for credit losses on loans as a percentage of total loans was 1.09% at December 31, 2024, 1.12% at September 30, 2024 and 1.16% at December 31, 2023.

The fourth quarter of 2024 included a provision for credit losses of $942 thousand compared to a reversal of provision for credit losses of $6.0 million recorded during the third quarter of 2024. Net charge-offs for the fourth quarter of 2024 were $2.0 million, or 0.11% (annualized) of average loans, compared to net charge-offs of $3.9 million, or 0.21% (annualized) of average loans, for the third quarter of 2024.

The year ended December 31, 2024 included a reversal of provision for credit losses of $2.9 million compared to a provision for credit losses of $8.9 million recorded for the year ended December 31, 2023. Net charge-offs for the year ended December 31, 2024 were $6.7 million, or 0.09% of average loans, compared to net charge-offs of $11.1 million, or 0.14% of average loans, for the year ended December 31, 2023.



2

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, January 31, 2025 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its results for the fourth quarter and full year 2024. Participants may register for the conference call at https://registrations.events/direct/Q4I635866 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/Q4I635866 and requires pre-registration. If you are unable to participate during the live webcast, the webcast will be accessible via the Investor Relations section of the Company’s website at ir.stellar.bank.

About Stellar Bancorp, Inc.

Stellar Bancorp, Inc. is a bank holding company headquartered in Houston, Texas. Stellar’s principal banking subsidiary, Stellar Bank, provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers across the Houston, Dallas, Beaumont and surrounding communities in Texas.

Investor Relations
IR@stellar.bank

Forward-Looking Statements

Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements about the benefits of the Company’s merger with Allegiance Bancshares, Inc. (the “Merger”), including future financial performance and operating results, the Company’s plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “scheduled,” “plans,” “intends,” “projects,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” “would,” or “continue” or negatives of such terms or other comparable terminology.

All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Stellar to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others: the risk that the cost savings and any revenue synergies from the Merger may not be fully realized or may take longer than anticipated to be realized; disruption to our business as a result of the Merger; the risk that the integration of operations will be materially delayed or will be more costly or difficult than we expected or that we are otherwise unable to successfully integrate our legacy businesses; the amount of the costs, fees, expenses and charges related to the Merger; reputational risk and the reaction of our customers, suppliers, employees or other business partners to the Merger; changes in the interest rate environment, the value of Stellar’s assets and obligations and the availability of capital and liquidity; general competitive, economic, political and market conditions; and other factors that may affect future results of Stellar including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; disruptions to the economy and the U.S. banking system caused by recent bank failures, risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in the cost of our deposit insurance assessments and other actions of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking and legislative and regulatory actions and reforms.

Additional factors which could affect the Company’s future results can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC’s website at https://www.sec.gov. We disclaim any obligation and do not intend to update or revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.


3

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
20242023
December 31September 30June 30March 31December 31
 (Dollars in thousands)
ASSETS
Cash and due from banks$419,967 $103,735 $110,341 $74,663 $121,004 
Interest-bearing deposits at other financial institutions491,249 412,482 379,909 325,079 278,233 
Total cash and cash equivalents911,216 516,217 490,250 399,742 399,237 
Available for sale securities, at fair value1,673,016 1,691,752 1,630,971 1,523,100 1,395,680 
Loans held for investment7,439,854 7,551,124 7,713,897 7,908,111 7,925,133 
Less: allowance for credit losses on loans(81,058)(84,501)(94,772)(96,285)(91,684)
Loans, net7,358,796 7,466,623 7,619,125 7,811,826 7,833,449 
Accrued interest receivable37,884 39,473 43,348 45,466 44,244 
Premises and equipment, net111,856 113,742 113,984 115,698 118,683 
Federal Home Loan Bank stock8,209 20,123 15,089 16,050 25,051 
Bank-owned life insurance107,498 106,876 106,262 105,671 105,084 
Goodwill497,318 497,318 497,318 497,318 497,318 
Core deposit intangibles, net92,546 98,116 104,315 110,513 116,712 
Other assets106,771 79,537 103,001 103,838 111,681 
Total assets$10,905,110 $10,629,777 $10,723,663 $10,729,222 $10,647,139 
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing$3,576,206 $3,303,048 $3,308,441 $3,323,149 $3,546,815 
Interest-bearing
Demand1,845,749 1,571,504 1,564,405 1,576,261 1,659,999 
Money market and savings2,253,193 2,280,651 2,213,031 2,203,767 2,136,777 
Certificates and other time1,453,236 1,587,398 1,639,426 1,691,539 1,529,876 
Total interest-bearing deposits5,552,178 5,439,553 5,416,862 5,471,567 5,326,652 
Total deposits9,128,384 8,742,601 8,725,303 8,794,716 8,873,467 
Accrued interest payable17,052 16,915 12,327 12,227 11,288 
Borrowed funds— 60,000 240,000 215,000 50,000 
Subordinated debt70,105 110,064 109,964 109,864 109,765 
Other liabilities79,104 74,074 70,274 66,717 81,601 
Total liabilities9,294,645 9,003,654 9,157,868 9,198,524 9,126,121 
SHAREHOLDERS’ EQUITY:
Common stock534 535 536 536 533 
Capital surplus1,240,050 1,238,619 1,238,477 1,235,221 1,232,627 
Retained earnings495,245 474,905 447,948 425,130 405,945 
Accumulated other comprehensive loss(125,364)(87,936)(121,166)(130,189)(118,087)
Total shareholders’ equity1,610,465 1,626,123 1,565,795 1,530,698 1,521,018 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$10,905,110 $10,629,777 $10,723,663 $10,729,222 $10,647,139 
4

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months EndedYears Ended
2024202320242023
December 31September 30June 30March 31December 31December 31December 31
INTEREST INCOME:
Loans, including fees$128,738 $132,372 $135,885 $134,685 $139,114 $531,680 $537,722 
Securities:
Taxable14,789 13,898 11,923 9,293 9,622 49,903 38,494 
Tax-exempt814 814 816 818 418 3,262 2,553 
Deposits in other financial institutions5,681 4,692 3,555 3,627 3,021 17,555 12,048 
Total interest income150,022 151,776 152,179 148,423 152,175 602,400 590,817 
INTEREST EXPENSE:
Demand, money market and savings deposits27,877 29,440 28,399 27,530 25,033 113,246 87,335 
Certificates and other time deposits16,830 18,073 18,758 15,084 15,075 68,745 41,286 
Borrowed funds235 840 1,700 1,774 4,154 4,549 17,807 
Subordinated debt2,123 1,916 1,912 1,917 1,983 7,868 7,630 
Total interest expense47,065 50,269 50,769 46,305 46,245 194,408 154,058 
NET INTEREST INCOME102,957 101,507 101,410 102,118 105,930 407,992 436,759 
Provision for (reversal of) credit losses942 (5,985)(1,935)4,098 1,047 (2,880)8,943 
Net interest income after provision for credit losses102,015 107,492 103,345 98,020 104,883 410,872 427,816 
NONINTEREST INCOME:
Service charges on deposit accounts1,590 1,594 1,648 1,598 1,520 6,430 6,064 
(Loss) gain on sale of assets(112)432 (64)513 198 769 390 
Bank-owned life insurance622 614 591 587 573 2,414 2,178 
Debit card and ATM income570 551 543 527 542 2,191 4,996 
Other2,362 3,111 2,698 3,071 4,053 11,242 10,934 
Total noninterest income5,032 6,302 5,416 6,296 6,886 23,046 24,562 
NONINTEREST EXPENSE:
Salaries and employee benefits40,512 41,123 39,061 41,376 40,464 162,072 157,034 
Net occupancy and equipment4,401 4,570 4,503 4,390 4,572 17,864 16,932 
Depreciation1,984 1,911 1,948 1,964 1,955 7,807 7,584 
Data processing and software amortization5,551 5,706 5,501 4,894 5,000 21,652 19,526 
Professional fees3,428 1,714 1,620 2,662 3,867 9,424 7,955 
Regulatory assessments and FDIC insurance1,636 1,779 2,299 1,854 5,169 7,568 11,032 
Amortization of intangibles5,581 6,212 6,215 6,212 6,247 24,220 26,883 
Communications807 827 847 937 743 3,418 2,796 
Advertising1,593 878 891 765 1,004 4,127 3,627 
Acquisition and merger-related expenses— — — — 3,072 — 15,555 
Other6,488 6,346 8,331 6,356 5,848 27,521 21,570 
Total noninterest expense71,981 71,066 71,216 71,410 77,941 285,673 290,494 
INCOME BEFORE INCOME TAXES35,066 42,728 37,545 32,906 33,828 148,245 161,884 
Provision for income taxes7,249 8,837 7,792 6,759 6,562 30,637 31,387 
NET INCOME$27,817 $33,891 $29,753 $26,147 $27,266 $117,608 $130,497 
EARNINGS PER SHARE
Basic$0.52 $0.63 $0.56 $0.49 $0.51 $2.20 $2.45 
Diluted$0.52 $0.63 $0.56 $0.49 $0.51 $2.20 $2.45 
5

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months EndedYears Ended
2024202320242023
December 31September 30June 30March 31December 31December 31December 31
(Dollars and share amounts in thousands, except per share data)
Net income$27,817$33,891$29,753$26,147$27,266$117,608$130,497
Earnings per share, basic$0.52$0.63$0.56$0.49$0.51$2.20$2.45
Earnings per share, diluted$0.52$0.63$0.56$0.49$0.51$2.20$2.45
Dividends per share$0.14$0.13$0.13$0.13$0.13$0.53$0.52
Return on average assets(A)
1.04 %1.27 %1.13 %0.98 %1.02 %1.10 %1.21 %
Return on average equity(A)
6.85 %8.49 %7.78 %6.88 %7.33 %7.50 %8.96 %
Return on average tangible equity(A)(B)
10.82 %13.63 %12.82 %11.47 %12.61 %12.18 %15.75 %
Net interest margin (tax equivalent)(A)(C)
4.25 %4.19 %4.24 %4.26 %4.40 %4.24 %4.51 %
Net interest margin (tax equivalent) excluding PAA(A)(B)(C)
3.94 %3.91 %3.82 %3.91 %3.91 %3.89 %4.03 %
Efficiency ratio(D)
66.59 %66.18 %66.63 %66.18 %69.21 %66.39 %63.02 %
Capital Ratios
Stellar Bancorp, Inc. (Consolidated)
Equity to assets14.77 %15.30 %14.60 %14.27 %14.29 %14.77 %14.29 %
Tangible equity to tangible assets(B)
9.89 %10.27 %9.53 %9.12 %9.04 %9.89 %9.04 %
Estimated Total capital ratio (to risk-weighted assets)16.06 %15.91 %15.34 %14.62 %14.02 %16.06 %14.02 %
Estimated Common equity Tier 1 capital (to risk weighted assets)
14.19 %13.62 %12.98 %12.29 %11.77 %14.19 %11.77 %
Estimated Tier 1 capital (to risk-weighted assets)
14.31 %13.74 %13.10 %12.41 %11.89 %14.31 %11.89 %
Estimated Tier 1 leverage (to average tangible assets)
11.30 %11.25 %10.93 %10.55 %10.18 %11.30 %10.18 %
Stellar Bank
Estimated Total capital ratio (to risk-weighted assets)15.34 %15.07 %14.65 %14.13 %13.65 %15.34 %13.65 %
Estimated Common equity Tier 1 capital (to risk-weighted assets)
14.19 %13.63 %13.12 %12.61 %12.20 %14.19 %12.20 %
Estimated Tier 1 capital (to risk-weighted assets)
14.19 %13.63 %13.12 %12.61 %12.20 %14.19 %12.20 %
Estimated Tier 1 leverage (to average tangible assets)
11.19 %11.16 %10.94 %10.72 %10.44 %11.19 %10.44 %
Other Data
Weighted average shares:
Basic53,42253,54153,57253,34353,28253,46953,229
Diluted53,47153,58053,60853,40653,35053,51053,313
Period end shares outstanding53,42953,44653,56453,55153,29153,42953,291
Book value per share$30.14$30.43$29.23$28.58$28.54$30.14$28.54
Tangible book value per share(B)
$19.10$19.28$18.00$17.23$17.02$19.10$17.02
Employees - full-time equivalents1,0371,0401,0451,0079981,037998

(A)Interim periods annualized.
(B)Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 10 of this Earnings Release.
(C)Net interest margin represents net interest income divided by average interest-earning assets.
(D)Represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of assets. Additionally, taxes and provision for credit losses are not part of this calculation.

    
6

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months Ended
December 31, 2024September 30, 2024December 31, 2023
Average BalanceInterest Earned/
Interest Paid		Average Yield/RateAverage BalanceInterest Earned/
Interest Paid		Average Yield/RateAverage BalanceInterest Earned/
Interest Paid		Average Yield/Rate
(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans$7,477,332 $128,738 6.85%$7,627,522 $132,372 6.90%$7,973,780 $139,114 6.92%
Securities1,702,111 15,603 3.65%1,676,614 14,712 3.49%1,386,079 10,040 2.87%
Deposits in other financial institutions473,719 5,681 4.77%339,493 4,692 5.50%217,068 3,021 5.52%
Total interest-earning assets9,653,162 $150,022 6.18%9,643,629 $151,776 6.26%9,576,927 $152,175 6.30%
Allowance for credit losses on loans(84,423)(94,785)(92,992)
Noninterest-earning assets1,080,429 1,077,422 1,142,438 
Total assets$10,649,168 $10,626,266 $10,626,373 
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits$1,623,867 $11,341 2.78%$1,606,736 $12,458 3.08%$1,420,892 $10,548 2.95%
Money market and savings deposits2,312,711 16,536 2.84%2,254,767 16,982 3.00%2,163,348 14,485 2.66%
Certificates and other time deposits1,538,785 16,830 4.35%1,620,908 18,073 4.44%1,461,227 15,075 4.09%
Borrowed funds15,978 235 5.85%49,077 840 6.81%275,694 4,154 5.98%
Subordinated debt101,394 2,123 8.33%110,007 1,916 6.93%109,713 1,983 7.17%
Total interest-bearing liabilities5,592,735 $47,065 3.35%5,641,495 $50,269 3.54%5,430,874 $46,245 3.38%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits3,342,636 3,303,726 3,624,417 
Other liabilities99,006 93,127 95,705 
Total liabilities9,034,377 9,038,348 9,150,996 
Shareholders’ equity1,614,791 1,587,918 1,475,377 
Total liabilities and shareholders’ equity$10,649,168 $10,626,266 $10,626,373 
Net interest rate spread2.83%2.72%2.92%
Net interest income and margin$102,957 4.24%$101,507 4.19%$105,930 4.39%
Net interest income and net interest margin (tax equivalent)$103,039 4.25%$101,578 4.19%$106,121 4.40%
Cost of funds2.10%2.24%2.03%
Cost of deposits2.02%2.15%1.84%
7

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Years Ended December 31,
20242023
Average BalanceInterest Earned/
Interest Paid		Average Yield/RateAverage BalanceInterest Earned/
Interest Paid		Average Yield/Rate
(Dollars in thousands)
Assets
Interest-Earning Assets:
Loans$7,712,122 $531,680 6.89%$7,961,911 $537,722 6.75%
Securities1,593,073 53,165 3.34%1,490,588 41,047 2.75%
Deposits in other financial institutions334,654 17,555 5.25%242,803 12,048 4.96%
Total interest-earning assets9,639,849 $602,400 6.25%9,695,302 $590,817 6.09%
Allowance for credit losses on loans(91,770)(95,668)
Noninterest-earning assets1,098,395 1,147,232 
Total assets$10,646,474 $10,746,866 
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits$1,618,212 $48,290 2.98%$1,464,015 $38,689 2.64%
Money market and savings deposits2,236,678 64,956 2.90%2,259,264 48,646 2.15%
Certificates and other time deposits1,574,598 68,745 4.37%1,239,345 41,286 3.33%
Borrowed funds77,662 4,549 5.86%318,721 17,807 5.59%
Subordinated debt107,768 7,868 7.30%109,560 7,630 6.96%
Total interest-bearing liabilities5,614,918 $194,408 3.46%5,390,905 $154,058 2.86%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits3,369,931 3,814,651 
Other liabilities94,156 85,376 
Total liabilities9,079,005 9,290,932 
Shareholders’ equity1,567,469 1,455,934 
Total liabilities and shareholders' equity$10,646,474 $10,746,866 
Net interest rate spread2.79%3.23%
Net interest income and margin$407,992 4.23%$436,759 4.50%
Net interest income and net interest margin (tax equivalent)$408,305 4.24%$437,670 4.51%
Cost of funds2.16%1.67%
Cost of deposits2.07%1.47%
8

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months Ended
20242023
 December 31  September 30  June 30  March 31  December 31
(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial$1,362,260$1,350,753$1,396,064$1,455,755$1,414,102
Real estate:
Commercial real estate (including multi-family residential)3,868,2183,976,2964,029,6714,049,8854,071,807
Commercial real estate construction and land development845,494890,316922,8051,039,4431,060,406
1-4 family residential (including home equity)1,115,4841,112,2351,098,6811,049,3161,047,174
Residential construction157,977161,494200,134252,573267,357
Consumer and other90,42160,03066,54261,13964,287
Total loans held for investment$7,439,854$7,551,124$7,713,897$7,908,111$7,925,133
Deposits:
Noninterest-bearing$3,576,206$3,303,048$3,308,441$3,323,149$3,546,815
Interest-bearing
Demand1,845,7491,571,5041,564,4051,576,2611,659,999
Money market and savings2,253,1932,280,6512,213,0312,203,7672,136,777
Certificates and other time1,453,2361,587,3981,639,4261,691,5391,529,876
Total interest-bearing deposits5,552,1785,439,5535,416,8625,471,5675,326,652
Total deposits$9,128,384$8,742,601$8,725,303$8,794,716$8,873,467
Asset Quality:
Nonaccrual loans$37,212$32,140$50,906$57,129$39,191
Accruing loans 90 or more days past due—————
Total nonperforming loans37,21232,14050,90657,12939,191
Foreclosed assets1,7082,9842,548——
Total nonperforming assets$38,920$35,124$53,454$57,129$39,191
Net charge-offs (recoveries) $2,016$3,933$(1)$714$2,577
Nonaccrual loans:
Commercial and industrial$8,500$9,718$18,451$15,465$5,048
Real estate:
Commercial real estate (including multi-family residential)16,45910,69518,09421,26816,699
Commercial real estate construction and land development3,0614,1831,6418,4065,043
1-4 family residential (including home equity)9,0567,25912,45410,3688,874
Residential construction—1211551,4103,288
Consumer and other136164111212239
Total nonaccrual loans$37,212$32,140$50,906$57,129$39,191
Asset Quality Ratios:
Nonperforming assets to total assets0.36 %0.33 %0.50 %0.53 %0.37 %
Nonperforming loans to total loans0.50 %0.43 %0.66 %0.72 %0.49 %
Allowance for credit losses on loans to nonperforming loans217.83 %262.92 %186.17 %168.54 %233.94 %
Allowance for credit losses on loans to total loans1.09 %1.12 %1.23 %1.22 %1.16 %
Net charge-offs to average loans (annualized)0.11 %0.21 %0.00 %0.04 %0.13 %

9
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 EndedYears Ended
2024202320242023
 December 31  September 30  June 30  March 31  December 31 December 31December 31
(Dollars and share amounts in thousands, except per share data)
Net income$27,817$33,891$29,753$26,147$27,266$117,608$130,497
Add: Provision for credit losses942(5,985)(1,935)4,0981,047(2,880)8,943
Add: Provision for income taxes7,2498,8377,7926,7596,56230,63731,387
Pre-tax, pre-provision income$36,008$36,743$35,610$37,004$34,875$145,365$170,827
Total average assets$10,649,168$10,626,266$10,623,865$10,686,789$10,626,373$10,646,474$10,746,866
Pre-tax, pre-provision return on average assets(B)
1.35 %1.38 %1.35 %1.39 %1.30 %1.37 %1.59 %
Total shareholders’ equity$1,610,465$1,626,123$1,565,795$1,530,698$1,521,018$1,610,465$1,521,018
Less: Goodwill and core deposit intangibles, net589,864595,434601,633607,831614,030589,864614,030
Tangible shareholders’ equity$1,020,601$1,030,689$964,162$922,867$906,988$1,020,601$906,988
Shares outstanding at end of period53,42953,44653,56453,55153,29153,42953,291
Tangible book value per share$19.10$19.28$18.00$17.23$17.02$19.10$17.02
Average shareholders’ equity$1,614,791$1,587,918$1,538,124$1,528,298$1,475,377$1,567,469$1,455,934
Less: Average goodwill and core deposit intangibles, net592,471598,866604,722611,149617,236601,768627,449
Average tangible shareholders’ equity$1,022,320$989,052$933,402$917,149$858,141$965,701$828,485
Return on average tangible equity(B)
10.82 %13.63 %12.82 %11.47 %12.61 %12.18 %15.75 %
Total assets$10,905,110$10,629,777$10,723,663$10,729,222$10,647,139$10,905,110$10,647,139
Less: Goodwill and core deposit intangibles, net589,864595,434601,633607,831614,030589,864614,030
Tangible assets$10,315,246$10,034,343$10,122,030$10,121,391$10,033,109$10,315,246$10,033,109
Tangible equity to tangible assets9.89 %10.27 %9.53 %9.12 %9.04 %9.89 %9.04 %
Net interest income (tax equivalent)$103,039$101,578$101,482$102,207$106,121$408,305$437,670
Less: Purchase accounting accretion7,5556,79510,0988,55111,72632,99946,802
Adjusted net interest income (tax equivalent)$95,484$94,783$91,384$93,656$94,395$375,306$390,868
Average earning assets$9,653,162$9,643,629$9,616,874$9,645,544$9,576,927$9,639,849$9,695,302
Net interest margin (tax equivalent) excluding PAA3.94 %3.91 %3.82 %3.91 %3.91 %3.89 %4.03 %
(A)Represents total noninterest expense, excluding acquisition and merger-related expenses, core deposit intangibles amortization and write-downs on assets moved to held for sale, divided by the sum of net interest income, excluding purchase accounting adjustments plus noninterest income, excluding gains and losses on the sale of assets. Additionally, taxes and provision for credit losses are not part of this calculation.
(B)Interim periods annualized.
10
Fourth Quarter 2024 Earnings Presentation Exhibit 99.2

 
Forward-Looking Statements and Non-GAAP Financial Measures 2 Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements about the benefits of the merger of Allegiance Bancshares, Inc. with and into and CBTX, Inc. (the “Merger”) which became effective on October 1, 2022, including the future financial performance of Stellar Bancorp, Inc. (the “Company”), operating results, plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “scheduled,” “plans,” “intends,” “projects,” “anticipates,” “expects,” “believes,” “estimates,” “potential,” “would,” or “continue” or negatives of such terms or other comparable terminology. All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company. Such factors include, among others: the risk that the cost savings and any revenue synergies from the Merger may not be fully realized or may take longer than anticipated to be realized; disruption to our business as a result of the Merger; the risk that the integration of operations will be materially delayed or will be more costly or difficult than we expected or that we are otherwise unable to successfully integrate our legacy businesses; the amount of the costs, fees, expenses and charges related to the Merger; reputational risk and the reaction of our customers, suppliers, employees or other business partners to the Merger; changes in the interest rate environment, the value of Stellar’s assets and obligations and the availability of capital and liquidity; general competitive, economic, political and market conditions; and other factors that may affect future results of Stellar including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; disruptions to the economy and the U.S. banking system caused by recent bank failures, risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in the cost of our deposit insurance assessments and other actions of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking and legislative and regulatory actions and reforms. Additional factors which could affect the Company’s future results can be found in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC’s website at https://www.sec.gov. We disclaim any obligation and do not intend to update or revise any forward-looking statements contained in this communication, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. GAAP Reconciliation of Non-GAAP Financial Measures The Company’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. The Company believes that these non- GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, the Company reviews pre-tax, pre-provision income; pre-tax pre-provision ROAA, the ratio of tangible equity to tangible assets; net interest margin (tax equivalent) excluding purchase accounting adjustments; and loan yield excluding accretion for internal planning and forecasting purposes. The Company has included in this presentation information relating to these non-GAAP financial measures for the applicable periods presented. These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Stellar calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

 
3 (1) Deposit market share based on FDIC data as of June 30, 2024. (2) Houston Region defined as the Houston-Pasadena-The Woodlands and Beaumont-Port Arthur MSAs; Excludes non-retail branches (3) Refer to the calculation of this non-GAAP financial measure and a reconciliation to its most directly comparable GAAP financial measure in the appendix. Houston’s Largest Regionally Focused Bank  Valuable franchise in one of the best markets in the U.S. • 6th in deposit market share for Houston region(1)(2) • 1st in deposit market share for Texas-based banks in the Houston region(1)(2) • Noninterest-bearing deposits to total deposits of 39.2% at December 31, 2024  Strong core earnings power and capital position at fourth quarter 2024 • Net interest margin (tax equivalent) of 4.25% • Net interest margin (tax equivalent) excluding purchase accounting adjustments of 3.94%(3) • Total capital ratio (to risk weighted-assets) of 16.06% Banking Centers Banking Centers Free-standing ATM 12/31/2024 9/30/2024 10,905,110$ 10,629,777$ 7,439,854 7,551,124 9,128,384 8,742,601 81.50% 86.37% 4.25% 4.19% excluding PPA(3) deposits weighted assets (Dollars in thousands) Total assets Total loans Total deposits Total loans to total deposits Estimated Total capital ratio (to risk- 16.06% 15.91% Net interest margin (tax equivalent) Net interest margin (tax equivalent) Noninterest bearing deposits to total 3.94% 3.91% 39.18% 37.78%

 
$30.1 $25.3 $13.2 $9.0 $8.6 $7.8 $5.7 $5.7 $5.7 $5.3 $3.4 $3.0 $2.6 $2.4 $2.3 $2.1 $1.9 JPMorgan Wells Fargo BofA Zions PNC Frost Prosperity Cadence Woodforest Capital One Third Coast Comerica Truist BOK Regions Texas Capital Texas Independent Focused on Serving the Houston Region 4 Note: Deposit market share based on FDIC data as of June 30, 2024. 1) Houston Region defined as the Houston-Pasadena-The Woodlands and Beaumont-Port Arthur MSAs; Excludes non-retail branches. Source: S&P Capital IQ Pro Stellar Houston Region Market Share(1) Deposits (dollars in billions) $150.8 Houston Percent of Houston Total Assets Region(1) Company Region Market Name ($B) Deposits ($B) Deposits (%) Share (%) JPMorgan 4,143 150.8 7.5 47.4 Wells Fargo 1,940 30.1 2.1 9.5 BofA 3,258 25.3 1.3 7.9 Zions 88 13.2 17.8 4.1 PNC 557 9.0 2.1 2.8 Stellar 11 8.6 97.6 2.7 Frost 49 7.8 19.1 2.4 Prosperity 40 5.7 20.5 1.8 Cadence 48 5.7 15.1 1.8 Woodforest 10 5.7 70.9 1.8 Capital One 480 5.3 1.4 1.7 Third Coast 4 3.4 87.4 1.1 Comerica 80 3.0 4.8 1.0 Truist 520 2.6 0.7 0.8 BOK 50 2.4 6.5 0.8 Regions 154 2.3 1.8 0.7 Texas Capital 30 2.1 8.7 0.7 Texas Independent 2 1.9 100 0.6

 
5 2024 Highlights (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix.  Solid Profitability: Net income for the full year 2024 was $117.6 million, or diluted earnings per share of $2.20, which translated into a return on average assets of 1.10%, a return on average equity of 7.50% and a return on average tangible equity of 12.18%(1). Net income for the fourth quarter of 2024 was $27.8 million, or diluted earnings per share of $0.52, which translated into an annualized return on average assets of 1.04%, an annualized return on average equity of 6.85% and an annualized return on average tangible equity of 10.82%(1).  Strong Net Interest Margin: Tax equivalent net interest margin was 4.24% for the year 2024 compared to 4.51% for 2023. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.89%(1) for 2024 compared to 4.03%(1) for 2023. Tax equivalent net interest margin for the fourth quarter of 2024 was 4.25% compared to 4.19% for the third quarter of 2024. The tax equivalent net interest margin, excluding PAA, was 3.94%(1) for the fourth quarter of 2024 compared to 3.91%(1) for the third quarter of 2024.  Meaningful Capital and Book Value Build: Total risk-based capital ratio increased to 16.06% at December 31, 2024 from 14.02% at December 31, 2023, book value per share increased to $30.14 from $28.54 at December 31, 2023 and tangible book value per share increased to $19.10(1) from $17.02(1) at December 31, 2023.  Credit Metrics: Nonperforming loans decreased $2.0 million to $37.2 million at December 31, 2024 from $39.2 million at December 31, 2023. Tangible Book Value Per Share(1) Total Capital Ratio $14.02 $17.02 $19.10 12/31/2022 12/31/2023 12/31/2024 12.39% 14.02% 16.06% 12/31/2022 12/31/2023 12/31/2024

 
Deposit Summary 6 Deposit Portfolio Composition Deposits (in millions)(1) Maintaining Discipline Navigating Competitive Deposit Market As of December 31, 2024: • Noninterest-bearing deposits to total deposits: 39.2% • Q4 cost of deposits: 2.02% • Q4 cost of funds: 2.10% • Loan to deposit ratio: 81.5% • Brokered deposits: $481.8 million at December 31, 2024 from $649.4 million at September 30, 2024 . (1) NIB 39.2% IB Demand 20.2% MMDA & Sav. 24.7% CD's 15.9% Q4 2024 Q3 2024 Noninterest-bearing ("NIB") 3,576,206$ 3,303,048$ Interest-bearing demand ("IB Demand") 1,845,749 1,571,504 Money market and savings ("MMDA & Sav.") 2,253,193 2,280,651 Certificates and other time ("CD's") 1,453,236 1,587,398 Total deposits 9,128,384$ 8,742,601$ (Dollars in thousands) (1) Other includes changes in IB Demand and MMDA & Sav. deposits.

 
Loan Summary 7 (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix. . Loan Portfolio Composition (1) (1) Q4 2024 Q3 2024 Commercial and Industrial (“C&I”) 1,362,260$ 1,350,753$ Nonowner-occupied Commercial Real Estate (“NOO CRE”) 1,623,373 1,689,530 Owner-occupied CRE (“OO CRE”) 1,834,354 1,871,742 Multifamily Real Estate (“MF”) 410,491 415,024 Total Commercial Real Estate 3,868,218 3,976,296 CRE Construction & Development (“CRE C&D”) 845,494 890,316 1-4 Family Residential (“1-4 Family”) 1,115,484 1,112,235 Residential Construction (“Resi. C&D”) 157,977 161,494 Consumer and other ("Other") 90,421 60,030 Total 7,439,854$ 7,551,124$ (In thousands) 1-4 Family 15.0% MF 5.5% Resi. C&D 2.1% Other 1.2%CRE C&D 11.4% NOO CRE 21.8% OO CRE 24.7% C&I 18.3% Average Yield Excl. PAA(1) Average Yield Excl. PAA(1) Interest-earning Assets: Loans 7,477,332$ 128,738$ 6.85% 6.45% 7,627,522$ 132,372$ 6.90% 6.55% Securities 1,702,111 15,603 3.65% 1,676,614 14,712 3.49% Deposits in other financial institutions 473,719 5,681 4.77% 339,493 4,692 5.50% Total interest-earning assets 9,653,162$ 150,022$ 6.18% 5.87% 9,643,629$ 151,776$ 6.26% 5.98% Q4 2024 Q3 2024 (Dollars in thousands) Average Outstanding Balance Interest Earned Average Outstanding Balance Interest Earned

 
Asset Quality Summary 8 Nonperforming Loans by Type (1) Combined represents the simple addition of legacy balances for 2022; estimated.  Nonperforming loans to total loans: • 0.50% at December 31, 2024 compared to 0.43% as of September 30, 2024  Allowance for credit losses on loans to nonperforming loans: • 217.83% at December 31, 2024 compared to 262.92% as of September 30, 2024  Allowance for credit losses on loans: • $81.1 million, or 1.09% of total loans, at December 31, 2024, compared to $84.5 million, or 1.12% of total loans, as of September 30, 2024 C&I 22.9% Other 0.4% CRE 44.2% CRE C&D 8.2% 1-4 Family 24.3% Q4 2024 Q3 2024 Total nonperforming loans 37,212$ 32,140$ Nonperforming loans to total loans 0.50% 0.43% Total nonperforming assets 38,920$ 35,124$ 0.36% 0.33% Net charge-offs (recoveries) 2,016$ 3,933$ 0.11% 0.21% YTD net charge-offs 6,662$ 4,646$ 0.09% 0.08% (Dollars in thousands) Nonperforming assets to total assets Net charge-offs to average loans (annualized) YTD net charge-offs to average loans (annualized) Nonaccrual Loans with No Related Allowance Nonaccrual Loans with Related Allowance Total Nonaccrual Loans Commercial and industrial 4,835$ 3,665$ 8,500$ Commercial real estate (including multi-family residential) 11,711 4,748 16,459 Commercial real estate construction and land development 633 2,428 3,061 1-4 family residential (including equity) 6,834 2,222 9,056 Residential construction — — — Consumer and other 80 56 136 Total 24,093$ 13,119$ 37,212$ (In thousands)

 
CRE and Office Detail: Q4 2024 9 (1) (1) CRE (incl. multifamily) by Property Type CRE - Office Owner- occupied 40.7% Non-owner occupied 59.3% Retail 638,827$ 1,245$ 16.5% Warehouse 558,882 746 14.4% Convenience Store (C-Store) 430,850 1,318 11.1% Multi-family 410,491 1,918 10.6% Office 408,571 807 10.6% Industrial 164,462 1,495 4.3% Restaurant / Bar 163,728 1,056 4.2% Auto Sales / Repair 158,345 728 4.1% Church 133,290 958 3.5% Hotel / Motel 133,110 3,503 3.4% Healthcare 110,630 1,095 2.9% Other 557,032 1,170 14.4% Total 3,868,218$ 1,093 100.0% (Dollars in thousands) Property Type Balance Average Loan Size % of Total Retail 16.5% Office 10.6% Warehouse 14.4% C-Store 11.1% Multi-family 10.6% Industrial 4.3% Hotel / Motel 3.4% Restaurant / Bar 4.2% Auto Sales / Repair 4.1% Church Healthcare 2.9% Other 14.4% Multi-Story Office Building 129 232,185$ 56.8% 1,800$ Single Story Office Building 303 130,639 32.0% 431 Flex Office Space 69 45,747 11.2% 663 Total 501 408,571$ 100.0% 816 0 - 12 months 85 59,551$ 14.6% 701$ 13 - 24 months 85 62,225 15.2% 732 25 - 36 months 73 83,490 20.4% 1,144 37 - 48 months 56 37,037 9.1% 661 49 + months 202 166,268 40.7% 823 Total 501 408,571$ 100.0% 816 Average Loan Size (Dollars in thousands) (Dollars in thousands) CRE Office - Maturity Number BalanceCRE Office - Collateral Type Number Balance % of Total % of Total Average Loan Size

 
CRE Construction and Development: Q4 2024 10 (1) (1) • Total committed exposure for CRE construction loans was $1.18 billion at December 31, 2024 and $1.23 at September 30, 2024. • The largest category of CRE construction loans was Land – Commercial at $312.9 million outstanding, or 37.0%, of CRE construction loans at December 31, 2024. • Owner-occupied CRE construction loans were 13.1% of CRE construction loans at December 31, 2024. (1) Includes loans that are secured by commercial properties that are in some stage of construction, land with improvements but valued as and only with intent to remove and construct new structures in the future, and raw land. (2) Multi-family community development loans (“CD”). CRE Construction Lending Highlights Land - Commercial 37.0% Warehouse 9.8%Multi-family - CD 17.5% Multi-family - Market Rate 7.2% Residential Subdivision 3.1% Land - Residential Lot 6.7% RV Park 2.0% Commercial 4.1% Retail 4.1% C-Store 1.4% Other 7.1% Number Balance Number Balance Land - Commercial(1) 429 312,902$ 729$ 439 354,616$ 808$ Multi-family - CD(2) 15 147,974 9,865 14 137,102 9,793 Warehouse 24 82,665 3,444 30 123,545 4,118 Multi-family - Market Rate 7 60,761 8,680 6 50,275 8,379 Other 69 60,123 871 74 51,707 699 Land - Residential Lot 238 56,926 239 246 56,931 231 Retail 22 34,807 1,582 19 28,616 1,506 Commercial Development 6 34,389 5,732 6 25,161 4,194 Residential Subdivision 8 25,968 3,246 8 29,067 3,633 RV Park 5 16,784 3,357 4 14,734 3,684 Convenience Store (C-Store) 8 12,195 1,524 10 18,565 1,857 Total 831 845,494$ 1,017 856 890,319$ 1,040 (Dollars in thousands) (Dollars in thousands) Loan Type Q4 2024 Q3 2024 Average Loan Size Average Loan Size

 
Regulatory Capital Ratios 11 (1) Refer to the calculation of this non-GAAP financial measure and a reconciliation to its most directly comparable GAAP financial measure in the appendix. Minimum Required Plus Capital Conservation Buffer Consolidated Capital Ratios Estimated Total Capital Ratio (to risk-weighted assets) 16.06% 15.91% 10.50% Estimated Common Equity Tier 1 Capital Ratio (to risk-weighted assets) 14.19% 13.62% 7.00% Estimated Tier 1 Capital Ratio (to risk-weighted assets) 14.31% 13.74% 8.50% Estimated Tier 1 Leverage Ratio (to average tangible assets) 11.49% 11.25% 4.00% Estimated Tangible Equity to Tangible Assets (1) 9.89% 10.27% N/A Bank Capital Ratios Estimated Total Capital Ratio (to risk-weighted assets) 15.34% 15.07% 10.50% Estimated Common Equity Tier 1 Capital Ratio (to risk-weighted assets) 14.19% 13.63% 7.00% Estimated Tier 1 Capital Ratio (to risk-weighted assets) 14.19% 13.63% 8.50% Estimated Tier 1 Leverage Ratio (to average tangible assets) 11.38% 11.16% 4.00% December 31, 2024 September 30, 2024

 
12 Key Takeaways Excellent core funding profile Strong earnings power and franchise value in one of the best markets in the U.S. Key success factors: Credit performance and risk management Significant financial flexibility Positioned for rapid capital-build to continue

 
$30.1 $25.3 $13.2 $9.0 $8.6 $7.8 $5.7 $5.7 $5.7 JPMorgan Wells Fargo BofA Zions PNC Frost Prosperity Cadence Woodforest Diverse and Strong Markets of Operation 13 Houston is Diverse, with Significant Economic TailwindsGreater Houston Market Top 10 Bank by Deposits in Houston Region(1) ($B) Note: Deposit market share based on FDIC data as of June 30, 2024. 1) Houston Region defined as the Houston-Pasadena-The Woodlands and Beaumont-Port Arthur MSAs; Excludes non-retail branches. Source: S&P Capital IQ Pro, Houston.org, Texas Medical Center, and Wallet Hub. $150.8 Est. Population Growth ’24-’29 Est. Number of Households Growth ’24-’29 Population Change (’19-’24) Median Household Income (’24) Significant Deposit Share Houston MSA: 6.0% Texas: 5.9% / U.S: 2.1% Houston MSA: $75,557 Texas: $73,203 / U.S: $75,874 Stellar has over $8.6 billion in deposits in the Houston region(1) Houston HQ Bank  Houston is the #4 most diverse city in the U.S. based on socioeconomic factors, according to Wallet Hub  Houston added nearly 140,000 residents in ’23, 2nd among U.S. metros in population growth. The increase equates to a new resident every 3.8 minutes  25th largest economy in the world – if ranked as a country, 14th largest population in the U.S – if ranked as a state  Port Houston is the busiest Gulf Coast container port, the Houston Ship Channel is #1 ranked U.S. port in total foreign and domestic waterborne tonnage  Houston is home to the Texas Medical Center, the world's largest medical complex, which has 10 million annual patient encounters  Business friendly: #3 among U.S. metro areas in Fortune 500 headquarters (26)  Major business clusters in Beaumont-Port Arthur area include chemical and petroleum manufacturing, materials manufacturing and transportation 4.9% 4.7% 2.4% Houston MSA Texas USA 5.1% 5.1% 2.7% Houston MSA Texas USA Stellar

 
Diversified and Growing Economy 14 1) Data is preliminary as of February 2024, from the U.S. Bureau of Labor Statistics Source: U.S. Bureau of Labor Statistics Houston vs. U.S. Job Change by Industry (Feb ‘23 – Feb. ‘24)(1) Diversified Economy by Job Sector(1) Commentary  Houston’s economy has become much more diversified over the years, while remaining the energy capital of the United States  Most of Houston's job sectors are growing at a faster rate than U.S.  Transportation, warehousing, and utility services showed a large gain over the last year versus the United States United States Houston MSA Professional and Business Services 16% Education and Health Services 14% Government 13% Leisure and Hospitality 10% Retail Trade 9% Manufacturing 7% Construction 7% Transportation, Warehousing, and Utilities 6% Financial Activities 5% Wholesale Trade 5% Other Services 4% Mining and Logging 2% Information 1% (0.7)% 5.3% 0.1% 1.9% 1.6% (2.4)% 1.9% 2.5% 4.4% 2.4% 3.3% 0.5% 0.0% 4.8% Mining and Logging Private Education and Health Services Financial Activities Leisure and Hospitality Professional and Business Services Information Wholesale Trade Transportation, Warehousing, and Utilities Government Total Nonfarm Manufacturing Construction Retail Trade Other Services

 
2.0 3.0 4.0 5.0 6.0 7.0 2.0 2.5 3.0 3.5 2007 2009 2011 2013 2015 2017 2019 2021 2023 Houston is a Strong and Resilient Market 15  Since the Great Recession, Houston has proven its resiliency, weathering economic cycles and natural disasters − Houston welcomed 2.1 million new residents and created over 965 thousand jobs since 2007 Population (M ) O il Pr ic e D ec lin e G re at R ec es si on Ik e H ar ve y C O VI D -1 9 Em pl oy m en t( M ) Employment Population1) Data is preliminary as of February 2024, from the U.S. Bureau of Labor Statistics Source: U.S. Bureau of Labor Statistics, Texas Workforce Commission

 
92,198 (150,000) (100,000) (50,000) 0 50,000 100,000 150,000 D al la s H ou st on Ta m pa At la nt a Ph oe ni x M ia m i D en ve r W as hi ng to n Bo st on M in ne ap ol is R iv er si de Se at tle Ba lti m or e Ph ila de lp hi a D et ro it Sa n D ie go Sa n Fr an ci sc o C hi ca go Lo s An ge le s N ew Y or k Houston’s Growth Projected to Continue 16 Source: S&P Capital IQ Pro; U.S. Census Bureau. 2010-2024 Population Change (%) Houston had the second highest net migration in 2023 20 most populated metros 3.93% 0.31% -0.48% 27.64% 27.00% 21.95% 8.88% New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. • Houston has seen tremendous growth over the past ten years, aided by the relocation of multiple Fortune 500 companies • The continued growth of the Houston metro will strengthen and diversify the greater economy, benefiting the businesses and constituents Houston added over 90,000 people by net migration in 2023, second only to Dallas

 
$92,406 $89,429 $85,119 $82,998 $75,557 $73,203 $75,874 New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. $800,000 $982,500 $363,500 $450,000 $339,000 $344,800 $420,357 New York Los Angeles Chicago Dallas Houston Texas U.S. 8.7x 11.0x 4.3x 5.4x 4.5x 4.7x 5.5x New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. Housing Market and Cost of Living 17 • Cost of living in Houston is 5.9% less than that of the U.S. market average while the median household income is in line with U.S. median • Houston is #1 in U.S. annual new home construction 20 24 M ed ia n H ou se ho ld In co m e 20 24 M ed ia n H om e Pr ic e (1 ) M ed ia n H om e Pr ic e to H H I R at io (1) Home price shown for each respective city Source: S&P Capital IQ Pro; Redfin (March 2024); Houston.org

 
Appendix: Non-GAAP Reconciliation(1) 18 (1) See the disclosure under the heading “GAAP Reconciliation of Non-GAAP Financial Measures” on slide 2 regarding the use of non-GAAP financial measures. (2) Interim periods annualized. Total shareholders’ equity $ 1,610,465 $ 1,626,123 $ 1,610,465 $ 1,521,018 Less: Goodw ill and core deposit intangibles, net 589,864 595,434 589,864 614,030 Tangible shareholders’ equity $ 1,020,601 $ 1,030,689 $ 1,020,601 $ 906,988 Shares outstanding at end of period 53,429 53,446 53,429 53,291 Tangible book value per share $ 19.10 $ 19.28 19.10 17.02 Average shareholders’equity $ 1,614,791 1,587,918 1,567,469 1,455,934 Less: Average goodw ill and core deposit intangibles, net 592,471 598,866 601,768 627,449 Average tangible shareholders’equity $ 1,022,320 $ 989,052 $ 965,701 $ 828,485 Return on average tangible equity 10.82% 13.63% 12.18% 15.75% Total assets $ 10,905,110 $ 10,629,777 $ 10,905,110 $ 10,647,139 Less: Goodw ill and core deposit intangibles, net 589,864 595,434 589,864 614,030 Tangible assets $ 10,315,246 $ 10,034,343 $ 10,315,246 $ 10,033,109 Tangible equity to tangible assets 9.89% 10.27% 9.89% 9.04% Net interest income (tax equivalent) $ 103,039 $ 101,578 $ 408,305 $ 437,670 Less: Purchase accounting accretion 7,555 6,795 32,999 46,802 Adjusted net interest income (tax equivalent) $ 95,484 $ 94,783 $ 375,306 $ 390,868 Average earning assets $ 9,653,162 $ 9,643,629 $ 9,639,849 $ 9,695,302 Net interest margin (tax equivalent)(2) 4.25% 4.19% 4.24% 4.51% Net interest margin (tax equivalent) excluding PAA(2) 3.94% 3.91% 3.89% 4.03% Interest on loans, as reported $ 128,738 $ 132,372 $ 531,680 $ 537,722 Less: Purchase accounting accretion 7,555 6,795 32,999 46,802 Interest on loans w ithout loan accretion $ 121,183 $ 125,577 $ 498,681 $ 490,920 Average loans $ 7,477,332 $ 7,627,522 $ 7,712,122 $ 7,961,911 Loan yield, as reported 6.85% 6.90% 6.89% 6.75% Loan yield, w ithout loan accretion 6.45% 6.55% 6.47% 6.17% Interest on interest-earning assets, as reported $ 150,022 $ 151,776 $ 602,400 $ 590,817 Less: Purchase accounting accretion 7,555 6,795 32,999 46,802 Interest on interest-earnings assets w ithout loan accretion $ 142,467 $ 144,981 $ 569,401 $ 544,015 Average interest-earnings assets $ 9,653,162 $ 9,643,629 $ 9,639,849 $ 9,695,302 Yield on interest-earnings assets, as reported 6.18% 6.26% 6.25% 6.09% Yield on interest-earnings assets, w ithout loan accretion 5.87% 5.98% 5.91% 5.61% Year Ended 2023Q4 2024 Q3 2024 Year Ended 2024 (Dollars in thousands)

 
19 NYSE: STEL

 
v3.24.4
Cover
Jan. 30, 2025
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Jan. 30, 2025
Entity File Number 001-38280
Entity Registrant Name Stellar Bancorp, Inc.
Entity Central Index Key 0001473844
Entity Tax Identification Number 20-8339782
Entity Incorporation, State or Country Code TX
Entity Address, Address Line One 9 Greenway Plaza,
Entity Address, Address Line Two Suite 110
Entity Address, City or Town Houston
Entity Address, State or Province TX
Entity Address, Postal Zip Code 77046
City Area Code 713
Local Phone Number 210-7600
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common stock, par value $0.01 per share
Trading Symbol STEL
Security Exchange Name NYSE
Entity Emerging Growth Company false
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