STEL Stellar Bancorp Inc

Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $26.1 million, or diluted earnings per share of $0.49, for the first quarter of 2024 compared to net income of $27.3 million, or diluted earnings per share of $0.51, for the fourth quarter of 2023.

“We are pleased to announce our first quarter 2024 results that reflect our continued focus on building capital, maintaining liquidity, and monitoring credit as uncertainty with the interest rate environment persists,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer. “We are working with our customers as they adapt and understand how to operate in the higher interest rate environment,” continued Mr. Franklin.

“We operate in one of the best markets in the country with continued population growth, increasing jobs and a friendly environment to build businesses. Our incredible team continues to deliver great service to the community and our customers. We are well positioned in our markets and are excited about what Stellar is building,” concluded Mr. Franklin.

First Quarter 2024 Financial Highlights

• Solid Profitability: First quarter 2024 net income of $26.1 million, or diluted earnings per share of $0.49, translated into an annualized return on average assets of 0.98%, an annualized return on average equity of 6.88% and an annualized return on average tangible equity of 11.47%(1).

• Strong Net Interest Margin: Tax equivalent net interest margin was 4.26% for the first quarter of 2024 compared to 4.40% for the fourth quarter of 2023. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.91%(1) for the first quarter of 2024 compared to 3.91%(1) for the fourth quarter of 2023.

• Meaningful Regulatory Capital Build: Total risk-based capital ratio increased to 14.62% at March 31, 2024 from 14.02% at December 31, 2023 and Tier 1 leverage ratio increased to 10.41% at March 31, 2024 from 10.18% at December 31, 2023.

• Favorable Cost of Funds: Cost of funds was 2.06% for the first quarter of 2024 compared to 2.03% for the fourth quarter of 2023.

First Quarter 2024 Results

Net interest income in the first quarter of 2024 decreased $3.8 million, or 3.6%, to $102.1 million from $105.9 million for the fourth quarter of 2023. The net interest margin on a tax equivalent basis decreased 14 basis points to 4.26% for the first quarter of 2024 from 4.40% for the fourth quarter of 2023. The decrease in the net interest margin from the prior quarter was primarily due to the decreased yield on interest earning assets from decreased purchase accounting adjustments during the first quarter. Net interest income for the first quarter of 2024 benefited from $8.6 million of income from purchase accounting adjustments compared to $11.7 million in the fourth quarter of 2023. Excluding purchase accounting adjustments, net interest income (tax equivalent) for the first quarter 2024 would have been $93.7 million(1) and the tax equivalent net interest margin would have been 3.91%(1).

Noninterest income for the fourth quarter of 2023 was $6.3 million, a decrease of $590 thousand, or 8.6%, compared to $6.9 million for the fourth quarter of 2023. Noninterest income decreased in the first quarter of 2024 compared to the fourth quarter of 2023 primarily due to Small Business Investment Company income recognized in the fourth quarter of 2023, partially offset by an increase in gains on sales of assets in the first quarter of 2024 compared to the fourth quarter of 2023.

_____________________ (1) Refer to page 9 of this earnings release for the calculation of this non-GAAP financial measure.

Noninterest expense for the first quarter of 2024 decreased $6.5 million, or 8.4%, to $71.4 million compared to $77.9 million for the fourth quarter of 2023. The decrease in noninterest expense in the first quarter of 2024 compared to the fourth quarter of 2023 was primarily due to higher nonrecurring items in the fourth quarter of 2023, including higher professional fees associated with various projects some of which related to the Company’s total assets crossing the $10 billion asset threshold, $3.1 million of acquisition and merger-related expenses, a $2.4 million accrual for future payments to the FDIC pursuant to the special insurance assessment and $1.9 million of severance expense.

The efficiency ratio was 66.18% for the first quarter of 2024 compared to 69.21% for the fourth quarter of 2023. First quarter 2024 annualized returns on average assets, average equity and average tangible equity were 0.98%, 6.88% and 11.47%(1), respectively, compared to 1.02%, 7.33% and 12.61%(1), respectively, for the fourth quarter of 2023.

Financial Condition

Total loans at March 31, 2024 decreased $17.0 million to $7.91 billion compared to $7.93 billion at December 31, 2023. At March 31, 2024, the remaining balance of the purchase accounting adjustments on loans was $98.3 million.

Total deposits at March 31, 2024 decreased $78.8 million to $8.79 billion compared to $8.87 billion at December 31, 2023, due to decreases in noninterest-bearing deposits and interest-bearing demand deposits, partially offset by increases in money market and certificates and other time deposits. Shifts in the deposit mix were primarily driven by the current interest rate environment and an intensely competitive market for deposits. Estimated uninsured deposits totaled $4.80 billion and estimated uninsured deposits net of collateralized deposits of $1.03 billion were $3.77 billion, or 42.8%, of total deposits at March 31, 2024.

Total assets at March 31, 2024 were $10.73 billion, an increase of $82.1 million, compared to $10.65 billion at December 31, 2023.

Asset Quality

Nonperforming assets totaled $57.1 million, or 0.53% of total assets, at March 31, 2024, compared to $39.2 million, or 0.37%, of total assets, at December 31, 2023. The allowance for credit losses on loans as a percentage of total loans was 1.22% at March 31, 2024 and 1.16% at December 31, 2023.

The provision for credit losses for the first quarter of 2024 was $4.1 million compared to $1.0 million for the fourth quarter of 2023. First quarter 2024 net charge-offs were $714 thousand, or 0.04% (annualized) of average loans, compared to net charge-offs of $2.6 million, or 0.13% (annualized) of average loans, for the fourth quarter 2023.

GAAP Reconciliation of Non-GAAP Financial Measures

Stellar’s management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures on page 9 of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

Stellar’s management team will host a conference call and webcast on Friday, April 26, 2024 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its first quarter 2024 results. Participants may register for the conference call at https://registrations.events/direct/Q4I635866971 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 audio-only webcast may be accessed at https://events.q4inc.com/attendee/952298333. If you are unable to participate during the live webcast, the webcast will be accessible via the Investor Relations section of the Company’s website at ir.stellar.bank.

About Stellar Bancorp, Inc.

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

Forward-Looking Statements

Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, 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.

Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

 

 

2024

 

2023

 

 

March 31

 

December 31

 

September 30

 

June 30

 

March 31

 

(Dollars in thousands)

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

74,663

 

 

$

121,004

 

 

$

94,970

 

 

$

105,913

 

 

$

99,231

 

Interest-bearing deposits at other financial institutions

 

325,079

 

 

 

278,233

 

 

 

207,302

 

 

 

198,176

 

 

 

164,102

 

Total cash and cash equivalents

 

399,742

 

 

 

399,237

 

 

 

302,272

 

 

 

304,089

 

 

 

263,333

 

 

 

 

 

 

 

 

 

 

 

Available for sale securities, at fair value

 

1,523,100

 

 

 

1,395,680

 

 

 

1,414,952

 

 

 

1,478,222

 

 

 

1,519,175

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment

 

7,908,111

 

 

 

7,925,133

 

 

 

8,004,528

 

 

 

8,068,718

 

 

 

7,886,044

 

Less: allowance for credit losses on loans

 

(96,285

)

 

 

(91,684

)

 

 

(93,575

)

 

 

(100,195

)

 

 

(96,188

)

Loans, net

 

7,811,826

 

 

 

7,833,449

 

 

 

7,910,953

 

 

 

7,968,523

 

 

 

7,789,856

 

 

 

 

 

 

 

 

 

 

 

Accrued interest receivable

 

45,466

 

 

 

44,244

 

 

 

43,536

 

 

 

42,051

 

 

 

42,405

 

Premises and equipment, net

 

115,698

 

 

 

118,683

 

 

 

119,332

 

 

 

119,142

 

 

 

124,723

 

Federal Home Loan Bank stock

 

16,050

 

 

 

25,051

 

 

 

29,022

 

 

 

24,478

 

 

 

19,676

 

Bank-owned life insurance

 

105,671

 

 

 

105,084

 

 

 

104,699

 

 

 

104,148

 

 

 

103,616

 

Goodwill

 

497,318

 

 

 

497,318

 

 

 

497,318

 

 

 

497,260

 

 

 

497,260

 

Core deposit intangibles, net

 

110,513

 

 

 

116,712

 

 

 

122,944

 

 

 

129,805

 

 

 

136,665

 

Other assets

 

103,838

 

 

 

111,681

 

 

 

120,432

 

 

 

110,633

 

 

 

108,009

 

Total assets

$

10,729,222

 

 

$

10,647,139

 

 

$

10,665,460

 

 

$

10,778,351

 

 

$

10,604,718

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing

$

3,323,149

 

 

$

3,546,815

 

 

$

3,656,288

 

 

$

3,713,536

 

 

$

3,877,859

 

Interest-bearing

 

 

 

 

 

 

 

 

 

Demand

 

1,576,261

 

 

 

1,659,999

 

 

 

1,397,492

 

 

 

1,437,509

 

 

 

1,394,244

 

Money market and savings

 

2,203,767

 

 

 

2,136,777

 

 

 

2,128,950

 

 

 

2,174,073

 

 

 

2,401,840

 

Certificates and other time

 

1,691,539

 

 

 

1,529,876

 

 

 

1,503,891

 

 

 

1,441,251

 

 

 

1,064,932

 

Total interest-bearing deposits

 

5,471,567

 

 

 

5,326,652

 

 

 

5,030,333

 

 

 

5,052,833

 

 

 

4,861,016

 

Total deposits

 

8,794,716

 

 

 

8,873,467

 

 

 

8,686,621

 

 

 

8,766,369

 

 

 

8,738,875

 

 

 

 

 

 

 

 

 

 

 

Accrued interest payable

 

12,227

 

 

 

11,288

 

 

 

7,612

 

 

 

4,555

 

 

 

3,875

 

Borrowed funds

 

215,000

 

 

 

50,000

 

 

 

323,981

 

 

 

369,963

 

 

 

238,944

 

Subordinated debt

 

109,864

 

 

 

109,765

 

 

 

109,665

 

 

 

109,566

 

 

 

109,420

 

Other liabilities

 

66,717

 

 

 

81,601

 

 

 

76,735

 

 

 

69,218

 

 

 

67,388

 

Total liabilities

 

9,198,524

 

 

 

9,126,121

 

 

 

9,204,614

 

 

 

9,319,671

 

 

 

9,158,502

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

Common stock

 

536

 

 

 

533

 

 

 

533

 

 

 

533

 

 

 

533

 

Capital surplus

 

1,235,221

 

 

 

1,232,627

 

 

 

1,231,686

 

 

 

1,228,532

 

 

 

1,225,596

 

Retained earnings

 

425,130

 

 

 

405,945

 

 

 

385,600

 

 

 

361,619

 

 

 

333,368

 

Accumulated other comprehensive loss

 

(130,189

)

 

 

(118,087

)

 

 

(156,973

)

 

 

(132,004

)

 

 

(113,281

)

Total shareholders’ equity

 

1,530,698

 

 

 

1,521,018

 

 

 

1,460,846

 

 

 

1,458,680

 

 

 

1,446,216

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

10,729,222

 

 

$

10,647,139

 

 

$

10,665,460

 

 

$

10,778,351

 

 

$

10,604,718

Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

 

 

Three Months Ended

 

2024

 

2023

 

March 31

 

December 31

 

September 30

 

June 30

 

March 31

 

(Dollars in thousands, except per share data)

INTEREST INCOME:

 

 

 

 

 

 

 

 

 

Loans, including fees

$

134,685

 

$

139,114

 

$

138,948

 

$

133,931

 

 

$

125,729

Securities:

 

 

 

 

 

 

 

 

 

Taxable

 

9,293

 

 

9,622

 

 

9,493

 

 

9,726

 

 

 

9,653

Tax-exempt

 

818

 

 

418

 

 

437

 

 

436

 

 

 

1,262

Deposits in other financial institutions

 

3,627

 

 

3,021

 

 

2,391

 

 

2,865

 

 

 

3,771

Total interest income

 

148,423

 

 

152,175

 

 

151,269

 

 

146,958

 

 

 

140,415

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

Demand, money market and savings deposits

 

27,530

 

 

25,033

 

 

23,557

 

 

20,708

 

 

 

18,037

Certificates and other time deposits

 

15,084

 

 

15,075

 

 

13,282

 

 

9,622

 

 

 

3,307

Borrowed funds

 

1,774

 

 

4,154

 

 

5,801

 

 

6,535

 

 

 

1,317

Subordinated debt

 

1,917

 

 

1,983

 

 

1,908

 

 

1,812

 

 

 

1,927

Total interest expense

 

46,305

 

 

46,245

 

 

44,548

 

 

38,677

 

 

 

24,588

NET INTEREST INCOME

 

102,118

 

 

105,930

 

 

106,721

 

 

108,281

 

 

 

115,827

Provision for credit losses

 

4,098

 

 

1,047

 

 

2,315

 

 

1,915

 

 

 

3,666

Net interest income after provision for credit losses

 

98,020

 

 

104,883

 

 

104,406

 

 

106,366

 

 

 

112,161

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME:

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

1,598

 

 

1,520

 

 

1,620

 

 

1,575

 

 

 

1,349

Gain (loss) on sale of assets

 

513

 

 

198

 

 

—

 

 

(6

)

 

 

198

Bank-owned life insurance

 

587

 

 

573

 

 

551

 

 

532

 

 

 

522

Debit card and ATM income

 

527

 

 

542

 

 

935

 

 

1,821

 

 

 

1,698

Other

 

3,071

 

 

4,053

 

 

1,589

 

 

1,561

 

 

 

3,731

Total noninterest income

 

6,296

 

 

6,886

 

 

4,695

 

 

5,483

 

 

 

7,498

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

41,376

 

 

40,464

 

 

39,495

 

 

37,300

 

 

 

39,775

Net occupancy and equipment

 

4,390

 

 

4,572

 

 

4,455

 

 

3,817

 

 

 

4,088

Depreciation

 

1,964

 

 

1,955

 

 

1,952

 

 

1,841

 

 

 

1,836

Data processing and software amortization

 

4,894

 

 

5,000

 

 

4,798

 

 

4,674

 

 

 

5,054

Professional fees

 

2,662

 

 

3,867

 

 

997

 

 

1,564

 

 

 

1,527

Regulatory assessments and FDIC insurance

 

1,854

 

 

5,169

 

 

1,814

 

 

2,755

 

 

 

1,294

Amortization of intangibles

 

6,212

 

 

6,247

 

 

6,876

 

 

6,881

 

 

 

6,879

Communications

 

937

 

 

743

 

 

663

 

 

689

 

 

 

701

Advertising

 

765

 

 

1,004

 

 

877

 

 

907

 

 

 

839

Acquisition and merger-related expenses

 

—

 

 

3,072

 

 

3,421

 

 

2,897

 

 

 

6,165

Other

 

6,356

 

 

5,848

 

 

5,400

 

 

5,882

 

 

 

4,440

Total noninterest expense

 

71,410

 

 

77,941

 

 

70,748

 

 

69,207

 

 

 

72,598

INCOME BEFORE INCOME TAXES

 

32,906

 

 

33,828

 

 

38,353

 

 

42,642

 

 

 

47,061

Provision for income taxes

 

6,759

 

 

6,562

 

 

7,445

 

 

7,467

 

 

 

9,913

NET INCOME

$

26,147

 

$

27,266

 

$

30,908

 

$

35,175

 

 

$

37,148

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

Basic

$

0.49

 

$

0.51

 

$

0.58

 

$

0.66

 

 

$

0.70

Diluted

$

0.49

 

$

0.51

 

$

0.58

 

$

0.66

 

 

$

0.70

Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

 

 

Three Months Ended

 

2024

 

2023

 

March 31

 

December 31

 

September 30

 

June 30

 

March 31

 

(Dollars and share amounts in thousands, except per share data)

Net income

$

26,147

 

 

$

27,266

 

 

$

30,908

 

 

$

35,175

 

 

$

37,148

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic

$

0.49

 

 

$

0.51

 

 

$

0.58

 

 

$

0.66

 

 

$

0.70

 

Earnings per share, diluted

$

0.49

 

 

$

0.51

 

 

$

0.58

 

 

$

0.66

 

 

$

0.70

 

Dividends per share

$

0.13

 

 

$

0.13

 

 

$

0.13

 

 

$

0.13

 

 

$

0.13

 

 

 

 

 

 

 

 

 

 

 

Return on average assets(A)

 

0.98

%

 

 

1.02

%

 

 

1.14

%

 

 

1.31

%

 

 

1.38

%

Return on average equity(A)

 

6.88

%

 

 

7.33

%

 

 

8.34

%

 

 

9.67

%

 

 

10.62

%

Return on average tangible equity(A)(B)

 

11.47

%

 

 

12.61

%

 

 

14.47

%

 

 

17.05

%

 

 

19.32

%

Net interest margin (tax equivalent)(A)(C)

 

4.26

%

 

 

4.40

%

 

 

4.37

%

 

 

4.49

%

 

 

4.80

%

Net interest margin (tax equivalent) excluding PAA(A)(B)(C)

 

3.91

%

 

 

3.91

%

 

 

3.87

%

 

 

3.97

%

 

 

4.38

%

Efficiency ratio(D)

 

66.18

%

 

 

69.21

%

 

 

63.50

%

 

 

60.83

%

 

 

58.96

%

 

 

 

 

 

 

 

 

 

 

Capital Ratios

 

 

 

 

 

 

 

 

 

Stellar Bancorp, Inc. (Consolidated)

 

 

 

 

 

 

 

 

 

Equity to assets

 

14.27

%

 

 

14.29

%

 

 

13.70

%

 

 

13.53

%

 

 

13.64

%

Tangible equity to tangible assets(B)

 

9.12

%

 

 

9.04

%

 

 

8.37

%

 

 

8.19

%

 

 

8.15

%

Estimated Total capital ratio (to risk-weighted assets)

 

14.62

%

 

 

14.02

%

 

 

13.61

%

 

 

13.21

%

 

 

12.72

%

Estimated Common equity Tier 1 capital (to risk weighted assets)

 

12.29

%

 

 

11.77

%

 

 

11.30

%

 

 

10.83

%

 

 

10.39

%

Estimated Tier 1 capital (to risk-weighted assets)

 

12.41

%

 

 

11.89

%

 

 

11.41

%

 

 

10.94

%

 

 

10.50

%

Estimated Tier 1 leverage (to average tangible assets)

 

10.41

%

 

 

10.18

%

 

 

9.82

%

 

 

9.51

%

 

 

9.01

%

Stellar Bank

 

 

 

 

 

 

 

 

 

Estimated Total capital ratio (to risk-weighted assets)

 

14.13

%

 

 

13.65

%

 

 

13.32

%

 

 

12.98

%

 

 

12.42

%

Estimated Common equity Tier 1 capital (to risk-weighted assets)

 

12.61

%

 

 

12.20

%

 

 

11.80

%

 

 

11.38

%

 

 

10.87

%

Estimated Tier 1 capital (to risk-weighted assets)

 

12.61

%

 

 

12.20

%

 

 

11.80

%

 

 

11.38

%

 

 

10.87

%

Estimated Tier 1 leverage (to average tangible assets)

 

10.59

%

 

 

10.44

%

 

 

10.15

%

 

 

9.89

%

 

 

9.35

%

 

 

 

 

 

 

 

 

 

 

Other Data

 

 

 

 

 

 

 

 

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

Basic

 

53,343

 

 

 

53,282

 

 

 

53,313

 

 

 

53,297

 

 

 

53,021

 

Diluted

 

53,406

 

 

 

53,350

 

 

 

53,380

 

 

 

53,375

 

 

 

53,138

 

Period end shares outstanding

 

53,551

 

 

 

53,291

 

 

 

53,322

 

 

 

53,303

 

 

 

53,296

 

Book value per share

$

28.58

 

 

$

28.54

 

 

$

27.40

 

 

$

27.37

 

 

$

27.14

 

Tangible book value per share(B)

$

17.23

 

 

$

17.02

 

 

$

15.76

 

 

$

15.60

 

 

$

15.24

 

Employees - full-time equivalents

 

1,007

 

 

 

998

 

 

 

1,008

 

 

 

1,004

 

 

 

1,055

 

(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 9 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 loans, securities and assets. Additionally, taxes and provision for credit losses are not part of this calculation.

Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

 

 

Three Months Ended

 

March 31, 2024

 

December 31, 2023

 

March 31, 2023

 

Average Balance

 

Interest Earned/

Interest Paid

 

Average Yield/Rate

 

Average Balance

 

Interest Earned/

Interest Paid

 

Average Yield/Rate

 

Average Balance

 

Interest Earned/

Interest Paid

 

Average Yield/Rate

 

(Dollars in thousands)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

7,938,824

 

 

$

134,685

 

6.82

%

 

$

7,973,780

 

 

$

139,114

 

6.92

%

 

$

7,847,011

 

 

$

125,729

 

6.50

%

Securities

 

1,441,814

 

 

 

10,111

 

2.82

%

 

 

1,386,079

 

 

 

10,040

 

2.87

%

 

 

1,604,011

 

 

 

10,915

 

2.76

%

Deposits in other financial institutions

 

264,906

 

 

 

3,627

 

5.51

%

 

 

217,068

 

 

 

3,021

 

5.52

%

 

 

364,781

 

 

 

3,771

 

4.19

%

Total interest-earning assets

 

9,645,544

 

 

$

148,423

 

6.19

%

 

 

9,576,927

 

 

$

152,175

 

6.30

%

 

 

9,815,803

 

 

$

140,415

 

5.80

%

Allowance for credit losses on loans

 

(91,612

)

 

 

 

 

 

 

(92,992

)

 

 

 

 

 

 

(93,331

)

 

 

 

 

Noninterest-earning assets

 

1,132,857

 

 

 

 

 

 

 

1,142,438

 

 

 

 

 

 

 

1,160,061

 

 

 

 

 

Total assets

$

10,686,789

 

 

 

 

 

 

$

10,626,373

 

 

 

 

 

 

$

10,882,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,697,211

 

 

$

12,278

 

2.91

%

 

$

1,420,892

 

 

$

10,548

 

2.95

%

 

$

1,650,273

 

 

$

8,382

 

2.06

%

Money market and savings deposits

 

2,150,805

 

 

 

15,252

 

2.85

%

 

 

2,163,348

 

 

 

14,485

 

2.66

%

 

 

2,490,889

 

 

 

9,655

 

1.57

%

Certificates and other time deposits

 

1,444,048

 

 

 

15,084

 

4.20

%

 

 

1,461,227

 

 

 

15,075

 

4.09

%

 

 

861,595

 

 

 

3,307

 

1.56

%

Borrowed funds

 

134,400

 

 

 

1,774

 

5.31

%

 

 

275,694

 

 

 

4,154

 

5.98

%

 

 

105,191

 

 

 

1,317

 

5.08

%

Subordinated debt

 

109,808

 

 

 

1,917

 

7.02

%

 

 

109,713

 

 

 

1,983

 

7.17

%

 

 

109,415

 

 

 

1,927

 

7.14

%

Total interest-bearing liabilities

 

5,536,272

 

 

$

46,305

 

3.36

%

 

 

5,430,874

 

 

$

46,245

 

3.38

%

 

 

5,217,363

 

 

$

24,588

 

1.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

3,525,758

 

 

 

 

 

 

 

3,624,417

 

 

 

 

 

 

 

4,166,265

 

 

 

 

 

Other liabilities

 

96,461

 

 

 

 

 

 

 

95,705

 

 

 

 

 

 

 

80,823

 

 

 

 

 

Total liabilities

 

9,158,491

 

 

 

 

 

 

 

9,150,996

 

 

 

 

 

 

 

9,464,451

 

 

 

 

 

Shareholders’ equity

 

1,528,298

 

 

 

 

 

 

 

1,475,377

 

 

 

 

 

 

 

1,418,082

 

 

 

 

 

Total liabilities and shareholders’ equity

$

10,686,789

 

 

 

 

 

 

$

10,626,373

 

 

 

 

 

 

$

10,882,533

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread

 

 

 

 

2.83

%

 

 

 

 

 

2.92

%

 

 

 

 

 

3.89

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income and margin

 

 

$

102,118

 

4.26

%

 

 

 

$

105,930

 

4.39

%

 

 

 

$

115,827

 

4.79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income and net interest margin (tax equivalent)

 

 

$

102,207

 

4.26

%

 

 

 

$

106,121

 

4.40

%

 

 

 

$

116,119

 

4.80

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of funds

 

 

 

 

2.06

%

 

 

 

 

 

2.03

%

 

 

 

 

 

1.06

%

Cost of deposits

 

 

 

 

1.94

%

 

 

 

 

 

1.84

%

 

 

 

 

 

0.94

%

Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

 

 

Three Months Ended

 

2024

 

2023

 

March 31

 

December 31

 

September 30

 

June 30

 

March 31

 

(Dollars in thousands)

Period-end Loan Portfolio:

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

1,451,462

 

 

$

1,409,002

 

 

$

1,474,600

 

 

$

1,512,476

 

 

$

1,477,340

 

Paycheck Protection Program (PPP)

 

4,293

 

 

 

5,100

 

 

 

5,968

 

 

 

8,027

 

 

 

11,081

 

Real estate:

 

 

 

 

 

 

 

 

 

Commercial real estate (including multi-family residential)

 

4,049,885

 

 

 

4,071,807

 

 

 

4,076,606

 

 

 

4,038,487

 

 

 

4,014,609

 

Commercial real estate construction and land development

 

1,039,443

 

 

 

1,060,406

 

 

 

1,078,265

 

 

 

1,136,124

 

 

 

1,034,538

 

1-4 family residential (including home equity)

 

1,049,316

 

 

 

1,047,174

 

 

 

1,024,945

 

 

 

1,009,439

 

 

 

1,008,362

 

Residential construction

 

252,573

 

 

 

267,357

 

 

 

289,553

 

 

 

311,208

 

 

 

292,143

 

Consumer and other

 

61,139

 

 

 

64,287

 

 

 

54,591

 

 

 

52,957

 

 

 

47,971

 

Total loans held for investment

$

7,908,111

 

 

$

7,925,133

 

 

$

8,004,528

 

 

$

8,068,718

 

 

$

7,886,044

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing

$

3,323,149

 

 

$

3,546,815

 

 

$

3,656,288

 

 

$

3,713,536

 

 

$

3,877,859

 

Interest-bearing

 

 

 

 

 

 

 

 

 

Demand

 

1,576,261

 

 

 

1,659,999

 

 

 

1,397,492

 

 

 

1,437,509

 

 

 

1,394,244

 

Money market and savings

 

2,203,767

 

 

 

2,136,777

 

 

 

2,128,950

 

 

 

2,174,073

 

 

 

2,401,840

 

Certificates and other time

 

1,691,539

 

 

 

1,529,876

 

 

 

1,503,891

 

 

 

1,441,251

 

 

 

1,064,932

 

Total interest-bearing deposits

 

5,471,567

 

 

 

5,326,652

 

 

 

5,030,333

 

 

 

5,052,833

 

 

 

4,861,016

 

Total deposits

$

8,794,716

 

 

$

8,873,467

 

 

$

8,686,621

 

 

$

8,766,369

 

 

$

8,738,875

 

 

 

 

 

 

 

 

 

 

 

Asset Quality:

 

 

 

 

 

 

 

 

 

Nonaccrual loans

$

57,129

 

 

$

39,191

 

 

$

38,291

 

 

$

43,349

 

 

$

43,413

 

Accruing loans 90 or more days past due

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total nonperforming loans

 

57,129

 

 

 

39,191

 

 

 

38,291

 

 

 

43,349

 

 

 

43,413

 

Other repossessed assets

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

124

 

Total nonperforming assets

$

57,129

 

 

$

39,191

 

 

$

38,291

 

 

$

43,349

 

 

$

43,537

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs

$

714

 

 

$

2,577

 

 

$

8,116

 

 

$

236

 

 

$

192

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans:

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

15,465

 

 

$

5,048

 

 

$

14,991

 

 

$

22,968

 

 

$

23,329

 

Real estate:

 

 

 

 

 

 

 

 

 

Commercial real estate (including multi-family residential)

 

21,268

 

 

 

16,699

 

 

 

13,563

 

 

 

8,221

 

 

 

9,026

 

Commercial real estate construction and land development

 

8,406

 

 

 

5,043

 

 

 

170

 

 

 

388

 

 

 

27

 

1-4 family residential (including home equity)

 

10,368

 

 

 

8,874

 

 

 

8,442

 

 

 

10,880

 

 

 

10,586

 

Residential construction

 

1,410

 

 

 

3,288

 

 

 

635

 

 

 

665

 

 

 

195

 

Consumer and other

 

212

 

 

 

239

 

 

 

490

 

 

 

227

 

 

 

250

 

Total nonaccrual loans

$

57,129

 

 

$

39,191

 

 

$

38,291

 

 

$

43,349

 

 

$

43,413

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets

 

0.53

%

 

 

0.37

%

 

 

0.36

%

 

 

0.40

%

 

 

0.41

%

Nonperforming loans to total loans

 

0.72

%

 

 

0.49

%

 

 

0.48

%

 

 

0.54

%

 

 

0.55

%

Allowance for credit losses on loans to nonperforming loans

 

168.54

%

 

 

233.94

%

 

 

244.38

%

 

 

231.14

%

 

 

221.56

%

Allowance for credit losses on loans to total loans

 

1.22

%

 

 

1.16

%

 

 

1.17

%

 

 

1.24

%

 

 

1.22

%

Net charge-offs to average loans (annualized)

 

0.04

%

 

 

0.13

%

 

 

0.40

%

 

 

0.01

%

 

 

0.01

%

Stellar Bancorp, Inc.

GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures

(Unaudited)

Stellar’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Stellar believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing Stellar’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, Stellar reviews pre-tax, pre-provision income, pre-tax pre-provision ROAA, tangible book value per share, return on average tangible equity, tangible equity to tangible assets and net interest margin (tax equivalent) excluding PAA for internal planning and forecasting purposes. Stellar has included in this earnings release information relating to these non-GAAP financial measures for the applicable periods presented. These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Stellar calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.

 

Three Months Ended

 

2024

 

2023

 

March 31

 

December 31

 

September 30

 

June 30

 

March 31

 

(Dollars and share amounts in thousands, except per share data)

Net income

$

26,147

 

 

$

27,266

 

 

$

30,908

 

 

$

35,175

 

 

$

37,148

 

Add: Provision for credit losses

 

4,098

 

 

 

1,047

 

 

 

2,315

 

 

 

1,915

 

 

 

3,666

 

Add: Provision for income taxes

 

6,759

 

 

 

6,562

 

 

 

7,445

 

 

 

7,467

 

 

 

9,913

 

Pre-tax, pre-provision income

$

37,004

 

 

$

34,875

 

 

$

40,668

 

 

$

44,557

 

 

$

50,727

 

 

 

 

 

 

 

 

 

 

 

Total average assets

$

10,686,789

 

 

$

10,626,373

 

 

$

10,741,295

 

 

$

10,740,138

 

 

$

10,882,533

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision return on average assets(B)

 

1.39

%

 

 

1.30

%

 

 

1.50

%

 

 

1.66

%

 

 

1.89

%

 

 

 

 

 

 

 

 

 

 

Total shareholders’ equity

$

1,530,698

 

 

$

1,521,018

 

 

$

1,460,846

 

 

$

1,458,680

 

 

$

1,446,216

 

Less: Goodwill and core deposit intangibles, net

 

607,831

 

 

 

614,030

 

 

 

620,262

 

 

 

627,065

 

 

 

633,925

 

Tangible shareholders’ equity

$

922,867

 

 

$

906,988

 

 

$

840,584

 

 

$

831,615

 

 

$

812,291

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding at end of period

 

53,551

 

 

 

53,291

 

 

 

53,322

 

 

 

53,303

 

 

 

53,296

 

 

 

 

 

 

 

 

 

 

 

Tangible book value per share

$

17.23

 

 

$

17.02

 

 

$

15.76

 

 

$

15.60

 

 

$

15.24

 

 

 

 

 

 

 

 

 

 

 

Average shareholders’ equity

$

1,528,298

 

 

$

1,475,377

 

 

$

1,471,009

 

 

$

1,458,473

 

 

$

1,418,082

 

Less: Average goodwill and core deposit intangibles, net

 

611,149

 

 

 

617,236

 

 

 

623,864

 

 

 

630,854

 

 

 

638,110

 

Average tangible shareholders’ equity

$

917,149

 

 

$

858,141

 

 

$

847,145

 

 

$

827,619

 

 

$

779,972

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible equity(B)

 

11.47

%

 

 

12.61

%

 

 

14.47

%

 

 

17.05

%

 

 

19.32

%

 

 

 

 

 

 

 

 

 

 

Total assets

$

10,729,222

 

 

$

10,647,139

 

 

$

10,665,460

 

 

$

10,778,351

 

 

$

10,604,718

 

Less: Goodwill and core deposit intangibles, net

 

607,831

 

 

 

614,030

 

 

 

620,262

 

 

 

627,065

 

 

 

633,925

 

Tangible assets

$

10,121,391

 

 

$

10,033,109

 

 

$

10,045,198

 

 

$

10,151,286

 

 

$

9,970,793

 

 

 

 

 

 

 

 

 

 

 

Tangible equity to tangible assets

 

9.12

%

 

 

9.04

%

 

 

8.37

%

 

 

8.19

%

 

 

8.15

%

 

 

 

 

 

 

 

 

 

 

Net interest income (tax equivalent)

$

102,207

 

 

$

106,121

 

 

$

106,919

 

 

$

108,509

 

 

$

116,119

 

Less: Purchase accounting accretion

 

8,551

 

 

 

11,726

 

 

 

12,400

 

 

 

12,572

 

 

 

10,104

 

Adjusted net interest income (tax equivalent)

$

93,656

 

 

$

94,395

 

 

$

94,519

 

 

$

95,937

 

 

$

106,015

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

$

9,645,544

 

 

$

9,576,927

 

 

$

9,697,553

 

 

$

9,693,527

 

 

$

9,815,803

 

Net interest margin (tax equivalent) excluding PAA

 

3.91

%

 

 

3.91

%

 

 

3.87

%

 

 

3.97

%

 

 

4.38

%

(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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240426630776/en/

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