Stellar Bancorp, Inc. Reports Third Quarter 2025 Results

By: Stellar Bancorp, Inc. via Business Wire

October 24, 2025 at 07:00 AM EDT

Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $25.7 million, or diluted earnings per share of $0.50, for the third quarter of 2025, compared to net income of $26.4 million, or diluted earnings per share of $0.51, for the second quarter of 2025.

“We are pleased to report strong third quarter results for 2025, highlighted by improved net interest income and margin. We also saw growth in deposits and tangible book value, which further strengthened our balance sheet to support our future,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer.

“Our team has continued to reposition the loan portfolio, reducing our exposure to non-relationship real estate commitments and moving toward a more balanced mix of C&I and real estate loans. Our real estate portfolio remains within regulatory guidance, and we intend to stay within those parameters. While loan payoffs persisted during the quarter, we believe this strategic portfolio shift will help moderate payoff activity over the longer term,” Mr. Franklin continued.

“Credit quality remains good, and the Texas markets we serve continue to perform well. Stellar is increasingly recognized as a strong, locally-managed bank focused on serving small-to-medium sized businesses, and we are well-positioned to capitalize on merger-related disruption in our markets. We remain confident in our ability to deepen customer relationships and deliver long-term value for our shareholders,” Mr. Franklin concluded.

Financial Highlights

Strong Net Interest Margin: Tax equivalent net interest margin for the third quarter of 2025 was 4.20% compared to 4.18% for the second quarter of 2025. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 4.00%⁽¹⁾ for the third quarter of 2025 compared to 3.95%⁽¹⁾ for the second quarter of 2025.

Solid Profitability: Net income for the third quarter of 2025 was $25.7 million, or diluted earnings per share of $0.50, which translated into an annualized return on average assets of 0.97%, an annualized return on average equity of 6.30% and an annualized return on average tangible equity of 11.45%⁽¹⁾.

Strong Capital Position and Book Value Build: Total risk-based capital ratio increased to 16.33% at September 30, 2025 from 15.98% at June 30, 2025, while book value per share increased to $32.27 at September 30, 2025 from $31.20 at June 30, 2025 and tangible book value per share increased to $21.08⁽¹⁾ at September 30, 2025 from $19.94⁽¹⁾ at June 30, 2025.

Paydown of Subordinated Debt: On October 1, 2025, the Company completed the previously announced redemption of $30 million of its $60 million of subordinated debt outstanding as of September 30, 2025.

Third Quarter 2025 Results

Net interest income in the third quarter of 2025 increased $2.3 million, or 2.3%, to $100.6 million from $98.3 million for the second quarter of 2025. The net interest margin on a tax equivalent basis increased to 4.20% for the third quarter of 2025 from 4.18% for the second quarter of 2025. The increase in net interest income from the prior quarter was primarily due to the increase in average securities, average yield on securities and deposits in other financial institutions. Net interest income for the third quarter of 2025 benefited from $4.8 million of income from PAA compared to $5.3 million in the second quarter of 2025. Excluding PAA, net interest income (tax equivalent) for the third quarter of 2025 would have been $95.9 million⁽¹⁾ and the tax equivalent net interest margin would have been 4.00%⁽¹⁾.

Noninterest income for the third quarter of 2025 was $5.0 million, a decrease of $805 thousand, or 13.9%, compared to $5.8 million for the second quarter of 2025. Noninterest income decreased in the third quarter of 2025 compared to the second quarter of 2025 primarily due to losses on sales and write-downs on foreclosed assets recorded during the third quarter.

Noninterest expense for the third quarter of 2025 increased $3.1 million, or 4.5%, to $73.1 million compared to $70.0 million for the second quarter of 2025. The increase in noninterest expense during the third quarter of 2025 compared to the second quarter of 2025 was primarily due to an increase in salaries and employee benefits of $2.2 million, an increase in professional fees of $314 thousand and a $258 thousand increase in advertising expense. Salaries and benefits during the third quarter of 2025 included $464 thousand in severance expense related to planned upcoming branch closures.

The efficiency ratio was 63.69%⁽¹⁾ for the third quarter of 2025 compared to 61.87%⁽¹⁾ for the second quarter of 2025. Annualized returns on average assets, average equity and average tangible equity were 0.97%, 6.30% and 11.45%⁽¹⁾ for the third quarter of 2025, respectively, compared to 1.01%, 6.62% and 12.16%⁽¹⁾ for the second quarter of 2025, respectively.

Financial Condition

Total assets at September 30, 2025 were $10.63 billion, an increase of $135 million compared to $10.49 billion at June 30, 2025. The increase in total assets was largely due to an increase in interest-bearing deposits at other financial institutions and securities, all of which were funded largely by core deposit growth, partially offset by a decrease in loans.

Total loans at September 30, 2025 decreased $119.5 million to $7.17 billion compared to $7.29 billion at June 30, 2025. At September 30, 2025, the remaining balance of the PAA on loans was $58.1 million.

Total deposits at September 30, 2025 increased $143.8 million to $8.82 billion compared to $8.67 billion at June 30, 2025 primarily due to increases in money market and savings deposits.

Asset Quality

Nonperforming assets totaled $54.2 million, or 0.51% of total assets, at September 30, 2025, compared to $58.2 million, or 0.55% of total assets, at June 30, 2025. The allowance for credit losses on loans as a percentage of total loans was 1.10% at September 30, 2025 compared to 1.14% at June 30, 2025.

The provision for credit losses was $305 thousand for the third quarter of 2025 compared to $1.1 million for the second quarter of 2025. Net charge-offs for the third quarter of 2025 were $3.3 million, or 0.18% (annualized) of average loans, compared to net charge-offs of $206 thousand, or 0.01% (annualized) of average loans, for the second quarter of 2025.

GAAP Reconciliation of Non-GAAP Financial Measures

Stellar’s management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures on page 10 of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

Stellar’s management team will host a conference call and webcast on Friday, October 24, 2025 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its results for the third quarter of 2025. Participants may register for the conference call at https://registrations.events/direct/Q4I6358688 conference ID 63586 to receive the dial-in numbers and unique PIN to access the call. If you need assistance in obtaining a dial-in number, please contact ir@stellar.bank. A simultaneous webcast is available at https://registrations.events/direct/Q4I6358688 and requires pre-registration. If you are unable to participate during the live webcast, the webcast will be accessible via the Investor Relations section of the Company’s website at ir.stellar.bank.

About Stellar Bancorp, Inc.

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

____________

⁽¹⁾ Refer to the calculation of this non-GAAP financial measure on page 10 of this earnings release. The calculation of returns on average tangible equity and the efficiency ratio have been adjusted from prior period disclosures.

Forward-Looking Statements

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

All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Stellar to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others: changes in the interest rate environment, the value of Stellar’s assets and obligations and the availability of capital and liquidity; general competitive, economic, political and market conditions; and other factors that may affect future results of Stellar including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; disruptions to the economy and the U.S. banking system; risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators; legislative changes, executive orders, regulatory actions and reforms of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking.

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

Stellar Bancorp, Inc. Financial Highlights (Unaudited)

	2025									2024
	September 30			June 30			March 31			December 31			September 30
	(Dollars in thousands)
ASSETS:
Cash and due from banks	$	99,407		$	136,060		$	130,932		$	419,967		$	103,735
Interest-bearing deposits at other financial institutions		629,042			442,044			429,643			491,249			412,482
Total cash and cash equivalents		728,449			578,104			560,575			911,216			516,217

Available for sale securities, at fair value		1,842,268			1,729,684			1,719,371			1,673,016			1,691,752

Loans held for investment		7,167,857			7,287,347			7,283,133			7,439,854			7,551,124
Less: allowance for credit losses on loans		(78,924	)		(83,165	)		(83,746	)		(81,058	)		(84,501	)
Loans, net		7,088,933			7,204,182			7,199,387			7,358,796			7,466,623

Accrued interest receivable		34,865			35,537			37,669			37,884			39,473
Premises and equipment, net		107,803			108,615			109,750			111,856			113,742
Federal Reserve Bank and Federal Home Loan Bank stock		45,437			47,099			20,902			8,209			20,123
Bank-owned life insurance		109,358			108,726			108,108			107,498			106,876
Goodwill		497,318			497,318			497,318			497,318			497,318
Core deposit intangibles, net		75,929			81,468			87,007			92,546			98,116
Other assets		97,753			102,277			94,800			107,451			79,537
Total assets	$	10,628,113		$	10,493,010		$	10,434,887		$	10,905,790		$	10,629,777


LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing	$	3,210,948		$	3,183,693		$	3,205,619		$	3,576,206		$	3,303,048
Interest-bearing
Demand		1,960,857			1,941,156			1,863,752			1,845,749			1,571,504
Money market and savings		2,489,169			2,393,767			2,248,616			2,253,193			2,280,651
Certificates and other time		1,156,489			1,154,998			1,244,726			1,453,236			1,587,398
Total interest-bearing deposits		5,606,515			5,489,921			5,357,094			5,552,178			5,439,553
Total deposits		8,817,463			8,673,614			8,562,713			9,128,384			8,742,601

Accrued interest payable		9,429			7,607			9,856			17,052			16,915
Borrowed funds		—			69,925			119,923			—			60,000
Subordinated debt		70,196			70,165			70,135			70,105			110,064
Other liabilities		77,887			67,865			61,428			82,389			74,074
Total liabilities		8,974,975			8,889,176			8,824,055			9,297,930			9,003,654

SHAREHOLDERS’ EQUITY:
Common stock		512			514			521			534			535
Capital surplus		1,182,781			1,185,048			1,202,628			1,240,050			1,238,619
Retained earnings		547,717			529,216			510,072			492,640			474,905
Accumulated other comprehensive loss		(77,872	)		(110,944	)		(102,389	)		(125,364	)		(87,936	)
Total shareholders’ equity		1,653,138			1,603,834			1,610,832			1,607,860			1,626,123
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	10,628,113		$	10,493,010		$	10,434,887		$	10,905,790		$	10,629,777

Stellar Bancorp, Inc. Financial Highlights (Unaudited)

	Three Months Ended														Nine Months Ended
	2025								2024						2025			2024
	September 30			June 30			March 31		December 31			September 30			September 30			September 30
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees	$	122,557		$	121,814		$	120,640	$	128,738		$	132,372		$	365,011		$	402,942
Securities:
Taxable		16,278			15,293			16,148		14,789			13,898			47,719			35,114
Tax-exempt		808			810			812		814			814			2,430			2,448
Deposits in other financial institutions		5,770			4,782			4,720		5,681			4,692			15,272			11,874
Total interest income		145,413			142,699			142,320		150,022			151,776			430,432			452,378

INTEREST EXPENSE:
Demand, money market and savings deposits		32,376			31,097			27,574		27,877			29,440			91,047			85,369
Certificates and other time deposits		10,920			11,459			13,527		16,830			18,073			35,906			51,915
Borrowed funds		56			407			517		235			840			980			4,314
Subordinated debt		1,417			1,401			1,444		2,123			1,916			4,262			5,745
Total interest expense		44,769			44,364			43,062		47,065			50,269			132,195			147,343
NET INTEREST INCOME		100,644			98,335			99,258		102,957			101,507			298,237			305,035
Provision for (reversal of) credit losses		305			1,090			3,632		942			(5,985	)		5,027			(3,822	)
Net interest income after provision for credit losses		100,339			97,245			95,626		102,015			107,492			293,210			308,857

NONINTEREST INCOME:
Service charges on deposit accounts		1,545			1,561			1,584		1,590			1,594			4,690			4,840
(Loss) gain on sale/write-down of assets		(491	)		(57	)		417		(112	)		432			(131	)		881
Bank-owned life insurance		632			618			610		622			614			1,860			1,792
Debit card and interchange income		572			566			520		570			551			1,658			1,621
Other		2,728			3,103			2,374		2,362			3,111			8,205			8,880
Total noninterest income		4,986			5,791			5,505		5,032			6,302			16,282			18,014

NONINTEREST EXPENSE:
Salaries and employee benefits		43,175			40,927			41,792		43,797			41,123			125,894			121,560
Net occupancy and equipment		4,518			4,399			3,926		4,401			4,570			12,843			13,463
Depreciation		2,015			1,992			1,995		1,984			1,911			6,002			5,823
Data processing and software amortization		5,882			5,620			5,682		5,551			5,706			17,184			16,101
Professional fees		1,601			1,287			1,786		3,428			1,714			4,674			5,996
Regulatory assessments and FDIC insurance		1,688			1,561			1,733		1,636			1,779			4,982			5,932
Amortization of intangibles		5,554			5,548			5,548		5,581			6,212			16,650			18,639
Communications		855			861			847		807			827			2,563			2,611
Advertising		1,425			1,167			782		1,593			878			3,374			2,534
Other		6,429			6,642			6,075		6,488			6,346			19,146			21,033
Total noninterest expense		73,142			70,004			70,166		75,266			71,066			213,312			213,692
INCOME BEFORE INCOME TAXES		32,183			33,032			30,965		31,781			42,728			96,180			113,179
Provision for income taxes		6,513			6,680			6,263		6,569			8,837			19,456			23,388
NET INCOME	$	25,670		$	26,352		$	24,702	$	25,212		$	33,891		$	76,724		$	89,791

EARNINGS PER SHARE
Basic	$	0.50		$	0.51		$	0.46	$	0.47		$	0.63		$	1.48		$	1.68
Diluted	$	0.50		$	0.51		$	0.46	$	0.47		$	0.63		$	1.47		$	1.68

Stellar Bancorp, Inc. Financial Highlights (Unaudited)

	Three Months Ended															Nine Months Ended
	2025									2024						2025			2024
	September 30			June 30			March 31			December 31			September 30			September 30			September 30
	(Dollars and share amounts in thousands, except per share data)
Net income	$	25,670		$	26,352		$	24,702		$	25,212		$	33,891		$	76,724		$	89,791

Earnings per share, basic	$	0.50		$	0.51		$	0.46		$	0.47		$	0.63		$	1.48		$	1.68
Earnings per share, diluted	$	0.50		$	0.51		$	0.46		$	0.47		$	0.63		$	1.47		$	1.68
Dividends per share	$	0.14		$	0.14		$	0.14		$	0.14		$	0.13		$	0.42		$	0.39

Return on average assets^(A)		0.97	%		1.01	%		0.94	%		0.94	%		1.27	%		0.97	%		1.13	%
Return on average equity^(A)		6.30	%		6.62	%		6.21	%		6.21	%		8.49	%		6.37	%		7.73	%
Return on average tangible equity^(A)(B)(D)		11.45	%		12.16	%		11.48	%		11.53	%		15.61	%		11.69	%		14.75	%
Net interest margin (tax equivalent)^(A)(C)		4.20	%		4.18	%		4.20	%		4.25	%		4.19	%		4.19	%		4.23	%
Net interest margin (tax equivalent) excluding PAA^(A)(B)(C)		4.00	%		3.95	%		3.97	%		3.94	%		3.91	%		3.97	%		3.88	%
Efficiency ratio^(B)(E)		63.69	%		61.87	%		61.93	%		64.46	%		60.40	%		62.50	%		60.54	%

Capital Ratios
Stellar Bancorp, Inc. (Consolidated)
Equity to assets		15.55	%		15.28	%		15.44	%		14.74	%		15.30	%		15.55	%		15.30	%
Tangible equity to tangible assets^(B)(E)		10.74	%		10.34	%		10.42	%		9.87	%		10.27	%		10.74	%		10.27	%
Estimated Total capital ratio (to risk-weighted assets)		16.33	%		15.98	%		15.97	%		16.00	%		15.85	%		16.33	%		15.85	%
Estimated Common equity Tier 1 capital (to risk weighted assets)		14.43	%		14.06	%		14.05	%		14.14	%		13.57	%		14.43	%		13.57	%
Estimated Tier 1 capital (to risk-weighted assets)		14.55	%		14.18	%		14.17	%		14.26	%		13.69	%		14.55	%		13.69	%
Estimated Tier 1 leverage (to average tangible assets)		11.60	%		11.44	%		11.20	%		11.31	%		11.10	%		11.60	%		11.10	%
Stellar Bank
Estimated Total capital ratio (to risk-weighted assets)		15.45	%		15.39	%		15.40	%		15.28	%		15.02	%		15.45	%		15.02	%
Estimated Common equity Tier 1 capital (to risk-weighted assets)		14.27	%		14.18	%		14.20	%		14.13	%		13.58	%		14.27	%		13.58	%
Estimated Tier 1 capital (to risk-weighted assets)		14.27	%		14.18	%		14.20	%		14.13	%		13.58	%		14.27	%		13.58	%
Estimated Tier 1 leverage (to average tangible assets)		11.37	%		11.44	%		11.22	%		11.21	%		11.01	%		11.37	%		11.01	%

Other Data
Weighted average shares:
Basic		51,283			51,529			53,146			53,422			53,541			51,979			53,485
Diluted		51,356			51,569			53,197			53,471			53,580			52,027			53,531
Period end shares outstanding		51,228			51,398			52,141			53,429			53,446			51,228			53,446
Book value per share	$	32.27		$	31.20		$	30.89		$	30.09		$	30.43		$	32.27		$	30.43
Tangible book value per share^(B)	$	21.08		$	19.94		$	19.69		$	19.05		$	19.28		$	21.08		$	19.28
Employees - full-time equivalents		1,065			1,062			1,054			1,037			1,040			1,065			1,040

(A)		Interim periods annualized.
(B)		Refer to the calculation of these non-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)		The calculation of return on average tangible equity has been adjusted from prior period disclosures and all periods presented above have been recalculated and disclosed under the same calculation.
(E)		The calculation of the efficiency ratio represents total noninterest expense less amortization of core deposits, divided by the sum of net interest income and noninterest income, excluding net gains and losses on the sale/write-down of assets. This calculation has been adjusted from prior period disclosures and all periods presented above have been recalculated and disclosed under the same calculation.

Stellar Bancorp, Inc. Financial Highlights (Unaudited)

	Three Months Ended
	September 30, 2025							June 30, 2025							September 30, 2024
	Average Balance			Interest Earned/ Interest Paid		Average Yield/Rate		Average Balance			Interest Earned/ Interest Paid		Average Yield/Rate		Average Balance			Interest Earned/ Interest Paid		Average Yield/Rate
	(Dollars in thousands)
Assets
Interest-earning assets:
Loans	$	7,228,778		$	122,557	6.73	%	$	7,282,609		$	121,814	6.71	%	$	7,627,522		$	132,372	6.90	%
Securities		1,790,897			17,086	3.79	%		1,729,384			16,103	3.73	%		1,676,614			14,712	3.49	%
Deposits in other financial institutions		505,342			5,770	4.53	%		436,596			4,782	4.39	%		339,493			4,692	5.50	%
Total interest-earning assets		9,525,017		$	145,413	6.06	%		9,448,589		$	142,699	6.06	%		9,643,629		$	151,776	6.26	%
Allowance for credit losses on loans		(82,983	)						(83,700	)						(94,785	)
Noninterest-earning assets		1,076,831							1,099,268							1,077,422
Total assets	$	10,518,865						$	10,464,157						$	10,626,266

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,935,203		$	14,356	2.94	%	$	1,952,004		$	14,399	2.96	%	$	1,606,736		$	12,458	3.08	%
Money market and savings deposits		2,475,306			18,020	2.89	%		2,371,221			16,698	2.82	%		2,254,767			16,982	3.00	%
Certificates and other time deposits		1,162,461			10,920	3.73	%		1,201,903			11,459	3.82	%		1,620,908			18,073	4.44	%
Borrowed funds		3,156			56	7.04	%		34,427			407	4.74	%		49,077			840	6.81	%
Subordinated debt		70,181			1,417	8.01	%		70,151			1,401	8.01	%		110,007			1,916	6.93	%
Total interest-bearing liabilities		5,646,307		$	44,769	3.15	%		5,629,706		$	44,364	3.16	%		5,641,495		$	50,269	3.54	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		3,172,054							3,160,791							3,303,726
Other liabilities		82,993							78,120							93,127
Total liabilities		8,901,354							8,868,617							9,038,348
Shareholders’ equity		1,617,511							1,595,540							1,587,918
Total liabilities and shareholders’ equity	$	10,518,865						$	10,464,157						$	10,626,266

Net interest rate spread						2.91	%						2.90	%						2.72	%

Net interest income and margin				$	100,644	4.19	%				$	98,335	4.17	%				$	101,507	4.19	%

Net interest income and margin (tax equivalent)				$	100,739	4.20	%				$	98,427	4.18	%				$	101,578	4.19	%

Cost of funds						2.01	%						2.02	%						2.24	%
Cost of deposits						1.96	%						1.97	%						2.15	%

Stellar Bancorp, Inc. Financial Highlights (Unaudited)

	Nine Months Ended September 30,
	2025							2024
	Average Balance			Interest Earned/ Interest Paid		Average Yield/Rate		Average Balance			Interest Earned/ Interest Paid		Average Yield/Rate
	(Dollars in thousands)
Assets
Interest-earning assets:
Loans	$	7,284,805		$	365,011	6.70	%	$	7,790,957		$	402,942	6.91	%
Securities		1,779,093			50,149	3.77	%		1,556,462			37,562	3.22	%
Deposits in other financial institutions		457,794			15,272	4.46	%		287,960			11,874	5.51	%
Total interest-earning assets		9,521,692		$	430,432	6.04	%		9,635,379		$	452,378	6.27	%
Allowance for credit losses on loans		(82,623	)						(94,236	)
Noninterest-earning assets		1,092,163							1,104,426
Total assets	$	10,531,232						$	10,645,569

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,933,030		$	41,148	2.85	%	$	1,616,313		$	36,949	3.05	%
Money market and savings deposits		2,361,247			49,899	2.83	%		2,211,148			48,420	2.93	%
Certificates and other time deposits		1,219,953			35,906	3.94	%		1,586,623			51,915	4.37	%
Borrowed funds		27,687			980	4.73	%		98,374			4,314	5.86	%
Subordinated debt		70,151			4,262	8.12	%		109,909			5,745	6.98	%
Total interest-bearing liabilities		5,612,068		$	132,195	3.15	%		5,622,367		$	147,343	3.50	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		3,225,666							3,379,096
Other liabilities		84,388							92,527
Total liabilities		8,922,122							9,093,990
Shareholders' equity		1,609,110							1,551,579
Total liabilities and shareholders' equity	$	10,531,232						$	10,645,569

Net interest rate spread						2.89	%						2.77	%

Net interest income and margin				$	298,237	4.19	%				$	305,035	4.23	%

Net interest income and margin (tax equivalent)				$	298,519	4.19	%				$	305,266	4.23	%

Cost of funds						2.00	%						2.19	%
Cost of deposits						1.94	%						2.09	%

Stellar Bancorp, Inc. Financial Highlights (Unaudited)

	Three Months Ended
	2025									2024
	September 30			June 30			March 31			December 31			September 30
	(Dollars in thousands)
Loan Portfolio:
Commercial and industrial	$	1,332,795		$	1,346,744		$	1,362,266		$	1,362,260		$	1,350,753
Real estate:
Commercial real estate (including multi-family residential)		3,733,293			3,840,981			3,854,607			3,868,218			3,976,296
Commercial real estate construction and land development		753,381			762,911			721,488			845,494			890,316
1-4 family residential (including home equity)		1,142,614			1,126,523			1,125,837			1,115,484			1,112,235
Residential construction		121,197			137,855			141,283			157,977			161,494
Consumer and other		84,577			72,333			77,652			90,421			60,030
Total loans held for investment	$	7,167,857		$	7,287,347		$	7,283,133		$	7,439,854		$	7,551,124

Deposits:
Noninterest-bearing	$	3,210,948		$	3,183,693		$	3,205,619		$	3,576,206		$	3,303,048
Interest-bearing
Demand		1,960,857			1,941,156			1,863,752			1,845,749			1,571,504
Money market and savings		2,489,169			2,393,767			2,248,616			2,253,193			2,280,651
Certificates and other time		1,156,489			1,154,998			1,244,726			1,453,236			1,587,398
Total interest-bearing deposits		5,606,515			5,489,921			5,357,094			5,552,178			5,439,553
Total deposits	$	8,817,463		$	8,673,614		$	8,562,713		$	9,128,384		$	8,742,601

Asset Quality:
Nonaccrual loans	$	46,250		$	50,505		$	54,518		$	37,212		$	32,140
Accruing loans 90 or more days past due		—			—			—			—			—
Total nonperforming loans		46,250			50,505			54,518			37,212			32,140
Foreclosed assets		7,939			7,652			5,154			1,734			2,984
Total nonperforming assets	$	54,189		$	58,157		$	59,672		$	38,946		$	35,124

Net charge-offs (recoveries)	$	3,323		$	206		$	163		$	2,016		$	3,933

Nonaccrual loans:
Commercial and industrial	$	5,594		$	13,395		$	11,471		$	8,500		$	9,718
Real estate:
Commercial real estate (including multi-family residential)		25,156			23,359			26,383			16,459			10,695
Commercial real estate construction and land development		2,899			3,412			2,027			3,061			4,183
1-4 family residential (including home equity)		12,083			9,965			14,550			9,056			7,259
Residential construction		457			176			—			—			121
Consumer and other		61			198			87			136			164
Total nonaccrual loans	$	46,250		$	50,505		$	54,518		$	37,212		$	32,140

Asset Quality Ratios:
Nonperforming assets to total assets		0.51	%		0.55	%		0.57	%		0.36	%		0.33	%
Nonperforming loans to total loans		0.65	%		0.69	%		0.75	%		0.50	%		0.43	%
Allowance for credit losses on loans to nonperforming loans		170.65	%		164.67	%		153.61	%		217.83	%		262.92	%
Allowance for credit losses on loans to total loans		1.10	%		1.14	%		1.15	%		1.09	%		1.12	%
Net charge-offs to average loans (annualized)		0.18	%		0.01	%		0.01	%		0.11	%		0.21	%

Stellar Bancorp, Inc. GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures (Unaudited)

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

	Three Months Ended															Nine Months Ended
	2025									2024						2025			2024
	September 30			June 30			March 31			December 31			September 30			September 30			September 30
	(Dollars and share amounts in thousands, except per share data)
Net income	$	25,670		$	26,352		$	24,702		$	25,212		$	33,891		$	76,724		$	89,791
Add: Provision for (reversal of) credit losses		305			1,090			3,632			942			(5,985	)		5,027			(3,822	)
Add: Provision for income taxes		6,513			6,680			6,263			6,569			8,837			19,456			23,388
Pre-tax, pre-provision income	$	32,488		$	34,122		$	34,597		$	32,723		$	36,743		$	101,207		$	109,357
Total average assets	$	10,518,865		$	10,464,157		$	10,611,691		$	10,649,175		$	10,626,266		$	10,531,232		$	10,645,569
Pre-tax, pre-provision return on average assets^(A)		1.23	%		1.31	%		1.32	%		1.22	%		1.38	%		1.28	%		1.37	%

Total shareholders’ equity	$	1,653,138		$	1,603,834		$	1,610,832		$	1,607,860		$	1,626,123		$	1,653,138		$	1,626,123
Less: Goodwill and core deposit intangibles, net		573,247			578,786			584,325			589,864			595,434			573,247			595,434
Tangible shareholders’ equity	$	1,079,891		$	1,025,048		$	1,026,507		$	1,017,996		$	1,030,689		$	1,079,891		$	1,030,689
Shares outstanding at end of period		51,228			51,398			52,141			53,429			53,446			51,228			53,446
Tangible book value per share	$	21.08		$	19.94		$	19.69		$	19.05		$	19.28		$	21.08		$	19.28

Average shareholders’ equity	$	1,617,511		$	1,595,540		$	1,614,242		$	1,614,762		$	1,587,918		$	1,609,110		$	1,551,579
Less: Average goodwill and core deposit intangibles, net		575,836			581,438			586,895			592,471			598,866			581,349			604,890
Average tangible shareholders’ equity	$	1,041,675		$	1,014,102		$	1,027,347		$	1,022,291		$	989,052		$	1,027,761		$	946,689
Net income	$	25,670		$	26,352		$	24,702		$	25,212		$	33,891		$	76,724		$	89,791
Add: Core deposit intangibles amortization, net of tax		4,388			4,383			4,383			4,409			4,907			13,154			14,725
Adjusted net income	$	30,058		$	30,735		$	29,085		$	29,621		$	38,798		$	89,878		$	104,516
Return on average tangible equity^(A)(B)		11.45	%		12.16	%		11.48	%		11.53	%		15.61	%		11.69	%		14.75	%

Total assets	$	10,628,113		$	10,493,010		$	10,434,887		$	10,905,790		$	10,629,777		$	10,628,113		$	10,629,777
Less: Goodwill and core deposit intangibles, net		573,247			578,786			584,325			589,864			595,434			573,247			595,434
Tangible assets	$	10,054,866		$	9,914,224		$	9,850,562		$	10,315,926		$	10,034,343		$	10,054,866		$	10,034,343
Tangible equity to tangible assets		10.74	%		10.34	%		10.42	%		9.87	%		10.27	%		10.74	%		10.27	%

Net interest income (tax equivalent)	$	100,739		$	98,427		$	99,353		$	103,039		$	101,578		$	298,519		$	305,266
Less: Purchase accounting accretion		4,800			5,344			5,397			7,555			6,795			15,541			25,444
Adjusted net interest income (tax equivalent)	$	95,939		$	93,083		$	93,956		$	95,484		$	94,783		$	282,978		$	279,822
Average earning assets	$	9,525,017		$	9,448,589		$	9,592,205		$	9,653,162		$	9,643,629		$	9,521,692		$	9,635,379
Net interest margin (tax equivalent) excluding PAA^(A)		4.00	%		3.95	%		3.97	%		3.94	%		3.91	%		3.97	%		3.88	%

Noninterest expense	$	73,142		$	70,004		$	70,166		$	75,266		$	71,066		$	213,312		$	213,692
Less: Core deposit intangibles amortization		5,554			5,548			5,548			5,581			6,212			16,650			18,639
Adjusted noninterest expense	$	67,588		$	64,456		$	64,618		$	69,685		$	64,854		$	196,662		$	195,053
Net interest income	$	100,644		$	98,335		$	99,258		$	102,957		$	101,507		$	298,237		$	305,035
Noninterest income		4,986			5,791			5,505			5,032			6,302			16,282			18,014
Less: (Loss) gain on sale of assets		(491	)		(57	)		417			(112	)		432			(131	)		881
Adjusted noninterest income		5,477			5,848			5,088			5,144			5,870			16,413			17,133
Net interest income plus adjusted noninterest income	$	106,121		$	104,183		$	104,346		$	108,101		$	107,377		$	314,650		$	322,168
Efficiency ratio^(C)		63.69	%		61.87	%		61.93	%		64.46	%		60.40	%		62.50	%		60.54	%

(A)		Interim periods annualized.
(B)		The calculation of return on average tangible equity has been adjusted from prior period disclosures and all periods presented above have been recalculated and disclosed under the same calculation.
(C)		The calculation of the efficiency ratio has been adjusted from prior period disclosures and all periods presented above have been recalculated and disclosed under the same calculation.