Stellar Bancorp, Inc. Reports Second Quarter 2025 Results

By: Stellar Bancorp, Inc. via Business Wire

July 25, 2025 at 07:00 AM EDT

Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $26.4 million, or diluted earnings per share of $0.51, for the second quarter of 2025, compared to net income of $24.7 million, or diluted earnings per share of $0.46, for the first quarter of 2025.

“We are pleased to report our second quarter results that reflect the efforts of our team beginning to add growth to the foundation we’ve built at Stellar Bank,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer.

“Our bankers made meaningful progress on originations during the second quarter after experiencing elevated payoff activity. We believe that the momentum we saw at the end of the second quarter will continue, which sets us up for loan and deposit growth over the remainder of the year,” Mr. Franklin continued.

“We also anticipate that the President’s spending bill will provide some tail wind for the Houston economy. The Stellar message is resonating with our customer base, and we are seeing great progress with our prospects. Our pipelines are building and Stellar Bank is well-positioned to gain market share in the vibrant Texas markets we serve,” Mr. Franklin concluded.

Financial Highlights

Solid Profitability: Net income for the second quarter of 2025 was $26.4 million, or diluted earnings per share of $0.51, which translated into an annualized return on average assets of 1.01%, an annualized return on average equity of 6.62% and an annualized return on average tangible equity of 12.16%⁽¹⁾.

Strong Net Interest Margin: Tax equivalent net interest margin for the second quarter of 2025 was 4.18% compared to 4.20% for the first quarter of 2025. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.95%⁽¹⁾ for the second quarter of 2025 compared to 3.97%⁽¹⁾ for the first quarter of 2025.

Strong Capital Position and Book Value Build: Total risk-based capital ratio increased to 15.98% at June 30, 2025, while book value per share increased to $31.20 at June 30, 2025 from $30.89 at March 31, 2025 and tangible book value per share increased to $19.94⁽¹⁾ at June 30, 2025 from $19.69⁽¹⁾ at March 31, 2025.

Low Net Charge-offs: Net charge-offs of $370 thousand, or 0.01% of average loans, for the six months ended June 30, 2025 along with manageable asset quality, compared to $713 thousand, or 0.02% of average loans, for the six months ended June 30, 2024.

Repurchase of Shares: Repurchased 791 thousand shares at a weighted average price per share of $26.08 during the second quarter of 2025.

Second Quarter 2025 Results

Net interest income in the second quarter of 2025 decreased $923 thousand, or 0.9%, to $98.3 million from $99.3 million for the first quarter of 2025. The net interest margin on a tax equivalent basis decreased to 4.18% for the second quarter of 2025 from 4.20% for the first quarter of 2025. The decrease in the net interest margin from the prior quarter was primarily due to the impact of increased rates on interest-bearing liabilities along with the decrease in average interest-earning assets partially offset by higher rates on loans. Net interest income for the second quarter of 2025 benefited from $5.3 million of income from PAA compared to $5.4 million in the first quarter of 2025. Excluding PAA, net interest income (tax equivalent) for the second quarter of 2025 would have been $93.1 million⁽¹⁾ and the tax equivalent net interest margin would have been 3.95%⁽¹⁾.

Noninterest income for the second quarter of 2025 was $5.8 million, an increase of $286 thousand, or 5.2%, compared to $5.5 million for the first quarter of 2025. Noninterest income increased in the second quarter of 2025 compared to the first quarter of 2025 primarily due to the increase in other noninterest income partially offset by the loss on sale of assets during the second quarter. A significant driver of the increase in other noninterest income was $490 thousand in Federal Reserve Bank dividends as a result of Stellar Bank becoming a member of the Federal Reserve System effective in April 2025.

Noninterest expense for the second quarter of 2025 decreased $162 thousand, or 0.2%, to $70.0 million compared to $70.2 million for the first quarter of 2025. The decrease in noninterest expense in the second quarter of 2025 compared to the first quarter of 2025 was primarily due to a decrease in salaries and employee benefits of $865 thousand along with a decrease in professional fees of $499 thousand partially offset by a $473 thousand increase in net occupancy and equipment, a $385 thousand increase in advertising expense and a $567 thousand increase in other noninterest expense.

The efficiency ratio was 61.87% for the second quarter of 2025 compared to 61.93%⁽¹⁾ for the first quarter of 2025. Annualized returns on average assets, average equity and average tangible equity were 1.01%, 6.62% and 12.16%⁽¹⁾for the second quarter of 2025, respectively, compared to 0.94%, 6.21% and 11.48%⁽¹⁾ for the first quarter of 2025, respectively.

Financial Condition

Total assets at June 30, 2025 were $10.49 billion, an increase of $58.1 million compared to $10.43 billion at March 31, 2025. The increase in total assets was largely due to an increase in Federal Reserve Bank stock along with increases in cash and securities, all of which were funded largely by core deposit growth.

Total loans at June 30, 2025 increased $4.2 million to $7.29 billion compared to $7.28 billion at March 31, 2025. At June 30, 2025, the remaining balance of the purchase accounting accretion (“PAA”) on loans was $62.9 million.

Total deposits at June 30, 2025 increased $110.9 million to $8.67 billion compared to $8.56 billion at March 31, 2025 primarily due to increases in demand and money market and savings deposits partially offset by decreases in certificates and other time and noninterest-bearing deposits. Certificates and other time deposits decreased primarily due to the reduction in brokered deposits.

Asset Quality

Nonperforming assets totaled $58.2 million, or 0.55% of total assets, at June 30, 2025, compared to $59.7 million, or 0.57% of total assets, at March 31, 2025. The allowance for credit losses on loans as a percentage of total loans was 1.14% at June 30, 2025 compared to 1.15% at March 31, 2025.

The provision for credit losses was $1.1 million for the second quarter of 2025 compared to $3.6 million for the first quarter of 2025. Net charge-offs for the second quarter of 2025 were $206 thousand, or 0.01% (annualized) of average loans, compared to net charge-offs of $163 thousand, or 0.01% (annualized) of average loans, for the first 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, July 25, 2025 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its results for the second quarter of 2025. Participants may register for the conference call at https://registrations.events/direct/Q4I635866891 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/Q4I635866891 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.

_____________________
⁽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.

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.

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
	June 30			March 31			December 31			September 30			June 30
	(Dollars in thousands)
ASSETS:
Cash and due from banks	$	136,060		$	130,932		$	419,967		$	103,735		$	110,341
Interest-bearing deposits at other financial institutions		442,044			429,643			491,249			412,482			379,909
Total cash and cash equivalents		578,104			560,575			911,216			516,217			490,250

Available for sale securities, at fair value		1,729,684			1,719,371			1,673,016			1,691,752			1,630,971

Loans held for investment		7,287,347			7,283,133			7,439,854			7,551,124			7,713,897
Less: allowance for credit losses on loans		(83,165	)		(83,746	)		(81,058	)		(84,501	)		(94,772	)
Loans, net		7,204,182			7,199,387			7,358,796			7,466,623			7,619,125

Accrued interest receivable		35,537			37,669			37,884			39,473			43,348
Premises and equipment, net		108,615			109,750			111,856			113,742			113,984
Federal Reserve Bank and Federal Home Loan Bank stock		47,099			20,902			8,209			20,123			15,089
Bank-owned life insurance		108,726			108,108			107,498			106,876			106,262
Goodwill		497,318			497,318			497,318			497,318			497,318
Core deposit intangibles, net		81,468			87,007			92,546			98,116			104,315
Other assets		102,277			94,800			107,451			79,537			103,001
Total assets	$	10,493,010		$	10,434,887		$	10,905,790		$	10,629,777		$	10,723,663


LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES:
Deposits:
Noninterest-bearing	$	3,183,693		$	3,205,619		$	3,576,206		$	3,303,048		$	3,308,441
Interest-bearing
Demand		1,941,156			1,863,752			1,845,749			1,571,504			1,564,405
Money market and savings		2,393,767			2,248,616			2,253,193			2,280,651			2,213,031
Certificates and other time		1,154,998			1,244,726			1,453,236			1,587,398			1,639,426
Total interest-bearing deposits		5,489,921			5,357,094			5,552,178			5,439,553			5,416,862
Total deposits		8,673,614			8,562,713			9,128,384			8,742,601			8,725,303

Accrued interest payable		7,607			9,856			17,052			16,915			12,327
Borrowed funds		69,925			119,923			—			60,000			240,000
Subordinated debt		70,165			70,135			70,105			110,064			109,964
Other liabilities		67,865			61,428			82,389			74,074			70,274
Total liabilities		8,889,176			8,824,055			9,297,930			9,003,654			9,157,868

SHAREHOLDERS’ EQUITY:
Common stock		514			521			534			535			536
Capital surplus		1,185,048			1,202,628			1,240,050			1,238,619			1,238,477
Retained earnings		529,216			510,072			492,640			474,905			447,948
Accumulated other comprehensive loss		(110,944	)		(102,389	)		(125,364	)		(87,936	)		(121,166	)
Total shareholders’ equity		1,603,834			1,610,832			1,607,860			1,626,123			1,565,795
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	10,493,010		$	10,434,887		$	10,905,790		$	10,629,777		$	10,723,663

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended														Six Months Ended
	2025					2024									2025		2024
	June 30			March 31		December 31			September 30			June 30			June 30		June 30
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees	$	121,814		$	120,640	$	128,738		$	132,372		$	135,885		$	242,454	$	270,570
Securities:
Taxable		15,293			16,148		14,789			13,898			11,923			31,441		21,216
Tax-exempt		810			812		814			814			816			1,622		1,634
Deposits in other financial institutions		4,782			4,720		5,681			4,692			3,555			9,502		7,182
Total interest income		142,699			142,320		150,022			151,776			152,179			285,019		300,602

INTEREST EXPENSE:
Demand, money market and savings deposits		31,097			27,574		27,877			29,440			28,399			58,671		55,929
Certificates and other time deposits		11,459			13,527		16,830			18,073			18,758			24,986		33,842
Borrowed funds		407			517		235			840			1,700			924		3,474
Subordinated debt		1,401			1,444		2,123			1,916			1,912			2,845		3,829
Total interest expense		44,364			43,062		47,065			50,269			50,769			87,426		97,074
NET INTEREST INCOME		98,335			99,258		102,957			101,507			101,410			197,593		203,528
Provision for (reversal of) credit losses		1,090			3,632		942			(5,985	)		(1,935	)		4,722		2,163
Net interest income after provision for credit losses		97,245			95,626		102,015			107,492			103,345			192,871		201,365

NONINTEREST INCOME:
Service charges on deposit accounts		1,561			1,584		1,590			1,594			1,648			3,145		3,246
(Loss) gain on sale of assets		(57	)		417		(112	)		432			(64	)		360		449
Bank-owned life insurance		618			610		622			614			591			1,228		1,178
Debit card and interchange income		566			520		570			551			543			1,086		1,070
Other		3,103			2,374		2,362			3,111			2,698			5,477		5,769
Total noninterest income		5,791			5,505		5,032			6,302			5,416			11,296		11,712

NONINTEREST EXPENSE:
Salaries and employee benefits		40,927			41,792		43,797			41,123			39,061			82,719		80,437
Net occupancy and equipment		4,399			3,926		4,401			4,570			4,503			8,325		8,893
Depreciation		1,992			1,995		1,984			1,911			1,948			3,987		3,912
Data processing and software amortization		5,620			5,682		5,551			5,706			5,501			11,302		10,395
Professional fees		1,287			1,786		3,428			1,714			1,620			3,073		4,282
Regulatory assessments and FDIC insurance		1,561			1,733		1,636			1,779			2,299			3,294		4,153
Amortization of intangibles		5,548			5,548		5,581			6,212			6,215			11,096		12,427
Communications		861			847		807			827			847			1,708		1,784
Advertising		1,167			782		1,593			878			891			1,949		1,656
Other		6,642			6,075		6,488			6,346			8,331			12,717		14,687
Total noninterest expense		70,004			70,166		75,266			71,066			71,216			140,170		142,626
INCOME BEFORE INCOME TAXES		33,032			30,965		31,781			42,728			37,545			63,997		70,451
Provision for income taxes		6,680			6,263		6,569			8,837			7,792			12,943		14,551
NET INCOME	$	26,352		$	24,702	$	25,212		$	33,891		$	29,753		$	51,054	$	55,900

EARNINGS PER SHARE
Basic	$	0.51		$	0.46	$	0.47		$	0.63		$	0.56		$	0.98	$	1.05
Diluted	$	0.51		$	0.46	$	0.47		$	0.63		$	0.56		$	0.97	$	1.04

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended															Six Months Ended
	2025						2024									2025			2024
	June 30			March 31			December 31			September 30			June 30			June 30			June 30
	(Dollars and share amounts in thousands, except per share data)
Net income	$	26,352		$	24,702		$	25,212		$	33,891		$	29,753		$	51,054		$	55,900

Earnings per share, basic	$	0.51		$	0.46		$	0.47		$	0.63		$	0.56		$	0.98		$	1.05
Earnings per share, diluted	$	0.51		$	0.46		$	0.47		$	0.63		$	0.56		$	0.97		$	1.04
Dividends per share	$	0.14		$	0.14		$	0.14		$	0.13		$	0.13		$	0.28		$	0.26

Return on average assets^(A)		1.01	%		0.94	%		0.94	%		1.27	%		1.13	%		0.98	%		1.06	%
Return on average equity^(A)		6.62	%		6.21	%		6.21	%		8.49	%		7.78	%		6.42	%		7.33	%
Return on average tangible equity^(A)(B)(D)		12.16	%		11.48	%		11.53	%		15.61	%		14.94	%		11.82	%		14.28	%
Net interest margin (tax equivalent)^(A)(C)		4.18	%		4.20	%		4.25	%		4.19	%		4.24	%		4.19	%		4.25	%
Net interest margin (tax equivalent) excluding PAA^(A)(B)(C)		3.95	%		3.97	%		3.94	%		3.91	%		3.82	%		3.96	%		3.86	%
Efficiency ratio^(B)(E)		61.87	%		61.93	%		64.46	%		60.40	%		60.81	%		61.90	%		60.62	%

Capital Ratios
Stellar Bancorp, Inc. (Consolidated)
Equity to assets		15.28	%		15.44	%		14.74	%		15.30	%		14.60	%		15.28	%		14.60	%
Tangible equity to tangible assets^(B)(E)		10.34	%		10.42	%		9.87	%		10.27	%		9.53	%		10.34	%		9.53	%
Estimated Total capital ratio (to risk-weighted assets)		15.98	%		15.97	%		16.00	%		15.85	%		15.30	%		15.98	%		15.30	%
Estimated Common equity Tier 1 capital (to risk weighted assets)		14.06	%		14.05	%		14.14	%		13.57	%		12.95	%		14.06	%		12.95	%
Estimated Tier 1 capital (to risk-weighted assets)		14.18	%		14.17	%		14.26	%		13.69	%		13.06	%		14.18	%		13.06	%
Estimated Tier 1 leverage (to average tangible assets)		11.44	%		11.20	%		11.31	%		11.10	%		10.77	%		11.44	%		10.77	%
Stellar Bank
Estimated Total capital ratio (to risk-weighted assets)		15.39	%		15.40	%		15.28	%		15.02	%		14.61	%		15.39	%		14.61	%
Estimated Common equity Tier 1 capital (to risk-weighted assets)		14.18	%		14.20	%		14.13	%		13.58	%		13.08	%		14.18	%		13.08	%
Estimated Tier 1 capital (to risk-weighted assets)		14.18	%		14.20	%		14.13	%		13.58	%		13.08	%		14.18	%		13.08	%
Estimated Tier 1 leverage (to average tangible assets)		11.44	%		11.22	%		11.21	%		11.01	%		10.78	%		11.44	%		10.78	%

Other Data
Weighted average shares:
Basic		51,529			53,146			53,422			53,541			53,572			52,333			53,457
Diluted		51,569			53,197			53,471			53,580			53,608			52,376			53,506
Period end shares outstanding		51,398			52,141			53,429			53,446			53,564			51,398			53,564
Book value per share	$	31.20		$	30.89		$	30.09		$	30.43		$	29.23		$	31.20		$	29.23
Tangible book value per share^(B)	$	19.94		$	19.69		$	19.05		$	19.28		$	18.00		$	19.94		$	18.00
Employees - full-time equivalents		1,062			1,054			1,037			1,040			1,045			1,062			1,045

(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. All periods presented above have been recalculated and disclosed under the same calculation.
(E)		The calculation of the efficiency ratio has been adjusted from prior period disclosures. All periods presented above have been recalculated and disclosed under the same calculation.

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
	June 30, 2025							March 31, 2025							June 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	$	7,282,609		$	121,814	6.71	%	$	7,344,298		$	120,640	6.66	%	$	7,808,320		$	135,885	7.00	%
Securities		1,729,384			16,103	3.73	%		1,817,286			16,960	3.78	%		1,549,638			12,739	3.31	%
Deposits in other financial institutions		436,596			4,782	4.39	%		430,621			4,720	4.45	%		258,916			3,555	5.52	%
Total interest-earning assets		9,448,589		$	142,699	6.06	%		9,592,205		$	142,320	6.02	%		9,616,874		$	152,179	6.36	%
Allowance for credit losses on loans		(83,700	)						(81,166	)						(96,306	)
Noninterest-earning assets		1,099,268							1,100,652							1,103,297
Total assets	$	10,464,157						$	10,611,691						$	10,623,865

Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	1,952,004		$	14,399	2.96	%	$	1,911,625		$	12,392	2.63	%	$	1,545,096		$	12,213	3.18	%
Money market and savings deposits		2,371,221			16,698	2.82	%		2,234,571			15,182	2.76	%		2,227,393			16,186	2.92	%
Certificates and other time deposits		1,201,903			11,459	3.82	%		1,296,972			13,527	4.23	%		1,694,536			18,758	4.45	%
Borrowed funds		34,427			407	4.74	%		45,795			517	4.58	%		112,187			1,700	6.09	%
Subordinated debt		70,151			1,401	8.01	%		70,121			1,444	8.35	%		109,910			1,912	7.00	%
Total interest-bearing liabilities		5,629,706		$	44,364	3.16	%		5,559,084		$	43,062	3.14	%		5,689,122		$	50,769	3.59	%

Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		3,160,791							3,346,066							3,308,633
Other liabilities		78,120							92,299							87,986
Total liabilities		8,868,617							8,997,449							9,085,741
Shareholders’ equity		1,595,540							1,614,242							1,538,124
Total liabilities and shareholders’ equity	$	10,464,157						$	10,611,691						$	10,623,865

Net interest rate spread						2.90	%						2.88	%						2.77	%

Net interest income and margin				$	98,335	4.17	%				$	99,258	4.20	%				$	101,410	4.24	%

Net interest income and margin (tax equivalent)				$	98,427	4.18	%				$	99,353	4.20	%				$	101,482	4.24	%

Cost of funds						2.02	%						1.96	%						2.27	%
Cost of deposits						1.97	%						1.90	%						2.16	%

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)

	Six Months Ended June 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	$	7,313,283		$	242,454	6.69	%	$	7,873,572		$	270,570	6.91	%
Securities		1,773,092			33,063	3.76	%		1,495,726			22,850	3.07	%
Deposits in other financial institutions		433,625			9,502	4.42	%		261,911			7,182	5.51	%
Total interest-earning assets		9,520,000		$	285,019	6.04	%		9,631,209		$	300,602	6.28	%
Allowance for credit losses on loans		(82,440	)						(93,959	)
Noninterest-earning assets		1,099,956							1,118,077
Total assets	$	10,537,516						$	10,655,327

Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	1,931,926		$	26,791	2.80	%	$	1,621,154		$	24,491	3.04	%
Money market and savings deposits		2,303,273			31,880	2.79	%		2,189,099			31,438	2.89	%
Certificates and other time deposits		1,249,175			24,986	4.03	%		1,569,292			33,842	4.34	%
Borrowed funds		40,079			924	4.65	%		123,293			3,474	5.67	%
Subordinated debt		70,136			2,845	8.18	%		109,859			3,829	7.01	%
Total interest-bearing liabilities		5,594,589		$	87,426	3.15	%		5,612,697		$	97,074	3.48	%

Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits		3,252,917							3,417,196
Other liabilities		85,171							92,223
Total liabilities		8,932,677							9,122,116
Shareholders' equity		1,604,839							1,533,211
Total liabilities and shareholders' equity	$	10,537,516						$	10,655,327

Net interest rate spread						2.89	%						2.80	%

Net interest income and margin				$	197,593	4.19	%				$	203,528	4.25	%

Net interest income and margin (tax equivalent)				$	197,780	4.19	%				$	203,688	4.25	%

Cost of funds						1.99	%						2.16	%
Cost of deposits						1.93	%						2.05	%

Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)

	Three Months Ended
	2025						2024
	June 30			March 31			December 31			September 30			June 30
	(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial	$	1,346,744		$	1,362,266		$	1,362,260		$	1,350,753		$	1,396,064
Real estate:
Commercial real estate (including multi-family residential)		3,840,981			3,854,607			3,868,218			3,976,296			4,029,671
Commercial real estate construction and land development		762,911			721,488			845,494			890,316			922,805
1-4 family residential (including home equity)		1,126,523			1,125,837			1,115,484			1,112,235			1,098,681
Residential construction		137,855			141,283			157,977			161,494			200,134
Consumer and other		72,333			77,652			90,421			60,030			66,542
Total loans held for investment	$	7,287,347		$	7,283,133		$	7,439,854		$	7,551,124		$	7,713,897

Deposits:
Noninterest-bearing	$	3,183,693		$	3,205,619		$	3,576,206		$	3,303,048		$	3,308,441
Interest-bearing
Demand		1,941,156			1,863,752			1,845,749			1,571,504			1,564,405
Money market and savings		2,393,767			2,248,616			2,253,193			2,280,651			2,213,031
Certificates and other time		1,154,998			1,244,726			1,453,236			1,587,398			1,639,426
Total interest-bearing deposits		5,489,921			5,357,094			5,552,178			5,439,553			5,416,862
Total deposits	$	8,673,614		$	8,562,713		$	9,128,384		$	8,742,601		$	8,725,303

Asset Quality:
Nonaccrual loans	$	50,505		$	54,518		$	37,212		$	32,140		$	50,906
Accruing loans 90 or more days past due		—			—			—			—			—
Total nonperforming loans		50,505			54,518			37,212			32,140			50,906
Foreclosed assets		7,652			5,154			1,734			2,984			2,548
Total nonperforming assets	$	58,157		$	59,672		$	38,946		$	35,124		$	53,454

Net charge-offs (recoveries)	$	206		$	163		$	2,016		$	3,933		$	(1	)

Nonaccrual loans:
Commercial and industrial	$	13,395		$	11,471		$	8,500		$	9,718		$	18,451
Real estate:
Commercial real estate (including multi-family residential)		23,359			26,383			16,459			10,695			18,094
Commercial real estate construction and land development		3,412			2,027			3,061			4,183			1,641
1-4 family residential (including home equity)		9,965			14,550			9,056			7,259			12,454
Residential construction		176			—			—			121			155
Consumer and other		198			87			136			164			111
Total nonaccrual loans	$	50,505		$	54,518		$	37,212		$	32,140		$	50,906

Asset Quality Ratios:
Nonperforming assets to total assets		0.55	%		0.57	%		0.36	%		0.33	%		0.50	%
Nonperforming loans to total loans		0.69	%		0.75	%		0.50	%		0.43	%		0.66	%
Allowance for credit losses on loans to nonperforming loans		164.67	%		153.61	%		217.83	%		262.92	%		186.17	%
Allowance for credit losses on loans to total loans		1.14	%		1.15	%		1.09	%		1.12	%		1.23	%
Net charge-offs to average loans (annualized)		0.01	%		0.01	%		0.11	%		0.21	%		0.00	%

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															Six Months Ended
	2025						2024									2025			2024
	June 30			March 31			December 31			September 30			June 30			June 30			June 30
	(Dollars and share amounts in thousands, except per share data)
Net income	$	26,352		$	24,702		$	25,212		$	33,891		$	29,753		$	51,054		$	55,900
Add: Provision for (reversal of) credit losses		1,090			3,632			942			(5,985	)		(1,935	)		4,722			2,163
Add: Provision for income taxes		6,680			6,263			6,569			8,837			7,792			12,943			14,551
Pre-tax, pre-provision income	$	34,122		$	34,597		$	32,723		$	36,743		$	35,610		$	68,719		$	72,614
Total average assets	$	10,464,157		$	10,611,691		$	10,649,175		$	10,626,266		$	10,623,865		$	10,537,516		$	10,655,327
Pre-tax, pre-provision return on average assets^(A)		1.31	%		1.32	%		1.22	%		1.38	%		1.35	%		1.32	%		1.37	%

Total shareholders’ equity	$	1,603,834		$	1,610,832		$	1,607,860		$	1,626,123		$	1,565,795		$	1,603,834		$	1,565,795
Less: Goodwill and core deposit intangibles, net		578,786			584,325			589,864			595,434			601,633			578,786			601,633
Tangible shareholders’ equity	$	1,025,048		$	1,026,507		$	1,017,996		$	1,030,689		$	964,162		$	1,025,048		$	964,162
Shares outstanding at end of period		51,398			52,141			53,429			53,446			53,564			51,398			53,564
Tangible book value per share	$	19.94		$	19.69		$	19.05		$	19.28		$	18.00		$	19.94		$	18.00

Average shareholders’ equity	$	1,595,540		$	1,614,242		$	1,614,762		$	1,587,918		$	1,538,124		$	1,604,839		$	1,533,211
Less: Average goodwill and core deposit intangibles, net		581,438			586,895			592,471			598,866			604,722			584,152			607,935
Average tangible shareholders’ equity	$	1,014,102		$	1,027,347		$	1,022,291		$	989,052		$	933,402		$	1,020,687		$	925,276
Net income	$	26,352		$	24,702		$	25,212		$	33,891		$	29,753		$	51,054		$	55,900
Add: Core deposit intangibles amortization, net of tax		4,383			4,383			4,409			4,907			4,910			8,766			9,817
Adjusted net income	$	30,735		$	29,085		$	29,621		$	38,798		$	34,663		$	59,820		$	65,717
Return on average tangible equity^(A)(B)		12.16	%		11.48	%		11.53	%		15.61	%		14.94	%		11.82	%		14.28	%

Total assets	$	10,493,010		$	10,434,887		$	10,905,790		$	10,629,777		$	10,723,663		$	10,493,010		$	10,723,663
Less: Goodwill and core deposit intangibles, net		578,786			584,325			589,864			595,434			601,633			578,786			601,633
Tangible assets	$	9,914,224		$	9,850,562		$	10,315,926		$	10,034,343		$	10,122,030		$	9,914,224		$	10,122,030
Tangible equity to tangible assets		10.34	%		10.42	%		9.87	%		10.27	%		9.53	%		10.34	%		9.53	%

Net interest income (tax equivalent)	$	98,427		$	99,353		$	103,039		$	101,578		$	101,482		$	197,780		$	203,688
Less: Purchase accounting accretion		5,344			5,397			7,555			6,795			10,098			10,741			18,649
Adjusted net interest income (tax equivalent)	$	93,083		$	93,956		$	95,484		$	94,783		$	91,384		$	187,039		$	185,039
Average earning assets	$	9,448,589		$	9,592,205		$	9,653,162		$	9,643,629		$	9,616,874		$	9,520,000		$	9,631,209
Net interest margin (tax equivalent) excluding PAA^(A)		3.95	%		3.97	%		3.94	%		3.91	%		3.82	%		3.96	%		3.86	%

Noninterest expense	$	70,004		$	70,166		$	75,266		$	71,066		$	71,216		$	140,170		$	142,626
Less: Core deposit intangibles amortization		5,548			5,548			5,581			6,212			6,215			11,096			12,427
Adjusted noninterest expense	$	64,456		$	64,618		$	69,685		$	64,854		$	65,001		$	129,074		$	130,199
Net interest income	$	98,335		$	99,258		$	102,957		$	101,507		$	101,410		$	197,593		$	203,528
Noninterest income		5,791			5,505			5,032			6,302			5,416			11,296			11,712
Less: (Loss) gain on sale of assets		(57	)		417			(112	)		432			(64	)		360			449
Adjusted noninterest income		5,848			5,088			5,144			5,870			5,480			10,936			11,263
Net interest income plus adjusted noninterest income	$	104,183		$	104,346		$	108,101		$	107,377		$	106,890		$	208,529		$	214,791
Efficiency ratio^(C)		61.87	%		61.93	%		64.46	%		60.40	%		60.81	%		61.90	%		60.62	%

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