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Stellar Bancorp, Inc. Reports Fourth Quarter 2023 Results

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Stellar Bancorp, Inc. (STEL) reported net income of $130.5 million for the year ended December 31, 2023, with a return on average assets of 1.21% and return on average equity of 8.96%. The company's total risk-based capital ratio increased to 14.02% at December 31, 2023, from 12.39% at December 31, 2022. Noninterest-bearing deposit balances remained a significant portion of their deposit funding base, ending the year at 40.0% of total deposits. The tax equivalent net interest margin was 4.40% for the fourth quarter of 2023, up from 4.37% in the third quarter of 2023. Stellar's management uses non-GAAP financial measures to evaluate its performance.
Positive
  • Stellar reported strong net income of $130.5 million for the year ended December 31, 2023.
  • The company's total risk-based capital ratio increased to 14.02% at December 31, 2023, from 12.39% at December 31, 2022.
  • Noninterest-bearing deposit balances remained a significant portion of their deposit funding base, ending the year at 40.0% of total deposits.
  • The tax equivalent net interest margin was 4.40% for the fourth quarter of 2023, up from 4.37% in the third quarter of 2023.
Negative
  • The efficiency ratio was 69.21% for the fourth quarter 2023 compared to 63.50% for the third quarter 2023, indicating an increase in noninterest expenses.
  • Noninterest expense for the year ended December 31, 2023, increased $94.4 million, or 48.2%, to $290.5 million compared to $196.1 million for the year ended December 31, 2022, which is a significant increase.

Insights

Stellar Bancorp's reported net income of $27.3 million for Q4 2023 and $130.5 million for the full year, with diluted earnings per share of $0.51 and $2.45 respectively, indicates a robust financial performance in a challenging economic climate. The company's focus on capital, liquidity and credit quality, as highlighted by CEO Robert R. Franklin, Jr., has been a prudent strategy in the face of rising interest rates and bank failures. The reported increase in the total risk-based capital ratio to 14.02% and Tier 1 leverage ratio to 10.18% suggests a strengthened capital position, which is critical for absorbing potential losses and supporting growth.

The net interest margin (NIM) expansion, from 4.37% in Q3 to 4.40% in Q4 and a significant year-over-year increase to 4.51%, reflects effective asset-liability management, especially given the rate volatility in 2023. However, the reliance on purchase accounting adjustments (PAA) for NIM calculation could mask underlying performance issues. It's important to note that the efficiency ratio's uptick to 69.21% in Q4 from 63.50% in Q3 suggests rising costs, which could pressure margins if not managed alongside revenue growth.

The Merger of Equals with Allegiance Bancshares has evidently contributed to the scale of operations and financial results, though it complicates year-over-year comparisons. Investors should consider the one-time expenses and the impact of the merger when evaluating Stellar's operational efficiency and profitability moving forward.

Stellar Bancorp's strategic positioning, as discussed by the CEO, suggests an anticipation of a slower economy in 2024. The company's plan to optimize and reduce noninterest expenses is a proactive measure to maintain profitability in a potentially contracting economic environment. The emphasis on crossing the $10 billion asset threshold indicates regulatory and strategic considerations that are likely to influence the bank's operations and compliance costs.

The bank's advantageous funding profile, with noninterest-bearing deposits constituting 40% of the total deposit base, provides a cost advantage in terms of funding expenses. This is particularly relevant in a competitive banking market where deposit costs can significantly impact net interest income. The shift in deposit mix, driven by the current interest rate environment, requires continuous monitoring as it could affect the bank's liquidity and interest rate risk profile.

Asset quality remains a key factor, with nonperforming assets at 0.37% of total assets. This is relatively low, indicating effective risk management, but it will be important to monitor this closely given the economic headwinds anticipated in 2024.

The FDIC special insurance assessment expense of $2.4 million recorded by Stellar Bancorp is a direct consequence of regulatory costs associated with bank failures. This expense reflects the broader industry's risk environment and the regulatory framework in which banks operate. The assessment underscores the importance of maintaining strong capital and liquidity positions to meet regulatory requirements and absorb industry-wide shocks.

Additionally, the Merger of Equals accounting treatment as a reverse acquisition has significant legal and financial reporting implications. It is essential for investors to understand the complexity of such mergers and their impact on financial statements. The realignment of assets and liabilities at fair value can lead to significant changes in the balance sheet, affecting the comparability of financial results across periods.

HOUSTON--(BUSINESS WIRE)-- Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $27.3 million, or diluted earnings per share of $0.51, for the fourth quarter 2023 and net income of $130.5 million, or diluted earnings per share of $2.45, for the year ended December 31, 2023. During the fourth quarter, the Company recorded certain nonrecurring noninterest expense items, including the FDIC special insurance assessment expense of $2.4 million.

“We are pleased to announce our full-year and fourth quarter results, capping a successful year despite industry challenges and economic uncertainty,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer. “We maintained our focus on capital, liquidity, and credit to protect shareholder value in a year of rapidly rising interest rates and large bank failures, all while setting the foundation of a new organization following our combination in late 2022. Our staff has done a great job in combining two banks and we are poised to refine what we have built. The success of our team’s efforts during the year is reflected by our maintaining a solid net interest margin, a strong deposit base, our credit quality and ability to build capital,” he continued.

“While we expect a somewhat slower economy in 2024, our focus will be on continuing to optimize and reduce our noninterest expenses as we manage the organization’s needs and requirements from crossing the $10 billion asset threshold. We believe that we are well positioned to take advantage of the opportunities that may be presented in 2024 and that our strategy provides us with optionality,” said Mr. Franklin.

“We operate in some of the best banking markets in the country and we look forward to the possibility of additional clarity around the direction of interest rates and a more reasonably priced market for deposits and funding in the new year. Thank you to our shareholders for their support and we look forward to continuing to build shareholder value in 2024,” concluded Mr. Franklin.

2023 Financial Highlights

  • Strong Earnings: Stellar recorded 2023 net income of $130.5 million, or diluted earnings per share of $2.45, representing a return on average assets of 1.21%, return on average equity of 8.96% and return on average tangible equity of 15.75%(1).
  • Meaningful Regulatory Capital Build: Total risk-based capital ratio increased to 14.02% at December 31, 2023 from 12.39% at December 31, 2022 and Tier 1 leverage ratio increased to 10.18% at December 31, 2023 from 8.55% at December 31, 2022.
  • Book Value Growth: During 2023, book value per share increased to $28.54 at December 31, 2023 compared to $26.12 at December 31, 2022 while tangible book value per share increased by $3.00, or 21.4%, from $14.02 at December 31, 2022 to $17.02 at December 31, 2023.
  • Advantageous Funding Profile: Noninterest-bearing deposit balances remained a significant portion of our deposit funding base, ending the year at 40.0% of total deposits.

Fourth Quarter 2023 Financial Highlights

  • Strong Net Interest Margin: Tax equivalent net interest margin was 4.40% for fourth quarter of 2023 up from 4.37% in the third quarter of 2023. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.91%(1) for the fourth quarter of 2023 up from 3.87%(1) for the third quarter of 2023.
  • Solid Profitability: Fourth quarter 2023 net income of $27.3 million, or diluted earnings per share of $0.51, translated into an annualized return on average assets of 1.02%, an annualized return on average equity of 7.33% and an annualized return on average tangible equity of 12.61%(1).

_____________________
(1) Refer to page 10 of this earnings release for the calculation of this non-GAAP financial measure.

Merger of Equals

The merger of equals (the “Merger”) between Allegiance Bancshares, Inc. (“Allegiance”) and CBTX, Inc. (“CBTX”), which became effective on October 1, 2022, was accounted for as a reverse acquisition using the acquisition method of accounting, with CBTX treated as the legal acquirer and Allegiance treated as the accounting acquirer for financial reporting purposes. Therefore, the historical financial statements of the Company prior to the Merger reflect the historical financial statement balances of Allegiance. In addition, the assets and liabilities of CBTX as of the date of the Merger were recorded at estimated fair value and added to those of Allegiance. The Merger had a significant impact on all aspects of the Company's financial statements and, as a result, financial results after the Merger are not comparable to financial results prior to the Merger. Results of operations for 2023 and the fourth quarter 2022 reflect the combined operations following the Merger. The full year 2022 results of operations reflect the combined operations for the fourth quarter 2022 and the stand-alone Allegiance results for all periods prior to October 1, 2022.

Fourth Quarter 2023 Results

Net interest income in the fourth quarter 2023 decreased $791 thousand, or 0.7%, to $105.9 million from $106.7 million for the third quarter 2023. The net interest margin on a tax equivalent basis increased three basis points to 4.40% for the fourth quarter 2023 from 4.37% for the third quarter 2023. The increase in the net interest margin from the prior quarter was primarily due to the increased yield on interest earning assets partially offset by increased rates on our cost of funding. Net interest income for the fourth quarter of 2023 benefited from $11.7 million of income from purchase accounting adjustments compared to $12.4 million in the third quarter of 2023. Excluding purchase accounting adjustments, a non-GAAP measure that is reconciled on page 10 of this earnings release, net interest income (tax equivalent) for the fourth quarter 2023 would have been $94.4 million and the tax equivalent net interest margin would have been 3.91%.

Noninterest income for the fourth quarter 2023 was $6.9 million, an increase of $2.2 million, or 46.7%, compared to $4.7 million for the third quarter 2023. Noninterest income increased in the fourth quarter of 2023 compared to the third quarter of 2023 primarily due to Small Business Investment Company income recognized partially offset by a decrease in debit card and ATM income due to the impact of the Durbin Amendment and change in the Company’s policy on charging nonsufficient funds fees.

Noninterest expense for the fourth quarter 2023 increased $7.2 million, or 10.2%, to $77.9 million compared to $70.7 million for the third quarter 2023. The increase in noninterest expense in the fourth quarter of 2023 compared to the third quarter of 2023 was primarily due to nonrecurring items including higher professional fees associated with various projects during the quarter some of which related to crossing the $10 billion asset threshold, a $2.4 million accrual for future payments to the FDIC pursuant to the special insurance assessment associated with two bank failures during 2023 and $1.9 million of severance expense.

The efficiency ratio was 69.21% for the fourth quarter 2023 compared to 63.50% for the third quarter 2023. Fourth quarter 2023 annualized returns on average assets, average equity and average tangible equity were 1.02%, 7.33% and 12.61%, respectively, compared to 1.14%, 8.34% and 14.47%, respectively, for the third quarter 2023. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 10 of this earnings release.

Year Ended December 31, 2023 Results

Net interest income for the year ended December 31, 2023 increased $147.8 million, or 51.1%, to $436.8 million from $289.0 million for the year ended December 31, 2022. The net interest margin on a tax equivalent basis increased 57 basis points to 4.51% for the year ended December 31, 2023 from 3.94% for the year ended December 31, 2022. The increase in the net interest margin from the prior quarter was primarily due to the impact of the Merger. Net interest income for the year ended December 31, 2023 benefited from $46.8 million of purchase accounting adjustments compared to $8.4 million for the year ended December 31, 2022. Excluding purchase accounting adjustments, a non-GAAP measure that is reconciled on page 10 of this earnings release, net interest income (tax equivalent) for the year ended December 31, 2023 would have been $390.9 million and the tax equivalent net interest margin would have been 4.03%.

Noninterest income for the year ended December 31, 2023 was $24.6 million, an increase of $4.2 million, or 20.7%, compared to $20.4 million for the year ended December 31, 2022. Noninterest income increased in 2023 compared to 2022 primarily due to increased scale as a result of the Merger along with increased Small Business Investment Company income. The increase in noninterest income was partially offset by the decrease in debit card and ATM income due to the impact of the Durbin Amendment and change in the Company’s policy on charging nonsufficient funds fees along with the nonrecurring gains on sale of securities, loans and assets during the fourth quarter 2022.

Noninterest expense for the year ended December 31, 2023 increased $94.4 million, or 48.2%, to $290.5 million compared to $196.1 million for the year ended December 31, 2022. The increase in noninterest expense in 2023 compared to 2022 was due to increased scale as a result of the Merger primarily within categories such as salaries and benefits and amortization of intangibles along with higher professional fees associated with various projects some of which related to crossing the $10 billion asset threshold, partially offset by a decrease in acquisition and merger-related expenses to $15.6 million from $24.1 million in 2022.

The efficiency ratio was 63.02% for the year ended December 31, 2023 compared to 64.23% for the year ended December 31, 2022. Annualized returns on average assets, average equity and average tangible equity were 1.21%, 8.96% and 15.75%, respectively, for the year ended December 31, 2023 compared to 0.64%, 5.69% and 9.16%, respectively, for the year ended December 31, 2022. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 10 of this earnings release.

Financial Condition

Total loans at December 31, 2023 decreased $79.4 million to $7.93 billion compared to $8.00 billion at September 30, 2023. At December 31, 2023, the remaining balance of the purchase accounting adjustments on loans was $106.8 million.

Total deposits at December 31, 2023 increased $186.8 million to $8.87 billion compared to $8.69 billion at September 30, 2023, due to increases in interest-bearing demand, money market and certificates and other time deposits, partially offset by a decreases noninterest-bearing 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 $4.95 billion and estimated uninsured deposits net of collateralized deposits of $1.17 billion were $3.78 billion, or 42.6%, of total deposits at December 31, 2023.

Total assets at December 31, 2023 were $10.65 billion, a decrease of $18.3 million, compared to $10.67 billion at September 30, 2023.

Asset Quality

Nonperforming assets totaled $39.2 million, or 0.37% of total assets, at December 31, 2023, compared to $38.3 million, or 0.36%, of total assets, at September 30, 2023. The allowance for credit losses on loans as a percentage of total loans was 1.16% at December 31, 2023 and 1.17% at September 30, 2023.

The provision for credit losses for the fourth quarter 2023 was $1.0 million compared to $2.3 million for the third quarter 2023. Fourth quarter 2023 net charge-offs were $2.6 million, or 0.13% (annualized) of average loans, compared to net charge-offs of $8.1 million, or 0.40% (annualized) of average loans, for the third 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 10 of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call

Stellar’s management team will host a conference call and webcast on Friday, January 26, 2024 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its fourth quarter 2023 results. Participants may register for the conference call at https://conferencingportals.com/event/FdklYbaS 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/844946085. 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 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)

 

 

2023

 

2022

 

December 31

 

September 30

 

June 30

 

March 31

 

December 31

 

(Dollars in thousands)

ASSETS

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

121,004

 

 

$

94,970

 

 

$

105,913

 

 

$

99,231

 

 

$

67,063

 

Interest-bearing deposits at other financial institutions

 

278,233

 

 

 

207,302

 

 

 

198,176

 

 

 

164,102

 

 

 

304,642

 

Total cash and cash equivalents

 

399,237

 

 

 

302,272

 

 

 

304,089

 

 

 

263,333

 

 

 

371,705

 

 

 

 

 

 

 

 

 

 

 

Available for sale securities, at fair value

 

1,395,680

 

 

 

1,414,952

 

 

 

1,478,222

 

 

 

1,519,175

 

 

 

1,807,586

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment

 

7,925,133

 

 

 

8,004,528

 

 

 

8,068,718

 

 

 

7,886,044

 

 

 

7,754,751

 

Less: allowance for credit losses on loans

 

(91,684

)

 

 

(93,575

)

 

 

(100,195

)

 

 

(96,188

)

 

 

(93,180

)

Loans, net

 

7,833,449

 

 

 

7,910,953

 

 

 

7,968,523

 

 

 

7,789,856

 

 

 

7,661,571

 

 

 

 

 

 

 

 

 

 

 

Accrued interest receivable

 

44,244

 

 

 

43,536

 

 

 

42,051

 

 

 

42,405

 

 

 

44,743

 

Premises and equipment, net

 

118,683

 

 

 

119,332

 

 

 

119,142

 

 

 

124,723

 

 

 

126,803

 

Federal Home Loan Bank stock

 

25,051

 

 

 

29,022

 

 

 

24,478

 

 

 

19,676

 

 

 

15,058

 

Bank-owned life insurance

 

105,084

 

 

 

104,699

 

 

 

104,148

 

 

 

103,616

 

 

 

103,094

 

Goodwill

 

497,318

 

 

 

497,318

 

 

 

497,260

 

 

 

497,260

 

 

 

497,260

 

Core deposit intangibles, net

 

116,712

 

 

 

122,944

 

 

 

129,805

 

 

 

136,665

 

 

 

143,525

 

Other assets

 

111,681

 

 

 

120,432

 

 

 

110,633

 

 

 

108,009

 

 

 

129,092

 

Total assets

$

10,647,139

 

 

$

10,665,460

 

 

$

10,778,351

 

 

$

10,604,718

 

 

$

10,900,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing

$

3,546,815

 

 

$

3,656,288

 

 

$

3,713,536

 

 

$

3,877,859

 

 

$

4,230,169

 

Interest-bearing

 

 

 

 

 

 

 

 

 

Demand

 

1,659,999

 

 

 

1,397,492

 

 

 

1,437,509

 

 

 

1,394,244

 

 

 

1,591,828

 

Money market and savings

 

2,136,777

 

 

 

2,128,950

 

 

 

2,174,073

 

 

 

2,401,840

 

 

 

2,575,923

 

Certificates and other time

 

1,529,876

 

 

 

1,503,891

 

 

 

1,441,251

 

 

 

1,064,932

 

 

 

869,712

 

Total interest-bearing deposits

 

5,326,652

 

 

 

5,030,333

 

 

 

5,052,833

 

 

 

4,861,016

 

 

 

5,037,463

 

Total deposits

 

8,873,467

 

 

 

8,686,621

 

 

 

8,766,369

 

 

 

8,738,875

 

 

 

9,267,632

 

 

 

 

 

 

 

 

 

 

 

Accrued interest payable

 

11,288

 

 

 

7,612

 

 

 

4,555

 

 

 

3,875

 

 

 

2,098

 

Borrowed funds

 

50,000

 

 

 

323,981

 

 

 

369,963

 

 

 

238,944

 

 

 

63,925

 

Subordinated debt

 

109,765

 

 

 

109,665

 

 

 

109,566

 

 

 

109,420

 

 

 

109,367

 

Other liabilities

 

81,601

 

 

 

76,735

 

 

 

69,218

 

 

 

67,388

 

 

 

74,239

 

Total liabilities

 

9,126,121

 

 

 

9,204,614

 

 

 

9,319,671

 

 

 

9,158,502

 

 

 

9,517,261

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

Common stock

 

533

 

 

 

533

 

 

 

533

 

 

 

533

 

 

 

530

 

Capital surplus

 

1,232,627

 

 

 

1,231,686

 

 

 

1,228,532

 

 

 

1,225,596

 

 

 

1,222,761

 

Retained earnings

 

405,945

 

 

 

385,600

 

 

 

361,619

 

 

 

333,368

 

 

 

303,146

 

Accumulated other comprehensive loss

 

(118,087

)

 

 

(156,973

)

 

 

(132,004

)

 

 

(113,281

)

 

 

(143,261

)

Total shareholders’ equity

 

1,521,018

 

 

 

1,460,846

 

 

 

1,458,680

 

 

 

1,446,216

 

 

 

1,383,176

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

10,647,139

 

 

$

10,665,460

 

 

$

10,778,351

 

 

$

10,604,718

 

 

$

10,900,437

Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

 

 

Three Months Ended

 

Years Ended

 

2023

 

2022

 

2023

 

2022

 

December 31

 

September 30

 

June 30

 

March 31

 

December 31

 

December 31

 

December 31

 

(Dollars in thousands, except per share data)

INTEREST INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

$

139,114

 

$

138,948

 

$

133,931

 

 

$

125,729

 

$

116,145

 

 

$

537,722

 

$

280,375

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

9,622

 

 

9,493

 

 

9,726

 

 

 

9,653

 

 

9,834

 

 

 

38,494

 

 

27,128

Tax-exempt

 

418

 

 

437

 

 

436

 

 

 

1,262

 

 

3,057

 

 

 

2,553

 

 

10,733

Deposits in other financial institutions

 

3,021

 

 

2,391

 

 

2,865

 

 

 

3,771

 

 

2,933

 

 

 

12,048

 

 

4,758

Total interest income

 

152,175

 

 

151,269

 

 

146,958

 

 

 

140,415

 

 

131,969

 

 

 

590,817

 

 

322,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand, money market and savings deposits

 

25,033

 

 

23,557

 

 

20,708

 

 

 

18,037

 

 

12,406

 

 

 

87,335

 

 

19,139

Certificates and other time deposits

 

15,075

 

 

13,282

 

 

9,622

 

 

 

3,307

 

 

2,083

 

 

 

41,286

 

 

7,825

Borrowed funds

 

4,154

 

 

5,801

 

 

6,535

 

 

 

1,317

 

 

417

 

 

 

17,807

 

 

1,216

Subordinated debt

 

1,983

 

 

1,908

 

 

1,812

 

 

 

1,927

 

 

1,449

 

 

 

7,630

 

 

5,856

Total interest expense

 

46,245

 

 

44,548

 

 

38,677

 

 

 

24,588

 

 

16,355

 

 

 

154,058

 

 

34,036

NET INTEREST INCOME

 

105,930

 

 

106,721

 

 

108,281

 

 

 

115,827

 

 

115,614

 

 

 

436,759

 

 

288,958

Provision for credit losses

 

1,047

 

 

2,315

 

 

1,915

 

 

 

3,666

 

 

44,793

 

 

 

8,943

 

 

50,712

Net interest income after provision for credit losses

 

104,883

 

 

104,406

 

 

106,366

 

 

 

112,161

 

 

70,821

 

 

 

427,816

 

 

238,246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonsufficient funds and overdraft charges

 

183

 

 

291

 

 

418

 

 

 

406

 

 

447

 

 

 

1,298

 

 

834

Service charges on deposit accounts

 

1,337

 

 

1,329

 

 

1,157

 

 

 

943

 

 

1,242

 

 

 

4,766

 

 

2,856

Gain (loss) on sale of assets

 

198

 

 

 

 

(6

)

 

 

198

 

 

4,025

 

 

 

390

 

 

4,050

Bank-owned life insurance

 

573

 

 

551

 

 

532

 

 

 

522

 

 

515

 

 

 

2,178

 

 

1,125

Debit card and ATM income

 

542

 

 

935

 

 

1,821

 

 

 

1,698

 

 

1,897

 

 

 

4,996

 

 

4,465

Other

 

4,053

 

 

1,589

 

 

1,561

 

 

 

3,731

 

 

2,511

 

 

 

10,934

 

 

7,024

Total noninterest income

 

6,886

 

 

4,695

 

 

5,483

 

 

 

7,498

 

 

10,637

 

 

 

24,562

 

 

20,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

40,464

 

 

39,495

 

 

37,300

 

 

 

39,775

 

 

40,949

 

 

 

157,034

 

 

107,554

Net occupancy and equipment

 

4,572

 

 

4,455

 

 

3,817

 

 

 

4,088

 

 

3,781

 

 

 

16,932

 

 

10,335

Depreciation

 

1,955

 

 

1,952

 

 

1,841

 

 

 

1,836

 

 

1,903

 

 

 

7,584

 

 

4,951

Data processing and software amortization

 

5,000

 

 

4,798

 

 

4,674

 

 

 

5,054

 

 

3,776

 

 

 

19,526

 

 

11,337

Professional fees

 

3,867

 

 

997

 

 

1,564

 

 

 

1,527

 

 

2,298

 

 

 

7,955

 

 

3,583

Regulatory assessments and FDIC insurance

 

5,169

 

 

1,814

 

 

2,755

 

 

 

1,294

 

 

1,263

 

 

 

11,032

 

 

4,914

Amortization of intangibles

 

6,247

 

 

6,876

 

 

6,881

 

 

 

6,879

 

 

7,051

 

 

 

26,883

 

 

9,303

Communications

 

743

 

 

663

 

 

689

 

 

 

701

 

 

737

 

 

 

2,796

 

 

1,800

Advertising

 

1,004

 

 

877

 

 

907

 

 

 

839

 

 

1,130

 

 

 

3,627

 

 

2,460

Acquisition and merger-related expenses

 

3,072

 

 

3,421

 

 

2,897

 

 

 

6,165

 

 

11,469

 

 

 

15,555

 

 

24,138

Other

 

5,848

 

 

5,400

 

 

5,882

 

 

 

4,440

 

 

5,267

 

 

 

21,570

 

 

15,701

Total noninterest expense

 

77,941

 

 

70,748

 

 

69,207

 

 

 

72,598

 

 

79,624

 

 

 

290,494

 

 

196,076

INCOME BEFORE INCOME TAXES

 

33,828

 

 

38,353

 

 

42,642

 

 

 

47,061

 

 

1,834

 

 

 

161,884

 

 

62,524

Provision for income taxes

 

6,562

 

 

7,445

 

 

7,467

 

 

 

9,913

 

 

(218

)

 

 

31,387

 

 

11,092

NET INCOME

$

27,266

 

$

30,908

 

$

35,175

 

 

$

37,148

 

$

2,052

 

 

$

130,497

 

$

51,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.51

 

$

0.58

 

$

0.66

 

 

$

0.70

 

$

0.04

 

 

$

2.45

 

$

1.48

Diluted

$

0.51

 

$

0.58

 

$

0.66

 

 

$

0.70

 

$

0.04

 

 

$

2.45

 

$

1.47

Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

 

 

Three Months Ended

 

Years Ended

 

2023

 

2022

 

2023

 

2022

 

December 31

 

September 30

 

June 30

 

March 31

 

December 31

 

December 31

 

December 31

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

27,266

 

 

$

30,908

 

 

$

35,175

 

 

$

37,148

 

 

$

2,052

 

 

$

130,497

 

 

$

51,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic

$

0.51

 

 

$

0.58

 

 

$

0.66

 

 

$

0.70

 

 

$

0.04

 

 

$

2.45

 

 

$

1.48

 

Earnings per share, diluted

$

0.51

 

 

$

0.58

 

 

$

0.66

 

 

$

0.70

 

 

$

0.04

 

 

$

2.45

 

 

$

1.47

 

Dividends per share

$

0.13

 

 

$

0.13

 

 

$

0.13

 

 

$

0.13

 

 

$

0.13

 

 

$

0.52

 

 

$

0.43

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets(A)

 

1.02

%

 

 

1.14

%

 

 

1.31

%

 

 

1.38

%

 

 

0.07

%

 

 

1.21

%

 

 

0.64

%

Return on average equity(A)

 

7.33

%

 

 

8.34

%

 

 

9.67

%

 

 

10.62

%

 

 

0.60

%

 

 

8.96

%

 

 

5.69

%

Return on average tangible equity(A)(B)

 

12.61

%

 

 

14.47

%

 

 

17.05

%

 

 

19.32

%

 

 

1.16

%

 

 

15.75

%

 

 

9.16

%

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

 

4.40

%

 

 

4.37

%

 

 

4.49

%

 

 

4.80

%

 

 

4.71

%

 

 

4.51

%

 

 

3.94

%

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

 

3.91

%

 

 

3.87

%

 

 

3.97

%

 

 

4.38

%

 

 

4.38

%

 

 

4.03

%

 

 

3.83

%

Efficiency ratio(D)

 

69.21

%

 

 

63.50

%

 

 

60.83

%

 

 

58.96

%

 

 

65.14

%

 

 

63.02

%

 

 

64.23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

Stellar Bancorp, Inc. (Consolidated)

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity to assets

 

14.29

%

 

 

13.70

%

 

 

13.53

%

 

 

13.64

%

 

 

12.69

%

 

 

14.29

%

 

 

12.69

%

Tangible equity to tangible assets(B)

 

9.04

%

 

 

8.37

%

 

 

8.19

%

 

 

8.15

%

 

 

7.24

%

 

 

9.04

%

 

 

7.24

%

Estimated Total capital ratio (to risk-weighted assets)

 

14.02

%

 

 

13.42

%

 

 

13.03

%

 

 

12.72

%

 

 

12.39

%

 

 

14.02

%

 

 

12.39

%

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

 

11.77

%

 

 

11.14

%

 

 

10.67

%

 

 

10.39

%

 

 

10.04

%

 

 

11.77

%

 

 

10.04

%

Estimated Tier 1 capital (to risk-weighted assets)

 

11.89

%

 

 

11.25

%

 

 

10.78

%

 

 

10.50

%

 

 

10.15

%

 

 

11.89

%

 

 

10.15

%

Estimated Tier 1 leverage (to average tangible assets)

 

10.18

%

 

 

9.82

%

 

 

9.51

%

 

 

9.01

%

 

 

8.55

%

 

 

10.18

%

 

 

8.55

%

Stellar Bank

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Total capital ratio (to risk-weighted assets)

 

13.65

%

 

 

13.13

%

 

 

12.80

%

 

 

12.42

%

 

 

12.02

%

 

 

13.65

%

 

 

12.02

%

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

 

12.20

%

 

 

11.63

%

 

 

11.22

%

 

 

10.87

%

 

 

10.46

%

 

 

12.20

%

 

 

10.46

%

Estimated Tier 1 capital (to risk-weighted assets)

 

12.20

%

 

 

11.63

%

 

 

11.22

%

 

 

10.87

%

 

 

10.46

%

 

 

12.20

%

 

 

10.46

%

Estimated Tier 1 leverage (to average tangible assets)

 

10.44

%

 

 

10.15

%

 

 

9.89

%

 

 

9.35

%

 

 

8.81

%

 

 

10.44

%

 

 

8.81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Data

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

53,282

 

 

 

53,313

 

 

 

53,297

 

 

 

53,021

 

 

 

52,715

 

 

 

53,229

 

 

 

34,738

 

Diluted

 

53,350

 

 

 

53,380

 

 

 

53,375

 

 

 

53,138

 

 

 

52,973

 

 

 

53,313

 

 

 

35,007

 

Period end shares outstanding

 

53,291

 

 

 

53,322

 

 

 

53,303

 

 

 

53,296

 

 

 

52,955

 

 

 

53,291

 

 

 

52,955

 

Book value per share

$

28.54

 

 

$

27.40

 

 

$

27.37

 

 

$

27.14

 

 

$

26.12

 

 

$

28.54

 

 

$

26.12

 

Tangible book value per share(B)

$

17.02

 

 

$

15.76

 

 

$

15.60

 

 

$

15.24

 

 

$

14.02

 

 

$

17.02

 

 

$

14.02

 

Employees - full-time equivalents

 

998

 

 

 

1,008

 

 

 

1,004

 

 

 

1,055

 

 

 

1,025

 

 

 

998

 

 

 

1,025

 

(A)

Interim periods annualized.

(B)

Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures on page 10 of this Earnings Release.

(C)

Net interest margin represents net interest income divided by average interest-earning assets.

(D)

Represents total noninterest expense divided by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale of 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

 

December 31, 2023

 

September 30, 2023

 

December 31, 2022

 

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

$

7,973,780

 

 

$

139,114

 

6.92

%

 

$

8,043,706

 

 

$

138,948

 

6.85

%

 

$

7,666,502

 

 

$

116,145

 

6.01

%

Securities

 

1,386,079

 

 

 

10,040

 

2.87

%

 

 

1,471,916

 

 

 

9,930

 

2.68

%

 

 

1,795,082

 

 

 

12,891

 

2.85

%

Deposits in other financial institutions

 

217,068

 

 

 

3,021

 

5.52

%

 

 

181,931

 

 

 

2,391

 

5.21

%

 

 

354,117

 

 

 

2,933

 

3.29

%

Total interest-earning assets

 

9,576,927

 

 

$

152,175

 

6.30

%

 

 

9,697,553

 

 

$

151,269

 

6.19

%

 

 

9,815,701

 

 

$

131,969

 

5.33

%

Allowance for credit losses on loans

 

(92,992

)

 

 

 

 

 

 

(99,892

)

 

 

 

 

 

 

(88,150

)

 

 

 

 

Noninterest-earning assets

 

1,142,438

 

 

 

 

 

 

 

1,143,634

 

 

 

 

 

 

 

1,218,458

 

 

 

 

 

Total assets

$

10,626,373

 

 

 

 

 

 

$

10,741,295

 

 

 

 

 

 

$

10,946,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and

Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

deposits

$

1,420,892

 

 

$

10,548

 

2.95

%

 

$

1,400,508

 

 

$

10,415

 

2.95

%

 

$

1,465,711

 

 

$

5,422

 

1.47

%

Money market and savings

deposits

 

2,163,348

 

 

 

14,485

 

2.66

%

 

 

2,166,610

 

 

 

13,142

 

2.41

%

 

 

2,705,984

 

 

 

6,984

 

1.02

%

Certificates and other time

deposits

 

1,461,227

 

 

 

15,075

 

4.09

%

 

 

1,400,367

 

 

 

13,282

 

3.76

%

 

 

932,058

 

 

 

2,083

 

0.89

%

Borrowed funds

 

275,694

 

 

 

4,154

 

5.98

%

 

 

411,212

 

 

 

5,801

 

5.60

%

 

 

37,824

 

 

 

417

 

4.37

%

Subordinated debt

 

109,713

 

 

 

1,983

 

7.17

%

 

 

109,608

 

 

 

1,908

 

6.91

%

 

 

109,307

 

 

 

1,449

 

5.26

%

Total interest-bearing liabilities

 

5,430,874

 

 

$

46,245

 

3.38

%

 

 

5,488,305

 

 

$

44,548

 

3.22

%

 

 

5,250,884

 

 

$

16,355

 

1.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-Bearing

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

deposits

 

3,624,417

 

 

 

 

 

 

 

3,695,592

 

 

 

 

 

 

 

4,199,982

 

 

 

 

 

Other liabilities

 

95,705

 

 

 

 

 

 

 

86,389

 

 

 

 

 

 

 

147,205

 

 

 

 

 

Total liabilities

 

9,150,996

 

 

 

 

 

 

 

9,270,286

 

 

 

 

 

 

 

9,598,071

 

 

 

 

 

Shareholders' equity

 

1,475,377

 

 

 

 

 

 

 

1,471,009

 

 

 

 

 

 

 

1,347,938

 

 

 

 

 

Total liabilities and

shareholders' equity

$

10,626,373

 

 

 

 

 

 

$

10,741,295

 

 

 

 

 

 

$

10,946,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread

 

 

 

 

2.92

%

 

 

 

 

 

2.97

%

 

 

 

 

 

4.09

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income and margin

 

 

$

105,930

 

4.39

%

 

 

 

$

106,721

 

4.37

%

 

 

 

$

115,614

 

4.67

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income and net

interest margin (tax equivalent)

 

 

$

106,121

 

4.40

%

 

 

 

$

106,919

 

4.37

%

 

 

 

$

116,574

 

4.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of funds

 

 

 

 

2.03

%

 

 

 

 

 

1.92

%

 

 

 

 

 

0.69

%

Cost of deposits

 

 

 

 

1.84

%

 

 

 

 

 

1.69

%

 

 

 

 

 

0.62

%

Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

 

 

Years Ended December 31,

 

2023

 

2022

 

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

$

7,961,911

 

 

$

537,722

 

6.75

%

 

$

5,171,944

 

 

$

280,375

 

5.42

%

Securities

 

1,490,588

 

 

 

41,047

 

2.75

%

 

 

1,779,425

 

 

 

37,861

 

2.13

%

Deposits in other financial institutions

 

242,803

 

 

 

12,048

 

4.96

%

 

 

462,075

 

 

 

4,758

 

1.03

%

Total interest-earning assets

 

9,695,302

 

 

$

590,817

 

6.09

%

 

 

7,413,444

 

 

$

322,994

 

4.36

%

Allowance for credit losses on loans

 

(95,668

)

 

 

 

 

 

 

(59,099

)

 

 

 

 

Noninterest-earning assets

 

1,147,232

 

 

 

 

 

 

 

633,928

 

 

 

 

 

Total assets

$

10,746,866

 

 

 

 

 

 

$

7,988,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand deposits

$

1,464,015

 

 

$

38,689

 

2.64

%

 

$

1,140,575

 

 

$

9,278

 

0.81

%

Money market and savings deposits

 

2,259,264

 

 

 

48,646

 

2.15

%

 

 

1,841,348

 

 

 

9,861

 

0.54

%

Certificates and other time deposits

 

1,239,345

 

 

 

41,286

 

3.33

%

 

 

1,034,491

 

 

 

7,825

 

0.76

%

Borrowed funds

 

318,721

 

 

 

17,807

 

5.59

%

 

 

61,773

 

 

 

1,216

 

1.97

%

Subordinated debt

 

109,560

 

 

 

7,630

 

6.96

%

 

 

109,111

 

 

 

5,856

 

5.37

%

Total interest-bearing liabilities

 

5,390,905

 

 

$

154,058

 

2.86

%

 

 

4,187,298

 

 

 

34,036

 

0.81

%

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

3,814,651

 

 

 

 

 

 

 

2,833,865

 

 

 

 

 

Other liabilities

 

85,376

 

 

 

 

 

 

 

62,581

 

 

 

 

 

Total liabilities

 

9,290,932

 

 

 

 

 

 

 

7,083,744

 

 

 

 

 

Shareholders' equity

 

1,455,934

 

 

 

 

 

 

 

904,529

 

 

 

 

 

Total liabilities and shareholders' equity

$

10,746,866

 

 

 

 

 

 

$

7,988,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest rate spread

 

 

 

 

3.23

%

 

 

 

 

 

3.55

%

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income and margin

 

 

$

436,759

 

4.50

%

 

 

 

$

288,958

 

3.90

%

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income and net interest margin (tax equivalent)

 

 

$

437,670

 

4.51

%

 

 

 

$

292,152

 

3.94

%

 

 

 

 

 

 

 

 

 

 

 

 

Cost of funds

 

 

 

 

1.67

%

 

 

 

 

 

0.48

%

Cost of deposits

 

 

 

 

1.47

%

 

 

 

 

 

0.39

%

Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

 

 

Three Months Ended

 

2023

 

2022

 

December 31

 

September 30

 

June 30

 

March 31

 

December 31

 

(Dollars in thousands)

Period-end Loan Portfolio:

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

1,409,002

 

 

$

1,474,600

 

 

$

1,512,476

 

 

$

1,477,340

 

 

$

1,455,795

 

Paycheck Protection Program (PPP)

 

5,100

 

 

 

5,968

 

 

 

8,027

 

 

 

11,081

 

 

 

13,226

 

Real estate:

 

 

 

 

 

 

 

 

 

Commercial real estate (including multi-family residential)

 

4,071,807

 

 

 

4,076,606

 

 

 

4,038,487

 

 

 

4,014,609

 

 

 

3,931,480

 

Commercial real estate construction and land development

 

1,060,406

 

 

 

1,078,265

 

 

 

1,136,124

 

 

 

1,034,538

 

 

 

1,037,678

 

1-4 family residential (including home equity)

 

1,047,174

 

 

 

1,024,945

 

 

 

1,009,439

 

 

 

1,008,362

 

 

 

1,000,956

 

Residential construction

 

267,357

 

 

 

289,553

 

 

 

311,208

 

 

 

292,143

 

 

 

268,150

 

Consumer and other

 

64,287

 

 

 

54,591

 

 

 

52,957

 

 

 

47,971

 

 

 

47,466

 

Total loans held for investment

$

7,925,133

 

 

$

8,004,528

 

 

$

8,068,718

 

 

$

7,886,044

 

 

$

7,754,751

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing

$

3,546,815

 

 

$

3,656,288

 

 

$

3,713,536

 

 

$

3,877,859

 

 

$

4,230,169

 

Interest-bearing

 

 

 

 

 

 

 

 

 

Demand

 

1,659,999

 

 

 

1,397,492

 

 

 

1,437,509

 

 

 

1,394,244

 

 

 

1,591,828

 

Money market and savings

 

2,136,777

 

 

 

2,128,950

 

 

 

2,174,073

 

 

 

2,401,840

 

 

 

2,575,923

 

Certificates and other time

 

1,529,876

 

 

 

1,503,891

 

 

 

1,441,251

 

 

 

1,064,932

 

 

 

869,712

 

Total interest-bearing deposits

 

5,326,652

 

 

 

5,030,333

 

 

 

5,052,833

 

 

 

4,861,016

 

 

 

5,037,463

 

Total deposits

$

8,873,467

 

 

$

8,686,621

 

 

$

8,766,369

 

 

$

8,738,875

 

 

$

9,267,632

 

 

 

 

 

 

 

 

 

 

 

Asset Quality:

 

 

 

 

 

 

 

 

 

Nonaccrual loans

$

39,191

 

 

$

38,291

 

 

$

43,349

 

 

$

43,413

 

 

$

45,048

 

Accruing loans 90 or more days past due

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming loans

 

39,191

 

 

 

38,291

 

 

 

43,349

 

 

 

43,413

 

 

 

45,048

 

Other repossessed assets

 

 

 

 

 

 

 

 

 

 

124

 

 

 

 

Total nonperforming assets

$

39,191

 

 

$

38,291

 

 

$

43,349

 

 

$

43,537

 

 

$

45,048

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs

$

2,577

 

 

$

8,116

 

 

$

236

 

 

$

192

 

 

$

5,707

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans:

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

5,048

 

 

$

14,991

 

 

$

22,968

 

 

$

23,329

 

 

$

25,402

 

Real estate:

 

 

 

 

 

 

 

 

 

Commercial real estate (including multi-family residential)

 

16,699

 

 

 

13,563

 

 

 

8,221

 

 

 

9,026

 

 

 

9,970

 

Commercial real estate construction and land development

 

5,043

 

 

 

170

 

 

 

388

 

 

 

27

 

 

 

 

1-4 family residential (including home equity)

 

8,874

 

 

 

8,442

 

 

 

10,880

 

 

 

10,586

 

 

 

9,404

 

Residential construction

 

3,288

 

 

 

635

 

 

 

665

 

 

 

195

 

 

 

 

Consumer and other

 

239

 

 

 

490

 

 

 

227

 

 

 

250

 

 

 

272

 

Total nonaccrual loans

$

39,191

 

 

$

38,291

 

 

$

43,349

 

 

$

43,413

 

 

$

45,048

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

 

 

 

Nonperforming assets to total assets

 

0.37

%

 

 

0.36

%

 

 

0.40

%

 

 

0.41

%

 

 

0.41

%

Nonperforming loans to total loans

 

0.49

%

 

 

0.48

%

 

 

0.54

%

 

 

0.55

%

 

 

0.58

%

Allowance for credit losses on loans to nonperforming loans

 

233.94

%

 

 

244.38

%

 

 

231.14

%

 

 

221.56

%

 

 

206.85

%

Allowance for credit losses on loans to total loans

 

1.16

%

 

 

1.17

%

 

 

1.24

%

 

 

1.22

%

 

 

1.20

%

Net charge-offs to average loans (annualized)

 

0.13

%

 

 

0.40

%

 

 

0.01

%

 

 

0.01

%

 

 

0.30

%

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

 

Years Ended

 

2023

 

2022

 

2023

 

2022

 

December 31

 

September 30

 

June 30

 

March 31

 

December 31

 

December 31

 

December 31

 

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

Net income

$

27,266

 

 

$

30,908

 

 

$

35,175

 

 

$

37,148

 

 

$

2,052

 

 

$

130,497

 

 

$

51,432

 

Add: Provision for credit losses

 

1,047

 

 

 

2,315

 

 

 

1,915

 

 

 

3,666

 

 

 

44,793

 

 

 

8,943

 

 

 

50,712

 

Add: Provision for income taxes

 

6,562

 

 

 

7,445

 

 

 

7,467

 

 

 

9,913

 

 

 

(218

)

 

 

31,387

 

 

 

11,092

 

Pre-tax, pre-provision income

$

34,875

 

 

$

40,668

 

 

$

44,557

 

 

$

50,727

 

 

$

46,627

 

 

$

170,827

 

 

$

113,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total average assets

$

10,626,373

 

 

$

10,741,295

 

 

$

10,740,138

 

 

$

10,882,533

 

 

$

10,946,009

 

 

$

10,746,866

 

 

$

7,988,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1.30

%

 

 

1.50

%

 

 

1.66

%

 

 

1.89

%

 

 

1.69

%

 

 

1.59

%

 

 

1.42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total shareholders' equity

$

1,521,018

 

 

$

1,460,846

 

 

$

1,458,680

 

 

$

1,446,216

 

 

$

1,383,176

 

 

$

1,521,018

 

 

$

1,383,176

 

Less: Goodwill and core deposit intangibles, net

 

614,030

 

 

 

620,262

 

 

 

627,065

 

 

 

633,925

 

 

 

640,785

 

 

 

614,030

 

 

 

640,785

 

Tangible shareholders’ equity

$

906,988

 

 

$

840,584

 

 

$

831,615

 

 

$

812,291

 

 

$

742,391

 

 

$

906,988

 

 

$

742,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding at end of period

 

53,291

 

 

 

53,322

 

 

 

53,303

 

 

 

53,296

 

 

 

52,955

 

 

 

53,291

 

 

 

52,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible book value per share

$

17.02

 

 

$

15.76

 

 

$

15.60

 

 

$

15.24

 

 

$

14.02

 

 

$

17.02

 

 

$

14.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shareholders' equity

$

1,475,377

 

 

$

1,471,009

 

 

$

1,458,473

 

 

$

1,418,082

 

 

$

1,347,938

 

 

$

1,455,934

 

 

$

904,529

 

Less: Average goodwill and core deposit intangibles, net

 

617,236

 

 

 

623,864

 

 

 

630,854

 

 

 

638,110

 

 

 

658,107

 

 

 

627,449

 

 

 

343,257

 

Average tangible shareholders’ equity

$

858,141

 

 

$

847,145

 

 

$

827,619

 

 

$

779,972

 

 

$

689,831

 

 

$

828,485

 

 

$

561,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible equity(B)

 

12.61

%

 

 

14.47

%

 

 

17.05

%

 

 

19.32

%

 

 

1.18

%

 

 

15.75

%

 

 

9.16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

10,647,139

 

 

$

10,665,460

 

 

$

10,778,351

 

 

$

10,604,718

 

 

$

10,900,437

 

 

$

10,647,139

 

 

$

10,900,437

 

Less: Goodwill and core deposit intangibles, net

 

614,030

 

 

 

620,262

 

 

 

627,065

 

 

 

633,925

 

 

 

640,785

 

 

 

614,030

 

 

 

640,785

 

Tangible assets

$

10,033,109

 

 

$

10,045,198

 

 

$

10,151,286

 

 

$

9,970,793

 

 

$

10,259,652

 

 

$

10,033,109

 

 

$

10,259,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible equity to tangible assets

 

9.04

%

 

 

8.37

%

 

 

8.19

%

 

 

8.15

%

 

 

7.24

%

 

 

9.04

%

 

 

7.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (tax equivalent)

$

106,121

 

 

$

106,919

 

 

$

108,509

 

 

$

116,119

 

 

$

116,574

 

 

$

437,670

 

 

$

292,152

 

Less: Purchase accounting accretion

 

11,726

 

 

 

12,400

 

 

 

12,572

 

 

 

10,104

 

 

 

8,160

 

 

 

46,802

 

 

 

8,370

 

Adjusted net interest income (tax equivalent)

$

94,395

 

 

$

94,519

 

 

$

95,937

 

 

$

106,015

 

 

$

108,414

 

 

$

390,868

 

 

$

283,782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

$

9,576,927

 

 

$

9,697,553

 

 

$

9,693,527

 

 

$

9,815,803

 

 

$

9,815,701

 

 

$

9,695,302

 

 

$

7,413,444

 

Net interest margin (tax equivalent) excluding PAA

 

3.91

%

 

 

3.87

%

 

 

3.97

%

 

 

4.38

%

 

 

4.38

%

 

 

4.03

%

 

 

3.83

%

(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.

 

Investor relations

IR@stellar.bank

Source: Stellar Bancorp, Inc.

FAQ

What was Stellar Bancorp, Inc.'s net income for the year ended December 31, 2023?

Stellar Bancorp, Inc. reported net income of $130.5 million for the year ended December 31, 2023.

What was the total risk-based capital ratio for Stellar Bancorp, Inc. at December 31, 2023?

The company's total risk-based capital ratio increased to 14.02% at December 31, 2023, from 12.39% at December 31, 2022.

What was the tax equivalent net interest margin for the fourth quarter of 2023?

The tax equivalent net interest margin was 4.40% for the fourth quarter of 2023, up from 4.37% in the third quarter of 2023.

What non-GAAP financial measures does Stellar Bancorp, Inc. use to evaluate its performance?

Stellar's management uses non-GAAP financial measures to evaluate its performance.

Stellar Bancorp, Inc.

NYSE:STEL

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