Stellar Bancorp (NYSE: STEL) posts Q1 2026 growth as Prosperity merger advances
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Stellar Bancorp, Inc. reported first quarter 2026 net income of $27.0 million, or $0.53 diluted earnings per share, up from $26.1 million, or $0.51, in the fourth quarter of 2025. Adjusted net income, excluding $3.3 million of acquisition and merger-related expenses, was $29.6 million, or $0.58 per diluted share.
Loans held for investment grew to $7.59 billion, an increase of $287.4 million or 3.94% linked-quarter. Net interest income rose to $105.9 million, and the tax-equivalent net interest margin improved to 4.24%, or 4.10% excluding purchase accounting accretion.
Total assets reached $10.89 billion, while deposits were $8.98 billion. Asset quality remained controlled, with nonperforming assets at $70.1 million, or 0.64% of total assets, and an allowance for credit losses on loans of 1.13% of total loans.
The company redeemed the remaining $30 million of its fixed-to-floating rate subordinated notes on April 1, 2026. Stellar also highlighted progress on its proposed merger with Prosperity Bancshares, Inc., noting receipt of all required regulatory approvals and a shareholder meeting set for May 27, 2026 to consider the transaction.
Positive
- None.
Negative
- None.
Insights
Stellar posts steady Q1 growth while preparing for Prosperity merger.
Stellar Bancorp delivered modest quarterly improvement with net income of $27.0 million and diluted EPS of $0.53, slightly above the prior quarter. Core profitability looked stronger on an adjusted basis, with net income of $29.6 million and EPS of $0.58 excluding merger-related costs.
Loan growth of $287.4 million to $7.59 billion and a higher tax-equivalent net interest margin of 4.24% (or 4.10% excluding purchase accounting accretion) underpin the earnings trend. Asset quality metrics remain manageable, with nonperforming assets at 0.64% of total assets and an allowance for credit losses of 1.13% of total loans.
On capital and funding, total assets reached $10.89 billion and deposits were $8.98 billion. The redemption of $30 million of subordinated notes modestly simplifies the capital stack. Strategically, the pending merger with Prosperity Bancshares—all regulatory approvals received and a shareholder vote scheduled for May 27, 2026—is the next key milestone, with closing expected on or about July 1, 2026 subject to shareholder approval and customary conditions.
8-K Event Classification
3 items: 2.02, 7.01, 9.01
3 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 7.01
Regulation FD Disclosure
Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Net income Q1 2026: $27.0 million
Diluted EPS Q1 2026: $0.53 per share
Adjusted diluted EPS Q1 2026: $0.58 per share
+5 more
8 metrics
Net income Q1 2026
$27.0 million
Compared to $26.1 million in Q4 2025
Diluted EPS Q1 2026
$0.53 per share
Up from $0.51 in Q4 2025
Adjusted diluted EPS Q1 2026
$0.58 per share
Excludes $3.3 million merger-related expenses
Loans held for investment
$7.59 billion
As of March 31, 2026; up $287.4 million from December 31, 2025
Net interest income
$105.9 million
Q1 2026; up from $103.4 million in Q4 2025
Net interest margin (tax equivalent)
4.24%
Q1 2026; 4.10% excluding purchase accounting accretion
Total assets
$10.89 billion
As of March 31, 2026
Nonperforming assets ratio
0.64%
Nonperforming assets to total assets at March 31, 2026
Key Terms
net interest margin, purchase accounting adjustments, allowance for credit losses, nonperforming assets, +2 more
6 terms
net interest margin financial
"The tax equivalent net interest margin was 4.24% for the first quarter of 2026 compared to 4.21% for the fourth quarter of 2025."
Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.
purchase accounting adjustments financial
"The tax equivalent net interest margin, excluding Purchase Accounting Adjustments (“PAA”), was 4.10%(1) for the first quarter of 2026."
Purchase accounting adjustments are one-time changes made to a company’s financial statements after it buys another business, reallocating the purchase price to the acquired assets and liabilities at their fair values. Like re-appraising a house and its contents after a sale, these adjustments can shift reported assets, liabilities and future profit figures, so investors watch them because they affect balance sheets, reported earnings and comparisons with past performance.
allowance for credit losses financial
"The allowance for credit losses on loans as a percentage of total loans was 1.13% at March 31, 2026."
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
nonperforming assets financial
"Nonperforming assets totaled $70.1 million, or 0.64% of total assets, at March 31, 2026."
Nonperforming assets are loans or investments that are not generating expected payments or returns because the borrower has fallen behind on payments or the investment has lost value. They matter to investors because a high level of nonperforming assets can indicate financial trouble for a bank or institution, potentially affecting its stability and profitability.
efficiency ratio financial
"The efficiency ratio was 63.27%(1) for the first quarter of 2026 compared to 61.64%(1) for the fourth quarter of 2025."
A measure of how much a company spends to produce each dollar of revenue, usually shown as operating expenses divided by revenue and expressed as a percentage. Think of it as a household’s budget: a lower percentage means more of each dollar earned stays as profit, while a higher number means costs are eating into returns. Investors use it to judge cost control and compare how efficiently companies turn revenue into earnings, especially in banks and financial firms.
Agreement and Plan of Merger regulatory
"On January 27, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Prosperity Bancshares, Inc."
An Agreement and Plan of Merger is a formal document where two companies agree to combine into one, outlining how the process will happen. It’s like a step-by-step plan for merging, and it matters because it shows both sides have agreed on the details before the official transition takes place.
Earnings Snapshot
Net income: $27.0 million
Q1 2026
Net income
$27.0 million
Diluted EPS
$0.53
Net interest income
$105.9 million
Net interest margin (tax equivalent)
4.24%
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________
Form 8-K
____________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): April 28, 2026
(Exact Name of Registrant as Specified in Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||
(Address of Principal Executive Offices) (Zip Code)
(713 ) 210-7600
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
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| NYSE Texas | ||||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company £
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £
Item 2.02. Results of Operations and Financial Condition.
On April 28, 2026 Stellar Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter of 2026. A copy of the press release is furnished as Exhibit 99.1 hereto, respectively, and incorporated herein by reference.
In accordance with General Instruction B.2 to Form 8-K, the information furnished in this Item 2.02, Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, (the ”Securities Act”), except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure
The earnings release will be posted on the Company’s website. The earnings release and presentation materials are attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In accordance with General Instruction B.2 to Form 8-K, the information furnished in this Item 7.01, including Exhibit 99.2 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
Exhibits. The following are furnished as exhibits to this Current Report on Form 8-K:
| Exhibit Number | Description of Exhibit | ||||
| 99.1 | Q1 2026 Earnings Release | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
Forward-Looking Statements
This press release contains statements regarding the proposed transaction between Prosperity and Stellar; future financial and operating results; benefits and synergies of the proposed transaction; future opportunities for Prosperity; the issuance of common stock of Prosperity contemplated by the Merger Agreement; the expected timing of the closing of the proposed transaction contemplated by the Merger Agreement; the ability of the parties to complete the proposed transaction considering the various closing conditions and any other statements about future expectations that constitute forward-looking statements within the meaning of the federal securities laws, including the meaning of the Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, oral or written forward-looking statements may also be included in other information released to the public. Such forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,” “is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,” “will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will result,” “would be,” variations of such words or phrases (including where the word “could,” “may,” or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective . Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates, and projections about Prosperity, Stellar and their respective subsidiaries or related to the proposed transaction between Prosperity and Stellar and are subject to significant risks and uncertainties that could cause actual results to differ materially from the results expressed in such statements.
These forward-looking statements may include information about Prosperity’s and Stellar’s possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity’s and Stellar’s future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity’s and Stellar’s loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity’s and Stellar’s future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity’s and Stellar’s operations, results of operations, financial condition, and future
economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement.
These forward-looking statements are not guarantees of future performance and are based on expectations and assumptions Prosperity and Stellar currently believe to be valid. Because forward-looking statements relate to future results and occurrences, many of which are outside of the control of Prosperity and Stellar, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Many possible events or factors could adversely affect the future financial results and performance of Prosperity, Stellar or the combined company and could cause those results or performance to differ materially from those expressed in or implied by the forward-looking statements. Such risks and uncertainties include, among others: (1) the risk that the cost savings and synergies from the proposed transaction may not be fully realized or may take longer than anticipated to be realized, (2) disruption to Prosperity’s and Stellar’s businesses as a result of the announcements and pendency of the proposed transaction, (3) the risk that the integration of Stellar’s businesses and operations into Prosperity will be materially delayed or will be more costly or difficult than expected, or that Prosperity is otherwise unable to successfully integrate Stellar’s business into its own, including as a result of unexpected factors or events, (4) the failure to obtain the necessary approval by the shareholders of Stellar, (5) reputational risk and the reaction of each company’s customers, suppliers, employees or other business partners to the proposed transaction, (6) the failure of the closing conditions in the Merger Agreement to be satisfied, or any unexpected delay in closing the proposed transaction or the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (7) the dilution caused by the issuances of additional shares of Prosperity’s common stock in the proposed transaction, (8) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (9) the outcome of any legal or regulatory proceedings that may be currently pending or later instituted against Prosperity before or after the proposed transaction, or against Stellar, (10) diversion of management’s attention from ongoing business operations and (11) general competitive, economic, political and market conditions and other factors that may affect future results of Prosperity and Stellar. Prosperity and Stellar disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. These and various other risks, uncertainties, assumptions, and factors are discussed in the Annual Reports on Form 10-K for the year ended December 31, 2025, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed by Prosperity or Stellar and in other filings made by Prosperity and Stellar with the Securities and Exchange Commission (the “SEC”) from time to time.
Additional Information about the Transaction and Where to Find It
In connection with the proposed transaction, Prosperity has filed with the SEC a registration statement (the “Registration Statement”) on Form S-4 (File No. 333-294882) to register the shares of Prosperity common stock to be issued to the shareholders of Stellar in connection with the proposed transaction. The Registration Statement includes a prospectus of Prosperity and a proxy statement of Stellar included therein (the “proxy statement/prospectus”), which will be sent to the shareholders of Stellar in connection with the proposed transaction. The Registration Statement was declared effective on April 21, 2026, at which time Prosperity filed a final prospectus and Stellar filed a definitive proxy statement. The mailing of the proxy statement/prospectus to Stellar shareholders commenced on or about April 23, 2026. This communication is not a substitute for the Registration Statement, the proxy statement/prospectus or any other document that may be filed by Prosperity or Stellar with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE INTO THE PROXY STATEMENT/PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain the Registration Statement and the proxy statement/prospectus and other documents that are filed with the SEC by Prosperity or Stellar, as applicable, free of charge from the SEC’s website at https://www.sec.gov or through the investor relations section of Prosperity’s website at https://www.prosperitybankusa.com/investor-relations/ or Stellar’s website at https://ir.stellar.bank.
Participants in the Solicitation
Prosperity, Stellar and certain of their directors and executive officers and other employees may be deemed to be participants in the solicitation of proxies from Stellar’s shareholders in connection with the proposed transaction. Information about the directors and executive officers of Prosperity and their ownership of Prosperity common stock is contained in the definitive proxy statement for Prosperity’s 2026 annual meeting of shareholders (the “Prosperity Annual Meeting Proxy Statement”), which was filed with the SEC on March 16, 2026, including under the headings “Item 1. Election of Directors,” “Corporate Governance,” “Executive Compensation and Other Matters,” “Item 3. Advisory Vote on Executive Compensation,” and “Beneficial Ownership of Common Stock by Management of the Company and Principal Shareholders.” Information about the directors and executive officers of Stellar and their ownership of Stellar common stock is contained in Amendment No. 1 to the Annual Report on Form 10-K for the year ended December 31, 2025 of Stellar (the “Stellar 10-K/A”), which was filed with the SEC on April 17, 2026. Additional information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the shareholders of Stellar in
connection with the proposed transaction, including a description of their direct or indirect interests, by security holdings or otherwise, is included in the proxy statement/prospectus relating to the proposed transaction filed with the SEC. To the extent holdings of securities by potential participants (or the identity of such participants) have changed since the information printed in the Prosperity Annual Meeting Proxy Statement or the Stellar 10-K/A, such information has been or will be reflected on Statements of Change in Ownership on Forms 3 and 4 filed with the SEC, as applicable. Free copies of the proxy statement/prospectus relating to the proposed transaction and free copies of the other SEC filings to which reference is made in this paragraph may be obtained from the SEC’s website at https://www.sec.gov or through the investor relations section of Prosperity’s website at https://www.prosperitybankusa.com/investor-relations/ or Stellar’s website at https://ir.stellar.bank.
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or sell, or the solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, invitation, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, and otherwise in accordance with applicable law.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
STELLAR BANCORP, INC. | ||||||||
| Date: April 28, 2026 | By: | /s/ Paul P. Egge | ||||||
| Paul P. Egge | ||||||||
| Chief Financial Officer | ||||||||
Exhibit 99.1
PRESS RELEASE
STELLAR BANCORP, INC. REPORTS
FIRST QUARTER 2026 RESULTS
HOUSTON, April 28, 2026 - Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $27.0 million, or diluted earnings per share of $0.53, for the first quarter of 2026, compared to net income of $26.1 million, or diluted earnings per share of $0.51, for the fourth quarter of 2025.
“We are pleased to announce Stellar Bancorp’s first quarter results, building on the momentum that began in the second half of last year,” said Robert R. Franklin, Jr., Chief Executive Officer of Stellar Bancorp, Inc. “During the quarter, we grew our loan portfolio and expanded our net interest margin, driving improved core earnings for our shareholders. These results underscore the strength of our franchise and provide a strong foundation as we move forward with our proposed combination with Prosperity Bancshares.”
“We have received the required regulatory approvals and have scheduled a special meeting of shareholders for May 27, 2026 to consider the proposed transaction,” Franklin added. “Integration planning and consolidation discussions are progressing, and we believe the combination positions us to create a Texas banking platform with scale, enhanced capabilities and long‑term value. Our markets remain resilient, and we are optimistic about the opportunities ahead,” Franklin concluded.
Financial Highlights
•Loan Growth: During the first quarter, loans held for investment increased $287.4 million, representing linked-quarter growth of 3.94%, or 16.0% annualized.
•Strong Net Interest Income and Margin: Net interest income was $105.9 million for the first quarter of 2026 up from $103.4 million for the fourth quarter of 2025. The tax equivalent net interest margin was 4.24% for the first quarter of 2026 compared to 4.21% for the fourth quarter of 2025. The tax equivalent net interest margin, excluding Purchase Accounting Adjustments (“PAA”), was 4.10%(1) for the first quarter of 2026 compared to 4.06%(1) for the fourth quarter of 2025.
•Earnings Growth: Net income for the first quarter of 2026 was $27.0 million, or diluted earnings per share of $0.53, which is up from $26.1 million, or diluted earnings per share of $0.51, for the fourth quarter of 2025. Excluding acquisition and merger-related expenses, adjusted net income was $29.6 million(1), or diluted earnings per share of $0.58, for the first quarter of 2026.
•Paydown of Subordinated Notes: On April 1, 2026, the Company redeemed the remaining $30 million of its Fixed-to-Floating Rate Subordinated Notes outstanding as of March 31, 2026.
| Three Months Ended | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | ||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 105,931 | $ | 103,383 | $ | 100,644 | $ | 98,335 | $ | 99,258 | ||||||||||||||||||||||
Pre-tax, pre-provision income(1) | $ | 35,877 | $ | 36,733 | $ | 32,488 | $ | 34,122 | $ | 34,597 | ||||||||||||||||||||||
| Acquisition and merger-related expense | 3,307 | — | — | — | — | |||||||||||||||||||||||||||
Adjusted pre-tax, pre-provision income(1) | $ | 39,184 | $ | 36,733 | $ | 32,488 | $ | 34,122 | $ | 34,597 | ||||||||||||||||||||||
| Net income | $ | 26,966 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | ||||||||||||||||||||||
| Acquisition and merger-related expense, net of tax | 2,613 | — | — | — | — | |||||||||||||||||||||||||||
Adjusted net income(1) | $ | 29,579 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | ||||||||||||||||||||||
____________
(1) Refer to the calculation of this non-GAAP financial measure on pages 11 and 12 of this earnings release.
1
| Three Months Ended | ||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | ||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||||||||||||||||
| Earnings per share, diluted | $ | 0.53 | $ | 0.51 | $ | 0.50 | $ | 0.51 | $ | 0.46 | ||||||||||||||||||||||
Adjusted earnings per share, diluted(1) | $ | 0.58 | $ | 0.51 | $ | 0.50 | $ | 0.51 | $ | 0.46 | ||||||||||||||||||||||
| Net interest margin (tax equivalent) | 4.24 | % | 4.21 | % | 4.20 | % | 4.18 | % | 4.20 | % | ||||||||||||||||||||||
Net interest margin (tax equivalent) excluding PAA(1) | 4.10 | % | 4.06 | % | 4.00 | % | 3.95 | % | 3.97 | % | ||||||||||||||||||||||
| Loans held for investment | $ | 7,587,952 | $ | 7,300,591 | $ | 7,167,857 | $ | 7,287,347 | $ | 7,283,133 | ||||||||||||||||||||||
Merger Agreement with Prosperity Bancshares, Inc.
On January 27, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Prosperity Bancshares, Inc., a Texas corporation (“Prosperity”). The Merger Agreement provides that, upon the terms and subject to the conditions set
forth therein, the Company will merge with and into Prosperity (the “Merger”), with Prosperity continuing as the surviving corporation in the Merger. Immediately following the Merger, Stellar Bank will merge with and into Prosperity’s wholly owned banking subsidiary, Prosperity
Bank (the “Bank Merger”). Prosperity Bank will continue as the surviving bank in the Bank Merger. Upon the terms and subject to the
conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.01 per share, of the Company (“Stellar Common Stock”) outstanding immediately prior to the Effective Time, other than certain
shares held by Prosperity or the Company and shares held by a holder of Stellar Common Stock who has properly exercised applicable dissenters’ rights in respect of such share, will be converted into the right to receive (i) 0.3803 shares of common stock, par value $1.00 per share, of Prosperity and (ii) an amount in cash equal to $11.36. On April 22, 2026, the Company and Prosperity announced the receipt of all regulatory approvals necessary to complete the merger. The closing of the Merger is expected to occur on or about July 1, 2026, subject to receipt of approval of the Company’s shareholders and satisfaction of customary closing conditions.
First Quarter 2026 Results
Net interest income in the first quarter of 2026 increased $2.5 million, or 2.5%, to $105.9 million from $103.4 million for the fourth quarter of 2025. The net interest margin on a tax equivalent basis increased to 4.24% for the first quarter of 2026 from 4.21% for the fourth quarter of 2025. The increase in net interest income from the prior quarter was primarily due to the increase in average securities, as a result of short-term investments made to support public funds seasonality during the quarter, and the yield on securities. Net interest income for the first quarter of 2026 benefited from $3.6 million of income from PAA compared to $3.8 million in the fourth quarter of 2025. Excluding PAA, net interest income (tax equivalent) for the first quarter of 2026 would have been $102.5 million(1) and the tax equivalent net interest margin would have been 4.10%(1).
Noninterest income for the first quarter of 2026 was $5.1 million, a decrease of $398 thousand, or 7.2%, compared to $5.5 million for the fourth quarter of 2025. Noninterest income decreased in the first quarter of 2026 compared to the fourth quarter of 2025 primarily due to a death benefit on bank-owned life insurance received during the fourth quarter of 2025.
Noninterest expense for the first quarter of 2026 increased $3.0 million, or 4.2%, to $75.2 million compared to $72.2 million for the fourth quarter of 2025. The increase in noninterest expense during the first quarter of 2026 compared to the fourth quarter of 2025 was primarily due to acquisition and merger-related expenses of $3.3 million related to the pending Merger with Prosperity.
The efficiency ratio was 63.27%(1) for the first quarter of 2026 compared to 61.64%(1) for the fourth quarter of 2025. When adjusted for acquisition and merger-related expenses, the efficiency ratio for the first quarter of 2026 was 60.29%(1). Annualized returns on average assets, average equity and average tangible equity were 0.98%, 6.51% and 11.23%(1) for the first quarter of 2026, respectively, compared to 0.97%, 6.23% and 10.90%(1) for the fourth quarter of 2025, respectively. When adjusted for acquisition and merger-related expenses, annualized returns on average assets, average equity and average tangible equity were 1.08%(1), 7.14%(1) and 12.18%(1) for the first quarter of 2026, respectively.
Financial Condition
Total assets at March 31, 2026 were $10.89 billion, an increase of $82.8 million compared to $10.81 billion at December 31, 2025. The increase in total assets was largely due to an increase in loans and interest-bearing deposits at other financial institutions partially offset by a decrease in securities.
____________
(1) Refer to the calculation of this non-GAAP financial measure on pages 11 and 12 of this earnings release.
2
Total loans at March 31, 2026 increased $287.4 million to $7.59 billion compared to $7.30 billion at December 31, 2025. At March 31, 2026, the remaining balance of the PAA on loans was $50.7 million.
Total deposits at March 31, 2026 decreased $39.5 million to $8.98 billion compared to $9.02 billion at December 31, 2025 primarily due to the decrease in noninterest-bearing deposits.
Asset Quality
Nonperforming assets totaled $70.1 million, or 0.64% of total assets, at March 31, 2026, compared to $60.0 million, or 0.56% of total assets, at December 31, 2025. The allowance for credit losses on loans as a percentage of total loans was 1.13% at March 31, 2026 compared to 1.15% at December 31, 2025.
The provision for credit losses was $2.5 million for the first quarter of 2026 compared to $5.1 million for the fourth quarter of 2025. Net charge-offs for the first quarter of 2026 were $1.4 million, or 0.07% (annualized) of average loans, compared to net charge-offs of $71 thousand for the fourth 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 pages 11 and 12 of this earnings release for a reconciliation of these non-GAAP financial measures.
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.
Investor Relations
ir@stellar.bank
Forward-Looking Statements
This press release contains statements regarding the proposed transaction between Prosperity and Stellar; future financial and operating results; benefits and synergies of the proposed transaction; future opportunities for Prosperity; the issuance of common stock of Prosperity contemplated by the Merger Agreement; the expected timing of the closing of the proposed transaction contemplated by the Merger Agreement; the ability of the parties to complete the proposed transaction considering the various closing conditions and any other statements about future expectations that constitute forward-looking statements within the meaning of the federal securities laws, including the meaning of the Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, oral or written forward-looking statements may also be included in other information released to the public. Such forward-looking statements are typically, but not exclusively, identified by the use in the statements of words or phrases such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “goal,” “guidance,” “intend,” “is anticipated,” “is expected,” “is intended,” “objective,” “plan,” “projected,” “projection,” “will affect,” “will be,” “will continue,” “will decrease,” “will grow,” “will impact,” “will increase,” “will incur,” “will reduce,” “will remain,” “will result,” “would be,” variations of such words or phrases (including where the word “could,” “may,” or “would” is used rather than the word “will” in a phrase) and similar words and phrases indicating that the statement addresses some future result, occurrence, plan or objective . Forward-looking statements include all statements other than statements of historical fact, including forecasts or trends, and are based on current expectations, assumptions, estimates, and projections about Prosperity, Stellar and their respective subsidiaries or related to the proposed transaction between Prosperity and Stellar and are subject to significant risks and uncertainties that could cause actual results to differ materially from the results expressed in such statements.
These forward-looking statements may include information about Prosperity’s and Stellar’s possible or assumed future economic performance or future results of operations, including future revenues, income, expenses, provision for loan losses, provision for taxes, effective tax rate, earnings per share and cash flows and Prosperity’s and Stellar’s future capital expenditures and dividends, future financial condition and changes therein, including changes in Prosperity’s and Stellar’s loan portfolio and allowance for loan losses, future capital structure or changes therein, as well as the plans and objectives of management for Prosperity’s and Stellar’s future operations, future or proposed acquisitions, the future or expected effect of acquisitions on Prosperity’s and Stellar’s operations, results of operations, financial condition, and future economic performance, statements about the anticipated benefits of the proposed transaction, and statements about the assumptions underlying any such statement.
These forward-looking statements are not guarantees of future performance and are based on expectations and assumptions Prosperity and Stellar currently believe to be valid. Because forward-looking statements relate to future results and occurrences, many of which are outside
3
of the control of Prosperity and Stellar, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Many possible events or factors could adversely affect the future financial results and performance of Prosperity, Stellar or the combined company and could cause those results or performance to differ materially from those expressed in or implied by the forward-looking statements. Such risks and uncertainties include, among others: (1) the risk that the cost savings and synergies from the proposed transaction may not be fully realized or may take longer than anticipated to be realized, (2) disruption to Prosperity’s and Stellar’s businesses as a result of the announcements and pendency of the proposed transaction, (3) the risk that the integration of Stellar’s businesses and operations into Prosperity will be materially delayed or will be more costly or difficult than expected, or that Prosperity is otherwise unable to successfully integrate Stellar’s business into its own, including as a result of unexpected factors or events, (4) the failure to obtain the necessary approval by the shareholders of Stellar, (5) reputational risk and the reaction of each company’s customers, suppliers, employees or other business partners to the proposed transaction, (6) the failure of the closing conditions in the Merger Agreement to be satisfied, or any unexpected delay in closing the proposed transaction or the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (7) the dilution caused by the issuances of additional shares of Prosperity’s common stock in the proposed transaction, (8) the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (9) the outcome of any legal or regulatory proceedings that may be currently pending or later instituted against Prosperity before or after the proposed transaction, or against Stellar, (10) diversion of management’s attention from ongoing business operations and (11) general competitive, economic, political and market conditions and other factors that may affect future results of Prosperity and Stellar. Prosperity and Stellar disclaim any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. These and various other risks, uncertainties, assumptions, and factors are discussed in the Annual Reports on Form 10-K for the year ended December 31, 2025, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, filed by Prosperity or Stellar and in other filings made by Prosperity and Stellar with the Securities and Exchange Commission (the “SEC”) from time to time.
Additional Information about the Transaction and Where to Find It
In connection with the proposed transaction, Prosperity has filed with the SEC a registration statement (the “Registration Statement”) on Form S-4 (File No. 333-294882) to register the shares of Prosperity common stock to be issued to the shareholders of Stellar in connection with the proposed transaction. The Registration Statement includes a prospectus of Prosperity and a proxy statement of Stellar included therein (the “proxy statement/prospectus”), which will be sent to the shareholders of Stellar in connection with the proposed transaction. The Registration Statement was declared effective on April 21, 2026, at which time Prosperity filed a final prospectus and Stellar filed a definitive proxy statement. The mailing of the proxy statement/prospectus to Stellar shareholders commenced on or about April 23, 2026. This communication is not a substitute for the Registration Statement, the proxy statement/prospectus or any other document that may be filed by Prosperity or Stellar with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE INTO THE PROXY STATEMENT/PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain the Registration Statement and the proxy statement/prospectus and other documents that are filed with the SEC by Prosperity or Stellar, as applicable, free of charge from the SEC’s website at https://www.sec.gov or through the investor relations section of Prosperity’s website at https://www.prosperitybankusa.com/investor-relations/ or Stellar’s website at https://ir.stellar.bank.
Participants in the Solicitation
Prosperity, Stellar and certain of their directors and executive officers and other employees may be deemed to be participants in the solicitation of proxies from Stellar’s shareholders in connection with the proposed transaction. Information about the directors and executive officers of Prosperity and their ownership of Prosperity common stock is contained in the definitive proxy statement for Prosperity’s 2026 annual meeting of shareholders (the “Prosperity Annual Meeting Proxy Statement”), which was filed with the SEC on March 16, 2026, including under the headings “Item 1. Election of Directors,” “Corporate Governance,” “Executive Compensation and Other Matters,” “Item 3. Advisory Vote on Executive Compensation,” and “Beneficial Ownership of Common Stock by Management of the Company and Principal Shareholders.” Information about the directors and executive officers of Stellar and their ownership of Stellar common stock is contained in Amendment No. 1 to the Annual Report on Form 10-K for the year ended December 31, 2025 of Stellar (the “Stellar 10-K/A”), which was filed with the SEC on April 17, 2026. Additional information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the shareholders of Stellar in connection with the proposed transaction, including a description of their direct or indirect interests, by security holdings or otherwise, is included in the proxy statement/prospectus relating to the proposed transaction filed with the SEC. To the extent holdings of securities by potential participants (or the identity of such participants) have changed since the information printed in the Prosperity Annual Meeting Proxy Statement or the Stellar 10-K/A, such information has been or will be reflected on Statements of Change in Ownership on Forms 3 and 4 filed with the SEC, as applicable. Free copies of the proxy statement/prospectus relating to the proposed transaction and free copies of the other SEC filings to which reference is made in this paragraph may be obtained from the SEC’s website at https://www.sec.gov or through the investor relations section of Prosperity’s website at https://www.prosperitybankusa.com/investor-relations/ or Stellar’s website at https://ir.stellar.bank.
4
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or sell, or the solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, invitation, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, and otherwise in accordance with applicable law.
5
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| 2026 | 2025 | ||||||||||||||||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| ASSETS: | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 107,736 | $ | 94,331 | $ | 99,407 | $ | 136,060 | $ | 130,932 | |||||||||||||||||||
| Interest-bearing deposits at other financial institutions | 441,834 | 325,122 | 629,042 | 442,044 | 429,643 | ||||||||||||||||||||||||
| Total cash and cash equivalents | 549,570 | 419,453 | 728,449 | 578,104 | 560,575 | ||||||||||||||||||||||||
| Available for sale securities, at fair value | 1,864,710 | 2,198,459 | 1,842,268 | 1,729,684 | 1,719,371 | ||||||||||||||||||||||||
| Loans held for investment | 7,587,952 | 7,300,591 | 7,167,857 | 7,287,347 | 7,283,133 | ||||||||||||||||||||||||
| Less: allowance for credit losses on loans | (85,431) | (83,629) | (78,924) | (83,165) | (83,746) | ||||||||||||||||||||||||
| Loans, net | 7,502,521 | 7,216,962 | 7,088,933 | 7,204,182 | 7,199,387 | ||||||||||||||||||||||||
| Accrued interest receivable | 36,589 | 35,869 | 34,865 | 35,537 | 37,669 | ||||||||||||||||||||||||
| Premises and equipment, net | 99,861 | 106,118 | 107,803 | 108,615 | 109,750 | ||||||||||||||||||||||||
| Federal Reserve Bank and Federal Home Loan Bank stock | 51,105 | 45,532 | 45,437 | 47,099 | 20,902 | ||||||||||||||||||||||||
| Bank-owned life insurance | 110,103 | 109,477 | 109,358 | 108,726 | 108,108 | ||||||||||||||||||||||||
| Goodwill | 497,318 | 497,318 | 497,318 | 497,318 | 497,318 | ||||||||||||||||||||||||
| Core deposit intangibles, net | 66,137 | 71,018 | 75,929 | 81,468 | 87,007 | ||||||||||||||||||||||||
| Other assets | 111,442 | 106,388 | 97,753 | 102,277 | 94,800 | ||||||||||||||||||||||||
| Total assets | $ | 10,889,356 | $ | 10,806,594 | $ | 10,628,113 | $ | 10,493,010 | $ | 10,434,887 | |||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||||||
| LIABILITIES: | |||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Noninterest-bearing | $ | 3,210,579 | $ | 3,407,865 | $ | 3,210,948 | $ | 3,183,693 | $ | 3,205,619 | |||||||||||||||||||
| Interest-bearing | |||||||||||||||||||||||||||||
| Demand | 2,171,968 | 2,114,997 | 1,960,857 | 1,941,156 | 1,863,752 | ||||||||||||||||||||||||
| Money market and savings | 2,596,972 | 2,469,845 | 2,489,169 | 2,393,767 | 2,248,616 | ||||||||||||||||||||||||
| Certificates and other time | 1,002,491 | 1,028,759 | 1,156,489 | 1,154,998 | 1,244,726 | ||||||||||||||||||||||||
| Total interest-bearing deposits | 5,771,431 | 5,613,601 | 5,606,515 | 5,489,921 | 5,357,094 | ||||||||||||||||||||||||
| Total deposits | 8,982,010 | 9,021,466 | 8,817,463 | 8,673,614 | 8,562,713 | ||||||||||||||||||||||||
| Accrued interest payable | 5,240 | 5,508 | 9,429 | 7,607 | 9,856 | ||||||||||||||||||||||||
| Borrowed funds | 135,000 | — | — | 69,925 | 119,923 | ||||||||||||||||||||||||
| Subordinated debt | 40,256 | 40,226 | 70,196 | 70,165 | 70,135 | ||||||||||||||||||||||||
| Other liabilities | 59,085 | 70,740 | 77,887 | 67,865 | 61,428 | ||||||||||||||||||||||||
| Total liabilities | 9,221,591 | 9,137,940 | 8,974,975 | 8,889,176 | 8,824,055 | ||||||||||||||||||||||||
| SHAREHOLDERS’ EQUITY: | |||||||||||||||||||||||||||||
| Common stock | 509 | 509 | 512 | 514 | 521 | ||||||||||||||||||||||||
| Capital surplus | 1,170,867 | 1,174,894 | 1,182,781 | 1,185,048 | 1,202,628 | ||||||||||||||||||||||||
| Retained earnings | 585,403 | 566,216 | 547,717 | 529,216 | 510,072 | ||||||||||||||||||||||||
| Accumulated other comprehensive loss | (89,014) | (72,965) | (77,872) | (110,944) | (102,389) | ||||||||||||||||||||||||
| Total shareholders’ equity | 1,667,765 | 1,668,654 | 1,653,138 | 1,603,834 | 1,610,832 | ||||||||||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 10,889,356 | $ | 10,806,594 | $ | 10,628,113 | $ | 10,493,010 | $ | 10,434,887 | |||||||||||||||||||
6
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||
| INTEREST INCOME: | |||||||||||||||||||||||||||||
| Loans, including fees | $ | 119,783 | $ | 119,866 | $ | 122,557 | $ | 121,814 | $ | 120,640 | |||||||||||||||||||
| Securities: | |||||||||||||||||||||||||||||
| Taxable | 19,623 | 17,619 | 16,278 | 15,293 | 16,148 | ||||||||||||||||||||||||
| Tax-exempt | 805 | 808 | 808 | 810 | 812 | ||||||||||||||||||||||||
| Deposits in other financial institutions | 4,884 | 5,745 | 5,770 | 4,782 | 4,720 | ||||||||||||||||||||||||
| Total interest income | 145,095 | 144,038 | 145,413 | 142,699 | 142,320 | ||||||||||||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||||||||||||||
| Demand, money market and savings deposits | 29,644 | 29,484 | 32,376 | 31,097 | 27,574 | ||||||||||||||||||||||||
| Certificates and other time deposits | 8,624 | 10,370 | 10,920 | 11,459 | 13,527 | ||||||||||||||||||||||||
| Borrowed funds | 149 | 6 | 56 | 407 | 517 | ||||||||||||||||||||||||
| Subordinated debt | 747 | 795 | 1,417 | 1,401 | 1,444 | ||||||||||||||||||||||||
| Total interest expense | 39,164 | 40,655 | 44,769 | 44,364 | 43,062 | ||||||||||||||||||||||||
| NET INTEREST INCOME | 105,931 | 103,383 | 100,644 | 98,335 | 99,258 | ||||||||||||||||||||||||
| Provision for credit losses | 2,497 | 5,131 | 305 | 1,090 | 3,632 | ||||||||||||||||||||||||
| Net interest income after provision for credit losses | 103,434 | 98,252 | 100,339 | 97,245 | 95,626 | ||||||||||||||||||||||||
| NONINTEREST INCOME: | |||||||||||||||||||||||||||||
| Service charges on deposit accounts | 1,635 | 1,592 | 1,545 | 1,561 | 1,584 | ||||||||||||||||||||||||
| (Loss) gain on sale/write-down of assets | (37) | (171) | (491) | (57) | 417 | ||||||||||||||||||||||||
| Bank-owned life insurance | 626 | 1,026 | 632 | 618 | 610 | ||||||||||||||||||||||||
| Debit card and interchange income | 547 | 583 | 572 | 566 | 520 | ||||||||||||||||||||||||
| Other | 2,339 | 2,478 | 2,728 | 3,103 | 2,374 | ||||||||||||||||||||||||
| Total noninterest income | 5,110 | 5,508 | 4,986 | 5,791 | 5,505 | ||||||||||||||||||||||||
| NONINTEREST EXPENSE: | |||||||||||||||||||||||||||||
| Salaries and employee benefits | 43,931 | 42,913 | 43,175 | 40,927 | 41,792 | ||||||||||||||||||||||||
| Net occupancy and equipment | 4,575 | 4,776 | 4,518 | 4,399 | 3,926 | ||||||||||||||||||||||||
| Depreciation | 1,971 | 2,056 | 2,015 | 1,992 | 1,995 | ||||||||||||||||||||||||
| Data processing and software amortization | 6,073 | 5,796 | 5,882 | 5,620 | 5,682 | ||||||||||||||||||||||||
| Professional fees | 886 | 1,587 | 1,601 | 1,287 | 1,786 | ||||||||||||||||||||||||
| Regulatory assessments and FDIC insurance | 1,639 | 1,205 | 1,688 | 1,561 | 1,733 | ||||||||||||||||||||||||
| Amortization of intangibles | 4,886 | 4,930 | 5,554 | 5,548 | 5,548 | ||||||||||||||||||||||||
| Communications | 759 | 872 | 855 | 861 | 847 | ||||||||||||||||||||||||
| Advertising | 799 | 1,333 | 1,425 | 1,167 | 782 | ||||||||||||||||||||||||
| Acquisition and merger-related expenses | 3,307 | — | — | — | — | ||||||||||||||||||||||||
| Other | 6,338 | 6,690 | 6,429 | 6,642 | 6,075 | ||||||||||||||||||||||||
| Total noninterest expense | 75,164 | 72,158 | 73,142 | 70,004 | 70,166 | ||||||||||||||||||||||||
| INCOME BEFORE INCOME TAXES | 33,380 | 31,602 | 32,183 | 33,032 | 30,965 | ||||||||||||||||||||||||
| Provision for income taxes | 6,414 | 5,454 | 6,513 | 6,680 | 6,263 | ||||||||||||||||||||||||
| NET INCOME | $ | 26,966 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| EARNINGS PER SHARE | |||||||||||||||||||||||||||||
| Basic | $ | 0.53 | $ | 0.51 | $ | 0.50 | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Diluted | $ | 0.53 | $ | 0.51 | $ | 0.50 | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
7
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |||||||||||||||||||||||||
| (Dollars and share amounts in thousands, except per share data) | |||||||||||||||||||||||||||||
| Net income | $ | 26,966 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| Earnings per share, basic | $ | 0.53 | $ | 0.51 | $ | 0.50 | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Earnings per share, diluted | $ | 0.53 | $ | 0.51 | $ | 0.50 | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Dividends per share | $ | 0.15 | $ | 0.15 | $ | 0.14 | $ | 0.14 | $ | 0.14 | |||||||||||||||||||
Return on average assets(A) | 0.98 | % | 0.97 | % | 0.97 | % | 1.01 | % | 0.94 | % | |||||||||||||||||||
Return on average equity(A) | 6.51 | % | 6.23 | % | 6.30 | % | 6.62 | % | 6.21 | % | |||||||||||||||||||
Return on average tangible equity(A)(B) | 11.23 | % | 10.90 | % | 11.45 | % | 12.16 | % | 11.48 | % | |||||||||||||||||||
Net interest margin (tax equivalent)(A)(C) | 4.24 | % | 4.21 | % | 4.20 | % | 4.18 | % | 4.20 | % | |||||||||||||||||||
Net interest margin (tax equivalent) excluding PAA(A)(B)(C) | 4.10 | % | 4.06 | % | 4.00 | % | 3.95 | % | 3.97 | % | |||||||||||||||||||
Efficiency ratio(B)(D) | 63.27 | % | 61.64 | % | 63.69 | % | 61.87 | % | 61.93 | % | |||||||||||||||||||
| Capital Ratios | |||||||||||||||||||||||||||||
| Stellar Bancorp, Inc. (Consolidated) | |||||||||||||||||||||||||||||
| Equity to assets | 15.32 | % | 15.44 | % | 15.55 | % | 15.28 | % | 15.44 | % | |||||||||||||||||||
Tangible equity to tangible assets(B)(D) | 10.69 | % | 10.75 | % | 10.74 | % | 10.34 | % | 10.42 | % | |||||||||||||||||||
| Estimated Total capital ratio (to risk-weighted assets) | 15.48 | % | 15.73 | % | 16.33 | % | 15.98 | % | 15.97 | % | |||||||||||||||||||
Estimated Common equity Tier 1 capital (to risk weighted assets) | 13.97 | % | 14.18 | % | 14.43 | % | 14.06 | % | 14.05 | % | |||||||||||||||||||
Estimated Tier 1 capital (to risk-weighted assets) | 14.09 | % | 14.31 | % | 14.55 | % | 14.18 | % | 14.17 | % | |||||||||||||||||||
Estimated Tier 1 leverage (to average tangible assets) | 11.29 | % | 11.52 | % | 11.60 | % | 11.44 | % | 11.20 | % | |||||||||||||||||||
| Stellar Bank | |||||||||||||||||||||||||||||
| Estimated Total capital ratio (to risk-weighted assets) | 14.74 | % | 15.03 | % | 15.45 | % | 15.39 | % | 15.40 | % | |||||||||||||||||||
Estimated Common equity Tier 1 capital (to risk-weighted assets) | 13.56 | % | 13.83 | % | 14.27 | % | 14.18 | % | 14.20 | % | |||||||||||||||||||
Estimated Tier 1 capital (to risk-weighted assets) | 13.56 | % | 13.83 | % | 14.27 | % | 14.18 | % | 14.20 | % | |||||||||||||||||||
Estimated Tier 1 leverage (to average tangible assets) | 10.86 | % | 11.14 | % | 11.37 | % | 11.44 | % | 11.22 | % | |||||||||||||||||||
| Other Data | |||||||||||||||||||||||||||||
| Weighted average shares: | |||||||||||||||||||||||||||||
| Basic | 50,829 | 51,083 | 51,283 | 51,529 | 53,146 | ||||||||||||||||||||||||
| Diluted | 50,944 | 51,167 | 51,356 | 51,569 | 53,197 | ||||||||||||||||||||||||
| Period end shares outstanding | 50,912 | 50,902 | 51,228 | 51,398 | 52,141 | ||||||||||||||||||||||||
| Book value per share | $ | 32.76 | $ | 32.78 | $ | 32.27 | $ | 31.20 | $ | 30.89 | |||||||||||||||||||
Tangible book value per share(B) | $ | 21.69 | $ | 21.62 | $ | 21.08 | $ | 19.94 | $ | 19.69 | |||||||||||||||||||
| Employees - full-time equivalents | 1,065 | 1,075 | 1,065 | 1,062 | 1,054 | ||||||||||||||||||||||||
(A)Interim periods annualized.
(B)Refer to the calculation of these non-GAAP financial measures on page 11 of this Earnings Release.
(C)Net interest margin represents net interest income divided by average interest-earning assets.
(D)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.
8
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 7,462,404 | $ | 119,783 | 6.51 | % | $ | 7,198,899 | $ | 119,866 | 6.61 | % | $ | 7,344,298 | $ | 120,640 | 6.66 | % | |||||||||||||||||||||||||||||||||||
| Securities | 2,145,882 | 20,428 | 3.86 | % | 1,976,112 | 18,427 | 3.70 | % | 1,817,286 | 16,960 | 3.78 | % | |||||||||||||||||||||||||||||||||||||||||
| Deposits in other financial institutions | 530,947 | 4,884 | 3.73 | % | 578,480 | 5,745 | 3.94 | % | 430,621 | 4,720 | 4.45 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 10,139,233 | $ | 145,095 | 5.80 | % | 9,753,491 | $ | 144,038 | 5.86 | % | 9,592,205 | $ | 142,320 | 6.02 | % | ||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses on loans | (83,396) | (78,995) | (81,166) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 1,087,991 | 1,070,537 | 1,100,652 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 11,143,828 | $ | 10,745,033 | $ | 10,611,691 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Shareholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 2,333,522 | $ | 13,860 | 2.41 | % | $ | 2,008,416 | $ | 13,281 | 2.62 | % | $ | 1,911,625 | $ | 12,392 | 2.63 | % | |||||||||||||||||||||||||||||||||||
| Money market and savings deposits | 2,594,999 | 15,784 | 2.47 | % | 2,546,538 | 16,203 | 2.52 | % | 2,234,571 | 15,182 | 2.76 | % | |||||||||||||||||||||||||||||||||||||||||
| Certificates and other time deposits | 1,011,031 | 8,624 | 3.46 | % | 1,127,248 | 10,370 | 3.65 | % | 1,296,972 | 13,527 | 4.23 | % | |||||||||||||||||||||||||||||||||||||||||
| Borrowed funds | 17,056 | 149 | 3.54 | % | 327 | 6 | 7.28 | % | 45,795 | 517 | 4.58 | % | |||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | 40,242 | 747 | 7.53 | % | 40,211 | 795 | 7.84 | % | 70,121 | 1,444 | 8.35 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 5,996,850 | $ | 39,164 | 2.65 | % | 5,722,740 | $ | 40,655 | 2.82 | % | 5,559,084 | $ | 43,062 | 3.14 | % | ||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing demand deposits | 3,387,638 | 3,269,053 | 3,346,066 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 79,940 | 88,699 | 92,299 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 9,464,428 | 9,080,492 | 8,997,449 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 1,679,400 | 1,664,541 | 1,614,242 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 11,143,828 | $ | 10,745,033 | $ | 10,611,691 | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest rate spread | 3.15 | % | 3.04 | % | 2.88 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income and margin | $ | 105,931 | 4.24 | % | $ | 103,383 | 4.21 | % | $ | 99,258 | 4.20 | % | |||||||||||||||||||||||||||||||||||||||||
| Net interest income and margin (tax equivalent) | $ | 106,041 | 4.24 | % | $ | 103,487 | 4.21 | % | $ | 99,353 | 4.20 | % | |||||||||||||||||||||||||||||||||||||||||
| Cost of funds | 1.69 | % | 1.79 | % | 1.96 | % | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of deposits | 1.66 | % | 1.77 | % | 1.90 | % | |||||||||||||||||||||||||||||||||||||||||||||||
9
Stellar Bancorp, Inc.
Financial Highlights
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||
| Loan Portfolio: | |||||||||||||||||||||||||||||
| Commercial and industrial | $ | 1,563,421 | $ | 1,476,559 | $ | 1,332,795 | $ | 1,346,744 | $ | 1,362,266 | |||||||||||||||||||
| Real estate: | |||||||||||||||||||||||||||||
| Commercial real estate (including multi-family residential) | 3,844,629 | 3,766,294 | 3,733,293 | 3,840,981 | 3,854,607 | ||||||||||||||||||||||||
| Commercial real estate construction and land development | 821,723 | 720,779 | 753,381 | 762,911 | 721,488 | ||||||||||||||||||||||||
| 1-4 family residential (including home equity) | 1,167,436 | 1,136,227 | 1,142,614 | 1,126,523 | 1,125,837 | ||||||||||||||||||||||||
| Residential construction | 102,609 | 124,653 | 121,197 | 137,855 | 141,283 | ||||||||||||||||||||||||
| Consumer and other | 88,134 | 76,079 | 84,577 | 72,333 | 77,652 | ||||||||||||||||||||||||
| Total loans held for investment | $ | 7,587,952 | $ | 7,300,591 | $ | 7,167,857 | $ | 7,287,347 | $ | 7,283,133 | |||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||
| Noninterest-bearing | $ | 3,210,579 | $ | 3,407,865 | $ | 3,210,948 | $ | 3,183,693 | $ | 3,205,619 | |||||||||||||||||||
| Interest-bearing | |||||||||||||||||||||||||||||
| Demand | 2,171,968 | 2,114,997 | 1,960,857 | 1,941,156 | 1,863,752 | ||||||||||||||||||||||||
| Money market and savings | 2,596,972 | 2,469,845 | 2,489,169 | 2,393,767 | 2,248,616 | ||||||||||||||||||||||||
| Certificates and other time | 1,002,491 | 1,028,759 | 1,156,489 | 1,154,998 | 1,244,726 | ||||||||||||||||||||||||
| Total interest-bearing deposits | 5,771,431 | 5,613,601 | 5,606,515 | 5,489,921 | 5,357,094 | ||||||||||||||||||||||||
| Total deposits | $ | 8,982,010 | $ | 9,021,466 | $ | 8,817,463 | $ | 8,673,614 | $ | 8,562,713 | |||||||||||||||||||
| Asset Quality: | |||||||||||||||||||||||||||||
| Nonaccrual loans | $ | 60,590 | $ | 52,548 | $ | 46,250 | $ | 50,505 | $ | 54,518 | |||||||||||||||||||
| Accruing loans 90 or more days past due | — | — | — | — | — | ||||||||||||||||||||||||
| Total nonperforming loans | 60,590 | 52,548 | 46,250 | 50,505 | 54,518 | ||||||||||||||||||||||||
| Foreclosed assets | 9,489 | 7,492 | 7,939 | 7,652 | 5,154 | ||||||||||||||||||||||||
| Total nonperforming assets | $ | 70,079 | $ | 60,040 | $ | 54,189 | $ | 58,157 | $ | 59,672 | |||||||||||||||||||
| Net charge-offs | $ | 1,358 | $ | 71 | $ | 3,323 | $ | 206 | $ | 163 | |||||||||||||||||||
| Nonaccrual loans: | |||||||||||||||||||||||||||||
| Commercial and industrial | $ | 10,488 | $ | 7,616 | $ | 5,594 | $ | 13,395 | $ | 11,471 | |||||||||||||||||||
| Real estate: | |||||||||||||||||||||||||||||
| Commercial real estate (including multi-family residential) | 32,939 | 29,271 | 25,156 | 23,359 | 26,383 | ||||||||||||||||||||||||
| Commercial real estate construction and land development | 905 | 1,838 | 2,899 | 3,412 | 2,027 | ||||||||||||||||||||||||
| 1-4 family residential (including home equity) | 15,920 | 13,333 | 12,083 | 9,965 | 14,550 | ||||||||||||||||||||||||
| Residential construction | 292 | 448 | 457 | 176 | — | ||||||||||||||||||||||||
| Consumer and other | 46 | 42 | 61 | 198 | 87 | ||||||||||||||||||||||||
| Total nonaccrual loans | $ | 60,590 | $ | 52,548 | $ | 46,250 | $ | 50,505 | $ | 54,518 | |||||||||||||||||||
| Asset Quality Ratios: | |||||||||||||||||||||||||||||
| Nonperforming assets to total assets | 0.64 | % | 0.56 | % | 0.51 | % | 0.55 | % | 0.57% | ||||||||||||||||||||
| Nonperforming loans to total loans | 0.80 | % | 0.72 | % | 0.65 | % | 0.69 | % | 0.75% | ||||||||||||||||||||
| Allowance for credit losses on loans to nonperforming loans | 141.00 | % | 159.15 | % | 170.65 | % | 164.67 | % | 153.61% | ||||||||||||||||||||
| Allowance for credit losses on loans to total loans | 1.13 | % | 1.15 | % | 1.10 | % | 1.14 | % | 1.15% | ||||||||||||||||||||
| Net charge-offs to average loans (annualized) | 0.07 | % | 0.00 | % | 0.18 | % | 0.01 | % | 0.01% | ||||||||||||||||||||
10
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 | |||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |||||||||||||||||||||||||
| (Dollars and share amounts in thousands, except per share data) | |||||||||||||||||||||||||||||
| Net income | $ | 26,966 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| Add: Provision for credit losses | 2,497 | 5,131 | 305 | 1,090 | 3,632 | ||||||||||||||||||||||||
| Add: Provision for income taxes | 6,414 | 5,454 | 6,513 | 6,680 | 6,263 | ||||||||||||||||||||||||
| Pre-tax, pre-provision income | 35,877 | 36,733 | 32,488 | 34,122 | 34,597 | ||||||||||||||||||||||||
| Average total assets | $ | 11,143,828 | $ | 10,745,033 | $ | 10,518,865 | $ | 10,464,157 | $ | 10,611,691 | |||||||||||||||||||
Pre-tax, pre-provision return on average assets(A) | 1.31 | % | 1.36 | % | 1.23 | % | 1.31 | % | 1.32 | % | |||||||||||||||||||
| Total shareholders’ equity | $ | 1,667,765 | $ | 1,668,654 | $ | 1,653,138 | $ | 1,603,834 | $ | 1,610,832 | |||||||||||||||||||
| Less: Goodwill and core deposit intangibles, net | (563,455) | (568,336) | (573,247) | (578,786) | (584,325) | ||||||||||||||||||||||||
| Tangible shareholders’ equity | $ | 1,104,310 | $ | 1,100,318 | $ | 1,079,891 | $ | 1,025,048 | $ | 1,026,507 | |||||||||||||||||||
| Shares outstanding at end of period | 50,912 | 50,902 | 51,228 | 51,398 | 52,141 | ||||||||||||||||||||||||
| Tangible book value per share | $ | 21.69 | $ | 21.62 | $ | 21.08 | $ | 19.94 | $ | 19.69 | |||||||||||||||||||
| Average shareholders’ equity | $ | 1,679,400 | $ | 1,664,541 | $ | 1,617,511 | $ | 1,595,540 | $ | 1,614,242 | |||||||||||||||||||
| Less: Average goodwill and core deposit intangibles, net | (565,769) | (570,721) | (575,836) | (581,438) | (586,895) | ||||||||||||||||||||||||
| Average tangible shareholders’ equity | $ | 1,113,631 | $ | 1,093,820 | $ | 1,041,675 | $ | 1,014,102 | $ | 1,027,347 | |||||||||||||||||||
| Net income | $ | 26,966 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| Add: Core deposit intangibles amortization, net of tax | 3,860 | 3,895 | 4,388 | 4,383 | 4,383 | ||||||||||||||||||||||||
| Net income plus core deposit intangibles amortization, net of tax | $ | 30,826 | $ | 30,043 | $ | 30,058 | $ | 30,735 | $ | 29,085 | |||||||||||||||||||
Return on average tangible equity(A) | 11.23 | % | 10.90 | % | 11.45 | % | 12.16 | % | 11.48 | % | |||||||||||||||||||
| Total assets | $ | 10,889,356 | $ | 10,806,594 | $ | 10,628,113 | $ | 10,493,010 | $ | 10,434,887 | |||||||||||||||||||
| Less: Goodwill and core deposit intangibles, net | (563,455) | (568,336) | (573,247) | (578,786) | (584,325) | ||||||||||||||||||||||||
| Tangible assets | $ | 10,325,901 | $ | 10,238,258 | $ | 10,054,866 | $ | 9,914,224 | $ | 9,850,562 | |||||||||||||||||||
| Tangible equity to tangible assets | 10.69 | % | 10.75 | % | 10.74 | % | 10.34 | % | 10.42 | % | |||||||||||||||||||
| Net interest income (tax equivalent) | $ | 106,041 | $ | 103,487 | $ | 100,739 | $ | 98,427 | $ | 99,353 | |||||||||||||||||||
| Less: Purchase accounting accretion | (3,561) | (3,781) | (4,800) | (5,344) | (5,397) | ||||||||||||||||||||||||
| Net interest income (tax equivalent) excluding PAA | $ | 102,480 | $ | 99,706 | $ | 95,939 | $ | 93,083 | $ | 93,956 | |||||||||||||||||||
| Average earning assets | $ | 10,139,233 | $ | 9,753,491 | $ | 9,525,017 | $ | 9,448,589 | $ | 9,592,205 | |||||||||||||||||||
Net interest margin (tax equivalent) excluding PAA(A) | 4.10 | % | 4.06 | % | 4.00 | % | 3.95 | % | 3.97 | % | |||||||||||||||||||
| Noninterest expense | $ | 75,164 | $ | 72,158 | $ | 73,142 | $ | 70,004 | $ | 70,166 | |||||||||||||||||||
| Less: Core deposit intangibles amortization | (4,886) | (4,930) | (5,554) | (5,548) | (5,548) | ||||||||||||||||||||||||
| Noninterest expense less core deposit amortization | $ | 70,278 | $ | 67,228 | $ | 67,588 | $ | 64,456 | $ | 64,618 | |||||||||||||||||||
| Net interest income | $ | 105,931 | $ | 103,383 | $ | 100,644 | $ | 98,335 | $ | 99,258 | |||||||||||||||||||
| Noninterest income | 5,110 | 5,508 | 4,986 | 5,791 | 5,505 | ||||||||||||||||||||||||
| Less: (Loss) gain on sale of assets | (37) | (171) | (491) | (57) | 417 | ||||||||||||||||||||||||
| Adjusted noninterest income | 5,147 | 5,679 | 5,477 | 5,848 | 5,088 | ||||||||||||||||||||||||
| Net interest income plus adjusted noninterest income | $ | 111,078 | $ | 109,062 | $ | 106,121 | $ | 104,183 | $ | 104,346 | |||||||||||||||||||
| Efficiency ratio | 63.27 | % | 61.64 | % | 63.69 | % | 61.87 | % | 61.93 | % | |||||||||||||||||||
(A)Interim periods annualized.
11
Stellar Bancorp, Inc.
GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||
| March 31 | December 31 | September 30 | June 30 | March 31 | |||||||||||||||||||||||||
| (Dollars and share amounts in thousands, except per share data) | |||||||||||||||||||||||||||||
| Net income | $ | 26,966 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| Add: Acquisition and merger-related expenses, net of tax | 2,613 | — | — | — | — | ||||||||||||||||||||||||
| Adjusted net income | $ | 29,579 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| Weighted average shares, diluted | 50,944 | 51,167 | 51,356 | 51,569 | 53,197 | ||||||||||||||||||||||||
| Adjusted earnings per share, diluted | $ | 0.58 | $ | 0.51 | $ | 0.50 | $ | 0.51 | $ | 0.46 | |||||||||||||||||||
| Net income | $ | 26,966 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| Add: Provision for credit losses | 2,497 | 5,131 | 305 | 1,090 | 3,632 | ||||||||||||||||||||||||
| Add: Provision for income taxes | 6,414 | 5,454 | 6,513 | 6,680 | 6,263 | ||||||||||||||||||||||||
| Pre-tax, pre-provision income | 35,877 | 36,733 | 32,488 | 34,122 | 34,597 | ||||||||||||||||||||||||
| Add: Acquisition and merger-related expenses | 3,307 | — | — | — | — | ||||||||||||||||||||||||
| Adjusted pre-tax, pre-provision net income | $ | 39,184 | $ | 36,733 | $ | 32,488 | $ | 34,122 | $ | 34,597 | |||||||||||||||||||
| Average assets | $ | 11,143,828 | $ | 10,745,033 | $ | 10,518,865 | $ | 10,464,157 | $ | 10,611,691 | |||||||||||||||||||
Adjusted pre-tax, pre-provision return on average assets(A) | 1.43 | % | 1.36 | % | 1.23 | % | 1.31 | % | 1.32 | % | |||||||||||||||||||
| Adjusted net income | $ | 29,579 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| Average total assets | $ | 11,143,828 | $ | 10,745,033 | $ | 10,518,865 | $ | 10,464,157 | $ | 10,611,691 | |||||||||||||||||||
Adjusted return on average assets(A) | 1.08 | % | 0.97 | % | 0.97 | % | 1.01 | % | 0.94 | % | |||||||||||||||||||
| Adjusted net income | $ | 29,579 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| Average shareholders’ equity | $ | 1,679,400 | $ | 1,664,541 | $ | 1,617,511 | $ | 1,595,540 | $ | 1,614,242 | |||||||||||||||||||
Adjusted return on average equity(A) | 7.14 | % | 6.23 | % | 6.30 | % | 6.62 | % | 6.21 | % | |||||||||||||||||||
| Average shareholders’ equity | $ | 1,679,400 | $ | 1,664,541 | $ | 1,617,511 | $ | 1,595,540 | $ | 1,614,242 | |||||||||||||||||||
| Less: Average goodwill and core deposit intangibles, net | (565,769) | (570,721) | (575,836) | (581,438) | (586,895) | ||||||||||||||||||||||||
| Average tangible shareholders’ equity | $ | 1,113,631 | $ | 1,093,820 | $ | 1,041,675 | $ | 1,014,102 | $ | 1,027,347 | |||||||||||||||||||
| Adjusted net income | $ | 29,579 | $ | 26,148 | $ | 25,670 | $ | 26,352 | $ | 24,702 | |||||||||||||||||||
| Add: Core deposit intangibles amortization, net of tax | 3,860 | 3,895 | 4,388 | 4,383 | 4,383 | ||||||||||||||||||||||||
| Adjusted net income plus core deposit intangibles amortization, net of tax | $ | 33,439 | $ | 30,043 | $ | 30,058 | $ | 30,735 | $ | 29,085 | |||||||||||||||||||
Adjusted return on average tangible equity(A) | 12.18 | % | 10.90 | % | 11.45 | % | 12.16 | % | 11.48 | % | |||||||||||||||||||
| Noninterest expense | $ | 75,164 | $ | 72,158 | $ | 73,142 | $ | 70,004 | $ | 70,166 | |||||||||||||||||||
| Less: Core deposit intangibles amortization | (4,886) | (4,930) | (5,554) | (5,548) | (5,548) | ||||||||||||||||||||||||
| Noninterest expense less core deposit amortization | 70,278 | 67,228 | 67,588 | 64,456 | 64,618 | ||||||||||||||||||||||||
| Less: Acquisition and merger-related expenses | (3,307) | — | — | — | — | ||||||||||||||||||||||||
| Adjusted noninterest expense | $ | 66,971 | $ | 67,228 | $ | 67,588 | $ | 64,456 | $ | 64,618 | |||||||||||||||||||
| Net interest income | $ | 105,931 | $ | 103,383 | $ | 100,644 | $ | 98,335 | $ | 99,258 | |||||||||||||||||||
| Noninterest income | 5,110 | 5,508 | 4,986 | 5,791 | 5,505 | ||||||||||||||||||||||||
| Less: (Loss) gain on sale of assets | (37) | (171) | (491) | (57) | 417 | ||||||||||||||||||||||||
| Adjusted noninterest income | 5,147 | 5,679 | 5,477 | 5,848 | 5,088 | ||||||||||||||||||||||||
| Net interest income plus adjusted noninterest income | $ | 111,078 | $ | 109,062 | $ | 106,121 | $ | 104,183 | $ | 104,346 | |||||||||||||||||||
| Adjusted efficiency ratio | 60.29 | % | 61.64 | % | 63.69 | % | 61.87 | % | 61.93 | % | |||||||||||||||||||
(A)Interim periods annualized.
12
FAQ
How did Stellar Bancorp (STEL) perform in the first quarter of 2026?
Stellar Bancorp reported net income of $27.0 million, or $0.53 diluted EPS, for Q1 2026. This was slightly higher than Q4 2025 net income of $26.1 million and EPS of $0.51, reflecting improved net interest income and margin.
What was Stellar Bancorp (STEL)’s loan growth in Q1 2026?
Loans held for investment increased by $287.4 million in Q1 2026 to $7.59 billion. This represents linked-quarter growth of 3.94%, or about 16.0% on an annualized basis, showing continued expansion of the company’s lending portfolio.
How did Stellar Bancorp’s net interest margin change in Q1 2026?
Stellar’s tax-equivalent net interest margin rose to 4.24% in Q1 2026, up from 4.21% in Q4 2025. Excluding purchase accounting adjustments, the margin improved to 4.10% from 4.06%, indicating slightly better core spread performance.
What are the key asset quality metrics for Stellar Bancorp (STEL) as of March 31, 2026?
Nonperforming assets totaled $70.1 million, or 0.64% of total assets, at March 31, 2026. The allowance for credit losses on loans was 1.13% of total loans, and net charge-offs were $1.4 million, or 0.07% annualized of average loans.
Did Stellar Bancorp (STEL) take any notable capital actions in early 2026?
Yes. On April 1, 2026, Stellar redeemed the remaining $30 million of its fixed-to-floating rate subordinated notes outstanding as of March 31, 2026. This reduces subordinated debt and modestly streamlines the company’s capital structure.
What were Stellar Bancorp’s total assets and deposits at March 31, 2026?
At March 31, 2026, Stellar Bancorp reported $10.89 billion in total assets. Total deposits were $8.98 billion, down slightly from $9.02 billion at December 31, 2025, mainly due to lower noninterest-bearing deposits.