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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Stellar Bancorp Inc | NYSE:STEL | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.45 | 1.59% | 28.69 | 29.00 | 28.01 | 28.46 | 126,666 | 23:18:18 |
From Jan 2023 to Jan 2025
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
Fourth Quarter 2023 Financial Highlights
_____________________ (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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240126435458/en/
Investor relations IR@stellar.bank
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