EX-99.1 2 stel2024q4earningsreleasee.htm EX-99.1

Exhibit 99.1

PRESS RELEASE                    

STELLAR BANCORP, INC. REPORTS

FOURTH QUARTER AND FULL YEAR 2024 RESULTS

HOUSTON, January 30, 2025 - Stellar Bancorp, Inc. (the “Company” or “Stellar”) (NYSE: STEL) today reported net income of $27.8 million, or diluted earnings per share of $0.52, for the fourth quarter of 2024 and net income of $117.6 million, or diluted earnings per share of $2.20, for the full year 2024.

“We are proud of our team and their work establishing the foundation of Stellar Bank,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer. “Our strong foundation is a testament to their significant efforts over the past two years and they have prepared us for the year ahead. We intend to turn towards growth at a more normalized organic pattern while we keep an eye towards opportunities with downstream partners that would increase our operating leverage,” Mr. Franklin continued.

“We remain focused on core fundamentals as we enter 2025 and are encouraged by the economic activity in our markets. We are excited about the future ahead of us,” Mr. Franklin concluded.

2024 Financial Highlights

•Solid Profitability: Net income for the full year 2024 was $117.6 million, or diluted earnings per share of $2.20, which translated into a return on average assets of 1.10%, a return on average equity of 7.50% and a return on average tangible equity of 12.18%(1). Net income for the fourth quarter of 2024 was $27.8 million, or diluted earnings per share of $0.52, which translated into an annualized return on average assets of 1.04%, an annualized return on average equity of 6.85% and an annualized return on average tangible equity of 10.82%(1).

•Strong Net Interest Margin: Tax equivalent net interest margin was 4.24% for the year 2024 compared to 4.51% for 2023. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.89%(1) for 2024 compared to 4.03%(1) for 2023. Tax equivalent net interest margin for the fourth quarter of 2024 was 4.25% compared to 4.19% for the third quarter of 2024. The tax equivalent net interest margin, excluding PAA, was 3.94%(1) for the fourth quarter of 2024 compared to 3.91%(1) for the third quarter of 2024.

•Meaningful Capital and Book Value Build: Total risk-based capital ratio increased to 16.06% at December 31, 2024 from 14.02% at December 31, 2023, book value per share increased to $30.14 from $28.54 at December 31, 2023 and tangible book value per share increased to $19.10(1) from $17.02(1) at December 31, 2023.

•Credit Metrics: Nonperforming loans decreased $2.0 million to $37.2 million at December 31, 2024 from $39.2 million at December 31, 2023.

Year 2024 Results

Net interest income for 2024 decreased $28.8 million, or 6.6%, to $408.0 million from $436.8 million for 2023. The net interest margin on a tax equivalent basis decreased 27 basis points to 4.24% for the full year 2024 from 4.51% for the full year 2023. The decrease in the net interest margin from the prior year was primarily due to the impact of increased average interest-bearing liabilities and increased rates on interest-bearing liabilities, partially offset by increased rates on interest-earning assets. Net interest income for the year 2024 benefited from $33.0 million of income from purchase accounting accretion compared to $46.8 million for the year 2023. Excluding purchase accounting accretion, net interest income (tax equivalent) for the year 2024 would have been $375.3 million(1) and the tax equivalent net interest margin would have been 3.89%(1).

Noninterest income for the year 2024 was $23.0 million, an increase of $1.5 million, or 6.2%, compared to $24.6 million for the year 2023. Noninterest income decreased in 2024 compared to 2023 primarily due to a decrease in debit card and ATM income, partially offset by the increase in gains on sales of assets and Small Business Investment Company income recognized in 2024 compared to 2023.

_____________________

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

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Noninterest expense for the year 2024 decreased $4.8 million, or 1.7%, to $285.7 million compared to $290.5 million for the year 2023. The decrease in noninterest expense in 2024 compared to 2023 was primarily due to $15.6 million of acquisition and merger-related expenses recognized in 2023, a $3.5 million decrease in regulatory assessments and a $2.7 million decrease in amortization of intangibles, partially offset by a $5.0 million increase in salaries and employee benefits.

The efficiency ratio was 66.39% for the year ended December 31, 2024 compared to 63.02% for the year ended December 31, 2023. Returns on average assets, average equity and average tangible equity were 1.10%, 7.50% and 12.18%(1) for 2024, respectively, compared to 1.21%, 8.96% and 15.75%(1) for 2023, respectively.

Fourth Quarter 2024 Results

Net interest income in the fourth quarter of 2024 increased $1.5 million, or 1.4%, to $103.0 million from $101.5 million for the third quarter of 2024. The net interest margin on a tax equivalent basis increased 6 basis points to 4.25% for the fourth quarter of 2024 from 4.19% for the third quarter of 2024. The increase in the net interest margin from the prior quarter was primarily due to the impact of decreased rates on interest-bearing liabilities. Net interest income for the fourth quarter of 2024 benefited from $7.6 million of income from purchase accounting accretion compared to $6.8 million in the third quarter of 2024. Excluding purchase accounting accretion, net interest income (tax equivalent) for the fourth quarter of 2024 would have been $95.5 million(1) and the tax equivalent net interest margin would have been 3.94%(1).

Noninterest income for the fourth quarter of 2024 was $5.0 million, a decrease of $1.3 million, or 20.2%, compared to $6.3 million for the third quarter of 2024. Noninterest income decreased in the fourth quarter of 2024 compared to the third quarter of 2024 primarily due to

a loss on sales of assets in the fourth quarter of 2024 and Small Business Investment Company income recognized in the third quarter of 2024.

Noninterest expense for the fourth quarter of 2024 increased $915 thousand, or 1.3%, to $72.0 million compared to $71.1 million for the third quarter of 2024. The increase in noninterest expense in the fourth quarter of 2024 compared to the third quarter of 2024 was primarily due to an increase of $1.7 million in professional fees and a $715 thousand increase in advertising expense, partially offset by a $611 thousand decrease in salaries and employee benefits and a $631 thousand decrease in amortization of intangibles.

The efficiency ratio was 66.59% for the fourth quarter of 2024 compared to 66.18% for the third quarter of 2024. Annualized returns on average assets, average equity and average tangible equity were 1.04%, 6.85% and 10.82%(1) for the fourth quarter of 2024, respectively, compared to 1.27%, 8.49% and 13.63%(1) for the third quarter of 2024, respectively.

Financial Condition

Total assets at December 31, 2024 were $10.91 billion, an increase of $275.3 million, compared to $10.63 billion at September 30, 2024.

Total loans at December 31, 2024 decreased $111.3 million to $7.44 billion compared to $7.55 billion at September 30, 2024. At December 31, 2024, the remaining balance of the purchase accounting accretion on loans was $73.7 million.

Total deposits at December 31, 2024 increased $385.8 million to $9.13 billion compared to $8.74 billion at September 30, 2024, due to increases in interest-bearing and noninterest-bearing demand deposits, partially offset by decreases in certificates and other time deposits and money-market and savings accounts. Shifts in the deposit mix were primarily driven by the current interest rate environment and an intensely competitive market for deposits.

Asset Quality

Nonperforming assets totaled $38.9 million, or 0.36% of total assets, at December 31, 2024, compared to $35.1 million, or 0.33% of total assets, at September 30, 2024 and $39.2 million at December 31, 2023. The allowance for credit losses on loans as a percentage of total loans was 1.09% at December 31, 2024, 1.12% at September 30, 2024 and 1.16% at December 31, 2023.

The fourth quarter of 2024 included a provision for credit losses of $942 thousand compared to a reversal of provision for credit losses of $6.0 million recorded during the third quarter of 2024. Net charge-offs for the fourth quarter of 2024 were $2.0 million, or 0.11% (annualized) of average loans, compared to net charge-offs of $3.9 million, or 0.21% (annualized) of average loans, for the third quarter of 2024.

The year ended December 31, 2024 included a reversal of provision for credit losses of $2.9 million compared to a provision for credit losses of $8.9 million recorded for the year ended December 31, 2023. Net charge-offs for the year ended December 31, 2024 were $6.7 million, or 0.09% of average loans, compared to net charge-offs of $11.1 million, or 0.14% of average loans, for the year ended December 31, 2023.

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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 31, 2025 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its results for the fourth quarter and full year 2024. Participants may register for the conference call at https://registrations.events/direct/Q4I635866 conference ID 63586 to receive the dial-in numbers and unique PIN to access the call. If you need assistance in obtaining a dial-in number, please contact IR@stellar.bank. A simultaneous webcast is available at https://registrations.events/direct/Q4I635866 and requires pre-registration. If you are unable to participate during the live webcast, the webcast will be accessible via the Investor Relations section of the Company’s website at ir.stellar.bank.

About Stellar Bancorp, Inc.

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

Investor Relations

IR@stellar.bank

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 Company’s merger with Allegiance Bancshares, Inc. (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.

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Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

			2024																								2023
			December 31						September 30						June 30						March 31						December 31
			(Dollars in thousands)
ASSETS
Cash and due from banks			$	419,967					$	103,735					$	110,341					$	74,663					$	121,004
Interest-bearing deposits at other financial institutions			491,249						412,482						379,909						325,079						278,233
Total cash and cash equivalents			911,216						516,217						490,250						399,742						399,237
Available for sale securities, at fair value			1,673,016						1,691,752						1,630,971						1,523,100						1,395,680
Loans held for investment			7,439,854						7,551,124						7,713,897						7,908,111						7,925,133
Less: allowance for credit losses on loans			(81,058)						(84,501)						(94,772)						(96,285)						(91,684)
Loans, net			7,358,796						7,466,623						7,619,125						7,811,826						7,833,449
Accrued interest receivable			37,884						39,473						43,348						45,466						44,244
Premises and equipment, net			111,856						113,742						113,984						115,698						118,683
Federal Home Loan Bank stock			8,209						20,123						15,089						16,050						25,051
Bank-owned life insurance			107,498						106,876						106,262						105,671						105,084
Goodwill			497,318						497,318						497,318						497,318						497,318
Core deposit intangibles, net			92,546						98,116						104,315						110,513						116,712
Other assets			106,771						79,537						103,001						103,838						111,681
Total assets			$	10,905,110					$	10,629,777					$	10,723,663					$	10,729,222					$	10,647,139
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing			$	3,576,206					$	3,303,048					$	3,308,441					$	3,323,149					$	3,546,815
Interest-bearing
Demand			1,845,749						1,571,504						1,564,405						1,576,261						1,659,999
Money market and savings			2,253,193						2,280,651						2,213,031						2,203,767						2,136,777
Certificates and other time			1,453,236						1,587,398						1,639,426						1,691,539						1,529,876
Total interest-bearing deposits			5,552,178						5,439,553						5,416,862						5,471,567						5,326,652
Total deposits			9,128,384						8,742,601						8,725,303						8,794,716						8,873,467
Accrued interest payable			17,052						16,915						12,327						12,227						11,288
Borrowed funds			—						60,000						240,000						215,000						50,000
Subordinated debt			70,105						110,064						109,964						109,864						109,765
Other liabilities			79,104						74,074						70,274						66,717						81,601
Total liabilities			9,294,645						9,003,654						9,157,868						9,198,524						9,126,121
SHAREHOLDERS’ EQUITY:
Common stock			534						535						536						536						533
Capital surplus			1,240,050						1,238,619						1,238,477						1,235,221						1,232,627
Retained earnings			495,245						474,905						447,948						425,130						405,945
Accumulated other comprehensive loss			(125,364)						(87,936)						(121,166)						(130,189)						(118,087)
Total shareholders’ equity			1,610,465						1,626,123						1,565,795						1,530,698						1,521,018
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	10,905,110					$	10,629,777					$	10,723,663					$	10,729,222					$	10,647,139

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Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

			Three Months Ended																														Years Ended
			2024																								2023						2024						2023
			December 31						September 30						June 30						March 31						December 31						December 31						December 31
INTEREST INCOME:
Loans, including fees			$	128,738					$	132,372					$	135,885					$	134,685					$	139,114					$	531,680					$	537,722
Securities:
Taxable			14,789						13,898						11,923						9,293						9,622						49,903						38,494
Tax-exempt			814						814						816						818						418						3,262						2,553
Deposits in other financial institutions			5,681						4,692						3,555						3,627						3,021						17,555						12,048
Total interest income			150,022						151,776						152,179						148,423						152,175						602,400						590,817
INTEREST EXPENSE:
Demand, money market and savings deposits			27,877						29,440						28,399						27,530						25,033						113,246						87,335
Certificates and other time deposits			16,830						18,073						18,758						15,084						15,075						68,745						41,286
Borrowed funds			235						840						1,700						1,774						4,154						4,549						17,807
Subordinated debt			2,123						1,916						1,912						1,917						1,983						7,868						7,630
Total interest expense			47,065						50,269						50,769						46,305						46,245						194,408						154,058
NET INTEREST INCOME			102,957						101,507						101,410						102,118						105,930						407,992						436,759
Provision for (reversal of) credit losses			942						(5,985)						(1,935)						4,098						1,047						(2,880)						8,943
Net interest income after provision for credit losses			102,015						107,492						103,345						98,020						104,883						410,872						427,816
NONINTEREST INCOME:
Service charges on deposit accounts			1,590						1,594						1,648						1,598						1,520						6,430						6,064
(Loss) gain on sale of assets			(112)						432						(64)						513						198						769						390
Bank-owned life insurance			622						614						591						587						573						2,414						2,178
Debit card and ATM income			570						551						543						527						542						2,191						4,996
Other			2,362						3,111						2,698						3,071						4,053						11,242						10,934
Total noninterest income			5,032						6,302						5,416						6,296						6,886						23,046						24,562
NONINTEREST EXPENSE:
Salaries and employee benefits			40,512						41,123						39,061						41,376						40,464						162,072						157,034
Net occupancy and equipment			4,401						4,570						4,503						4,390						4,572						17,864						16,932
Depreciation			1,984						1,911						1,948						1,964						1,955						7,807						7,584
Data processing and software amortization			5,551						5,706						5,501						4,894						5,000						21,652						19,526
Professional fees			3,428						1,714						1,620						2,662						3,867						9,424						7,955
Regulatory assessments and FDIC insurance			1,636						1,779						2,299						1,854						5,169						7,568						11,032
Amortization of intangibles			5,581						6,212						6,215						6,212						6,247						24,220						26,883
Communications			807						827						847						937						743						3,418						2,796
Advertising			1,593						878						891						765						1,004						4,127						3,627
Acquisition and merger-related expenses			—						—						—						—						3,072						—						15,555
Other			6,488						6,346						8,331						6,356						5,848						27,521						21,570
Total noninterest expense			71,981						71,066						71,216						71,410						77,941						285,673						290,494
INCOME BEFORE INCOME TAXES			35,066						42,728						37,545						32,906						33,828						148,245						161,884
Provision for income taxes			7,249						8,837						7,792						6,759						6,562						30,637						31,387
NET INCOME			$	27,817					$	33,891					$	29,753					$	26,147					$	27,266					$	117,608					$	130,497
EARNINGS PER SHARE
Basic			$	0.52					$	0.63					$	0.56					$	0.49					$	0.51					$	2.20					$	2.45
Diluted			$	0.52					$	0.63					$	0.56					$	0.49					$	0.51					$	2.20					$	2.45

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Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

			Three Months Ended																														Years Ended
			2024																								2023						2024						2023
			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			$	27,817					$	33,891					$	29,753					$	26,147					$	27,266					$	117,608					$	130,497
Earnings per share, basic			$	0.52					$	0.63					$	0.56					$	0.49					$	0.51					$	2.20					$	2.45
Earnings per share, diluted			$	0.52					$	0.63					$	0.56					$	0.49					$	0.51					$	2.20					$	2.45
Dividends per share			$	0.14					$	0.13					$	0.13					$	0.13					$	0.13					$	0.53					$	0.52
Return on average assets(A)			1.04		%				1.27		%				1.13		%				0.98		%				1.02		%				1.10		%				1.21		%
Return on average equity(A)			6.85		%				8.49		%				7.78		%				6.88		%				7.33		%				7.50		%				8.96		%
Return on average tangible equity(A)(B)			10.82		%				13.63		%				12.82		%				11.47		%				12.61		%				12.18		%				15.75		%
Net interest margin (tax equivalent)(A)(C)			4.25		%				4.19		%				4.24		%				4.26		%				4.40		%				4.24		%				4.51		%
Net interest margin (tax equivalent) excluding PAA(A)(B)(C)			3.94		%				3.91		%				3.82		%				3.91		%				3.91		%				3.89		%				4.03		%
Efficiency ratio(D)			66.59		%				66.18		%				66.63		%				66.18		%				69.21		%				66.39		%				63.02		%
Capital Ratios
Stellar Bancorp, Inc. (Consolidated)
Equity to assets			14.77		%				15.30		%				14.60		%				14.27		%				14.29		%				14.77		%				14.29		%
Tangible equity to tangible assets(B)			9.89		%				10.27		%				9.53		%				9.12		%				9.04		%				9.89		%				9.04		%
Estimated Total capital ratio (to risk-weighted assets)			16.06		%				15.91		%				15.34		%				14.62		%				14.02		%				16.06		%				14.02		%
Estimated Common equity Tier 1 capital (to risk weighted assets)			14.19		%				13.62		%				12.98		%				12.29		%				11.77		%				14.19		%				11.77		%
Estimated Tier 1 capital (to risk-weighted assets)			14.31		%				13.74		%				13.10		%				12.41		%				11.89		%				14.31		%				11.89		%
Estimated Tier 1 leverage (to average tangible assets)			11.30		%				11.25		%				10.93		%				10.55		%				10.18		%				11.30		%				10.18		%
Stellar Bank
Estimated Total capital ratio (to risk-weighted assets)			15.34		%				15.07		%				14.65		%				14.13		%				13.65		%				15.34		%				13.65		%
Estimated Common equity Tier 1 capital (to risk-weighted assets)			14.19		%				13.63		%				13.12		%				12.61		%				12.20		%				14.19		%				12.20		%
Estimated Tier 1 capital (to risk-weighted assets)			14.19		%				13.63		%				13.12		%				12.61		%				12.20		%				14.19		%				12.20		%
Estimated Tier 1 leverage (to average tangible assets)			11.19		%				11.16		%				10.94		%				10.72		%				10.44		%				11.19		%				10.44		%
Other Data
Weighted average shares:
Basic			53,422						53,541						53,572						53,343						53,282						53,469						53,229
Diluted			53,471						53,580						53,608						53,406						53,350						53,510						53,313
Period end shares outstanding			53,429						53,446						53,564						53,551						53,291						53,429						53,291
Book value per share			$	30.14					$	30.43					$	29.23					$	28.58					$	28.54					$	30.14					$	28.54
Tangible book value per share(B)			$	19.10					$	19.28					$	18.00					$	17.23					$	17.02					$	19.10					$	17.02
Employees - full-time equivalents			1,037						1,040						1,045						1,007						998						1,037						998

(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 assets. Additionally, taxes and provision for credit losses are not part of this calculation.

    

6

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Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

			Three Months Ended
			December 31, 2024																		September 30, 2024																		December 31, 2023
			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			$	7,477,332					$	128,738					6.85%						$	7,627,522					$	132,372					6.90%						$	7,973,780					$	139,114					6.92%
Securities			1,702,111						15,603						3.65%						1,676,614						14,712						3.49%						1,386,079						10,040						2.87%
Deposits in other financial institutions			473,719						5,681						4.77%						339,493						4,692						5.50%						217,068						3,021						5.52%
Total interest-earning assets			9,653,162						$	150,022					6.18%						9,643,629						$	151,776					6.26%						9,576,927						$	152,175					6.30%
Allowance for credit losses on loans			(84,423)																		(94,785)																		(92,992)
Noninterest-earning assets			1,080,429																		1,077,422																		1,142,438
Total assets			$	10,649,168																	$	10,626,266																	$	10,626,373
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits			$	1,623,867					$	11,341					2.78%						$	1,606,736					$	12,458					3.08%						$	1,420,892					$	10,548					2.95%
Money market and savings deposits			2,312,711						16,536						2.84%						2,254,767						16,982						3.00%						2,163,348						14,485						2.66%
Certificates and other time deposits			1,538,785						16,830						4.35%						1,620,908						18,073						4.44%						1,461,227						15,075						4.09%
Borrowed funds			15,978						235						5.85%						49,077						840						6.81%						275,694						4,154						5.98%
Subordinated debt			101,394						2,123						8.33%						110,007						1,916						6.93%						109,713						1,983						7.17%
Total interest-bearing liabilities			5,592,735						$	47,065					3.35%						5,641,495						$	50,269					3.54%						5,430,874						$	46,245					3.38%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits			3,342,636																		3,303,726																		3,624,417
Other liabilities			99,006																		93,127																		95,705
Total liabilities			9,034,377																		9,038,348																		9,150,996
Shareholders’ equity			1,614,791																		1,587,918																		1,475,377
Total liabilities and shareholders’ equity			$	10,649,168																	$	10,626,266																	$	10,626,373
Net interest rate spread															2.83%																		2.72%																		2.92%
Net interest income and margin									$	102,957					4.24%												$	101,507					4.19%												$	105,930					4.39%
Net interest income and net interest margin (tax equivalent)									$	103,039					4.25%												$	101,578					4.19%												$	106,121					4.40%
Cost of funds															2.10%																		2.24%																		2.03%
Cost of deposits															2.02%																		2.15%																		1.84%

7

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Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

			Years Ended December 31,
			2024																		2023
			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			$	7,712,122					$	531,680					6.89%						$	7,961,911					$	537,722					6.75%
Securities			1,593,073						53,165						3.34%						1,490,588						41,047						2.75%
Deposits in other financial institutions			334,654						17,555						5.25%						242,803						12,048						4.96%
Total interest-earning assets			9,639,849						$	602,400					6.25%						9,695,302						$	590,817					6.09%
Allowance for credit losses on loans			(91,770)																		(95,668)
Noninterest-earning assets			1,098,395																		1,147,232
Total assets			$	10,646,474																	$	10,746,866
Liabilities and Shareholders' Equity
Interest-Bearing Liabilities:
Interest-bearing demand deposits			$	1,618,212					$	48,290					2.98%						$	1,464,015					$	38,689					2.64%
Money market and savings deposits			2,236,678						64,956						2.90%						2,259,264						48,646						2.15%
Certificates and other time deposits			1,574,598						68,745						4.37%						1,239,345						41,286						3.33%
Borrowed funds			77,662						4,549						5.86%						318,721						17,807						5.59%
Subordinated debt			107,768						7,868						7.30%						109,560						7,630						6.96%
Total interest-bearing liabilities			5,614,918						$	194,408					3.46%						5,390,905						$	154,058					2.86%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits			3,369,931																		3,814,651
Other liabilities			94,156																		85,376
Total liabilities			9,079,005																		9,290,932
Shareholders’ equity			1,567,469																		1,455,934
Total liabilities and shareholders' equity			$	10,646,474																	$	10,746,866
Net interest rate spread															2.79%																		3.23%
Net interest income and margin									$	407,992					4.23%												$	436,759					4.50%
Net interest income and net interest margin (tax equivalent)									$	408,305					4.24%												$	437,670					4.51%
Cost of funds															2.16%																		1.67%
Cost of deposits															2.07%																		1.47%

8

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Stellar Bancorp, Inc.

Financial Highlights

(Unaudited)

			Three Months Ended
			2024																								2023
			December 31						September 30						June 30						March 31						December 31
			(Dollars in thousands)
Period-end Loan Portfolio:
Commercial and industrial			$	1,362,260					$	1,350,753					$	1,396,064					$	1,455,755					$	1,414,102
Real estate:
Commercial real estate (including multi-family residential)			3,868,218						3,976,296						4,029,671						4,049,885						4,071,807
Commercial real estate construction and land development			845,494						890,316						922,805						1,039,443						1,060,406
1-4 family residential (including home equity)			1,115,484						1,112,235						1,098,681						1,049,316						1,047,174
Residential construction			157,977						161,494						200,134						252,573						267,357
Consumer and other			90,421						60,030						66,542						61,139						64,287
Total loans held for investment			$	7,439,854					$	7,551,124					$	7,713,897					$	7,908,111					$	7,925,133
Deposits:
Noninterest-bearing			$	3,576,206					$	3,303,048					$	3,308,441					$	3,323,149					$	3,546,815
Interest-bearing
Demand			1,845,749						1,571,504						1,564,405						1,576,261						1,659,999
Money market and savings			2,253,193						2,280,651						2,213,031						2,203,767						2,136,777
Certificates and other time			1,453,236						1,587,398						1,639,426						1,691,539						1,529,876
Total interest-bearing deposits			5,552,178						5,439,553						5,416,862						5,471,567						5,326,652
Total deposits			$	9,128,384					$	8,742,601					$	8,725,303					$	8,794,716					$	8,873,467
Asset Quality:
Nonaccrual loans			$	37,212					$	32,140					$	50,906					$	57,129					$	39,191
Accruing loans 90 or more days past due			—						—						—						—						—
Total nonperforming loans			37,212						32,140						50,906						57,129						39,191
Foreclosed assets			1,708						2,984						2,548						—						—
Total nonperforming assets			$	38,920					$	35,124					$	53,454					$	57,129					$	39,191
Net charge-offs (recoveries)			$	2,016					$	3,933					$	(1)					$	714					$	2,577
Nonaccrual loans:
Commercial and industrial			$	8,500					$	9,718					$	18,451					$	15,465					$	5,048
Real estate:
Commercial real estate (including multi-family residential)			16,459						10,695						18,094						21,268						16,699
Commercial real estate construction and land development			3,061						4,183						1,641						8,406						5,043
1-4 family residential (including home equity)			9,056						7,259						12,454						10,368						8,874
Residential construction			—						121						155						1,410						3,288
Consumer and other			136						164						111						212						239
Total nonaccrual loans			$	37,212					$	32,140					$	50,906					$	57,129					$	39,191
Asset Quality Ratios:
Nonperforming assets to total assets			0.36		%				0.33		%				0.50		%				0.53		%				0.37		%
Nonperforming loans to total loans			0.50		%				0.43		%				0.66		%				0.72		%				0.49		%
Allowance for credit losses on loans to nonperforming loans			217.83		%				262.92		%				186.17		%				168.54		%				233.94		%
Allowance for credit losses on loans to total loans			1.09		%				1.12		%				1.23		%				1.22		%				1.16		%
Net charge-offs to average loans (annualized)			0.11		%				0.21		%				0.00		%				0.04		%				0.13		%

9

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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
			2024																								2023						2024						2023
			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			$	27,817					$	33,891					$	29,753					$	26,147					$	27,266					$	117,608					$	130,497
Add: Provision for credit losses			942						(5,985)						(1,935)						4,098						1,047						(2,880)						8,943
Add: Provision for income taxes			7,249						8,837						7,792						6,759						6,562						30,637						31,387
Pre-tax, pre-provision income			$	36,008					$	36,743					$	35,610					$	37,004					$	34,875					$	145,365					$	170,827
Total average assets			$	10,649,168					$	10,626,266					$	10,623,865					$	10,686,789					$	10,626,373					$	10,646,474					$	10,746,866
Pre-tax, pre-provision return on average assets(B)			1.35		%				1.38		%				1.35		%				1.39		%				1.30		%				1.37		%				1.59		%
Total shareholders’ equity			$	1,610,465					$	1,626,123					$	1,565,795					$	1,530,698					$	1,521,018					$	1,610,465					$	1,521,018
Less: Goodwill and core deposit intangibles, net			589,864						595,434						601,633						607,831						614,030						589,864						614,030
Tangible shareholders’ equity			$	1,020,601					$	1,030,689					$	964,162					$	922,867					$	906,988					$	1,020,601					$	906,988
Shares outstanding at end of period			53,429						53,446						53,564						53,551						53,291						53,429						53,291
Tangible book value per share			$	19.10					$	19.28					$	18.00					$	17.23					$	17.02					$	19.10					$	17.02
Average shareholders’ equity			$	1,614,791					$	1,587,918					$	1,538,124					$	1,528,298					$	1,475,377					$	1,567,469					$	1,455,934
Less: Average goodwill and core deposit intangibles, net			592,471						598,866						604,722						611,149						617,236						601,768						627,449
Average tangible shareholders’ equity			$	1,022,320					$	989,052					$	933,402					$	917,149					$	858,141					$	965,701					$	828,485
Return on average tangible equity(B)			10.82		%				13.63		%				12.82		%				11.47		%				12.61		%				12.18		%				15.75		%
Total assets			$	10,905,110					$	10,629,777					$	10,723,663					$	10,729,222					$	10,647,139					$	10,905,110					$	10,647,139
Less: Goodwill and core deposit intangibles, net			589,864						595,434						601,633						607,831						614,030						589,864						614,030
Tangible assets			$	10,315,246					$	10,034,343					$	10,122,030					$	10,121,391					$	10,033,109					$	10,315,246					$	10,033,109
Tangible equity to tangible assets			9.89		%				10.27		%				9.53		%				9.12		%				9.04		%				9.89		%				9.04		%
Net interest income (tax equivalent)			$	103,039					$	101,578					$	101,482					$	102,207					$	106,121					$	408,305					$	437,670
Less: Purchase accounting accretion			7,555						6,795						10,098						8,551						11,726						32,999						46,802
Adjusted net interest income (tax equivalent)			$	95,484					$	94,783					$	91,384					$	93,656					$	94,395					$	375,306					$	390,868
Average earning assets			$	9,653,162					$	9,643,629					$	9,616,874					$	9,645,544					$	9,576,927					$	9,639,849					$	9,695,302
Net interest margin (tax equivalent) excluding PAA			3.94		%				3.91		%				3.82		%				3.91		%				3.91		%				3.89		%				4.03		%

(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.

10