Stellar Bancorp, Inc.

Third-quarter 2025 net income was $25.7 million, or $0.50 per diluted share, compared with $26.4 million, or $0.51 per share, in the second quarter. Annualized ROAA was 0.97% and annualized ROATCE was 11.45%. Net interest income was $100.6 million, up from $98.3 million, and net interest margin was 4.2% versus 4.18%; excluding purchase accounting accretion, tax-equivalent net interest income was $95.9 million versus $93.1 million, and NIM was 4.0% versus 3.95%. Provision for loan losses was $305,000, and net charge-offs were $3.3 million; year-to-date net charge-offs were $3.7 million, or approximately 7 basis points annualized. Noninterest income was $5 million versus $5.8 million, and noninterest expense was $73.1 million versus $70 million. The allowance for credit losses on loans was $78.9 million, or 1.1% of loans, down from $83.2 million, or 1.14%, in the prior quarter. Total risk-based capital was 16.33% versus 15.98%, and tangible book value per share increased 9.3% year over year to $21.08 from $19.28. Management did not give formal numerical revenue or EPS guidance; instead, it said fourth-quarter expenses should be closer to the first-half run rate, deposit seasonality could help late in the fourth quarter, and balance-sheet deployment may include loans, securities, or opportunistic M&A.

Bob Franklin emphasized that the quarter showed solid performance, stronger net interest income and margin, and balance-sheet growth driven by deposit growth. He repeatedly framed the company as disciplined and relationship-focused, saying the bank will not chase “credit light” business just to win volume and will instead prioritize full client relationships, strong funding, and asset quality. His tone was confident and opportunistic, especially around Texas market disruption creating potential hiring, customer, and strategic opportunities.

Paul Egge focused on the mechanics behind the quarter: $25.7 million of net income, $100.6 million of net interest income, 4.2% NIM, $3.3 million of net charge-offs, and $73.1 million of noninterest expense. He said $4.8 million of purchase accounting accretion helped NII and that excluding it, NIM reached 4.0%, which he described as a level the bank feels good about defending. On capital and liquidity, he highlighted total risk-based capital of 16.33%, year-over-year tangible book value per share growth to $21.08, and roughly $64 million of share repurchases year-to-date, along with a post-quarter $30 million subordinated debt paydown.

Analysts focused on loan growth, deposit momentum, expense normalization, margin sustainability, and M&A. Management said payoffs were elevated because of collateral sales, business sales, and competitive refinancing, but originations were still up 62% year to date, the pipeline remains healthy, and they expect growth to improve into 2026. On deposits, they said 51% of new deposits came from new customers and seasonal government deposits could add late-quarter or early-year strength, while on M&A they said they are having conversations but will be very selective and will protect the balance sheet and deposit base rather than pursue size for its own sake.