STEL - NASDAQ

SB

Stellar Bancorp, Inc.

STEL·NASDAQ

$32.41

+0.062%
Financial ServicesBanks - Regional

Stellar Bancorp, Inc. operates as the bank holding company that provides a range of commercial banking services primarily to small and medium-sized businesses, professionals, and individual customers. It accepts deposit products, including checking accounts, commercial accounts, money market accounts, savings accounts, and other time deposits; and certificates of deposit. The company's loan portfolio comprises commercial and industrial loans; commercial real estate loans, including multi-family residential loans; commercial real estate construction and land development loans; residential real estate loans, such as 1-4 family residential mortgage loans; residential construction loans; and consumer and other loans. In addition, it offers automated teller machine services, drive-through services, and depository facilities; mobile banking services; and telephone, mail, and Internet banking services. Further, the company provides safe deposit boxes, debit cards, cash management and wire transfer services, night depository services, direct deposits, cashier's checks, and letters of credit. It has locations in the Southeast region, including Houston, The Woodlands, Sugar Land, Beaumont, and Port Arthur, as well as Dallas. The company was founded in 2007 and is headquartered in Houston, Texas.

StatementsValue Model

At a Glance

Live Snapshot
Market Cap$1.66B
EPS2.1500
P/E Ratio13.20
Earnings Date01/29/2026

Earnings Call Transcript

STEL • 2024 • Q3

Operator
Greeting, and welcome to the Stellar Bancorp, Inc. Q3 2024 Earnings Release Conference Call. At this time, all participants are in listen only mode. A brief question and answer session will follow after the formal presentation. [Operator Instructions]. Thank you. I will now turn the call over to Courtney Theriot, Chief Accounting Officer. You may now begin.
Operator
Your next question comes from Matthew Olney from Stephens. Your line is now open.
Matthew Olney
Okay. Appreciate that, Bob. And then I guess switching gears on the expense side. I know there were some non-core items this year. I think we've been targeting about $280 million for the full year, but looks like we're trending a little bit above that. Just any updated thoughts on expense levels from here?
Paul Egge
Certainly. That $70 million quarterly run rate is what we target and unfortunately there tends to be noise and we have some noise in seasonality in all our quarters year-to-date, generally trending more of that $71 million run rate. We are working as hard as we can to position the bank well from an infrastructure standpoint and really hold the line on that expense growth. So yes, we've had some items that have had us running about $1 million above our $70 million target, but we're still doing our best to hold the line and we see fourth quarter expenses, we're going to be targeting that same level and managing it along those lines.
Matthew Olney
Okay. That's great, Paul. Thanks for color.
Operator
Our next question comes from Matthew Olney from Stephens. Your line is now open.
Matthew Olney
Hey, guys. Thanks for taking the follow-up. Just want to hit on the securities portfolio, another big quarter of growth there. Just curious on, I guess, a few things. One, are you just remind us, are you targeting any certain size of that portfolio, or is that just a temporary kind of placeholder in the absence of loan growth? And then two, just a bit of thoughts on duration. Are you seeing any kind of duration at this point?
Paul Egge
Certainly. Well, a big push early on was to get ourselves to a minimum of 15% of our balance sheet and we consider even increasing that because we believe in the value of a good strong balance sheet and good liquidity profile. We have a great cash flowing securities portfolio. We in the next 24 months we projected to bring in 30% of that back in cash flows. Our current adjusted duration effective duration is about 3.5 years and we have about $300 billion in principal cash flows that we expect just in the next 12 months. So we definitely value the norm look forward to and will value the normalization of the yield curve and the ability to choose our spot as it relates to duration to optimize our earnings profile, notwithstanding having a higher proportion of securities on our balance sheet.
Matthew Olney
Okay. Thanks guys. Appreciate your help.
Operator
Your next question comes from Catherine Mealor from KBW. Your line is now open.
Catherine Mealor
Thanks. Good morning, everyone. I want just to follow-up on the margin and see if you could just give us a little bit more commentary on your expectations for loan yield repricing. I know you've said previously that you've got about 20% truly floating, 40% variable, 40% fixed, and so just if you could kind of talk us through those three buckets and the repricing opportunity, just to kind of give us a to where you think loan yields are going? Thanks.
Paul Egge
Well, let me kind of correct a little bit. We're about 55% fixed and about 45% variable and that variable is what's split amongst kind of pure floating and otherwise, but we do still have repricing.
Catherine Mealor
Say that again, what's the truly floating again?
Paul Egge
The truly floating is I think about 20% of that variable number. Pardon me, 20% of the total for the 40% to 50% of the variable number.
Catherine Mealor
20% of the total number?
Paul Egge
Yes.
Catherine Mealor
Got it. Okay. That's what we had. Okay. Great.
Paul Egge
But what you see is the fixed rate loans are about 5.59% which still represents northward repricing opportunity and the variable rate loans are sitting spot at 7.07%, and Ray can give a little bit of guidance on how loans that were originating are coming onto the books, but we feel like our spot levels have at least some room for improvement as the fixed rate loans pay down or pay off and reprice higher and Ray why don't you share some color?
Ramon Vitulli
Yes, Catherine, so on the $300 million of new loans that we originated, weighted average rate was $758 million on those loans and in the quarter we also renewed another $750 million of loans that renewed at $847 million. So between the $750 million and the $300 million call it $1 billion in the quarter that received the market rate.
Catherine Mealor
Okay, great. And then mostly of that 20% floating, is that mostly tied to SOFR?
Ramon Vitulli
Prime and SOFR.
Catherine Mealor
They are combined Okay. Great. Okay. So still significant upward repricing, opportunities, it feels like, and then on the on the funding side, you mentioned that you still had a large amount of new deposit accounts come in this quarter. Do you have the kind of average pricing of what that looks like?
Ramon Vitulli
Yes. That all in that came on at 297 which was about a little bit more than 40 basis point improvement from the prior quarter of our new onboarded deposit accounts.
Catherine Mealor
Okay, great. And then all in the NIM, even with Fed cuts, it feels like you can keep that core NIM fairly stable just given the kind of balance between those two things and maybe even up a little bit, Paul, you're saying?
Paul Egge
We want to set expectations appropriately. We feel really good about our ability to defend NIM and that there's potential for upside. There's a lot of moving parts, but we've got great confidence in our ability to maintain really strong NIM.
Catherine Mealor
Got it. Okay. Great. The additional color is helpful. Thank you very much.
Transcript from October 25, 2024

Other Transcripts

 

stel Earnings Call Transcripts

STEL
View Financials All Transcripts

Related Guides

Blog Categories

Continue your STEL research with focused valuation guides.

Forecasting

Compare management guidance with modeled outcomes.

Risk Analysis

Track estimate risk, misses, and downside scenarios.

Reference

Review analyst process and transcript interpretation.

Value Investing

Anchor quarterly narrative to intrinsic value discipline.

Research Paths

Pick your next lens
1

Snapshot

Start with context, operating signals, and key market metrics.

2

Value Model

Stress test fair value across bear, base, and bull assumptions.

3

Statements

Validate revenue quality, margins, and balance sheet durability.

4

Earnings Call

Read management commentary and compare it with reported outcomes.

5

Dividends

Check payout sustainability and long-term distribution behavior.

6

Analyst Expectations

Review consensus spread and where estimate risk is concentrated.