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Stellar Bancorp (STEL)
NYSE:STEL
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Stellar Bancorp
(NYSE:STEL)
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Rating:77Outperform
Price Target:
$35.00
▲(13.56% Upside)
Stellar Bancorp's overall stock score reflects strong financial performance and positive earnings call sentiment. The company's robust profitability, effective cost management, and strategic initiatives like share repurchases contribute positively. However, challenges in revenue growth and valuation concerns slightly temper the outlook.
Stellar Bancorp (STEL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.58B
Dividend Yield1.82%
Average Volume (3M)270.01K
Price to Earnings (P/E)14.9
Beta (1Y)0.83
Revenue Growth-2.85%
EPS Growth-0.33%
CountryUS
Employees1,054
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)0.60
Shares Outstanding51,352,646
10 Day Avg. Volume293,700
30 Day Avg. Volume270,012
Financial Highlights & Ratios
PEG Ratio-1.08
Price to Book (P/B)0.94
Price to Sales (P/S)2.43
P/FCF Ratio11.86
Enterprise Value/Market Cap0.93
Enterprise Value/Revenue2.40
Enterprise Value/Gross Profit3.44
Enterprise Value/Ebitda8.65
Forecast
1Y Price Target
$31.00Price Target Upside0.58% Upside
Rating ConsensusHold
Number of Analyst Covering2
Stellar Bancorp Business Overview & Revenue Model
Company DescriptionStellar Bancorp (STEL) is a financial services holding company based in the United States, primarily engaged in providing a wide range of banking and financial products. The company operates through its subsidiary, which offers personal and commercial banking services, including deposits, loans, mortgages, and wealth management solutions. Stellar Bancorp focuses on serving individuals, small to medium-sized enterprises, and corporate clients, emphasizing customer service and innovative financial solutions in its operations.
How the Company Makes MoneyStellar Bancorp generates revenue primarily through interest income from loans and mortgages, which are funded by customer deposits and other borrowings. Key revenue streams include interest on commercial and consumer loans, as well as fees from mortgage origination and servicing. Additionally, the company earns non-interest income from services such as wealth management, transaction fees, and investment services. Significant partnerships with fintech companies and other financial institutions enhance its service offerings and customer reach, contributing to overall earnings.
Stellar Bancorp Earnings Call Summary
Earnings Call Date:Jul 25, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong loan origination growth, increased net income, and effective expense management. However, there were challenges with a slight decrease in net interest income and higher funding costs impacting margins. Share repurchases and an increase in tangible book value contributed positively to the overall outlook.Q2-2025 Updates
Positive Updates
Strong Loan Origination Growth
New loan originations nearly doubled in the second quarter compared to the first, marking the highest level since 2022, indicating a return to organic growth supported by the resilient Texas marketplace.
Increase in Net Income
Second quarter 2025 net income was $26.4 million or $0.51 per diluted share, up from $24.7 million or $0.46 per share in the first quarter.
Non-Interest Expense Management
Non-interest expenses were essentially flat at approximately $70 million, better than planned and reflective of the company's focus on holding the line on expenses.
Tangible Book Value Increase
Year-over-year tangible book value increased 10.8% from $18 per share to $19.94 per share.
Strategic Share Repurchases
The company bought back 791,000 shares at a weighted average price of $26.08 per share during the quarter.
Negative Updates
Slight Decrease in Net Interest Income
Net interest income was $98.3 million, a slight decrease from $99.3 million in the first quarter, due to lower earning assets and slightly lower net interest margin.
Margin Performance Impacted by Higher Funding Costs
Margin performance during the second quarter was impacted by higher funding costs which more than offset higher yields on earning assets.
Provision for Credit Losses
A provision for credit losses of $1.1 million was booked in the second quarter, driven by an increase in allowance for unfunded commitments.
Company Guidance
During the Stellar Bank Q2 2025 earnings call, management provided several key metrics and guidance reflecting the company's financial health and strategic direction. The bank reported a net income of $26.4 million or $0.51 per diluted share, up from the previous quarter's $24.7 million or $0.46 per share. The annualized return on average assets (ROAA) was 1.01%, and the annualized return on average tangible common equity (ROATCE) was 12.16%. The net interest income for the quarter was $98.3 million, with a net interest margin of 4.18%, slightly down from 4.2% in the previous quarter. The provision for credit losses was $1.1 million, and the allowance for credit losses on loans ended the quarter at $83.2 million or 1.14% of loans. Non-interest income rose to $5.8 million, partly due to earnings from a Federal Reserve Bank dividend. Operating expenses remained flat at approximately $70 million, highlighting the company's focus on expense management. Total risk-based capital was 15.98%, and tangible book value per share increased by 10.8% year-over-year. The bank also repurchased 791,000 shares at an average price of $26.08 per share. Looking forward, Stellar Bank aims to drive loan growth through its strong pipeline, particularly in the Texas marketplace, while continuing to manage deposit costs and expand its core funding base.Stellar Bancorp Financial Statement Overview
Summary
Stellar Bancorp exhibits strong profitability and financial stability, with efficient cost management and low leverage. However, challenges in revenue growth and recent declines in free cash flow growth present potential risks. The company is well-positioned in terms of profitability and leverage, but needs to address growth concerns to maintain its financial health.Income Statement
Stellar Bancorp's income statement shows a strong gross profit margin of approximately 69.7% TTM, indicating efficient cost management. However, the net profit margin has slightly decreased to 18.1% TTM from 21.2% in 2023, reflecting some pressure on profitability. Revenue growth has been negative at -1.47% TTM, which is a concern, but the company maintains solid EBIT and EBITDA margins at 22.7% and 27.8% TTM, respectively. Overall, the company demonstrates stable profitability with some challenges in revenue growth.75
Positive
Balance Sheet
The balance sheet of Stellar Bancorp is robust, with a low debt-to-equity ratio of 0.098 TTM, indicating conservative leverage. The return on equity is moderate at 6.8% TTM, showing decent profitability relative to shareholder equity. The equity ratio stands at a healthy level, suggesting strong financial stability. Overall, the company maintains a solid financial position with low leverage and stable equity.80
Positive
Cash Flow
Stellar Bancorp's cash flow statement reveals a decline in free cash flow growth at -11.65% TTM, which is a concern. However, the operating cash flow to net income ratio is low at 0.0096 TTM, indicating potential cash flow constraints. The free cash flow to net income ratio remains high at 96.3% TTM, reflecting efficient cash generation relative to net income. Overall, while cash flow generation is strong, recent declines in free cash flow growth warrant attention.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 609.45M | 625.45M | 615.38M | 343.35M | 261.75M | 249.92M |
| Gross Profit | 425.01M | 433.92M | 452.38M | 258.60M | 239.45M | 183.47M |
| EBITDA | 169.28M | 176.99M | 196.35M | 76.78M | 107.44M | 63.61M |
| Net Income | 110.16M | 115.00M | 130.50M | 51.43M | 81.55M | 45.53M |
Balance Sheet | ||||||
| Total Assets | 10.49B | 10.91B | 10.65B | 10.90B | 7.10B | 3.95B |
| Cash, Cash Equivalents and Short-Term Investments | 1.77B | 2.10B | 1.79B | 2.18B | 2.53B | 738.69M |
| Total Debt | 140.09M | 70.11M | 159.76M | 173.29M | 212.94M | 66.45M |
| Total Liabilities | 8.89B | 9.30B | 9.13B | 9.52B | 6.29B | 3.40B |
| Stockholders Equity | 1.60B | 1.61B | 1.52B | 1.38B | 816.47M | 546.45M |
Cash Flow | ||||||
| Free Cash Flow | 80.37M | 127.96M | 161.36M | 105.25M | 104.45M | 53.88M |
| Operating Cash Flow | 83.48M | 132.62M | 168.22M | 109.07M | 107.38M | 61.06M |
| Investing Cash Flow | 358.06M | 246.09M | 295.25M | 73.76M | -754.82M | -961.10M |
| Financing Cash Flow | -353.69M | 133.27M | -435.94M | -568.63M | 982.19M | 976.56M |
Stellar Bancorp Technical Analysis
Positive
30.82
Price Trends
30.36
Positive
28.74
Positive
28.21
Positive
Market Momentum
0.30
Positive
51.77
Neutral
56.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STEL, the sentiment is Positive. The current price of 30.82 is below the 20-day moving average (MA) of 30.97, above the 50-day MA of 30.36, and above the 200-day MA of 28.21, indicating a neutral trend. The MACD of 0.30 indicates Positive momentum. The RSI at 51.77 is Neutral, neither overbought nor oversold. The STOCH value of 56.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for STEL.
Stellar Bancorp Risk Analysis
Stellar Bancorp disclosed 57 risk factors in its most recent earnings report. Stellar Bancorp reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Stellar Bancorp Peers Comparison
Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | 1.53B | 15.76 | 8.05% | 2.79% | 22.42% | -5.59% | |
77 Outperform | $1.58B | 14.90 | 7.12% | 1.82% | -2.85% | -0.33% | |
75 Outperform | 1.56B | 11.28 | 11.78% | 2.33% | 6.43% | 11.69% | |
74 Outperform | 1.51B | 11.76 | 9.06% | 3.46% | -0.57% | -3.92% | |
74 Outperform | 2.25B | 16.45 | 7.92% | ― | -7.45% | -45.67% | |
72 Outperform | 1.51B | 13.42 | 8.83% | 2.95% | 0.60% | -6.31% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
Performance Comparison
STEL
Stellar Bancorp
30.82
4.96
19.18%
SRCE
1St Source
63.65
5.46
9.38%
GABC
German American Bancorp
40.80
2.74
7.20%
LKFN
Lakeland Financial
65.55
0.53
0.82%
NBHC
National Bank Holdings
39.96
-0.80
-1.96%
CLBK
Columbia Financial
15.51
-1.73
-10.03%
Stellar Bancorp Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Stellar Bancorp Announces Redemption of Subordinated Notes
Neutral
Sep 2, 2025
On August 29, 2025, Stellar Bancorp, Inc. announced its plan to redeem $30 million of its $60 million 4.70% Fixed-to-Floating Rate Subordinated Notes due 2029. The redemption is set for October 1, 2025, at a price equal to 100% of the principal amount plus any accrued interest, impacting the company’s financial obligations and potentially its market positioning.
Dividends
Stellar Bancorp Declares Quarterly Cash Dividend
Positive
Aug 28, 2025
On August 27, 2025, Stellar Bancorp‘s Board of Directors declared a quarterly cash dividend of $0.14 per share, payable on September 30, 2025, to shareholders recorded by September 15, 2025. This announcement underscores the company’s commitment to returning value to its shareholders and may positively impact investor sentiment and the company’s market positioning.
Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Stellar Bancorp Reports Strong Q2 2025 Financial Results
Positive
Jul 25, 2025
Stellar Bancorp, Inc. reported its financial results for the second quarter of 2025, showing a net income of $26.4 million, an increase from the previous quarter. The company experienced growth in loan originations and deposit growth, and anticipates further growth due to favorable economic conditions and strategic positioning in the Texas market. Stellar’s financial highlights include a solid profitability with a net interest margin of 4.18%, a strong capital position with a risk-based capital ratio of 15.98%, and low net charge-offs. The company also repurchased 791 thousand shares during the quarter.
Executive/Board Changes
Stellar Bancorp Director William Wilson Resigns
Neutral
Jun 16, 2025
On June 12, 2025, William E. Wilson, Jr., a member of the Board of Directors of Stellar Bancorp, Inc., resigned from his position, effective immediately. Mr. Wilson, who had been a director since 2017 and served on the Audit Committee, left without any disagreements with the company’s operations or policies. The Board and management expressed their gratitude for his contributions to the company and its predecessor, CBTX, Inc.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.