Stellar Bancorp (STEL) investor relations material

Executive summary

• Net income for Q1 2026 was $27.0 million, or $0.53 diluted EPS, up from $24.7 million in Q1 2025 and $26.1 million in Q4 2025, driven by higher net interest income and lower provision for credit losses, despite increased noninterest expense, including $3.3 million in merger-related costs.

• Adjusted net income, excluding merger-related expenses, was $29.6 million, or $0.58 diluted EPS.

• Annualized return on average assets was 0.98% and return on average equity was 6.51% for Q1 2026.

• A pending merger with Prosperity Bancshares is expected to close around July 1, 2026, with all regulatory approvals received and a shareholder vote scheduled for May 27, 2026.

• Loan portfolio grew by $287.4 million (3.94% linked-quarter, 16.0% annualized).

Financial highlights

• Net interest income rose 6.7% year-over-year to $105.9 million, with interest income at $145.1 million and interest expense at $39.2 million.

• Net interest income increased $2.5 million (2.5%) sequentially to $105.9 million, with net interest margin rising to 4.24%.

• Noninterest income decreased 7.2% to $5.1 million, mainly due to lower gains on asset sales and a prior quarter death benefit.

• Noninterest expense increased 7.1% year-over-year and 4.2% sequentially to $75.2 million, primarily due to merger-related expenses and higher salaries.

• Total assets at March 31, 2026 were $10.89 billion, up $82.8 million from December 31, 2025.

Outlook and guidance

• Management expects continued benefit from a scalable operating platform, is optimistic about market resilience, and is monitoring overhead expenses to support growth.

• Integration planning for the Prosperity merger is progressing, with closing expected around July 1, 2026, pending shareholder approval.