“We are pleased with our results for the third quarter 2023 given the uncertainty of the economic environment. We remain steadfast in our commitment to provide and protect the qualities we think drive shareholder value; balance sheet strength; sound quality; and stable core deposits,” said
“We continue our strategy of not fighting the actions of the
“We will continue to build our capital base, be mindful of our liquidity position and be watchful of our credit quality. We believe that Stellar remains well positioned to have optionality as we move through this economic cycle while protecting and increasing long-term shareholder value,” concluded
Third Quarter 2023 Financial Highlights
- Strong Profitability: Third quarter 2023 net income of
$30.9 million and diluted earnings per share of$0.58 translated into an annualized return on average assets of 1.14% and an annualized return on average tangible equity of 14.47%(1).
- Continued Regulatory Capital Build: Total risk-based capital ratio increased to 13.42% at
September 30, 2023 from 12.39% atDecember 31, 2022 and Tier 1 leverage ratio increased to 9.82% atSeptember 30, 2023 from 8.55% atDecember 31, 2022 .
- Solid Margin: Tax equivalent net interest margin was 4.37% for the third quarter of 2023 as compared to 4.49% in the second quarter of 2023. The tax equivalent net interest margin, excluding purchase accounting accretion (“PAA”), was 3.87%(1) for the third quarter of 2023 and 3.97%(1) for the second quarter of 2023.
- Advantageous Funding Profile: Noninterest-bearing deposit balances decreased from the second quarter but remained a significant portion of our deposit funding base at 42.1% at the end of the third quarter 2023 compared to 42.4% at the end of the second quarter 2023.
Merger of Equals
The merger of equals (the “Merger”) between Allegiance Bancshares, Inc. (“Allegiance”) and
_____________________
(1) Refer to page 10 of this earnings release for the calculation of this non-GAAP financial measure.
Third Quarter 2023 Results
Stellar’s net interest income in the third quarter 2023 decreased
Noninterest income for the third quarter 2023 was
Noninterest expense for the third quarter 2023 increased
Stellar’s efficiency ratio was 63.50% for the third quarter 2023 compared to 60.83% for the second quarter 2023. Third quarter 2023 annualized returns on average assets, average equity and average tangible equity were 1.14%, 8.34% and 14.47%, respectively, compared to 1.31%, 9.67% and 17.05%, respectively, for the second quarter 2023. Return on average tangible equity is a non-GAAP measure. Please refer to the non-GAAP reconciliation on page 10 of this earnings release.
Financial Condition
Total loans at
Total deposits at
Total assets at
Asset Quality
Nonperforming assets totaled
The provision for credit losses for the third quarter 2023 was
GAAP Reconciliation of Non-GAAP Financial Measures
Stellar’s management uses certain non-GAAP financial measures. 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
About
Investor relations
IR@stellarbancorpinc.com
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 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
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
Financial Highlights (Unaudited) | |||||||||||||||||||
2023 | 2022 | ||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 94,970 | $ | 105,913 | $ | 99,231 | $ | 67,063 | $ | 16,449 | |||||||||
Interest-bearing deposits at other financial institutions | 207,302 | 198,176 | 164,102 | 304,642 | 102,118 | ||||||||||||||
Total cash and cash equivalents | 302,272 | 304,089 | 263,333 | 371,705 | 118,567 | ||||||||||||||
Available for sale securities, at fair value | 1,414,952 | 1,478,222 | 1,519,175 | 1,807,586 | 1,618,995 | ||||||||||||||
Loans held for investment | 8,004,528 | 8,068,718 | 7,886,044 | 7,754,751 | 4,591,912 | ||||||||||||||
Less: allowance for credit losses on loans | (93,575 | ) | (100,195 | ) | (96,188 | ) | (93,180 | ) | (52,147 | ) | |||||||||
Loans, net | 7,910,953 | 7,968,523 | 7,789,856 | 7,661,571 | 4,539,765 | ||||||||||||||
Accrued interest receivable | 43,536 | 42,051 | 42,405 | 44,743 | 29,697 | ||||||||||||||
Premises and equipment, net | 119,332 | 119,142 | 124,723 | 126,803 | 57,837 | ||||||||||||||
29,022 | 24,478 | 19,676 | 15,058 | 16,843 | |||||||||||||||
Bank-owned life insurance | 104,699 | 104,148 | 103,616 | 103,094 | 28,305 | ||||||||||||||
497,318 | 497,260 | 497,260 | 497,260 | 223,642 | |||||||||||||||
Core deposit intangibles, net | 122,944 | 129,805 | 136,665 | 143,525 | 12,406 | ||||||||||||||
Other assets | 120,432 | 110,633 | 108,009 | 129,092 | 84,285 | ||||||||||||||
Total assets | $ | 10,665,460 | $ | 10,778,351 | $ | 10,604,718 | $ | 10,900,437 | $ | 6,730,342 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
LIABILITIES: | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Noninterest-bearing | $ | 3,656,288 | $ | 3,713,536 | $ | 3,877,859 | $ | 4,230,169 | $ | 2,465,839 | |||||||||
Interest-bearing | |||||||||||||||||||
Demand | 1,397,492 | 1,437,509 | 1,394,244 | 1,591,828 | 956,920 | ||||||||||||||
Money market and savings | 2,128,950 | 2,174,073 | 2,401,840 | 2,575,923 | 1,471,690 | ||||||||||||||
Certificates and other time | 1,503,891 | 1,441,251 | 1,064,932 | 869,712 | 766,270 | ||||||||||||||
Total interest-bearing deposits | 5,030,333 | 5,052,833 | 4,861,016 | 5,037,463 | 3,194,880 | ||||||||||||||
Total deposits | 8,686,621 | 8,766,369 | 8,738,875 | 9,267,632 | 5,660,719 | ||||||||||||||
Accrued interest payable | 7,612 | 4,555 | 3,875 | 2,098 | 2,673 | ||||||||||||||
Borrowed funds | 323,981 | 369,963 | 238,944 | 63,925 | 257,000 | ||||||||||||||
Subordinated debt | 109,665 | 109,566 | 109,420 | 109,367 | 109,241 | ||||||||||||||
Other liabilities | 76,735 | 69,218 | 67,388 | 74,239 | 44,407 | ||||||||||||||
Total liabilities | 9,204,614 | 9,319,671 | 9,158,502 | 9,517,261 | 6,074,040 | ||||||||||||||
SHAREHOLDERS’ EQUITY: | |||||||||||||||||||
Common stock | 533 | 533 | 533 | 530 | 281 | ||||||||||||||
Capital surplus | 1,231,686 | 1,228,532 | 1,225,596 | 1,222,761 | 511,434 | ||||||||||||||
Retained earnings | 385,600 | 361,619 | 333,368 | 303,146 | 307,975 | ||||||||||||||
Accumulated other comprehensive loss | (156,973 | ) | (132,004 | ) | (113,281 | ) | (143,261 | ) | (163,388 | ) | |||||||||
Total shareholders’ equity | 1,460,846 | 1,458,680 | 1,446,216 | 1,383,176 | 656,302 | ||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 10,665,460 | $ | 10,778,351 | $ | 10,604,718 | $ | 10,900,437 | $ | 6,730,342 |
Financial Highlights (Unaudited) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||
INTEREST INCOME: | ||||||||||||||||||||||
Loans, including fees | $ | 138,948 | $ | 133,931 | $ | 125,729 | $ | 116,145 | $ | 58,025 | $ | 398,608 | $ | 164,230 | ||||||||
Securities: | ||||||||||||||||||||||
Taxable | 9,493 | 9,726 | 9,653 | 9,834 | 6,655 | 28,872 | 17,294 | |||||||||||||||
Tax-exempt | 437 | 436 | 1,262 | 3,057 | 2,594 | 2,135 | 7,676 | |||||||||||||||
Deposits in other financial institutions | 2,391 | 2,865 | 3,771 | 2,933 | 608 | 9,027 | 1,825 | |||||||||||||||
Total interest income | 151,269 | 146,958 | 140,415 | 131,969 | 67,882 | 438,642 | 191,025 | |||||||||||||||
INTEREST EXPENSE: | ||||||||||||||||||||||
Demand, money market and savings deposits | 23,557 | 20,708 | 18,037 | 12,406 | 3,527 | 62,302 | 6,733 | |||||||||||||||
Certificates and other time deposits | 13,282 | 9,622 | 3,307 | 2,083 | 1,664 | 26,211 | 5,742 | |||||||||||||||
Borrowed funds | 5,801 | 6,535 | 1,317 | 417 | 499 | 13,653 | 799 | |||||||||||||||
Subordinated debt | 1,908 | 1,812 | 1,927 | 1,449 | 1,502 | 5,647 | 4,407 | |||||||||||||||
Total interest expense | 44,548 | 38,677 | 24,588 | 16,355 | 7,192 | 107,813 | 17,681 | |||||||||||||||
NET INTEREST INCOME | 106,721 | 108,281 | 115,827 | 115,614 | 60,690 | 330,829 | 173,344 | |||||||||||||||
Provision for credit losses | 2,315 | 1,915 | 3,666 | 44,793 | 1,962 | 7,896 | 5,919 | |||||||||||||||
Net interest income after provision for credit losses | 104,406 | 106,366 | 112,161 | 70,821 | 58,728 | 322,933 | 167,425 | |||||||||||||||
NONINTEREST INCOME: | ||||||||||||||||||||||
Nonsufficient funds and overdraft charges | 291 | 418 | 406 | 447 | 145 | 1,115 | 387 | |||||||||||||||
Service charges on deposit accounts | 1,329 | 1,157 | 943 | 1,242 | 527 | 3,429 | 1,614 | |||||||||||||||
(Loss) gain on sale of assets | — | (6 | ) | 198 | 4,025 | 42 | 192 | 25 | ||||||||||||||
Bank-owned life insurance | 551 | 532 | 522 | 515 | 135 | 1,605 | 610 | |||||||||||||||
Debit card and ATM income | 935 | 1,821 | 1,698 | 1,897 | 869 | 4,454 | 2,568 | |||||||||||||||
Other | 1,589 | 1,561 | 3,731 | 2,511 | 1,277 | 6,881 | 4,513 | |||||||||||||||
Total noninterest income | 4,695 | 5,483 | 7,498 | 10,637 | 2,995 | 17,676 | 9,717 | |||||||||||||||
NONINTEREST EXPENSE: | ||||||||||||||||||||||
Salaries and employee benefits | 39,495 | 37,300 | 39,775 | 40,949 | 22,013 | 116,570 | 66,605 | |||||||||||||||
Net occupancy and equipment | 4,455 | 3,817 | 4,088 | 3,781 | 2,129 | 12,360 | 6,554 | |||||||||||||||
Depreciation | 1,952 | 1,841 | 1,836 | 1,903 | 1,003 | 5,629 | 3,048 | |||||||||||||||
Data processing and software amortization | 4,798 | 4,674 | 5,054 | 3,776 | 2,541 | 14,526 | 7,561 | |||||||||||||||
Professional fees | 997 | 1,564 | 1,527 | 2,298 | 485 | 4,088 | 1,285 | |||||||||||||||
Regulatory assessments and | 1,814 | 2,755 | 1,294 | 1,263 | 1,134 | 5,863 | 3,651 | |||||||||||||||
Amortization of intangibles | 6,876 | 6,881 | 6,879 | 7,051 | 750 | 20,636 | 2,252 | |||||||||||||||
Communications | 663 | 689 | 701 | 737 | 359 | 2,053 | 1,063 | |||||||||||||||
Advertising | 877 | 907 | 839 | 1,130 | 385 | 2,623 | 1,330 | |||||||||||||||
Acquisition and merger-related expenses | 3,421 | 2,897 | 6,165 | 11,469 | 10,551 | 12,483 | 12,669 | |||||||||||||||
Other | 5,400 | 5,882 | 4,440 | 5,267 | 2,681 | 15,722 | 10,434 | |||||||||||||||
Total noninterest expense | 70,748 | 69,207 | 72,598 | 79,624 | 44,031 | 212,553 | 116,452 | |||||||||||||||
INCOME BEFORE INCOME TAXES | 38,353 | 42,642 | 47,061 | 1,834 | 17,692 | 128,056 | 60,690 | |||||||||||||||
Provision for income taxes | 7,445 | 7,467 | 9,913 | (218 | ) | 3,406 | 24,825 | 11,310 | ||||||||||||||
NET INCOME | $ | 30,908 | $ | 35,175 | $ | 37,148 | $ | 2,052 | $ | 14,286 | $ | 103,231 | $ | 49,380 | ||||||||
EARNINGS PER SHARE | ||||||||||||||||||||||
Basic | $ | 0.58 | $ | 0.66 | $ | 0.70 | $ | 0.04 | $ | 0.51 | $ | 1.94 | $ | 1.72 | ||||||||
Diluted | $ | 0.58 | $ | 0.66 | $ | 0.70 | $ | 0.04 | $ | 0.50 | $ | 1.94 | $ | 1.71 |
Financial Highlights (Unaudited) | |||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||
(Dollars and share amounts in thousands, except per share data) | |||||||||||||||||||||||||||
Net income | $ | 30,908 | $ | 35,175 | $ | 37,148 | $ | 2,052 | $ | 14,286 | $ | 103,231 | $ | 49,380 | |||||||||||||
Earnings per share, basic | $ | 0.58 | $ | 0.66 | $ | 0.70 | $ | 0.04 | $ | 0.51 | $ | 1.94 | $ | 1.72 | |||||||||||||
Earnings per share, diluted | $ | 0.58 | $ | 0.66 | $ | 0.70 | $ | 0.04 | $ | 0.50 | $ | 1.94 | $ | 1.71 | |||||||||||||
Dividends per share | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.13 | $ | 0.10 | $ | 0.39 | $ | 0.30 | |||||||||||||
Return on average assets(A) | 1.14 | % | 1.31 | % | 1.38 | % | 0.07 | % | 0.84 | % | 1.28 | % | 0.94 | % | |||||||||||||
Return on average equity(A) | 8.34 | % | 9.67 | % | 10.62 | % | 0.60 | % | 7.90 | % | 9.52 | % | 8.74 | % | |||||||||||||
Return on average tangible equity(A)(B) | 14.47 | % | 17.05 | % | 19.32 | % | 1.16 | % | 11.78 | % | 16.86 | % | 12.75 | % | |||||||||||||
Net interest margin (tax equivalent)(A)(C) | 4.37 | % | 4.49 | % | 4.80 | % | 4.71 | % | 3.85 | % | 4.55 | % | 3.55 | % | |||||||||||||
Net interest margin (tax equivalent) excluding PAA(A)(B)(C) | 3.87 | % | 3.97 | % | 4.38 | % | 4.38 | % | 3.85 | % | 4.07 | % | 3.55 | % | |||||||||||||
Efficiency ratio(D) | 63.50 | % | 60.83 | % | 58.96 | % | 65.14 | % | 69.18 | % | 61.02 | % | 63.62 | % | |||||||||||||
Capital Ratios | |||||||||||||||||||||||||||
Equity to assets | 13.70 | % | 13.53 | % | 13.64 | % | 12.69 | % | 9.75 | % | 13.70 | % | 9.75 | % | |||||||||||||
Tangible equity to tangible assets(B) | 8.37 | % | 8.19 | % | 8.15 | % | 7.24 | % | 6.47 | % | 8.37 | % | 6.47 | % | |||||||||||||
Total capital ratio (to risk-weighted assets) | 13.42 | % | 13.03 | % | 12.72 | % | 12.39 | % | 14.66 | % | 13.44 | % | 14.66 | % | |||||||||||||
Common equity Tier 1 capital (to risk weighted assets) | 11.14 | % | 10.67 | % | 10.39 | % | 10.04 | % | 11.39 | % | 11.14 | % | 11.39 | % | |||||||||||||
Tier 1 capital (to risk-weighted assets) | 11.25 | % | 10.78 | % | 10.50 | % | 10.15 | % | 11.58 | % | 11.25 | % | 11.58 | % | |||||||||||||
Tier 1 leverage (to average tangible assets) | 9.82 | % | 9.51 | % | 9.01 | % | 8.55 | % | 9.00 | % | 9.82 | % | 9.00 | % | |||||||||||||
Total capital ratio (to risk-weighted assets) | 13.13 | % | 12.80 | % | 12.42 | % | 12.02 | % | 14.12 | % | 13.16 | % | 14.12 | % | |||||||||||||
Common equity Tier 1 capital (to risk-weighted assets) | 11.63 | % | 11.22 | % | 10.87 | % | 10.46 | % | 12.20 | % | 11.63 | % | 12.20 | % | |||||||||||||
Tier 1 capital (to risk-weighted assets) | 11.63 | % | 11.22 | % | 10.87 | % | 10.46 | % | 12.20 | % | 11.63 | % | 12.20 | % | |||||||||||||
Tier 1 leverage (to average tangible assets) | 10.15 | % | 9.89 | % | 9.35 | % | 8.81 | % | 9.49 | % | 10.15 | % | 9.49 | % | |||||||||||||
Other Data | |||||||||||||||||||||||||||
Weighted average shares: | |||||||||||||||||||||||||||
Basic | 53,313 | 53,297 | 53,021 | 52,715 | 28,286 | 53,211 | 28,679 | ||||||||||||||||||||
Diluted | 53,380 | 53,375 | 53,138 | 52,973 | 28,530 | 53,300 | 28,901 | ||||||||||||||||||||
Period end shares outstanding | 53,322 | 53,303 | 53,296 | 52,955 | 28,137 | 53,322 | 28,137 | ||||||||||||||||||||
Book value per share | $ | 27.40 | $ | 27.37 | $ | 27.14 | $ | 26.12 | $ | 23.33 | $ | 27.40 | $ | 23.33 | |||||||||||||
Tangible book value per share(B) | $ | 15.76 | $ | 15.60 | $ | 15.24 | $ | 14.02 | $ | 14.94 | $ | 15.76 | $ | 14.94 | |||||||||||||
Employees - full-time equivalents | 1,008 | 1,004 | 1,055 | 1,025 | 562 | 1,008 | 562 |
(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 loans, securities and assets. Additionally, taxes and provision for credit losses are not part of this calculation. |
Financial Highlights (Unaudited) | |||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||
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 | $ | 8,043,706 | $ | 138,948 | 6.85 | % | $ | 7,980,856 | $ | 133,931 | 6.73 | % | $ | 4,456,174 | $ | 58,025 | 5.17 | % | |||||||||||
Securities | 1,471,916 | 9,930 | 2.68 | % | 1,502,949 | 10,162 | 2.71 | % | 1,709,470 | 9,249 | 2.15 | % | |||||||||||||||||
Deposits in other financial institutions | 181,931 | 2,391 | 5.21 | % | 209,722 | 2,865 | 5.48 | % | 160,340 | 608 | 1.50 | % | |||||||||||||||||
Total interest-earning assets | 9,697,553 | $ | 151,269 | 6.19 | % | 9,693,527 | $ | 146,958 | 6.08 | % | 6,325,984 | $ | 67,882 | 4.26 | % | ||||||||||||||
Allowance for credit losses on loans | (99,892 | ) | (96,414 | ) | (50,609 | ) | |||||||||||||||||||||||
Noninterest-earning assets | 1,143,634 | 1,143,025 | 442,511 | ||||||||||||||||||||||||||
Total assets | $ | 10,741,295 | $ | 10,740,138 | $ | 6,717,886 | |||||||||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||||||||||
Interest-Bearing Liabilities: | |||||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 1,400,508 | $ | 10,415 | 2.95 | % | $ | 1,387,604 | $ | 9,343 | 2.70 | % | $ | 978,531 | $ | 2,380 | 0.96 | % | |||||||||||
Money market and savings deposits | 2,166,610 | 13,142 | 2.41 | % | 2,220,827 | 11,365 | 2.05 | % | 1,500,083 | 1,147 | 0.30 | % | |||||||||||||||||
Certificates and other time deposits | 1,400,367 | 13,282 | 3.76 | % | 1,225,834 | 9,622 | 3.15 | % | 877,231 | 1,664 | 0.75 | % | |||||||||||||||||
Borrowed funds | 411,212 | 5,801 | 5.60 | % | 479,896 | 6,535 | 5.46 | % | 68,752 | 499 | 2.88 | % | |||||||||||||||||
Subordinated debt | 109,608 | 1,908 | 6.91 | % | 109,499 | 1,812 | 6.64 | % | 109,177 | 1,502 | 5.46 | % | |||||||||||||||||
Total interest-bearing liabilities | 5,488,305 | $ | 44,548 | 3.22 | % | 5,423,660 | $ | 38,677 | 2.86 | % | 3,533,774 | $ | 7,192 | 0.81 | % | ||||||||||||||
Noninterest-Bearing Liabilities: | |||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | 3,695,592 | 3,779,594 | 2,424,884 | ||||||||||||||||||||||||||
Other liabilities | 86,389 | 78,411 | 41,792 | ||||||||||||||||||||||||||
Total liabilities | 9,270,286 | 9,281,665 | 6,000,450 | ||||||||||||||||||||||||||
Shareholders' equity | 1,471,009 | 1,458,473 | 717,436 | ||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 10,741,295 | $ | 10,740,138 | $ | 6,717,886 | |||||||||||||||||||||||
Net interest rate spread | 2.97 | % | 3.22 | % | 3.45 | % | |||||||||||||||||||||||
Net interest income and margin | $ | 106,721 | 4.37 | % | $ | 108,281 | 4.48 | % | $ | 60,690 | 3.81 | % | |||||||||||||||||
Net interest income and net interest margin (tax equivalent) | $ | 106,919 | 4.37 | % | $ | 108,509 | 4.49 | % | $ | 61,418 | 3.85 | % | |||||||||||||||||
Cost of funds | 1.92 | % | 1.69 | % | 0.48 | % | |||||||||||||||||||||||
Cost of deposits | 1.69 | % | 1.41 | % | 0.36 | % |
Financial Highlights (Unaudited) | |||||||||||||||||||
Nine Months Ended | |||||||||||||||||||
2023 | 2022 | ||||||||||||||||||
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 | $ | 7,957,911 | $ | 398,608 | 6.70 | % | $ | 4,331,288 | $ | 164,230 | 5.07 | % | |||||||
Securities | 1,525,808 | 31,007 | 2.72 | % | 1,774,149 | 24,970 | 1.88 | % | |||||||||||
Deposits in other financial institutions | 251,475 | 9,027 | 4.80 | % | 498,456 | 1,825 | 0.49 | % | |||||||||||
Total interest-earning assets | 9,735,194 | $ | 438,642 | 6.02 | % | 6,603,893 | $ | 191,025 | 3.87 | % | |||||||||
Allowance for credit losses on loans | (96,570 | ) | (49,422 | ) | |||||||||||||||
Noninterest-earning assets | 1,148,847 | 441,767 | |||||||||||||||||
Total assets | $ | 10,787,471 | $ | 6,996,238 | |||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||
Interest-Bearing Liabilities: | |||||||||||||||||||
Interest-bearing demand deposits | $ | 1,478,547 | $ | 28,141 | 2.54 | % | $ | 1,031,006 | $ | 3,856 | 0.50 | % | |||||||
Money market and savings deposits | 2,291,588 | 34,161 | 1.99 | % | 1,549,969 | 2,877 | 0.25 | % | |||||||||||
Certificates and other time deposits | 1,164,572 | 26,211 | 3.01 | % | 1,069,011 | 5,742 | 0.72 | % | |||||||||||
Borrowed funds | 333,220 | 13,653 | 5.48 | % | 69,492 | 799 | 1.54 | % | |||||||||||
Subordinated debt | 109,508 | 5,647 | 6.89 | % | 109,046 | 4,407 | 5.40 | % | |||||||||||
Total interest-bearing liabilities | 5,377,435 | $ | 107,813 | 2.68 | % | 3,828,524 | 17,681 | 0.62 | % | ||||||||||
Noninterest-Bearing Liabilities: | |||||||||||||||||||
Noninterest-bearing demand deposits | 3,878,760 | 2,373,489 | |||||||||||||||||
Other liabilities | 81,894 | 39,123 | |||||||||||||||||
Total liabilities | 9,338,089 | 6,241,136 | |||||||||||||||||
Shareholders' equity | 1,449,382 | 755,102 | |||||||||||||||||
Total liabilities and shareholders' equity | $ | 10,787,471 | $ | 6,996,238 | |||||||||||||||
Net interest rate spread | 3.34 | % | 3.25 | % | |||||||||||||||
Net interest income and margin | $ | 330,829 | 4.54 | % | $ | 173,344 | 3.51 | % | |||||||||||
Net interest income and net interest margin (tax equivalent) | $ | 331,549 | 4.55 | % | $ | 175,578 | 3.55 | % | |||||||||||
Cost of funds | 1.56 | % | 0.38 | % | |||||||||||||||
Cost of deposits | 1.34 | % | 0.28 | % |
Financial Highlights (Unaudited) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
2023 | 2022 | ||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Period-end Loan Portfolio: | |||||||||||||||||||
Commercial and industrial | $ | 1,474,600 | $ | 1,512,476 | $ | 1,477,340 | $ | 1,455,795 | $ | 732,636 | |||||||||
Paycheck Protection Program (PPP) | 5,968 | 8,027 | 11,081 | 13,226 | 17,827 | ||||||||||||||
Real estate: | |||||||||||||||||||
Commercial real estate (including multi-family residential) | 4,076,606 | 4,038,487 | 4,014,609 | 3,931,480 | 2,407,039 | ||||||||||||||
Commercial real estate construction and land development | 1,078,265 | 1,136,124 | 1,034,538 | 1,037,678 | 513,248 | ||||||||||||||
1-4 family residential (including home equity) | 1,024,945 | 1,009,439 | 1,008,362 | 1,000,956 | 699,636 | ||||||||||||||
Residential construction | 289,553 | 311,208 | 292,143 | 268,150 | 183,563 | ||||||||||||||
Consumer and other | 54,591 | 52,957 | 47,971 | 47,466 | 37,963 | ||||||||||||||
Total loans held for investment | $ | 8,004,528 | $ | 8,068,718 | $ | 7,886,044 | $ | 7,754,751 | $ | 4,591,912 | |||||||||
Deposits: | |||||||||||||||||||
Noninterest-bearing | $ | 3,656,288 | $ | 3,713,536 | $ | 3,877,859 | $ | 4,230,169 | $ | 2,465,839 | |||||||||
Interest-bearing | |||||||||||||||||||
Demand | 1,397,492 | 1,437,509 | 1,394,244 | 1,591,828 | 956,920 | ||||||||||||||
Money market and savings | 2,128,950 | 2,174,073 | 2,401,840 | 2,575,923 | 1,471,690 | ||||||||||||||
Certificates and other time | 1,503,891 | 1,441,251 | 1,064,932 | 869,712 | 766,270 | ||||||||||||||
Total interest-bearing deposits | 5,030,333 | 5,052,833 | 4,861,016 | 5,037,463 | 3,194,880 | ||||||||||||||
Total deposits | $ | 8,686,621 | $ | 8,766,369 | $ | 8,738,875 | $ | 9,267,632 | $ | 5,660,719 | |||||||||
Asset Quality: | |||||||||||||||||||
Nonaccrual loans | $ | 38,291 | $ | 43,349 | $ | 43,413 | $ | 45,048 | $ | 21,551 | |||||||||
Accruing loans 90 or more days past due | — | — | — | — | — | ||||||||||||||
Total nonperforming loans | 38,291 | 43,349 | 43,413 | 45,048 | 21,551 | ||||||||||||||
Other repossessed assets | — | — | 124 | — | — | ||||||||||||||
Total nonperforming assets | $ | 38,291 | $ | 43,349 | $ | 43,537 | $ | 45,048 | $ | 21,551 | |||||||||
Net charge-offs (recoveries) | $ | 8,116 | $ | 236 | $ | 192 | $ | 5,707 | $ | (245 | ) | ||||||||
Nonaccrual loans: | |||||||||||||||||||
Commercial and industrial | $ | 14,991 | $ | 22,968 | $ | 23,329 | $ | 25,402 | $ | 6,916 | |||||||||
Real estate: | |||||||||||||||||||
Commercial real estate (including multi-family residential) | 13,563 | 8,221 | 9,026 | 9,970 | 10,392 | ||||||||||||||
Commercial real estate construction and land development | 170 | 388 | 27 | — | 241 | ||||||||||||||
1-4 family residential (including home equity) | 8,442 | 10,880 | 10,586 | 9,404 | 3,854 | ||||||||||||||
Residential construction | 635 | 665 | 195 | — | — | ||||||||||||||
Consumer and other | 490 | 227 | 250 | 272 | 148 | ||||||||||||||
Total nonaccrual loans | $ | 38,291 | $ | 43,349 | $ | 43,413 | $ | 45,048 | $ | 21,551 | |||||||||
Asset Quality Ratios: | |||||||||||||||||||
Nonperforming assets to total assets | 0.36 | % | 0.40 | % | 0.41 | % | 0.41 | % | 0.32 | % | |||||||||
Nonperforming loans to total loans | 0.48 | % | 0.54 | % | 0.55 | % | 0.58 | % | 0.47 | % | |||||||||
Allowance for credit losses on loans to nonperforming loans | 244.38 | % | 231.14 | % | 221.56 | % | 206.85 | % | 241.97 | % | |||||||||
Allowance for credit losses on loans to total loans | 1.17 | % | 1.24 | % | 1.22 | % | 1.20 | % | 1.14 | % | |||||||||
Net charge-offs (recoveries) to average loans (annualized) | 0.40 | % | 0.01 | % | 0.01 | % | 0.30 | % | (0.02 | %) |
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, adjusted pre-tax, pre-provision income, adjusted pre-tax, pre-provision ROAA, adjusted efficiency ratio, 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.
GAAP Reconciliation and Management’s Explanation of Non-GAAP Financial Measures (Unaudited) | |||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||
(Dollars and share amounts in thousands, except per share data) | |||||||||||||||||||||||||||
Net income | $ | 30,908 | $ | 35,175 | $ | 37,148 | $ | 2,052 | $ | 14,286 | $ | 103,231 | $ | 49,380 | |||||||||||||
Add: Provision for credit losses | 2,315 | 1,915 | 3,666 | 44,793 | 1,962 | 7,896 | 5,919 | ||||||||||||||||||||
Add: Provision for income taxes | 7,445 | 7,467 | 9,913 | (218 | ) | 3,406 | 24,825 | 11,310 | |||||||||||||||||||
Pre-tax, pre-provision income | $ | 40,668 | $ | 44,557 | $ | 50,727 | $ | 46,627 | $ | 19,654 | $ | 135,952 | $ | 66,609 | |||||||||||||
Total average assets | $ | 10,741,295 | $ | 10,740,138 | $ | 10,882,533 | $ | 10,946,009 | $ | 6,717,886 | $ | 10,787,471 | $ | 6,996,238 | |||||||||||||
Pre-tax, pre-provision return on average assets(B) | 1.50 | % | 1.66 | % | 1.89 | % | 1.69 | % | 1.16 | % | 1.68 | % | 1.27 | % | |||||||||||||
Pre-tax, pre-provision income | $ | 40,668 | $ | 44,557 | $ | 50,727 | $ | 46,627 | $ | 19,654 | $ | 135,952 | $ | 66,609 | |||||||||||||
Add: Acquisition and merger-related expenses | 3,421 | 2,897 | 6,165 | 11,469 | 10,551 | 12,483 | 12,669 | ||||||||||||||||||||
Add: Amortization of intangibles | 6,876 | 6,881 | 6,879 | 7,051 | 750 | 20,636 | 2,252 | ||||||||||||||||||||
Less: Purchase accounting accretion | 12,400 | 12,572 | 10,104 | 8,160 | 40 | 35,076 | 210 | ||||||||||||||||||||
Less: (Loss) gain on sale of assets | — | (6 | ) | 198 | 4,025 | 42 | 192 | 25 | |||||||||||||||||||
Adjusted pre-tax, pre-provision income | $ | 38,565 | $ | 41,769 | $ | 53,469 | $ | 52,962 | $ | 30,873 | $ | 133,803 | $ | 81,295 | |||||||||||||
Adjusted pre-tax, pre-provision return on average assets(B) | 1.42 | % | 1.56 | % | 1.99 | % | 1.92 | % | 1.82 | % | 1.66 | % | 1.55 | % | |||||||||||||
Total noninterest expense | $ | 70,748 | $ | 69,207 | $ | 72,598 | $ | 79,624 | $ | 44,031 | $ | 212,553 | $ | 116,452 | |||||||||||||
Less: Acquisition and merger-related expenses | 3,421 | 2,897 | 6,165 | 11,469 | 10,551 | 12,483 | 12,669 | ||||||||||||||||||||
Less: Amortization of intangibles | 6,876 | 6,881 | 6,879 | 7,051 | 750 | 20,636 | 2,252 | ||||||||||||||||||||
Net interest income | 106,721 | 108,281 | 115,827 | 115,614 | 60,690 | 330,829 | 173,344 | ||||||||||||||||||||
Less: Purchase accounting accretion | 12,400 | 12,572 | 10,104 | 8,160 | 40 | 35,076 | 210 | ||||||||||||||||||||
Total noninterest income | 4,695 | 5,483 | 7,498 | 10,637 | 2,995 | 17,676 | 9,717 | ||||||||||||||||||||
Less: (Loss) gain on sale of assets | — | (6 | ) | 198 | 4,025 | 42 | 192 | 25 | |||||||||||||||||||
Adjusted efficiency ratio(A) | 61.05 | % | 58.73 | % | 52.69 | % | 53.57 | % | 51.46 | % | 57.28 | % | 55.53 | % | |||||||||||||
Total shareholders' equity | $ | 1,460,846 | $ | 1,458,680 | $ | 1,446,216 | $ | 1,383,176 | $ | 656,302 | $ | 1,460,846 | $ | 656,302 | |||||||||||||
Less: Goodwill and core deposit intangibles, net | 620,262 | 627,065 | 633,925 | 640,785 | 236,048 | 620,262 | 236,048 | ||||||||||||||||||||
Tangible shareholders’ equity | $ | 840,584 | $ | 831,615 | $ | 812,291 | $ | 742,391 | $ | 420,254 | $ | 840,584 | $ | 420,254 | |||||||||||||
Shares outstanding at end of period | 53,322 | 53,303 | 53,296 | 52,955 | 28,137 | 53,322 | 28,137 | ||||||||||||||||||||
Tangible book value per share | $ | 15.76 | $ | 15.60 | $ | 15.24 | $ | 14.02 | $ | 14.94 | $ | 15.76 | $ | 14.94 | |||||||||||||
Average shareholders' equity | $ | 1,471,009 | $ | 1,458,473 | $ | 1,418,082 | $ | 1,347,938 | $ | 717,436 | $ | 1,449,382 | $ | 755,102 | |||||||||||||
Less: Average goodwill and core deposit intangibles, net | 623,864 | 630,854 | 638,110 | 658,107 | 236,399 | 630,890 | 237,153 | ||||||||||||||||||||
Average tangible shareholders’ equity | $ | 847,145 | $ | 827,619 | $ | 779,972 | $ | 689,831 | $ | 481,037 | $ | 818,492 | $ | 517,949 | |||||||||||||
Return on average tangible equity(B) | 14.47 | % | 17.05 | % | 19.32 | % | 1.18 | % | 11.78 | % | 16.86 | % | 12.75 | % | |||||||||||||
Total assets | $ | 10,665,460 | $ | 10,778,351 | $ | 10,604,718 | $ | 10,900,437 | $ | 6,730,342 | $ | 10,665,460 | $ | 6,730,342 | |||||||||||||
Less: | 620,262 | 627,065 | 633,925 | 640,785 | 236,048 | 620,262 | 236,048 | ||||||||||||||||||||
Tangible assets | $ | 10,045,198 | $ | 10,151,286 | $ | 9,970,793 | $ | 10,259,652 | $ | 6,494,294 | $ | 10,045,198 | $ | 6,494,294 | |||||||||||||
Tangible equity to tangible assets | 8.37 | % | 8.19 | % | 8.15 | % | 7.24 | % | 6.47 | % | 8.37 | % | 6.47 | % | |||||||||||||
Net interest income (tax equivalent) | $ | 106,919 | $ | 108,509 | $ | 116,119 | $ | 116,574 | $ | 61,418 | $ | 331,549 | $ | 175,578 | |||||||||||||
Less: Purchase accounting accretion | 12,400 | 12,572 | 10,104 | 8,160 | 40 | 35,076 | 210 | ||||||||||||||||||||
Adjusted net interest income (tax equivalent) | $ | 94,519 | $ | 95,937 | $ | 106,015 | $ | 108,414 | $ | 61,378 | $ | 296,473 | $ | 175,368 | |||||||||||||
Average earning assets | $ | 9,697,553 | $ | 9,693,527 | $ | 9,815,803 | $ | 9,815,701 | $ | 6,325,984 | $ | 9,735,194 | $ | 6,603,893 | |||||||||||||
Net interest margin (tax equivalent) excluding PAA | 3.87 | % | 3.97 | % | 4.38 | % | 4.38 | % | 3.85 | % | 4.07 | % | 3.55 | % |
(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. |
Source:
2023 GlobeNewswire, Inc., source