Stellar Bancorp (STEL) Q4 2024 earnings summary

Executive summary

• Q4 2024 net income was $27.8 million ($0.52 per diluted share), with full-year net income at $117.6 million ($2.20 per diluted share), and annualized ROAA for Q4 was 1.04% and ROATCE was 10.82%; full-year ROAA was 1.1% and ROATCE was 12.18%.

• Book value per share rose to $30.14 and tangible book value per share to $19.10 at year-end 2024, with a 36.2% increase in tangible book value per share since Q1 2022.

• Management is optimistic about 2025, focusing on organic growth, operational leverage, and leveraging downstream partnerships, supported by positive economic trends and a stable interest rate environment.

• Stellar holds the #1 deposit market share among Texas-based banks in Houston and is 6th overall in the region.

Financial highlights

• Net interest income for Q4 was $103 million, up from $101.5 million in the prior quarter; full year 2024 net interest income was $408.0 million, down 6.6% year-over-year.

• Net interest margin (tax equivalent) for Q4 was 4.25% (3.94% excluding purchase accounting accretion); full year 2024 margin was 4.24% (3.89% excluding PAA).

• Non-interest income for Q4 was $5 million, down from $6.3 million in the prior quarter; full year noninterest income was $23.0 million, down 6.2% year-over-year.

• Non-interest expense for Q4 was $72 million, up from $71.1 million; full-year non-interest expense was $285.7 million, down from $290.5 million in 2023.

• Total assets at year-end were $10.91 billion; total loans $7.44 billion; total deposits $9.13 billion.

Outlook and guidance

• Expecting modest non-interest expense growth in 2025 to about $295 million, in line with inflation.

• Targeting mid-single-digit loan growth for 2025, with momentum from strong Q4 originations.

• Positive operating leverage anticipated, with revenue growth expected to match or exceed expense growth.

• Margin outlook remains strong, with a neutral rate positioning and ability to benefit from both stable and rising rates.

• Management plans to pursue organic growth and operational leverage in 2025, supported by optimism about economic activity in core markets.