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STEL, Stellar Bancorp Inc.
Stellar Bancorp Inc. is a leading provider of customized commercial banking services to small- and medium-sized businesses in our market by providing superior customer service and by leveraging the strength and capabilities of local management.
We refer to the Houston-The Woodlands-Sugar Land metropolitan statistical area ("MSA") and the Beaumont-Port Arthur MSA combined, as the Houston region (the "Houston region") and we refer to the Houston region and the Dallas MSA as our market ("market").
As of December 31, 2025, we operated 52 service banking centers, with 35 banking centers in the Houston MSA, 16 banking centers in the Beaumont MSA and one banking center in Dallas, Texas.
The business
What it sells, where the money comes from, the kind of company it is.
The business in brief
read the 10-K →What this business is and what moves its needle, from its own SEC filings.
- What moves the needle
- Net interest margin, loan losses, and book value. A lender is read on the quality of its balance sheet, not an earnings multiple, and the worst year of credit losses matters more than the best. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
- Is it a good business?
- Return on equity has sat below the cost of equity (median 7%, above 12% in only 0 of 10 years). It runs at a 67% efficiency ratio, about average. The cycle and the loan book decide this one; weigh the recession years in the record, not the average, and read the 10-K.
Every line is arithmetic on the company's filings, shown in full in the sections below.
The record
Ten years of arithmetic, read across the cycle.
The record, 2016–2025
realized figures from each filing · older years to the left| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Income statement | ||||||||||
| $117M | $122M | $139M | $155M | $211M | $237M | $309M | $461M | $431M | $423M | RevenueRevenue |
| $102M | $108M | $125M | $136M | $203M | $229M | $289M | $437M | $408M | $402M | Net interest incomeNet int. |
| $16M | $14M | $14M | $19M | $8M | $9M | $20M | $25M | $23M | $22M | Noninterest incomeFee inc. |
| $5M | ($338K) | ($2M) | — | — | — | — | — | — | — | Credit-loss provisionProvision |
| $27M | $28M | $47M | $51M | $46M | $82M | $51M | $130M | $115M | $103M | Net incomeNet inc. |
| 31% | 37% | 19% | 19% | 19% | 18% | 18% | 19% | 21% | 19% | Effective tax rateTax rate |
| Cash flow & returns | ||||||||||
| 0.9% | 0.9% | 1.4% | 1.5% | 1.2% | 1.1% | 0.5% | 1.2% | 1.1% | 1.0% | Return on assetsROA |
| 8% | 6% | 10% | 7% | 6% | 10% | 4% | 9% | 7% | 6% | Return on equityROE |
| 6% | 5% | 9% | 6% | 5% | 9% | 3% | 7% | 5% | 4% | Retained to equityRetained/eq |
| 10% | 8% | 12% | 10% | 9% | 14% | 7% | 14% | 11% | 9% | Return on tangible equityROTCE |
| 63% | 64% | 59% | 58% | 60% | 59% | 63% | 63% | 67% | 67% | Efficiency ratioEffic. |
| $4M | $4M | $5M | $9M | $8M | $10M | $15M | $28M | $28M | $29M | Dividends paidDiv. paid |
| $11M | — | — | $3K | $19M | $6M | $24M | $0 | $3M | $73M | BuybacksBuybacks |
| Balance sheet | ||||||||||
| $3.0B | $3.1B | $3.3B | $3.5B | $3.9B | $7.1B | $10.9B | $10.6B | $10.9B | $10.8B | Total assetsAssets |
| $2.5B | $2.6B | $2.8B | $2.9B | $3.3B | $6.0B | $9.3B | $8.9B | $9.1B | $9.0B | DepositsDeposits |
| $81M | $81M | $81M | $224M | $224M | $224M | $497M | $497M | $497M | $497M | GoodwillGoodwill |
| $358M | $446M | $488M | $710M | $759M | $816M | $1.4B | $1.5B | $1.6B | $1.7B | Shareholders’ equityEquity |
| Per share | ||||||||||
| 22.2M | 22.6M | 25.0M | 25.1M | 29.1M | 28.9M | 35.0M | 53.3M | 53.5M | 51.8M | Shares out (diluted)Shares |
| $1.22 | $1.22 | $1.89 | $2.02 | $1.56 | $2.82 | $1.47 | $2.45 | $2.15 | $1.99 | EPS (diluted)EPS |
| $0.20 | $0.20 | $0.20 | $0.35 | $0.28 | $0.34 | $0.44 | $0.52 | $0.53 | $0.57 | Dividends / shareDiv/sh |
| $16.08 | $19.77 | $19.49 | $28.33 | $26.03 | $28.28 | $39.51 | $28.53 | $30.05 | $32.21 | Book value / shareBVPS |
| $12.09 | $15.88 | $16.02 | $19.21 | $18.22 | $20.03 | $21.21 | $17.01 | $19.02 | $21.24 | Tangible book / shareTBVPS |
The diluted share count moved ×1.52 into 2023 — shares issued, not a split the totals corroborate — and the per-share figures carry the counts as filed.
| 9-yr | 5-yr | |
|---|---|---|
| Revenue / share | +5.0%/yr | +2.5%/yr |
| Owner earnings / share | +1.7%/yr | −0.7%/yr |
| EPS | +5.5%/yr | +4.9%/yr |
| Dividends / share | +12.4%/yr | +15.1%/yr |
| Capital spending / share | +0.0%/yr | −19.2%/yr |
| Book value / share | +8.0%/yr | +4.3%/yr |
The year, in the company's words
the filing →Verbatim from the 10-K's management discussion. Each sentence is shown only because its subject, direction, and stated figures check out against the filed numbers on this page. The words are the company's; the arithmetic is the record's.
- Net income-10.5%
“Net income was $102.9 million, or $1.99 per diluted common share, for the year ended December 31, 2025 compared with $115.0 million, or $2.15 per diluted common share, for the year ended December 31, 2024, a decrease of $12.1 million, or 10.5%. The decrease in net income was primarily due to a $13.0 million increase in the provision for credit losses, a $6.4 million decrease in net interest income and a $1.3 million decrease in noninterest income, partially offset by a $3.5 million decrease in noninterest expense along with a $5.0 mill…”
✓ figure matches the filed record - Net interest income-1.6%
“Net Interest Income Net interest income before the provision for credit losses for the year ended December 31, 2025 was $401.6 million compared with $408.0 million for the year ended December 31, 2024, a decrease of $6.4 million, or 1.6%. The decrease in net interest income from the prior year was primarily due to the decrease in average interest-earning assets partially offset by the decrease in the cost of interest-bearing liabilities.”
✓ figure matches the filed record
Quality & stewardship
Returns, the balance sheet, capital allocation, and pay.
Owner’s Scorecard
Is it a good business?
- Below the cost of equityNet income $103M ÷ equity $1.7BIndustry peers: median 8%
What this means
The bank's north star, what it earns on shareholders' capital. Cost of equity is roughly 10%, so a return durably above that builds value and below it destroys it. One year is noisy; the durability across a full credit cycle is what counts.
- ModestNet income ÷ (equity − goodwill $497M − intangibles $71M)Industry peers: median 9%
What this means
The cleaner return, stripping out the goodwill paid for past acquisitions. This is the number a buyer of the whole bank actually earns on the hard capital.
- Efficiency ratio 67%AverageNoninterest expense $285M ÷ (net interest income + fees)Industry peers: median 61%
What this means
The share of revenue eaten by running costs; lower is better, and below about 60% marks a genuinely efficient operation. A low ratio held for years is the operational side of a moat.
Is it sound?
- Capital (equity / assets) 15.4%Well capitalizedEquity $1.7B ÷ assets $10.8B
What this means
A plain-English leverage read: how much of the balance sheet is the owners' own money. This is a rough proxy; the regulatory figure is the CET1 ratio, which is risk-weighted and reported in the filing. The point is the same, how much loss the bank can absorb before depositors are at risk.
- Deposit funding 83%Deposit-fundedDeposits $9.0B ÷ assets $10.8B
What this means
Low-cost, sticky deposits are a bank's real moat, the cheap raw material it lends out at a spread. A bank funded mostly by deposits earns more durably than one that rents its money in the wholesale market.
- Credit cost (provision / NII) -0%Net reserve releaseProvision for credit losses ($2M) ÷ net interest income $402M
What this means
What the bank set aside this year against loans going bad, as a share of its lending income. This swings hard with the cycle, low in good years and spiking in recessions, so read it across the record, not in one year. Disciplined underwriting shows up as low, stable provisions through a downturn.
The franchise and the credit cycle
- Not enough data
What this means
The deposit mix isn't cleanly tagged in the filings' structured data; the funding read above carries what is.
- Not enough data
What this means
Not derivable from the filings' structured data — some filers carry recoveries only on segment axes, and a gross figure dressed as net would be a wrong number.
All figures as filed; the source filing is linked above.
Management, ownership & pay
read the proxy →From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.
| Fiscal year | Chief executive | Pay, as filed | “Actually paid” | Owner earnings |
|---|---|---|---|---|
| 2020 | Robert R. Franklin, Jr. | $1.5M | $1.4M | $54M |
| 2021 | Robert R. Franklin, Jr. | $1.7M | $1.8M | $104M |
| 2022 | Robert R. Franklin, Jr. | $3.5M | $3.1M | $105M |
| 2023 | Robert R. Franklin, Jr. | $2.4M | $2.5M | $161M |
| 2024 | Robert R. Franklin, Jr. | $2.7M | $1.4M | $128M |
Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.
- Insider ownership9.3%
The stake all directors and executive officers hold together, per the 2025 proxy: skin in the game, the first thing Munger reads.
- CEO pay ratio34:1
What the chief earns for every dollar the median employee makes, per the 2025 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
- Stock-based compensation$9M
The slice of the business handed to employees in shares in fiscal 2025, 2.2% of revenue, equal to 3.2% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
What an owner would ask, FY2025
read the 10-K →- How much of the deposit base could leave overnight?withheld
the filing states its uninsured deposits on a netted basis ("net of collateralized…"), which cannot be checked against the deposits line the record carries — withheld rather than shown unverifiedverify →
- Which reported numbers are a judgment call?Management names Income taxes, Credit & receivables, Acquisitions as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →
The questions the record and the charts do not answer on their own; each carries the figure and the place to look.
Peers, Banks
The same industry, side by side on the bank lens. Each column names the period it is read over; the group median at the foot is the line to read each figure against.
| Company | Revenuelatest FY, USD | ROEmedian over the record | ROTCEmedian over the record | Efficiencymedian over the record | NII / assetsmedian over the record | Noninterest-bearing sharelatest FY |
|---|---|---|---|---|---|---|
| FCFFirst Commonwealth Financial Corporation | $523M | 10% | 14% | 57% | 3.2% | 23% |
| HOPEHope Bancorp Inc. | $499M | 7% | 9% | 54% | 2.8% | 22% |
| AMTBAmerant Bancorp Inc. | $439M | 6% | 6% | 75% | 2.7% | 20% |
| STELStellar Bancorp Inc. | $423M | 7% | 10% | 63% | 3.7% | — |
| FSUNFirstSun Capital Bancorp | $419M | 8% | 9% | 72% | 3.3% | 23% |
| OCFCOceanFirst Financial Corp. | $405M | 7% | 9% | — | 2.7% | 16% |
| NICNicolet Bankshares Inc. | $392M | 10% | 15% | 57% | 3.0% | 24% |
| BHRBBurke & Herbert Financial Services Corp. | $342M | 9% | 9% | 65% | 2.9% | 21% |
| Group median | — | 8% | 9% | 63% | 3.0% | — |
The price
What a price has to assume.
What the price implies
price / tangible bookA bank is worth a multiple of its tangible book value, and the multiple it deserves is set by the return it earns on that book. Type today’s price; we show what you would be paying against what Stellar Bancorp Inc.’s record justifies.
Tangible book / share, delivered1%/yr’20→’25
The justified multiple is (return on tangible equity − growth) ÷ (cost of equity − growth). A bank earning exactly its cost of equity is worth about one times tangible book; the premium above that prices each point of durable excess return. A higher cost of equity lowers the justified multiple for a bank.
Enter a price above to run it.
Graham applied the same standards to financial enterprises (Intelligent Investor ch.14): the 15× multiple cap on averaged earnings, and P/E times price-to-book at most 22.5. The gate marks the bargain-hunter’s floor, not a verdict.
A dated snapshot of the price you typed, the assumptions you set, and what the page showed for them. A snapshot is never edited after it is saved. Your notebook is yours alone — the commitment states what is stored and what we will never do.
Tangible book $1.1B on 51M shares, a 10% normalized return on it. The dials set the multiple such a return would justify; your price sets the multiple you are paying. It assumes the bank keeps earning that return; a credit cycle, a rate shock or a bad acquisition changes it, which is what the record and the 10-K are for.
Manual order: ← STE its page in the Manual STEP →
Industry order: ← STBA the Banks chapter STT →