Stellar Bancorp Reports Decrease in Net Income and Total Assets for Q2 2025

Stellar Bancorp, Inc. reported a net income of $26.4 million, or $0.51 per diluted share, for the three months ended June 30, 2025, a decrease from $29.8 million, or $0.56 per diluted share, in the same period last year. The decline in profitability was attributed to a $3.1 million drop in net interest income and a $3.0 million increase in the provision for credit losses. For the six months ended June 30, 2025, net income was $51.1 million, or $0.97 per diluted share, down from $55.9 million, or $1.04 per diluted share, in the prior year. The decrease in net income for the first half of 2025 was primarily due to a $5.9 million reduction in net interest income and a $2.6 million increase in the provision for credit losses.

Total assets for Stellar Bancorp decreased to $10.49 billion as of June 30, 2025, down from $10.91 billion at the end of 2024. The company's loan portfolio also saw a decline, with total loans amounting to $7.29 billion, a decrease of $152.5 million, or 2.1%, compared to December 31, 2024. The allowance for credit losses on loans increased to $83.2 million, or 1.14% of total loans, from $81.1 million, or 1.09% of total loans, at the end of the previous year. The increase in the allowance was primarily due to changes in specific reserves related to nonperforming loans.

In terms of operational developments, Stellar Bancorp's total deposits decreased to $8.67 billion, a decline of $454.8 million, or 5.0%, from $9.13 billion at the end of 2024. This decrease was driven by seasonality and competitive pressures in the deposit market. Noninterest-bearing deposits fell by 11.0%, while interest-bearing deposits decreased by 1.1%. The company also reported a significant increase in its provision for credit losses, reflecting a cautious approach to potential credit risks amid changing economic conditions.

Looking ahead, Stellar Bancorp remains focused on maintaining its capital adequacy and managing its liquidity. The company reported a total capital ratio of 15.98% and a Tier 1 capital ratio of 14.18%, both exceeding the minimum regulatory requirements. The management expressed confidence in its ability to navigate the current economic landscape, emphasizing the importance of monitoring credit quality and maintaining a diversified loan portfolio. The company plans to continue leveraging its banking centers in Texas to support small- to medium-sized businesses and individuals, while also adapting to market conditions to enhance its operational efficiency.