Income Generation - The company generates most of its income from interest income on loans, investments in securities, and service charges on customer accounts[119]. - Interest income for the first half of 2024 was $300.6 million, an increase of $13.2 million, or 4.6%, compared to $287.4 million in the first half of 2023[156]. - Net interest income for Q2 2024 was $101.4 million, a decrease of $6.9 million, or 6.3%, compared to Q2 2023, attributed to increased funding costs[145]. Credit Losses and Reserves - The allowance for credit losses is based on estimates of expected losses in performing loans, specifically identified losses, and qualitative factors related to economic conditions[124]. - As of June 30, 2024, a 5% increase in historical loss rates would have increased funded reserves by $1.8 million, while a 5% increase in qualitative risk factors would have increased reserves by $3.1 million[129]. - The provision for credit losses for the six months ended June 30, 2024 was $2,200 thousand, down from $5,600 thousand in 2023, indicating a decrease of 60.7%[165]. Financial Performance - Net income for Q2 2024 was $29.8 million, or $0.56 per diluted share, down from $35.2 million, or $0.66 per diluted share in Q2 2023, primarily due to a $6.9 million decrease in net interest income[141]. - Annualized return on average assets for Q2 2024 was 1.13%, down from 1.31% in Q2 2023, while return on average equity decreased to 7.78% from 9.67%[142]. - For the first half of 2024, net income was $55.9 million, or $1.04 per diluted share, down from $72.3 million, or $1.36 per diluted share in the same period of 2023[143]. Interest Rates and Margins - The company’s net interest margin is calculated as net interest income divided by average interest-earning assets, including noninterest-bearing sources[119]. - Tax equivalent net interest margin for Q2 2024 was 4.24%, a decrease of 25 basis points from 4.49% in Q2 2023, primarily due to increased funding costs[149]. - The net interest margin for the six months ended June 30, 2024 was 4.25%, down from 4.63% in 2023, reflecting a decrease of 8.2%[161]. Asset and Liability Management - The company assesses the overall quality of the loan portfolio and the adequacy of the allowance for credit losses through a loan review program[126]. - The carrying amount of investment securities increased to $1.63 billion, a rise of $235.3 million, or 16.9%, from $1.40 billion as of December 31, 2023[200]. - The total amount of time deposits exceeding the FDIC insurance limit of $250,000 was $531.3 million as of June 30, 2024[210]. Market Conditions and Economic Factors - Economic uncertainty and market volatility in 2023 led to a decrease in the company's stock price and market capitalization, triggering an interim goodwill impairment analysis[133]. - Fluctuations in market interest rates are driven by factors such as governmental monetary policies, inflation, and macroeconomic developments[122]. - The company continues to evaluate economic conditions for potential goodwill impairment, which could materially impact financial results[138]. Nonperforming Assets - Nonperforming assets totaled $53.5 million, or 0.50% of total assets, at June 30, 2024, compared to $39.2 million, or 0.37%, at December 31, 2023[193]. - Nonperforming loans to total loans ratio increased to 0.66% as of June 30, 2024, compared to 0.49% as of December 31, 2023[194]. - The allowance for credit losses on loans was $94.8 million, or 1.23% of total loans, compared to $91.7 million, or 1.16% of total loans, as of December 31, 2023, indicating a rise in the allowance[197]. Operational Efficiency - The efficiency ratio was 66.63% for the three months ended June 30, 2024, compared to 60.83% for the same period in 2023, indicating a decrease in operational efficiency[176]. - Total noninterest expense for the three months ended June 30, 2024, was $71.2 million, an increase of $2.0 million (2.9%) compared to $69.2 million in 2023[172]. - Salaries and employee benefits increased by $1.8 million (4.7%) for the three months ended June 30, 2024, and by $3.4 million (4.4%) for the six months ended June 30, 2024, compared to the same periods in 2023[173]. Capital and Liquidity - Total shareholders' equity increased to $1.57 billion at June 30, 2024, up from $1.52 billion at December 31, 2023, primarily due to net income of $55.9 million[235]. - The Company maintained a total capital ratio of 15.34% to risk-weighted assets as of June 30, 2024, well above the minimum required ratio of 8.0%[237]. - The liquidity position is continuously monitored, with stress scenarios incorporated into the contingency funding plan to assess potential liquidity outflows[226]. Regulatory Compliance - The Bank was classified as well-capitalized under regulatory capital guidelines as of June 30, 2024[235]. - The company maintained compliance with all debt covenants under its loan agreement as of June 30, 2024[214]. - The company’s disclosure controls and procedures were deemed effective as of the end of the reporting period[245].

Houston's Largest Regionally Focused Bank 3 Stable Credit Performance: Net charge-offs of $715 thousand, or 0.02%, for the year-to-date 2024. As of June 30, 2024: | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------------------------------------------------------------------------------------------------------------|----------------------|-------|------------------------------------------|-----------------------|----------------------------|------------------------|--------- ...

Financial Data and Key Metrics Changes - The company reported a net income of $29.8 million or $0.56 per diluted share for Q2 2024, an increase from $26.1 million or $0.49 per diluted share in Q1 2024, resulting in an annualized ROAA of 1.13% and ROATCE of 12.82% compared to 0.98% and 11.47% respectively in the previous quarter [51][52] - Net interest income for the quarter was $101.4 million, a slight decrease of about $700,000 from $102.1 million in Q1 2024, with a net interest margin of 4.24% compared to 4.26% in the prior quarter [35][36] - The total risk-based capital ratio improved to 15.34% at the end of Q2 2024 from 14.02% at the end of 2023 and 12.39% at the end of 2022 [38] Business Line Data and Key Metrics Changes - Non-interest income decreased to $5.4 million in Q2 from $6.3 million in Q1, primarily due to a prior quarter gain on asset sales [56] - Non-interest expense was $71.2 million, slightly down from $71.4 million in Q1, with notable non-recurring items including a $420,000 FDIC special assessment charge and $450,000 in severance costs [57][90] Market Data and Key Metrics Changes - The company noted a stabilization in non-interest-bearing deposits after previous outflows, which is expected to support future growth in net interest income [54][82] - The company is focusing on small to medium-sized businesses and enhancing its deposit base, which is crucial for its growth strategy [31][33] Company Strategy and Development Direction - The company aims to de-risk its balance sheet by focusing on capital, liquidity, and credit, while managing its commercial real estate portfolio within regulatory guidelines [26][28] - The strategic goal is to build a strong deposit base and maintain a good net interest margin to capitalize on future growth opportunities [33][59] - The company is exploring both organic growth and potential M&A opportunities, emphasizing the importance of maintaining an attractive funding profile [72] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic impact of interest rates and the upcoming election year, while remaining optimistic about future growth opportunities [50][45] - The company is well-positioned to take advantage of market opportunities as conditions stabilize [37][59] Other Important Information - The company has a remaining loan discount of $87.4 million, which is expected to contribute positively to income as loans pay down [3][39] - The company has been successful in retaining capital since the merger and is considering various options for capital utilization moving forward [6][8] Q&A Session Summary Question: What drove the minimal net charge-offs and the provision reversal this quarter? - The minimal net charge-offs were attributed to lower outstanding amounts in certain categories and stable credit quality, leading to a reversal of provision for credit losses [5][20] Question: What is the outlook for yield accretion in the second half of the year? - Management suggested a conservative approach, guiding towards a yield accretion closer to the first quarter's performance rather than the second quarter's [2][3] Question: How is the company approaching capital retention versus returning capital to shareholders? - The company is focused on growth and is considering various options for capital utilization, including buybacks and dividends, while also emphasizing the importance of building its franchise [6][7] Question: What is the company's strategy regarding loan growth and credit appetite? - The company is taking a balanced approach to loan growth, with a focus on diversifying its lending business and managing its commercial real estate exposure [61][78]

Stellar Bancorp (STEL) reported $106.83 million in revenue for the quarter ended June 2024, representing a year-over-year decline of 6.1%. EPS of $0.56 for the same period compares to $0.66 a year ago. The reported revenue represents a surprise of +0.50% over the Zacks Consensus Estimate of $106.3 million. With the consensus EPS estimate being $0.48, the EPS surprise was +16.67%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to dete ...

Company Performance - Stellar Bancorp reported quarterly earnings of $0.56 per share, exceeding the Zacks Consensus Estimate of $0.48 per share, but down from $0.66 per share a year ago [1] - The company posted revenues of $106.83 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.50%, but down from $113.76 million year-over-year [4] - The earnings surprise for the quarter was 16.67%, with a previous quarter's earnings of $0.49 per share also exceeding expectations [3] Market Comparison - Stellar Bancorp shares have declined approximately 1.2% since the beginning of the year, while the S&P 500 has gained 13.2% [5] - The current consensus EPS estimate for the upcoming quarter is $0.47 on revenues of $107.47 million, and for the current fiscal year, it is $1.93 on revenues of $430.23 million [9] Industry Outlook - The Zacks Industry Rank for Banks - Southeast is in the top 37% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [10] - National Bankshares, another company in the same industry, is expected to report quarterly earnings of $0.32 per share, reflecting a year-over-year decline of 51.5% [11]

Exhibit 99.1 PRESS RELEASE STELLAR BANCORP, INC. REPORTS SECOND QUARTER 2024 RESULTS HOUSTON, July 26, 2024 - Stellar Bancorp, Inc. (the "Company" or "Stellar") (NYSE: STEL) today reported net income of $29.8 million, or diluted earnings per share of $0.56, for the second quarter of 2024 compared to net income of $26.1 million, or diluted earnings per share of $0.49, for the first quarter of 2024. "We are pleased to announce our second quarter 2024 results," said Robert R. Franklin, Jr., Stellar's Chief Exe ...

Highlights PETAH TIKVA, Israel, June 17, 2024 (GLOBE NEWSWIRE) -- Gilat Satellite Networks Ltd. (Nasdaq: GILT, TASE: GILT), a worldwide leader in satellite networking technology, solutions, and services, announced today that it has signed a definitive agreement to acquire Stellar Blu Solutions LLC, which will become a core component of Gilat's IFC growth strategy. Gilat will pay an initial cash payment of $98 Million at closing, subject to customary adjustments, and up to an additional $147 Million payable ...

Financial Data and Key Metrics Changes - The company reported a first quarter net income of $26.1 million or $0.49 per diluted share, down from $27.3 million or $0.51 per diluted share in the fourth quarter of 2023, reflecting an annualized return on average assets of 0.98% compared to 1.02% in the previous quarter [14] - Net interest income decreased to $102.1 million from $105.9 million in the fourth quarter, primarily due to a decrease in purchase accounting accretion [16] - The net interest margin for the first quarter was 4.26%, down from 4.4% in the fourth quarter, while excluding purchase accounting accretion, it remained unchanged at 3.91% [17] - A credit provision of $4.1 million was recorded, significantly higher than the $1 million in the prior quarter, reflecting conservative reserving for potential problem credits [17] Business Line Data and Key Metrics Changes - The company originated approximately $335 million in new loans during the first quarter, which is consistent with prior quarters, but faced $256 million in payoffs, leading to a net decrease in loan balances [31][32] - Noninterest income was reported at $6.3 million, bolstered by a gain on asset sales and some SBIC income [18] - Noninterest expense was approximately $71.4 million, aligning with expectations and reflecting seasonal dynamics [19] Market Data and Key Metrics Changes - The Houston market experienced significant growth, with a population increase of nearly 140,000 and over 100,000 new jobs created in the previous year, positioning the company favorably in a strong market [12][24] - The company noted that its funding profile remains strong despite a decrease in noninterest-bearing deposits, which fell below the 40% threshold [23] Company Strategy and Development Direction - The company is focused on building capital, strengthening liquidity, and closely monitoring credit quality, maintaining a defensive posture regarding loan growth [10][15] - The strategic positioning in the Houston market, characterized by job growth and affordability, is expected to support the company's success in 2024 and beyond [25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by higher interest rates affecting cash flows and loan demand, but expressed confidence in the company's ability to manage these pressures [5][34] - The management team remains optimistic about the future, citing strong capital and liquidity metrics, and a commitment to maintaining a conservative approach to underwriting [10][20] Other Important Information - The total risk-based capital ratio improved to 14.62% at the end of the first quarter, up from 14.02% at the end of 2023 [20] - The company aims to increase its securities as a percentage of assets to around 15%, currently at 14.2% [57] Q&A Session Summary Question: Drivers behind the decline in loan balances - The company originated $335 million in new loans but faced $256 million in payoffs, leading to a net decrease in loan balances. The underwriting posture and higher interest rates have contributed to slower loan growth [31][34] Question: Trends in core deposit growth - The company is onboarding new accounts successfully, although the dollar amount in noninterest-bearing deposits has decreased due to broker deposits impacting the overall mix [35][36] Question: Increase in nonaccruals and credit quality - The increase in nonaccruals was primarily due to two C&I credits facing management issues, along with some smaller construction loans encountering unexpected cost increases [38][39] Question: Core loan yields and repricing schedule - New loans were originated at a note rate of $8.49, with renewed loans averaging $8.05. The company is managing the impact of higher rates on borrowers, who are generally accepting of the changes [46][49] Question: Outlook for net interest margin - The company anticipates pressure on net interest margin in the second quarter due to rising deposit costs and an increase in nonperformers [53] Question: Investment securities portfolio - The company is focused on building liquidity through its securities portfolio, aiming for better yields moving forward [54]

Income Sources - The company generates most of its income from interest income on loans, investments in securities, and service charges on customer accounts[115]. - Net interest income is the largest source of revenue, influenced by changes in interest-earning assets and interest-bearing liabilities[115]. - The company monitors net interest spread and net interest margin to evaluate net interest income[115]. - Interest income increased by $8.0 million, or 5.7%, to $148.4 million in Q1 2024, driven by higher-yielding loans and increased average loans outstanding[138]. - Noninterest income totaled $6.3 million in Q1 2024, a decrease of $1.2 million, or 16.0%, compared to $7.5 million in Q1 2023, mainly due to reduced debit card and ATM income[150]. Financial Performance - Net income for Q1 2024 was $26.1 million, or $0.49 per diluted share, down from $37.1 million, or $0.70 per diluted share in Q1 2023, primarily due to a $13.7 million decrease in net interest income[135]. - Net interest income before provision for credit losses decreased by $13.7 million, or 11.8%, to $102.1 million in Q1 2024 compared to $115.8 million in Q1 2023[137]. - The efficiency ratio improved to 66.18% in Q1 2024 from 58.96% in Q1 2023, indicating better management of noninterest expenses relative to income[136]. - Noninterest expense decreased by $1.2 million, or 1.6%, to $71.4 million for the three months ended March 31, 2024, primarily due to a decrease in acquisition and merger-related expenses[152]. Credit Losses and Reserves - The allowance for credit losses is based on expected losses, historical loss experience, and qualitative factors, with management considering it the most critical accounting estimate[119]. - The provision for credit losses was $4.1 million in Q1 2024, up from $3.7 million in Q1 2023, reflecting changes to specific reserves[147]. - The allowance for credit losses on loans was $96.3 million as of March 31, 2024, compared to $91.7 million as of December 31, 2023[160]. - The provision for credit losses on loans for the first quarter of 2024 was $5,315 thousand, compared to $3,200 thousand in the same period of 2023, indicating a 66% increase[176]. Asset Quality - Nonperforming assets totaled $57.1 million, or 0.53% of total assets, at March 31, 2024, compared to $39.2 million, or 0.37% of total assets, at December 31, 2023[172]. - The allowance for credit losses on loans to nonperforming loans ratio was 168.54% as of March 31, 2024, down from 221.56%[176]. - Total charge-offs for all loan types in Q1 2024 were $841 thousand, compared to $434 thousand in Q1 2023, reflecting a 94% increase[176]. Deposits and Borrowings - Total deposits as of March 31, 2024, were $8.79 billion, a decrease of $78.8 million, or 0.9%, from $8.87 billion at December 31, 2023[188]. - Noninterest-bearing deposits decreased by $223.7 million, or 6.3%, to $3.32 billion, while interest-bearing deposits increased by $144.9 million, or 2.7%, to $5.47 billion[188]. - Total immediate contingent funding sources were $4.31 billion, or 49.0% of total deposits at March 31, 2024, potentially increasing to approximately $5.29 billion, or 60.2% of deposits, with policy-driven capacity for brokered deposits[209]. Capital and Liquidity - Total shareholders' equity increased to $1.53 billion at March 31, 2024, compared to $1.52 billion at December 31, 2023, primarily due to net income of $26.1 million[215]. - The Bank is well-capitalized, meeting all capital adequacy requirements imposed by the Federal Reserve and FDIC[213]. - The liquidity position is continuously monitored, with stress scenarios incorporated into the contingency funding plan to assess potential liquidity outflows[206]. Interest Rate Risk Management - The company uses an interest rate risk simulation model to assess the sensitivity of net interest income and the balance sheet, incorporating various attributes such as reset dates and prepayment assumptions[222]. - The company’s asset liability management policy aims to minimize interest rate risk while maximizing income, with regular reviews conducted by the Asset Liability Committee (ALCO)[221]. - The assumptions used in the interest rate risk model are inherently uncertain, leading to potential discrepancies between simulated and actual results due to market conditions[222]. Economic Conditions and Market Impact - Economic uncertainty and market volatility have led to a decrease in the company's stock price and market capitalization, triggering an interim goodwill impairment analysis[128]. - Changes in economic conditions, competitive landscape, and loan portfolio composition affect the company's net interest income[116]. - The company faces risks related to uninsured deposits, economic conditions, and changes in interest rates that could impact future performance[112].

Exhibit 99.1 PRESS RELEASE STELLAR BANCORP, INC. REPORTS FIRST QUARTER 2024 RESULTS HOUSTON, April 26, 2024 - Stellar Bancorp, Inc. (the "Company" or "Stellar") (NYSE: STEL) today reported net income of $26.1 million, or diluted earnings per share of $0.49, for the first quarter of 2024 compared to net income of $27.3 million, or diluted earnings per share of $0.51, for the fourth quarter of 2023. "We are pleased to announce our first quarter 2024 results that reflect our continued focus on building capital ...