Stellar Bancorp(STEL)2025-04-25 18:33Financial Data and Key Metrics Changes - Stellar Bancorp reported a net income of 0.46 per diluted share for Q1 2025, with an annualized return on average assets of 94 basis points and an annualized return on average tangible common equity of 11.48% [8][10] - The net interest income for the quarter was 103 million in the previous quarter, resulting in a net interest margin of 4.2% compared to 4.25% in Q4 2024 [12][10] - Noninterest expenses decreased to 75.3 million in the previous quarter, reflecting effective cost management [15][10] - The total risk-based capital ratio was 15.94% at the end of Q1 2025, slightly down from 16% at the end of Q4 2024 [16] Business Line Data and Key Metrics Changes - The company experienced a reduction in loans during the quarter, with payoffs estimated between 300 million [31][70] - Core net interest margin excluding purchase accounting accretion improved to 3.97% from 3.94% in the prior quarter [12][10] - Noninterest income increased to 5 million in the previous quarter, benefiting from small gains on asset sales [14] Market Data and Key Metrics Changes - The company noted a competitive market for deposits, with a focus on acquiring new accounts, achieving a significant number of new accounts onboarded in Q1 2025 [38][39] - Approximately 40% of new accounts were from customers who were not previously with the bank, indicating successful market penetration [38] Company Strategy and Development Direction - The management emphasized a cautious approach to growth due to economic uncertainty, with expectations for growth to materialize in the latter half of 2025 [7][11] - The company plans to utilize its strong capital position for share repurchases while remaining open to growth opportunities through M&A in the future [19][50] - The focus remains on building a strong foundation and optimizing capital management to benefit shareholders [6][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty introduced by new tariff policies but remains optimistic about customer acquisition and pipeline growth [4][5][7] - The management expressed confidence in returning to a reasonable level of growth later in the year, despite current challenges [11][20] Other Important Information - The company repurchased 1.4 million shares at an average price of 65 million [18][19] - Tangible book value per share increased by 14.3% year-over-year, from 19.69 [17] Q&A Session Summary Question: What is the current sentiment from clients regarding loan growth? - Management indicated cautious optimism about potential growth, noting that the pipeline is trending positively despite economic uncertainty [24][25][30] Question: Can you elaborate on the competitive landscape for deposits? - Management highlighted intense competition in the market but noted success in onboarding new accounts, particularly from new customers [35][38] Question: What are the expectations for loan paydowns and growth in the coming quarters? - Management expects payoffs to remain around 300 million per quarter, with growth anticipated in the second half of the year as the pipeline builds [70][69] Question: How is the company managing expenses moving forward? - Management expressed a commitment to managing expenses while also investing in growth, indicating that the first quarter's performance was better than planned [78][79]