# Stellar Bancorp, Inc. (STEL)

Informational only - not investment advice.

CIK: 0001473844
SIC: 6021 National Commercial Banks
SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Depository Institutions](/major-group/60/) > [SIC 6021 National Commercial Banks](/industry/6021/)
Latest 10-K filed: 2026-02-26
SEC page: https://www.sec.gov/edgar/browse/?CIK=1473844
Filing source: https://www.sec.gov/Archives/edgar/data/1473844/000147384426000006/stel-20251231.htm

## At a glance

FY2025 · period end 2025-12-31 · filed 2026-02-26 · accession 0001473844-26-000006 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001473844.json

| Metric | Value | FY | Provenance |
| --- | ---: | ---: | --- |
| Revenue | 574,470,000 USD | 2025 | verified |
| Net income | 102,872,000 USD | 2025 | verified |
| Assets | 10,806,594,000 USD | 2025 | verified |
| Free cash flow | 92,606,000 USD | 2025 | computed |
| Net margin | 17.91% | 2025 | computed |
| Revenue YoY | -4.64% | 2025 | computed |
| ROE | 6.16% | 2025 | computed |

Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity.

No market price, no rating, no forecast on this site. Not investment advice.

### Peer percentile fingerprint

| Ratio | STEL | Peer median | Percentile | N |
| --- | ---: | ---: | ---: | ---: |
| Net margin | 17.9% | 22.9% | 23 | 76 |
| Revenue growth | -4.6% | 5.2% | 4 | 76 |
| FCF margin | 16.1% | 22.0% | 23 | 65 |
| ROE | 6.2% | 9.9% | 11 | 76 |
| ROA | 1.0% | 1.1% | 33 | 76 |
| Liabilities / equity | 5.48 | 8.12 | 3 | 76 |

Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 6021 National Commercial Banks, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking.

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 574470000 | USD | 2025 | 2026-02-26 |
| Net income | 102872000 | USD | 2025 | 2026-02-26 |
| Assets | 10806594000 | USD | 2025 | 2026-02-26 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001473844.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  |  | 109,951,000 | 116,659,000 | 135,759,000 | 153,395,000 | 241,762,000 | 253,184,000 | 322,994,000 | 590,817,000 | 602,400,000 | 574,470,000 |
| Net income |  |  | 27,208,000 | 27,571,000 | 47,289,000 | 50,517,000 | 45,534,000 | 81,553,000 | 51,432,000 | 130,497,000 | 115,003,000 | 102,872,000 |
| Diluted EPS |  |  | 1.22 | 1.22 | 1.89 | 2.02 | 1.56 | 2.82 | 1.47 | 2.45 | 2.15 | 1.99 |
| Operating cash flow |  |  | 36,042,000 | 35,590,000 | 49,321,000 | 56,090,000 | 61,063,000 | 107,381,000 | 109,066,000 | 168,217,000 | 132,619,000 | 97,004,000 |
| Capital expenditures |  |  | 1,882,000 | 992,000 |  |  | 7,182,000 | 2,932,000 | 3,811,000 | 6,861,000 | 4,663,000 | 4,398,000 |
| Dividends paid |  |  | 4,395,000 | 4,412,000 | 4,979,000 | 8,757,000 | 8,165,000 | 9,697,000 | 15,378,000 | 27,698,000 | 28,308,000 | 29,296,000 |
| Share buybacks |  | 4,418,000 | 11,079,000 |  |  | 3,000 | 18,582,000 | 5,659,000 | 23,605,000 | 0.00 | 2,842,000 | 73,352,000 |
| Assets |  |  | 2,951,522,000 | 3,081,083,000 | 3,279,096,000 | 3,478,544,000 | 3,949,217,000 | 7,104,954,000 | 10,900,437,000 | 10,647,139,000 | 10,905,790,000 | 10,806,594,000 |
| Liabilities |  |  | 2,593,885,000 | 2,634,869,000 | 2,791,471,000 | 2,942,823,000 | 3,402,766,000 | 6,288,486,000 | 9,517,261,000 | 9,126,121,000 | 9,297,930,000 | 9,137,940,000 |
| Stockholders' equity |  |  | 357,637,000 | 446,214,000 | 487,625,000 | 709,865,000 | 758,669,000 | 816,468,000 | 1,383,176,000 | 1,521,018,000 | 1,607,860,000 | 1,668,654,000 |
| Cash and cash equivalents | 490,748,000 | 434,901,000 | 382,103,000 | 326,199,000 |  |  |  | 757,509,000 | 371,705,000 | 399,237,000 | 911,216,000 | 419,453,000 |
| Free cash flow |  |  | 34,160,000 | 34,598,000 |  |  | 53,881,000 | 104,449,000 | 105,255,000 | 161,356,000 | 127,956,000 | 92,606,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  |  | 24.75% | 23.63% | 34.83% | 32.93% | 18.83% | 32.21% | 15.92% | 22.09% | 19.09% | 17.91% |
| Return on equity |  |  | 7.61% | 6.18% | 9.70% | 7.12% | 6.00% | 9.99% | 3.72% | 8.58% | 7.15% | 6.16% |
| Return on assets |  |  | 0.92% | 0.89% | 1.44% | 1.45% | 1.15% | 1.15% | 0.47% | 1.23% | 1.05% | 0.95% |
| Liabilities / equity |  |  | 7.25 | 5.90 | 5.72 | 4.15 | 4.49 | 7.70 | 6.88 | 6.00 | 5.78 | 5.48 |

## As-reported value updates

14 tracked differences above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period.

Ledger: /company/STEL/revisions/


## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-28. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001473844.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q2 | 2022-06-30 |  |  | 0.48 | reported discrete quarter |
| 2022-Q3 | 2022-09-30 |  |  | 0.52 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | 0.70 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 | 146,958,000 | 35,175,000 | 0.66 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 151,269,000 | 30,908,000 | 0.58 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 152,175,000 | 27,266,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 148,423,000 | 26,147,000 | 0.49 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 152,179,000 | 29,753,000 | 0.56 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 151,776,000 | 33,891,000 | 0.63 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 150,022,000 | 25,212,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 142,320,000 | 24,702,000 | 0.46 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 142,699,000 | 26,352,000 | 0.51 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 145,413,000 | 25,670,000 | 0.50 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 144,038,000 | 26,148,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 145,095,000 | 26,966,000 | 0.53 | reported discrete quarter |

## Filed narrative (10-K & 10-Q)

## Business

Verbatim Item 1 Business section from STEL's latest 10-K: [/company/STEL/business/](/company/STEL/business/).

## Risk Factors

Verbatim Item 1A Risk Factors from STEL's latest 10-K: [/company/STEL/risk-factors/](/company/STEL/risk-factors/).

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1473844/000147384426000025/stel-20260331.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-04-28
Report date: 2026-03-31

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except where the context otherwise requires or where otherwise indicated in this Quarterly Report on Form 10-Q, the term “Stellar” refers to Stellar Bancorp, Inc., the terms “we,” “us,” “our,” “Company” and “our business” refer to Stellar Bancorp, Inc. and our wholly owned banking subsidiary, Stellar Bank, a Texas banking association.

Cautionary Notice Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward‑looking statements. These forward‑looking statements reflect the Company’s current views with respect to, among other things, future events and the Company’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward‑looking nature. These forward‑looking statements are not historical facts, and are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Accordingly, the Company cautions that any such forward‑looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward‑looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward‑looking statements.

There are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these forward‑looking statements, including, but not limited to, the risks described in “Part I— Item 1A.—Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and the following:

•the proposed transaction with Prosperity, including the likelihood of the satisfaction of the conditions to the completion of the transaction and whether and when the transaction will be consummated;

•disruptions to the economy and the U.S. banking system caused by recent bank failures;

•risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in our deposit insurance assessments and other actions of the Board of Governors of the Federal Reserve System, FDIC and Texas Department of Banking, legislative and regulatory actions and reforms and executive orders;

•the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board and the imposition of tariffs and retaliatory tariffs;

•inflation, interest rate, capital and securities markets and monetary fluctuations;

•changes in the interest rate environment, the value of the Company’s assets and obligations and the availability of capital and liquidity;

•general competitive, economic, political and market conditions and other factors that may affect future results of the Company including changes in asset quality and credit risk;

•local, regional, national and international economic conditions and the impact they may have on the Company and our customers and the Company’s assessment of that impact;

•the inability to sustain revenue and earnings growth;

•impairment of the Company’s goodwill or other intangible assets;

•the composition of the Company’s loan portfolio and the concentration of loans in commercial real estate and commercial real estate construction;

•the geographic concentration of the Company’s market;

•the accuracy and sufficiency of the assumptions and estimates the Company makes in establishing reserves for potential loan losses and other estimates;

•the amount of nonperforming and classified assets that the Company holds and the time and effort necessary to resolve nonperforming assets;

•deterioration of asset quality;

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Table of Contents

•customer borrowing, repayment, investment and deposit practices;

•the ability to maintain important deposit customer relationships;

•changes in the value of collateral securing the Company’s loans;

•natural disasters, climate change and adverse weather in the Company’s market area;

•the impact of pandemics, epidemics or any other health-related crisis;

•acts of terrorism, an outbreak of hostilities, such as the conflicts in Ukraine or the Middle East, or other international or domestic calamities;

•the ability to maintain effective internal control over financial reporting;

•the cost and effects of cyber incidents or other failures, interruptions or security breaches of the Company’s systems or those of the Company’s customers or third-party providers;

•the failure of certain third or fourth-party vendors to perform;

•the impact, extent and timing of technological changes;

•the institution and outcome of litigation and other legal proceedings against the Company or to which it may become subject;

•the costs, effects and results of regulatory examinations, investigations, or reviews or the ability to obtain required regulatory approvals or meet conditions associated with the same;

•changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters;

•the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; and

•other risks, uncertainties, and factors that are discussed from time to time in the Company’s reports and documents filed with the SEC.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Quarterly Report on Form 10-Q. This discussion and analysis includes forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that the Company believes are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth above may cause actual results to differ materially from projected results discussed in the forward-looking statements appearing in this discussion and analysis.

The Company disclaims any obligation and does not intend to update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Pending Merger with Prosperity

On January 27, 2026, the Company entered into the Agreement and Plan of Merger (the “Merger Agreement”) with Prosperity Bancshares, Inc., a Texas corporation (“Prosperity”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will merge with and into Prosperity (the “Merger”), with Prosperity continuing as the surviving corporation in the Merger. Immediately following the Merger, Stellar Bank will merge with and into Prosperity’s wholly owned banking subsidiary, Prosperity Bank (the “Bank Merger”). Prosperity Bank will continue as the surviving bank in the Bank Merger. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.01 per share, of the Company (“Stellar Common Stock”) outstanding immediately prior to the Effective Time, other than certain shares held by Prosperity or Stellar and shares held by a holder of Stellar Common Stock who has properly exercised applicable dissenters’ rights in respect of such share, will be converted into the right to receive (i) 0.3803 shares of common stock, par value $1.00 per share, of Prosperity and (ii) an amount in cash equal to $11.36. Stellar and Prosperity have received all regulatory approvals necessary to complete the Merger and the Bank Merger. In connection with the Merger, Stellar has called a special meeting of its shareholders to be held on May 27, 2026. Stellar shareholders of record as of the close of business on April 10, 2026 are entitled to vote at the special meeting. Completion of the Merger and the Bank Merger remains subject to Stellar shareholder approval and satisfaction of remaining customary closing conditions. The Merger is expected to be completed on or about July 1, 2026, subject to approval by Stellar shareholders and the satisfaction or waiver of other customary closing conditions set forth in the Merger Agreement. See Part I, Item 1A, “Risk Factors,” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

33

Table of Contents

Overview

We generate a majority of our income from interest income on loans, interest income from investments in securities and service charges on customer accounts. We incur interest expense on deposits and other borrowed funds and noninterest expenses such as salaries and employee benefits and occupancy expenses. Net interest income is the difference between interest income on earning assets such as loans and securities and interest expense on liabilities such as deposits and borrowings that are used to fund those assets. Net interest income is our largest source of revenue. To evaluate net interest income, we measure and monitor (1) yields on our loans and other interest-earning assets, (2) the interest expenses of our deposits and other funding sources, (3) our net interest spread and (4) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.

Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a “volume change.” Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Texas and specifically in our market, as well as developments affecting the real estate, technology, financial services, insurance, transportation, manufacturing and energy sectors within our market and throughout the state of Texas.

Our net interest income is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and borrowed funds, referred to as a “rate change.” Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions and conditions in domestic and foreign financial markets.

Critical Accounting Policies

Certain of our accounting estimates are important to the portrayal of our financial condition, since they require ma

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A (excerpt)

Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1473844/000147384426000006/stel-20251231.htm
Complete FY 2025 MD&A: /company/STEL/mda/fy2025/

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high
Filing date: 2026-02-26
Report date: 2025-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Notice Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains forward‑looking statements. These forward‑looking statements reflect the Company’s current views with respect to, among other things, future events and the Company’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward‑looking nature. These forward‑looking statements are not historical facts, and are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Accordingly, the Company cautions that any such forward‑looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward‑looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward‑looking statements.

There are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these forward‑looking statements, including, but not limited to, the risks described in “Part I.—Item 1A.—Risk Factors” and the following:

•the proposed transaction with Prosperity, including the likelihood of the satisfaction of the conditions to the completion of the transaction and whether and when the transaction will be consummated;

•disruptions to the economy and the U.S. banking system caused by recent bank failures;

•risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in our deposit insurance assessments and other actions of the Board of Governors of the Federal Reserve System, FDIC and Texas Department of Banking, legislative and regulatory actions and reforms and executive orders;

•the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board and the imposition of tariffs and retaliatory tariffs;

•inflation, interest rate, capital and securities markets and monetary fluctuations;

•changes in the interest rate environment, the value of the Company’s assets and obligations and the availability of capital and liquidity;

•general competitive, economic, political and market conditions and other factors that may affect future results of the Company including changes in asset quality and credit risk;

•local, regional, national and international economic conditions and the impact they may have on the Company and our customers and the Company’s assessment of that impact;

•the inability to sustain revenue and earnings growth;

•impairment of the Company’s goodwill or other intangible assets;

•the composition of the Company’s loan portfolio and the concentration of loans in commercial real estate and commercial real estate construction;

•the geographic concentration of the Company’s market;

•the accuracy and sufficiency of the assumptions and estimates the Company makes in establishing reserves for potential loan losses and other estimates;

•the amount of nonperforming and classified assets that the Company holds and the time and effort necessary to resolve nonperforming assets;

•deterioration of asset quality;

•customer borrowing, repayment, investment and deposit practices;

•the ability to maintain important deposit customer relationships;

•changes in the value of collateral securing the Company’s loans;

42

•natural disasters, climate change and adverse weather in the Company’s market area;

•the impact of pandemics, epidemics or any other health-related crisis;

•acts of terrorism, an outbreak of hostilities, such as the conflicts in Ukraine or the Middle East, or other international or domestic calamities;

•the ability to maintain effective internal control over financial reporting;

•the cost and effects of cyber incidents or other failures, interruptions or security breaches of the Company's systems or those of the Company’s customers or third-party providers;

•the failure of certain third- or fourth-party vendors to perform;

•the impact, extent and timing of technological changes;

•the institution and outcome of litigation and other legal proceedings against the Company or to which it may become subject;

•the costs, effects and results of regulatory examinations, investigations, or reviews or the ability to obtain required regulatory approvals or meet conditions associated with the same;

•changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters;

•the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; and

•other risks, uncertainties, and factors that are discussed from time to time in the Company’s reports and documents filed with the SEC.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with “Item 15. Exhibits and Financial Statement Schedules” and the consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K. This discussion and analysis includes forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that the Company believes are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth in “Part I. Item 1A.—Risk Factors” and elsewhere in this Annual Report on Form 10-K, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis.

The Company disclaims any obligation and does not intend to update or revise any forward-looking statements contained in this Annual Report on Form 10-K, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

Overview

We generate most of our income from interest income on loans, interest income from investments in securities and service charges on customer accounts. We incur interest expense on deposits and other borrowed funds and noninterest expenses such as salaries and employee benefits and occupancy expenses. Net interest income is the difference between interest income on earning assets such as loans and securities and interest expense on liabilities such as deposits and borrowings that are used to fund those assets. Net interest income is our largest source of revenue. To evaluate net interest income, we measure and monitor (1) yields on our loans and other interest-earning assets, (2) the interest expenses of our deposits and other funding sources, (3) our net interest spread and (4) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.

Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a “volume change.” Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Texas and specifically in our market, as well as developments affecting the real estate, technology, financial services, insurance, transportation, manufacturing and energy sectors within our market and throughout the state of Texas.

Our net interest income is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and borrowed funds, referred to as a “rate change.” Fluctuations in market interest rates are driven by many factors,

43

including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions and conditions in domestic and foreign financial markets.

On January 27, 2026, the Company entered into the Agreement and Plan of Merger (the “Merger Agreement”) with Prosperity Bancshares, Inc., a Texas corporation (“Prosperity”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will merge with and into Prosperity (the “Merger”), with Prosperity continuing as the surviving corporation in the Merger. Immediately following the Merger, Stellar Bank will merge with and into Prosperity’s wholly owned banking subsidiary, Prosperity Bank (the “Bank Merger”). Prosperity Bank will continue as the surviving bank in the Bank Merger. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.01 per share, of the Company (“Stellar Common Stock”) outstanding immediately prior to the Effective Time, other than certain shares held by Prosperity or Stellar and shares held by a holder of Stellar Common Stock who has properly exercised applicable dissenters’ rights in respect of such share, will be converted into the right to receive (i) 0.3803 shares of common stock, par value $1.00 per share, of Prosperity and (ii) an amount in cash equal to $11.36. The closing of the Merger is expected to occur in the second quarter of 2026, subject to customary conditions, including approval of the Company's shareholders and regulatory approvals. See Part I, Item 1A, “Risk Factors,” Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 18 – Subsequent Events of the Notes to Consolidated Financial Statement included in this Annual Report on Form 10-K for additional information regarding the transaction.

Critical Accounting Policies

Certain of our accounting estimates are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances that could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. Management believes that determining the allowance for credit losses is its most critical accounting estimate. Our accounting policies are discussed in detail in Note 1 – Nature of Operations and Summary of Significant Accounting and Reporting Policies in the accompanying notes to t

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]

Read the full FY 2025 MD&A: /company/STEL/mda/fy2025/
All MD&A years: /company/STEL/mda/


## MD&A history

Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page.

- [FY 2024 MD&A](/company/STEL/mda/fy2024/): filed 2025-03-03; accession 0001473844-25-000014 (https://www.sec.gov/Archives/edgar/data/1473844/000147384425000014/stel-20241231.htm)
- [FY 2023 MD&A](/company/STEL/mda/fy2023/): filed 2024-02-29; accession 0001473844-24-000010 (https://www.sec.gov/Archives/edgar/data/1473844/000147384424000010/stel-20231231.htm)
- [FY 2022 MD&A](/company/STEL/mda/fy2022/): filed 2023-03-15; accession 0001473844-23-000013 (https://www.sec.gov/Archives/edgar/data/1473844/000147384423000013/stel-20221231.htm)
- [FY 2021 MD&A](/company/STEL/mda/fy2021/): filed 2022-02-25; accession 0001558370-22-002170 (https://www.sec.gov/Archives/edgar/data/1473844/000155837022002170/cbtx-20211231x10k.htm)




## Macro cross-references

Indicators mapped to this company's SIC classification (industry 6021 National Commercial Banks) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim.

- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity

Macro-to-micro threads including this sector: [Interest rates & the Fed](/thread/interest-rates-fed/), [Money & trade](/thread/money-trade/), [Consumer & credit](/thread/consumer-credit/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/).

All macro indicators: /indicators/


## For LLMs & downloads

Markdown twin: /company/STEL.md · JSON record: /company/STEL.json · verified financials: /company/STEL/financials.json / /company/STEL/financials.csv · machine TOC for the whole site: /llms.txt