Stellar Bancorp, Inc. (the "Company" or "Stellar") (NYSE:STEL) today reported net income of $26.1 million, or diluted earnings per share of $0.51, for the fourth quarter of 2025 and net income of $102.9 million, or diluted earnings per share of $1.99, for the full year 2025.

Financial Highlights

Strong Net Interest Income and Margin: Net interest income was $103.4 million for the fourth quarter of 2025 up from $100.6 million for the third quarter of 2025. The tax equivalent net interest margin, excluding PAA ("Purchase Accounting Adjustments"), was 4.06%⁽¹⁾ for the fourth quarter of 2025 compared to 4.00%⁽¹⁾ for the third quarter of 2025.

Solid Profitability: Net income for the full year 2025 was $102.9 million, or diluted earnings per share of $1.99, which translated into a return on average assets of 0.97%, a return on average equity of 6.34% and a return on average tangible equity of 11.48%⁽¹⁾. Net income for the fourth quarter of 2025 was $26.1 million, or diluted earnings per share of $0.51, which translated into an annualized return on average assets of 0.97%, an annualized return on average equity of 6.23% and an annualized return on average tangible equity of 10.90%⁽¹⁾.

Meaningful Book Value Build: Book value per share increased to $32.78 at December 31, 2025 from $30.09 at December 31, 2024. Tangible book value per share increased to $21.62⁽¹⁾ at December 31, 2025 from $21.08⁽¹⁾ at September 30, 2025 and from $19.05⁽¹⁾ at December 31, 2024.

Repurchase of Shares: Repurchased 299,347 shares at a weighted average price per share of $30.44 during the fourth quarter of 2025.

Paydown of Subordinated Debt: On October 1, 2025, the Company completed the previously announced redemption of $30 million of its $60 million of subordinated debt.

Year 2025 Results

Net interest income for 2025 decreased $6.4 million, or 1.6%, to $401.6 million from $408.0 million for 2024. The net interest margin on a tax equivalent basis decreased to 4.20% for 2025 from 4.24% for 2024. 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 cost of interest-bearing liabilities. Net interest income for 2025 benefited from $19.3 million of income from PAA down from $33.0 million for 2024. Excluding PAA, net interest income (tax equivalent) for 2025 would have been $382.7 million⁽¹⁾ and the tax equivalent net interest margin would have been 3.99%⁽¹⁾an increase from $375.3 million and 3.89% for the year 2024.

Noninterest income for 2025 was $21.8 million, a decrease of $1.3 million, or 5.4%, compared to $23.0 million for 2024. Noninterest income decreased in 2025 compared to 2024 primarily due to losses on sales and write-downs on foreclosed assets recorded during 2025.

Noninterest expense for 2025 decreased $3.5 million, or 1.2%, to $285.5 million compared to $289.0 million for 2024. The decrease in noninterest expense during 2025 compared to 2024 was primarily due to a $3.2 million decrease in professional fees, a $2.6 million decrease in amortization of intangibles and a $1.4 million decrease in regulatory assessments partially offset by a $3.5 million increase salaries and employee benefits.

The efficiency ratio was 62.28%⁽¹⁾ for 2025 compared to 61.53%⁽¹⁾ for 2024. Annualized returns on average assets, average equity and average tangible equity were 0.97%, 6.34% and 11.48%⁽¹⁾ for 2025, respectively, compared to 1.08%, 7.34% and 13.89%⁽¹⁾ for 2024, respectively.

________________________
⁽¹⁾		Refer to the calculation of this non-GAAP financial measure on page 10 of this earnings release. The calculation of returns on average tangible equity and the efficiency ratio have been adjusted from prior period disclosures.

Fourth Quarter 2025 Results

Net interest income in the fourth quarter of 2025 increased $2.7 million, or 2.7%, to $103.4 million from $100.6 million for the third quarter of 2025. The net interest margin on a tax equivalent basis increased to 4.21% for the fourth quarter of 2025 from 4.20% for the third quarter of 2025. The increase in net interest income from the prior quarter was primarily due to the decrease in cost of average interest-bearing liabilities. Net interest income for the fourth quarter of 2025 benefited from $3.8 million of income from PAA compared to $4.8 million in the third quarter of 2025. Excluding PAA, net interest income (tax equivalent) for the fourth quarter of 2025 would have been $99.7 million⁽¹⁾ and the tax equivalent net interest margin would have been 4.06%⁽¹⁾compared to net interest income of $95.9 million and tax equivalent net interest margin of 4.00% for the third quarter of 2025.

Noninterest income for the fourth quarter of 2025 was $5.5 million, an increase of $522 thousand, or 10.5%, compared to $5.0 million for the third quarter of 2025. Noninterest income increased in the fourth quarter of 2025 compared to the third quarter of 2025 primarily due to a death benefit on bank-owned life insurance received during the fourth quarter of 2025.

Noninterest expense for the fourth quarter of 2025 decreased $984 thousand, or 1.3%, to $72.2 million compared to $73.1 million for the third quarter of 2025. The decrease in noninterest expense during the fourth quarter of 2025 compared to the third quarter of 2025 was primarily due to a decrease in amortization of intangibles of $624 thousand and a decrease in regulatory assessments of $483 thousand.

The efficiency ratio was 61.64%⁽¹⁾ for the fourth quarter of 2025 compared to 63.69%⁽¹⁾ for the third quarter of 2025. Annualized returns on average assets, average equity and average tangible equity were 0.97%, 6.23% and 10.90%⁽¹⁾ for the fourth quarter of 2025, respectively, compared to 0.97%, 6.30% and 11.45%⁽¹⁾ for the third quarter of 2025, respectively.

Financial Condition

Total assets at December 31, 2025 were $10.81 billion, an increase of $178.5 million compared to $10.63 billion at September 30, 2025. The increase in total assets was largely due to an increase of $356.2 million in securities and a $132.7 million increase in loans, partially offset by a $303.9 million decrease in interest-bearing deposits at other financial institutions.

Total loans at December 31, 2025 increased $132.7 million to $7.30 billion compared to $7.17 billion at September 30, 2025. At December 31, 2025, the remaining balance of the PAA on loans was $54.3 million.

Total deposits at December 31, 2025 increased $204.0 million to $9.02 billion compared to $8.82 billion at September 30, 2025 primarily due to increases in noninterest-bearing and interest-bearing demand deposits partially offset by a decrease in certificates and other time deposits.

Asset Quality

Nonperforming assets totaled $60.0 million, or 0.56% of total assets, at December 31, 2025, compared to $54.2 million, or 0.51% of total assets, at September 30, 2025 and $38.9 million, or 0.36% of total assets, at December 31, 2024. The allowance for credit losses on loans as a percentage of total loans was 1.15% at December 31, 2025 compared to 1.10% at September 30, 2025 and 1.09% at December 31, 2024.

The year ended December 31, 2025 included a provision for credit losses of $10.2 million compared to a reversal of provision for credit losses of $2.9 million for the year ended December 31, 2024. Net charge-offs for the year ended December 31, 2025 were $3.8 million, or 0.05% of average loans, compared to net charge-offs of $6.7 million, or 0.09% of average loans, for the year ended December 31, 2024.

The provision for credit losses was $5.1 million for the fourth quarter of 2025 compared to $305 thousand for the third quarter of 2025 primarily due to loan growth. Net charge-offs for the fourth quarter of 2025 were $71 thousand compared to net charge-offs of $3.3 million, or 0.18% (annualized) of average loans, for the third quarter of 2025.

GAAP Reconciliation of Non-GAAP Financial Measures

Stellar's management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures on page 10 of this earnings release for a reconciliation of these non-GAAP financial measures.

Conference Call Cancelled

As a result of today's announcement that the Company has entered into a merger agreement with Prosperity Bancshares, Inc., the Company has cancelled the previously announced conference call regarding the Company's fourth quarter results, which was scheduled for Friday, January 30, 2026, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time).

About Stellar Bancorp, Inc.

Stellar Bancorp, Inc. is a bank holding company headquartered in Houston, Texas. Stellar's principal banking subsidiary, Stellar Bank, provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers across Houston, Dallas, Beaumont and surrounding communities in Texas.

Forward-Looking Statements

Certain statements in this press release which are not historical in nature are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, future financial performance and operating results, the Company's plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including statements related to the expected timing, completion and benefits of the proposed transaction with Prosperity Bancshares, Inc., projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Forward-looking statements may be identified by terminology such as "may," "will," "should," "could," "scheduled," "plans," "intends," "projects," "anticipates," "expects," "believes," "estimates," "potential," "would," or "continue" or negatives of such terms or other comparable terminology.

All forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Stellar to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, among others: changes in the interest rate environment, the value of Stellar'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 Stellar including changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; the impact, extent and timing of technological changes; capital management activities; disruptions to the economy and the U.S. banking system; risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators; legislative changes, executive orders, regulatory actions and reforms of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking.

Additional factors which could affect the Company's future results can be found in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, in each case filed with the SEC and available on the SEC's website at www.sec.gov. We disclaim any obligation and do not intend to update or revise any forward-looking statements contained in this communication, 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.

Stellar Bancorp, Inc. Financial Highlights (Unaudited)
	2025													2024
	December 31			September 30			June 30			March 31			December 31
	(Dollars in thousands)
ASSETS:
Cash and due from banks	$	94,331		$	99,407		$	136,060		$	130,932		$	419,967
Interest-bearing deposits at other financial institutions		325,122			629,042			442,044			429,643			491,249
Total cash and cash equivalents		419,453			728,449			578,104			560,575			911,216

Available for sale securities, at fair value		2,198,459			1,842,268			1,729,684			1,719,371			1,673,016

Loans held for investment		7,300,591			7,167,857			7,287,347			7,283,133			7,439,854
Less: allowance for credit losses on loans		(83,629	)		(78,924	)		(83,165	)		(83,746	)		(81,058	)
Loans, net		7,216,962			7,088,933			7,204,182			7,199,387			7,358,796

Accrued interest receivable		35,869			34,865			35,537			37,669			37,884
Premises and equipment, net		106,118			107,803			108,615			109,750			111,856
Federal Reserve Bank and Federal Home Loan Bank stock		45,532			45,437			47,099			20,902			8,209
Bank-owned life insurance		109,477			109,358			108,726			108,108			107,498
Goodwill		497,318			497,318			497,318			497,318			497,318
Core deposit intangibles, net		71,018			75,929			81,468			87,007			92,546
Other assets		106,388			97,753			102,277			94,800			107,451
Total assets	$	10,806,594		$	10,628,113		$	10,493,010		$	10,434,887		$	10,905,790


LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing	$	3,407,865		$	3,210,948		$	3,183,693		$	3,205,619		$	3,576,206
Interest-bearing
Demand		2,114,997			1,960,857			1,941,156			1,863,752			1,845,749
Money market and savings		2,469,845			2,489,169			2,393,767			2,248,616			2,253,193
Certificates and other time		1,028,759			1,156,489			1,154,998			1,244,726			1,453,236
Total interest-bearing deposits		5,613,601			5,606,515			5,489,921			5,357,094			5,552,178
Total deposits		9,021,466			8,817,463			8,673,614			8,562,713			9,128,384

Accrued interest payable		5,508			9,429			7,607			9,856			17,052
Borrowed funds		—			—			69,925			119,923			—
Subordinated debt		40,226			70,196			70,165			70,135			70,105
Other liabilities		70,740			77,887			67,865			61,428			82,389
Total liabilities		9,137,940			8,974,975			8,889,176			8,824,055			9,297,930

SHAREHOLDERS' EQUITY:
Common stock		509			512			514			521			534
Capital surplus		1,174,894			1,182,781			1,185,048			1,202,628			1,240,050
Retained earnings		566,216			547,717			529,216			510,072			492,640
Accumulated other comprehensive loss		(72,965	)		(77,872	)		(110,944	)		(102,389	)		(125,364	)
Total shareholders' equity		1,668,654			1,653,138			1,603,834			1,610,832			1,607,860
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	10,806,594		$	10,628,113		$	10,493,010		$	10,434,887		$	10,905,790

Stellar Bancorp, Inc. Financial Highlights (Unaudited)

	Three Months Ended														Year Ended
	2025												2024			2025			2024
	December 31			September 30			June 30			March 31		December 31			December 31			December 31
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees	$	119,866		$	122,557		$	121,814		$	120,640	$	128,738		$	484,877		$	531,680
Securities:
Taxable		17,619			16,278			15,293			16,148		14,789			65,338			49,903
Tax-exempt		808			808			810			812		814			3,238			3,262
Deposits in other financial institutions		5,745			5,770			4,782			4,720		5,681			21,017			17,555
Total interest income		144,038			145,413			142,699			142,320		150,022			574,470			602,400

INTEREST EXPENSE:
Demand, money market and savings deposits		29,484			32,376			31,097			27,574		27,877			120,531			113,246
Certificates and other time deposits		10,370			10,920			11,459			13,527		16,830			46,276			68,745
Borrowed funds		6			56			407			517		235			986			4,549
Subordinated debt		795			1,417			1,401			1,444		2,123			5,057			7,868
Total interest expense		40,655			44,769			44,364			43,062		47,065			172,850			194,408
NET INTEREST INCOME		103,383			100,644			98,335			99,258		102,957			401,620			407,992
Provision for (reversal of) credit losses		5,131			305			1,090			3,632		942			10,158			(2,880	)
Net interest income after provision for credit losses		98,252			100,339			97,245			95,626		102,015			391,462			410,872

NONINTEREST INCOME:
Service charges on deposit accounts		1,592			1,545			1,561			1,584		1,590			6,282			6,430
(Loss) gain on sale/write-down of assets		(171	)		(491	)		(57	)		417		(112	)		(302	)		769
Bank-owned life insurance		1,026			632			618			610		622			2,886			2,414
Debit card and interchange income		583			572			566			520		570			2,241			2,191
Other		2,478			2,728			3,103			2,374		2,362			10,683			11,242
Total noninterest income		5,508			4,986			5,791			5,505		5,032			21,790			23,046

NONINTEREST EXPENSE:
Salaries and employee benefits		42,913			43,175			40,927			41,792		43,797			168,807			165,357
Net occupancy and equipment		4,776			4,518			4,399			3,926		4,401			17,619			17,864
Depreciation		2,056			2,015			1,992			1,995		1,984			8,058			7,807
Data processing and software amortization		5,796			5,882			5,620			5,682		5,551			22,980			21,652
Professional fees		1,587			1,601			1,287			1,786		3,428			6,261			9,424
Regulatory assessments and FDIC insurance		1,205			1,688			1,561			1,733		1,636			6,187			7,568
Amortization of intangibles		4,930			5,554			5,548			5,548		5,581			21,580			24,220
Communications		872			855			861			847		807			3,435			3,418
Advertising		1,333			1,425			1,167			782		1,593			4,707			4,127
Other		6,690			6,429			6,642			6,075		6,488			25,836			27,521
Total noninterest expense		72,158			73,142			70,004			70,166		75,266			285,470			288,958
INCOME BEFORE INCOME TAXES		31,602			32,183			33,032			30,965		31,781			127,782			144,960
Provision for income taxes		5,454			6,513			6,680			6,263		6,569			24,910			29,957
NET INCOME	$	26,148		$	25,670		$	26,352		$	24,702	$	25,212		$	102,872		$	115,003

EARNINGS PER SHARE
Basic	$	0.51		$	0.50		$	0.51		$	0.46	$	0.47		$	1.99		$	2.15
Diluted	$	0.51		$	0.50		$	0.51		$	0.46	$	0.47		$	1.99		$	2.15

Stellar Bancorp, Inc. Financial Highlights (Unaudited)

	Three Months Ended															Year Ended
	2025													2024			2025			2024
	December 31			September 30			June 30			March 31			December 31			December 31			December 31
	(Dollars and share amounts in thousands, except per share data)
Net income	$	26,148		$	25,670		$	26,352		$	24,702		$	25,212		$	102,872		$	115,003

Earnings per share, basic	$	0.51		$	0.50		$	0.51		$	0.46		$	0.47		$	1.99		$	2.15
Earnings per share, diluted	$	0.51		$	0.50		$	0.51		$	0.46		$	0.47		$	1.99		$	2.15
Dividends per share	$	0.15		$	0.14		$	0.14		$	0.14		$	0.14		$	0.57		$	0.53

Return on average assets^(A)		0.97	%		0.97	%		1.01	%		0.94	%		0.94	%		0.97	%		1.08	%
Return on average equity^(A)		6.23	%		6.30	%		6.62	%		6.21	%		6.21	%		6.34	%		7.34	%
Return on average tangible equity^(A)(B)(D)		10.90	%		11.45	%		12.16	%		11.48	%		11.53	%		11.48	%		13.89	%
Net interest margin (tax equivalent)^(A)(C)		4.21	%		4.20	%		4.18	%		4.20	%		4.25	%		4.20	%		4.24	%
Net interest margin (tax equivalent) excluding PAA^(A)(B)(C)		4.06	%		4.00	%		3.95	%		3.97	%		3.94	%		3.99	%		3.89	%
Efficiency ratio^(B)(E)		61.64	%		63.69	%		61.87	%		61.93	%		64.46	%		62.28	%		61.53	%

Capital Ratios
Stellar Bancorp, Inc. (Consolidated)
Equity to assets		15.44	%		15.55	%		15.28	%		15.44	%		14.74	%		15.44	%		14.74	%
Tangible equity to tangible assets^(B)(E)		10.75	%		10.74	%		10.34	%		10.42	%		9.87	%		10.75	%		9.87	%
Estimated Total capital ratio (to risk-weighted assets)		15.73	%		16.33	%		15.98	%		15.97	%		16.00	%		15.73	%		16.00	%
Estimated Common equity Tier 1 capital (to risk weighted assets)		14.18	%		14.43	%		14.06	%		14.05	%		14.14	%		14.18	%		14.14	%
Estimated Tier 1 capital (to risk-weighted assets)		14.31	%		14.55	%		14.18	%		14.17	%		14.26	%		14.31	%		14.26	%
Estimated Tier 1 leverage (to average tangible assets)		11.52	%		11.60	%		11.44	%		11.20	%		11.31	%		11.52	%		11.31	%
Stellar Bank
Estimated Total capital ratio (to risk-weighted assets)		15.03	%		15.45	%		15.39	%		15.40	%		15.28	%		15.03	%		15.28	%
Estimated Common equity Tier 1 capital (to risk-weighted assets)		13.83	%		14.27	%		14.18	%		14.20	%		14.13	%		13.83	%		14.13	%
Estimated Tier 1 capital (to risk-weighted assets)		13.83	%		14.27	%		14.18	%		14.20	%		14.13	%		13.83	%		14.13	%
Estimated Tier 1 leverage (to average tangible assets)		11.14	%		11.37	%		11.44	%		11.22	%		11.21	%		11.14	%		11.21	%

Other Data
Weighted average shares:
Basic		51,083			51,283			51,529			53,146			53,422			51,753			53,469
Diluted		51,167			51,356			51,569			53,197			53,471			51,805			53,510
Period end shares outstanding		50,902			51,228			51,398			52,141			53,429			50,902			53,429
Book value per share	$	32.78		$	32.27		$	31.20		$	30.89		$	30.09		$	32.78		$	30.09
Tangible book value per share^(B)	$	21.62		$	21.08		$	19.94		$	19.69		$	19.05		$	21.62		$	19.05
Employees - full-time equivalents		1,075			1,065			1,062			1,054			1,037			1,075			1,037

(A)	Interim periods annualized.
(B)	Refer to the calculation of these non-GAAP financial measures on page 10 of this Earnings Release.
(C)	Net interest margin represents net interest income divided by average interest-earning assets.
(D)	The calculation of return on average tangible equity has been adjusted from prior period disclosures and all periods presented above have been recalculated and disclosed under the same calculation.
(E)	The calculation of the efficiency ratio represents total noninterest expense less amortization of core deposits, divided by the sum of net interest income and noninterest income, excluding net gains and losses on the sale/write-down of assets. This calculation has been adjusted from prior period disclosures and all periods presented above have been recalculated and disclosed under the same calculation.

Stellar Bancorp, Inc. Financial Highlights (Unaudited)
	Three Months Ended
	December 31, 2025							September 30, 2025							December 31, 2024
	Average Balance			Interest Earned/ Interest Paid		Average Yield/Rate		Average Balance			Interest Earned/ Interest Paid		Average Yield/Rate		Average Balance			Interest Earned/ Interest Paid		Average Yield/Rate
	(Dollars in thousands)
Assets
Interest-earning assets:
Loans	$	7,198,899		$	119,866	6.61	%	$	7,228,778		$	122,557	6.73	%	$	7,477,332		$	128,738	6.85	%
Securities		1,976,112			18,427	3.70	%		1,790,897			17,086	3.79	%		1,702,111			15,603	3.65	%
Deposits in other financial institutions		578,480			5,745	3.94	%		505,342			5,770	4.53	%		473,719			5,681	4.77	%
Total interest-earning assets		9,753,491		$	144,038	5.86	%		9,525,017		$	145,413	6.06	%		9,653,162		$	150,022	6.18	%
Allowance for credit losses on loans		(78,995	)						(82,983	)						(84,423	)
Noninterest-earning assets		1,070,537							1,076,831							1,080,436
Total assets	$	10,745,033						$	10,518,865						$	10,649,175

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	2,008,416		$	13,281	2.62	%	$	1,935,203		$	14,356	2.94	%	$	1,623,867		$	11,341	2.78	%
Money market and savings deposits		2,546,538			16,203	2.52	%		2,475,306			18,020	2.89	%		2,312,711			16,536	2.84	%
Certificates and other time deposits		1,127,248			10,370	3.65	%		1,162,461			10,920	3.73	%		1,538,785			16,830	4.35	%
Borrowed funds		327			6	7.28	%		3,156			56	7.04	%		15,979			235	5.85	%
Subordinated debt		40,211			795	7.84	%		70,181			1,417	8.01	%		101,394			2,123	8.33	%
Total interest-bearing liabilities		5,722,740		$	40,655	2.82	%		5,646,307		$	44,769	3.15	%		5,592,736		$	47,065	3.35	%

Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		3,269,053							3,172,054							3,342,636
Other liabilities		88,715							82,993