Stellar Bancorp Reports Mixed Q3 Results, Net Income Declines for Nine-Month Period

Stellar Bancorp, Inc. reported its financial results for the third quarter and nine months ended September 30, 2024, showing a mixed performance compared to the previous fiscal period. The company recorded net income of $33.9 million for Q3 2024, an increase from $30.9 million in Q3 2023, translating to earnings per share of $0.63, up from $0.58. However, net income for the nine months ended September 30, 2024, was $89.8 million, down from $103.2 million in the same period last year.

Total interest income for Q3 2024 was $151.8 million, a slight increase from $151.3 million in Q3 2023. Conversely, net interest income decreased to $101.5 million, down from $106.7 million, primarily due to a rise in interest expenses, which increased to $50.3 million from $44.5 million. The net interest margin also declined to 4.19% from 4.37% year-over-year. For the nine-month period, net interest income fell by $25.8 million to $305.0 million, attributed to a decrease in average loans and an increase in interest expenses.

Stellar's total loans decreased by $374 million (4.7%) to $7.55 billion as of September 30, 2024, with notable declines in commercial and industrial loans and commercial real estate loans. The company reported a decrease in noninterest-bearing deposits by $243.8 million, while interest-bearing deposits increased by $112.9 million.

The company’s total assets as of September 30, 2024, were $10.63 billion, down from $10.74 billion a year earlier. Total shareholders' equity increased to $1.63 billion, up from $1.52 billion, reflecting a strong capital position with capital ratios exceeding regulatory requirements. The Common Equity Tier 1 capital ratio stood at 13.62%, well above the minimum requirement of 4.50%.

Stellar also reported an increase in noninterest income for Q3 2024, totaling $6.3 million, up from $4.7 million in Q3 2023. This increase was driven by gains on asset sales and bank-owned life insurance income. Noninterest expenses rose slightly to $71.1 million, with increases in salaries, data processing, and professional fees.

The company has maintained a robust liquidity position, with cash and cash equivalents totaling $516.2 million as of September 30, 2024, compared to $399.2 million at the end of 2023. Additionally, Stellar has a share repurchase program authorized for up to $60 million, effective through May 31, 2025.

Overall, while Stellar Bancorp demonstrated resilience in net income for the quarter, the decline in net income for the nine-month period and the decrease in total loans highlight challenges in the current market environment.