Earnings call transcript: Stellar Bancorp Q3 2025 beats EPS forecast, stock rises

Stellar Bancorp Inc. (STEL) reported its third-quarter 2025 earnings on October 24, revealing a slight earnings per share (EPS) beat and a minor revenue miss. The company posted an EPS of $0.50, surpassing the forecast of $0.49, while revenue fell slightly short of expectations at $105.63 million compared to the forecasted $105.92 million. Following the earnings release, Stellar Bancorp’s stock experienced a modest pre-market increase of 1.15%, closing at $29.80.

Key Takeaways

• Stellar Bancorp’s Q3 EPS of $0.50 exceeded forecasts by 2.04%.
• Revenue came in slightly below expectations, missing by 0.27%.
• Stock price increased by 1.15% in pre-market trading following the earnings release.
• The company emphasized a focus on building client relationships and expanding its C&I loan mix.
• Stellar Bancorp expects loan growth to continue into 2026, with strategic opportunities in focus.

Company Performance

Stellar Bancorp demonstrated solid performance in the third quarter of 2025, with a net income of $25.7 million. The company reported improvements in net interest income and margin, reflecting a favorable interest rate environment. The annualized return on average assets (ROAA) was 0.97%, while the return on tangible common equity (ROATCE) reached 11.45%. Despite a competitive market landscape, particularly in Texas, Stellar Bancorp maintained a disciplined approach to lending and capital management.

Financial Highlights

• Revenue: $105.63 million, slightly below forecast.
• Earnings per share: $0.50, exceeding forecast by 2.04%.
• Net interest income: $100.6 million, up from $98.3 million in Q2.
• Net interest margin: 4.2%, a slight increase from 4.18% in Q2.
• Provision for loan losses: $305,000.

Earnings vs. Forecast

Stellar Bancorp’s EPS of $0.50 beat the forecast of $0.49, marking a 2.04% surprise. However, the revenue of $105.63 million fell short of the $105.92 million forecast, a miss of 0.27%. Despite the revenue miss, the EPS beat suggests effective cost management and operational efficiency.

Market Reaction

Following the earnings announcement, Stellar Bancorp’s stock rose 1.15% in pre-market trading, closing at $29.80. This movement aligns with the company’s positive earnings surprise, despite the slight revenue miss. The stock remains within its 52-week range, with a high of $32.38 and a low of $24.13, indicating stable investor sentiment.

Outlook & Guidance

Looking ahead, Stellar Bancorp anticipates continued loan growth into the second half of 2025 and 2026. The company is focusing on lowering deposit costs and preparing for potential Federal Reserve rate cuts. Strategic flexibility remains a priority as the company explores opportunities in a dynamic market environment.

Executive Commentary

CEO Bob Franklin stated, "We feel comfortable at our present level of reserve based on our portfolio and the markets that we serve." CFO Paul Eggie emphasized the focus on reducing deposit costs, while Executive Ray highlighted satisfaction with loan originations, which are up 62% year-to-date.

Risks and Challenges

• Potential interest rate cuts could impact net interest margins.
• Increased competition from out-of-state banks in Texas markets.
• Execution risks associated with strategic opportunities and M&A activity.
• Economic uncertainties that could affect loan growth and asset quality.

Q&A

During the earnings call, analysts inquired about the $330 million in loan payoffs during Q3, with 44% related to asset or business sales and 25% due to refinancing. The company also addressed its cautious approach to M&A opportunities, emphasizing a disciplined strategy in evaluating potential deals.

Full transcript - Stellar Bancorp Inc (STEL) Q3 2025:

Audra, Conference Operator: Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Stellar Bank Third Quarter Earnings Call. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be a question and answer session. At this time, I would like to turn the conference over to Courtney Theriault, Chief Accounting Officer. Please go ahead.

Courtney Theriault, Chief Accounting Officer, Stellar Bank: Thank you, operator, and thank you to all who have joined our call today. Good morning. Our team would like to welcome you to our earnings call for the 2025. This morning’s earnings call will be led by our CEO, Bob Franklin and CFO, Paul Eggie. Also in attendance today are Steve Reitcloff, Executive Chairman of the company Fraser Tulli, President of the company and CEO of the bank and Joe Wett, Senior Executive Vice President and Chief Credit Officer of the bank.

Before we begin, I need to remind everyone that some of the remarks made today constitute forward looking statements as defined in the Private Securities Litigation Reform Act of 1995 as amended. We intend all such statements to be covered by the Safe Harbor provisions for forward looking statements contained in the act. Also note that if we give guidance about future results, that guidance is only a reflection of management’s beliefs at the time the statement is made and such beliefs are subject to change. We disclaim any obligation to publicly update any forward looking statements except as may be required by law. Please see the last page of the text in this morning’s earnings release, which is available on our website at ir.steller.com for additional information about the risk factors associated with forward looking statements.

At the conclusion of our remarks, we’ll open the line and allow time for questions. I will now turn the call over to our CEO, Bob Franklin.

Bob Franklin, CEO, Stellar Bancorp: Thank you, Courtney. Good morning and welcome to the Stellar Bancorp third quarter earnings call. I’m pleased to report that we delivered solid results including increasing our net interest income and our net interest margin. Our balance sheet expansion was driven primarily by deposit growth, reflecting our bankers’ emphasis on getting the full client relationship. Credit quality has found its way back into the headlines.

While we experienced some charge offs in the quarter, they were spread over several small credits, most of which were already identified and appropriately reserved. We feel comfortable at our present level of reserve based on our portfolio and the markets that we serve. We have little exposure to non originated credits and only have three Shared National Credits, all with long standing and additional business ties to the bank. Overall, credit trends remain favorable and our markets stable. Paul will provide more detail on our expenses during the quarter, including some onetime expenses and some increased advertising spend.

As we continue to strengthen our capital position, we have repurchased shares and we have paid down $30,000,000 of our subordinated debt just after quarter end. Our well capitalized position gives us valuable flexibility and we remain committed to deploying capital in ways to enhance our shareholder value. We are focused on growing our company. We believe that if we continue to be disciplined in building quality assets, protecting margins and focusing on full balance relationships, we will drive long term value for our shareholders. Now I’ll turn the call over to Paul Ege, our CFO, for more content.

Paul Eggie, CFO, Stellar Bancorp: Thanks, Bob, and good morning, everybody. We are pleased to report third quarter twenty twenty five net income of $25,700,000 or $0.50 per diluted share as compared to net income of $26,400,000 or $0.51 per share in the second quarter. These two represent an annualized ROAA of 0.97% and an annualized ROATCE of 11.45%. Key highlights of our third quarter performance were improvements in our net interest income and margin on incrementally larger interest earning assets. Our balance sheet growth was driven by strong deposit growth and we feel great about our liquidity, capital and overall balance sheet positioning.

So during the third quarter, net interest income was $100,600,000 representing an increase from the $98,300,000 booked in the second quarter, largely due to higher earning assets and net interest margin for the quarter. This translated into the net interest margin of 4.2% relative to 4.18% posted in the second quarter. Purchase accounting accretion in the third quarter was $4,800,000 down from $5,300,000 in the second quarter. So if you were to exclude purchase accounting accretion, tax equivalent net interest income increased by slightly more to $95,900,000 from $93,100,000 in the prior quarter and that change in net interest margin excluding purchase accounting accretion was also greater going from 3.95% in the prior quarter to 4% in the third quarter. We’re really proud to get NIM excluding purchase accounting accretion back to a 4% level and we continue to feel good about our ability to defend and perhaps incrementally improve on our top tier margin profile by focusing on staying true to our core relationship banking model.

Walking further down the income statement, we booked a provision for loan losses of $305,000 in the third quarter, which was driven primarily by an increase in our allowance for unfunded commitments and growth in that category. While we did experience $3,300,000 in net charge offs in the third quarter relating to over 10 relationships, most of these were previously identified and already specifically reserved for, therefore not impacting our quarterly provision. For a year to date perspective, our net charge off totaled $3,700,000 or approximately seven basis points annualized. Our allowance for credit losses on loans ended the quarter at $78,900,000 or 1.1% of loans, which is down slightly from $83,200,000 or 1.14% of loans at the end of the second quarter. Moving on to non interest income, we earned $5,000,000 in the third quarter versus $5,800,000 in the 2025.

This third quarter decrease was mostly due to approximately $445,000 of write downs on foreclosed assets and other lower other non interest income during the quarter. On to non interest expense, our expense increased to $73,100,000 from $70,000,000 in the second quarter, primarily due to an increase in salaries and benefits and to a lesser extent increases in professional fees and advertising. Salary and benefits expense included severance expenses recorded relating to two upcoming branch closures in the fourth quarter, which totaled about $05,000,000 as well as elevated medical insurance expenses relative to prior quarters. We view our third quarter expenses as an outlier and we expect fourth quarter expenses to be closer to our run rate for the first half of the year. So all of this drove solid bottom line results of $25,700,000 in net income, which continues to fuel our track record of internal capital generation and our very strong capital position.

Total risk based capital was 16.33 percent at the end of the third quarter relative to 15.98% at the end of the second quarter. Year over year tangible book value per share increased 9.3% from $19.28 to $21.08 per share and that is after the effect of dividends and meaningful share repurchases. I should note that our share repurchases in the third quarter was lighter than prior quarters totaling just under $5,000,000 relative to a total of approximately $64,000,000 in share repurchases year to date. In closing, we really like where we sit both financially and strategically, Even more so since recent M and A disruption in Texas accentuates our key differentiation among the only truly focused franchises with scale in a competitive landscape comprised of increasingly larger out of state competitors. We’ve built a strong balance sheet that can support quality growth and with growth we’re positioned to deliver positive operating leverage through adding scale to the Stellar Bank platform while maintaining the financial flexibility to be opportunistic.

Thank

Bob Franklin, CEO, Stellar Bancorp: you.

Speaker 4: And I will now turn the

Bob Franklin, CEO, Stellar Bancorp: call back over to Bob. Thank you, Paul. And operator, we’re ready for questions.

Audra, Conference Operator: Thank you. We’ll take our first question from David Feaster at Raymond James.

David Feaster, Analyst, Raymond James: Hi, good morning everybody. Good morning.

Analyst, Raymond James: I just wanted to start on let’s start on the growth side. I know somewhat of the decline is strategic and we’ve talked about that given your focus on a balanced approach. But I just wanted to get a sense on, first off, what’s driving the payoffs and paydowns? How much of that is competition versus just asset sales and those kinds of things? And then just how do you think about the growth outlook as we look forward?

I mean Texas is a very competitive market on one hand and that’s maybe that could be a headwind, but at the same time you talk about the disruption and that creates a ton of opportunities just given the strength of your franchise and your relationships. Just wanted to kind of taking that altogether, like how do you think about growth and just any insights you can provide on that?

David Feaster, Analyst, Raymond James: Sure, David. Yes, so start maybe a little bit with what’s impacting the growth as when we talk about the payoffs like you asked the color around that. Payoffs this last quarter were about $50,000,000 more than the previous quarter. So we’ve talked about a run rate of around $300,000,000 of payoffs. They were $330,000,000 in the last quarter.

Year to date, about 44% of our payoffs are related to sale of collateral, sale of business. About 25% is kind of in that competitive area of refinance elsewhere. So those are the things that we’re that we take a look at around. One, and as Bob already mentioned, us remaining disappointed around full relationships. So some of that, it will go away.

But on that refinance elsewhere if we put our best foot forward to try to keep some of that, but that’s some of what we’re faced with. On the other component of that in the waterfall is we call it we’ve talked about it before, we call it carried, which is our advances versus our pay downs and scheduled payments. And as Paul mentioned, we had a reserve related to unfunded that continues to grow, but we’re still not seeing the lift from that. So compared to the previous quarter that was almost another $50,000,000 of increase in payments and pay downs exceeding the advances. So that’s an area where we think we will get a lift as we continue to originate loans.

We’re really pleased with the originations. Last quarter the third quarter, we originated almost $500,000,000 of loans compared to $640,000,000 the previous quarter. But the real thing that I think we want to make sure we communicate is just overall year to date compared to last year first three quarters we’re up 62% of loan originations and the mix that we like with a little bit more C and I in that mix. So things are heading in the right direction. We just have to continue to convert on our pipeline and pipeline remains healthy.

I think a little bit of the originations that were down compared to the previous quarter were really due to in some cases there’s it’s competitive obviously, but also just some things that are going to get pushed into the fourth quarter. But the pipeline remains healthy and we’re really pleased with where we stand there.

Analyst, Raymond James: That’s great. Maybe touching on the credit side a little bit. Concerns are they have gotten heightened in the industry right now. I guess first, I was hoping you could maybe touch on what are you seeing on the credit front? Is there anything that you’re seeing broadly that’s causing you any concern?

And then secondarily, I was just hoping you could maybe touch a bit on your approach to credit, collateral management, stress testing, ongoing monitoring. It seems like some of those are what’s maybe investors are concerned about in the industry. So just was hoping you could elaborate maybe a little bit on your process and your approach to managing credit.

Bob Franklin, CEO, Stellar Bancorp: Yes. I think the best way to manage credit is when they come in through the front door, David. I mean, so that’s how we manage credit most of the time. However, we do stress testing. We do all the things that folks do to monitor portfolios.

And we’re moving our portfolio from what was two smaller community banks into a larger community bank. And it has a different look. I think you’ve seen it on our balance sheet as we’ve gone from where we used to run our banks, let’s say 90% to 100 loan to deposits. We’re now down about in the low 80s and feel comfortable there. We’re able to make money there.

We’re changing the mix a bit to try to have a little more emphasis on stickier C and I credits. Now we do we are very careful about how we approach C and I and how that’s getting monitored and what we do to make sure that we have solid results around C and I. But we also continue to do real estate loans and those things have been good to us over the years. We’re in a market that continues to grow and so real estate continues to be a good active place for us to put money. So we’re I think we would be more concerned if we were in a less dynamic market, but we’re in a very dynamic market.

All the things that are affecting the world for that matter with tariffs and the various things that are happening today, I think are being absorbed pretty well in Houston and Dallas and the markets that we’re in, Beaumont. So we feel supported by our markets and I think it’s about decision making with them and that’s kind of how we approach it.

Analyst, Raymond James: Okay. That’s helpful. And then just wanted to maybe switch gears to the deposit side. I mean your growth was really strong this quarter, cost declined. Just wanted to get a sense of some of the drivers behind that.

How much of that is new clients versus increasing the liquidity or relationships with existing clients? And then just again with the liquidity build, I mean, after paying down borrowings and buy a little bit of securities, just kind of curious what your plans are for some of that excess liquidity going forward?

Bob Franklin, CEO, Stellar Bancorp: David, I’ll touch well,

Will Jones, Analyst, KBW: let me touch real quick

David Feaster, Analyst, Raymond James: on the deposits on the deposit growth piece. So really pleased there as we’ve already mentioned. Of our new deposits that were onboarded in the quarter, 51% were to new customers that had not been here before. And we’ve seen that kind of hover in that 40% to 50% all year, which we really like. And we think that’s really a reflection of continued brand awareness of Stellar, our bankers that are really having good success with market share gains.

We’ve had improvement in our Net Promoter Score really getting into like a best in class area there and customer satisfaction is all heading in the right direction. I think that just points to the fact that we continue to bring new customers to the bank as well as this expansion of our existing customer base, which represents that other 50%. Really the growth is really around those new accounts and the deposits associated in that that are well exceeding in dollar amount, the closed accounts and our carry was nice and gave us a little lift.

Bob Franklin, CEO, Stellar Bancorp: David, we just feel very strongly that low cost deposits is something that everyone’s going to be fighting over and something we put a big emphasis on in any relationship that we have. And so we’re going to continue to do that. I think we’ve seen some success as we did this quarter and hopefully we’ll continue to see that as we keep the push on that going forward. We are building some liquidity and I think deploying that both in loans and securities is something that we intend to do in the future. But we want to grow the loan portfolio.

We want to that’s where we grow customers and that’s how we continue to grow the bank. And it’s important to us to continue on that block. A lot of turmoil in our markets, a lot of M and A going on, a lot of so it’s given us opportunity for customers. It’s given us opportunity for new employees and people to join our company, which is great. I think it’s but it’s also had some negatives to it and that you got new players in that want to buy the market and you’re seeing some interesting things around not only pricing, but covenant packages and sort of credit light.

And we’re not going to join that party. That one doesn’t fit us and if we have to retreat a little bit, we’ll do it. But we’ve been operating in a competitive market for a long time. We feel like we know how to do that. We’ll get our share.

And if we continue to do the right things, which I think we are, from a customer acquisition standpoint, we’ll continue to we’ll grow the bank. So that’s kind of how we’re approaching it.

David Feaster, Analyst, Raymond James: That’s helpful. Thanks everybody.

Bob Franklin, CEO, Stellar Bancorp: Thanks, David.

Audra, Conference Operator: We’ll move next to Stephen Scouten at Piper Sandler.

Speaker 4: Hey, good morning everyone. Just following up on the deposits quickly. You tended to have some seasonal strength in the fourth quarter. Is that something you would expect here this coming quarter as well?

Paul Eggie, CFO, Stellar Bancorp: We talk about that all the time because we do have seasonal strength with some of our government banking deposits. And in fact, last year we had about a $200,000,000 deposits that came in, in the last day of 2024. It’s kind of hard to predict as it relates to that. We’ll keep you guys abreast if there’s anything that majorly kind of creates a meaningful deviation from norm as we did I think last year and telling you all just how much represents what we would call seasonal excess. So we’ll note that when we report the third quarter fourth quarter, I should say, if and when some of that tax revenue seasonality comes in before year end.

A lot of it really hits in January and February and it’s kind of gone by March. But sometimes and last year was a great example where sometimes it comes in right before the end of the year.

Bob Franklin, CEO, Stellar Bancorp: But that’s not reflected in this quarter’s deposit growth. It doesn’t happen until late in the fourth quarter when those government deposits.

Paul Eggie, CFO, Stellar Bancorp: Precisely.

Speaker 4: Perfect. Great. That’s great color. When you were talking a little bit about the expense ratio saying it looked like this was maybe a bit of an outlier this quarter and can get back to that $70,000,000 level. What makes this quarter more of an outlier?

I know there was the severance payment in there, in salaries, but what makes this an outlier? And do you think that kind of $70,000,000 range is the level you can hang around in 2026? Should we see just some kind of general inflation build from here?

Paul Eggie, CFO, Stellar Bancorp: I’ll say to be more specific, I said that we’ll see fourth quarter earnings closer to our first quarter first half run rate than what we posted in the third quarter. So it might not be just as great as the $70,000,000 per quarter we were posting in the first half year, but definitely closer to that than the $73,000,000 we posted in the third quarter. Separately, will see some inflation. I mean, you guys know, we’ve been focused on holding the line where we can and really being focused on just that. We feel great about how we’ve been able to kind of stop the creep in expenses, particularly as it relates to a lot of what we had to build in crossing over the $10,000,000,000 threshold.

We’re in optimization mode on a go forward and we’ve been really pleased at how we’ve been able to do just that while remixing kind of with attrition and things along those lines in our human capital base. So we feel really good about where we sit and the goal is to continue optimizing and holding the line as much as we can going into 2026 and beyond.

Audra, Conference Operator: Next we’ll move to Will Jones at KBW.

Will Jones, Analyst, KBW: Hey, great. Thanks. Good morning, guys.

David Feaster, Analyst, Raymond James: Hey, Will.

Will Jones, Analyst, KBW: Hey, so Paul, maybe just sticking with you and moving to the margin discussion. I mean, if you exclude purchase accounting, we’ve kind of hit that 4%, and those on that felt like kind of the overarching near term target for you guys. And I go back to your comments on the call about feeling good about the ability just to defend that level, if not even improve from here. But as we think about this next period of Fed easing, will that ability to defend will that really be more of just some tailwinds from fixed repricing? Or do you intend to be relatively aggressive lowering deposit costs from here?

Paul Eggie, CFO, Stellar Bancorp: We’re going to be focused on lowering deposit costs where we can. Predominantly, it’s going to be on more of your specials and exception level pricing. Naturally, we’ve got some index pricing for certain deposit products that we’re going get immediate benefit from when rates change. So we feel really good about kind of the initial repricing dynamics.

Matt Olney, Analyst, Stephens: And then separately, there

Paul Eggie, CFO, Stellar Bancorp: is some tail trends that are helping us in how our securities and loans reprice. So we’re still in a kind of a pretty good backdrop to defend that margin. As the deck gets reshuffled at every rate cut, there could be some timing distinctions. But we feel like we’ve got the benefits are likely to sufficiently mitigate the drawbacks of how those re pricings go on. So we’re feeling good about the penny.

Actually, we’re pleasantly surprised to have gotten to the 4% NIM excluding purchase accounting accretion as fast as we did. Certainly did not promise that to the market and do not expect it necessarily to materialize as quick, but we’re really pleased that we were able to do that notwithstanding being a little less loaned up than what our budget and forecasts are in our plans to drive loan growth really are.

Will Jones, Analyst, KBW: Yes. I mean, well done there. And could you just remind us, is there a kind of a terminal interest bearing deposit beta that you guys are trying to manage through this cycle? Maybe just as you look at what you were able to accomplish on the up rate cycle?

Paul Eggie, CFO, Stellar Bancorp: We don’t necessarily think of it in terminal basis. We’re trying to gain as much ground as we can where we can. So just like on the upswing where we didn’t we weren’t as aggressive in necessarily moving a lot of our kind of base sheet rates and we’re more focused on, okay, how do we manage this exception population and what we and this index population? How do you really manage your most price sensitive customers on the deposit side? And we’re going to continue to do that on the way down.

And it’s a nuanced approach. We feel like we’re approaching it with more discipline than we really ever have in having a game plan for every rate cut and being ready to manage all those conversations and really get the highest beta out of our most out of our largest absolute value exception customers. And that’s all the reason we’ll ask. And it so far has functioned pretty well in the September rate cut. So we’ll follow the same game plan as we go forward.

Will Jones, Analyst, KBW: Yes. Okay. And then maybe to follow-up, as we’ve talked about deposits and the growth that’s happened there and kind of the excess liquidity that you have as a result. If we do continue to find the pay down bug a little bit and to the extent loans don’t really ramp up in growth meaningfully in the near term, could you look to be a little more opportunistic adding to the bond book from here?

Paul Eggie, CFO, Stellar Bancorp: It’s definitely an option and it’s something that we talk about every day, really what is the right size of the bond book, how do we manage our balance sheet best. We feel awesome about the fact that we’re building an even more fortress like balance sheet with strong capital, strong liquidity and a really nice foundation to grow upon. So we think that flexibility can allow us to be opportunistic when more meaningful loan growth presents itself or when other strategic opportunities can present themselves. So we are very pleased to be having a very healthy and strong balance sheet.

Will Jones, Analyst, KBW: Yes. Okay. Fair enough. That’s it for me guys. Thank you.

Bob Franklin, CEO, Stellar Bancorp: Thanks, Greg.

Audra, Conference Operator: We’ll go next to Matt Olney at Stephens.

Matt Olney, Analyst, Stephens: Thanks. Good morning. I want to circle back on the loan growth discussion. And we talked about the elevated payoffs a few minutes ago. I’m just curious when do you expect this to slow?

I mean, we’re seeing rates move lower in the fourth quarter and expectation that continues now for a little bit more. I would think that would just create more payoffs, not less, but just curious what your expectations are as when we could see this pressure ease up? Thanks.

David Feaster, Analyst, Raymond James: Hey Matt. So one of the things that we will get a lift we will get a lift from our advances exceeding our pay downs and payments and that’s when you go back and look at our history of when we were getting a lift, it patterns kind of this matches up with our loan origination. So as we said, we’ve loan originations were up 62%. We will get some lift there, whether that’s we may be a couple of quarters away from that helping us and not taking away from loan growth. So that’s kind of in the good news category.

I think we’re going to have to manage through the fact that we’ve got the way the portfolio, the nature of the portfolio of this $350,000,000 of payoffs that we have and we’ll do our best to try to limit that through some of those loans that we’re financing elsewhere to put our best foot forward. But the real story is going to be on that side. It’s going to be the funded portion of the new loans that we originate. So our pipeline again our pipeline is healthy. If we’re in this like last quarter $600,000,000 of origination that’s getting us closer to where that will get the fundings even with the payoffs to get us as you know last quarter we had a slight gain and or slight increase in net funded loan balances.

So it’s just it’s a matter of delivering on that pipeline and continuing on path that we’ve seen in the last couple of quarters and really year to date. We said before that we thought growth would manifest in the second half of the year. Of course, we saw the fourth quarter, but going into 2026, we feel good that we will pivot to that.

Matt Olney, Analyst, Stephens: Okay. Appreciate that, Ray. And also want to get the updated thoughts around M and A. We’re definitely seeing more M and A deal announcements in your backyard. Curious about the conversations you’re having with strategic partners and expectations for finding a partner for Seller Bank.

Thanks.

Bob Franklin, CEO, Stellar Bancorp: Yes, Matt. We continue to have conversations. We’ve talked to a lot of folks. I think it seems some transactions that we’ve had some interest in and some not. But I think the thing to remember and the thing that we want everyone to understand is that we’re very protective of the balance sheet that we’ve built and the deposit base that we’ve built.

And as we look at partners out there and how they’ve structured their funding, it would be it would not behoove us to join somebody that takes away from the funding base that we have just to be larger. So I think what we want to do is make sure that we find the right partners to think about the world the same way we do and find themselves in a similar fashion. So we continue to have conversations. I think there’s a possibility that we can be active in this space, but we’re going to be careful about how we approach it.

Matt Olney, Analyst, Stephens: Okay. Thanks for the commentary and agree it’s high class problem to have protecting the balance sheet. And just lastly from me, I guess over to Paul. Paul, I heard you mentioned the purchase accounting accretion in prepared remarks. Looking for the updated fair value mark on that portfolio.

Paul Eggie, CFO, Stellar Bancorp: I believe that’s $58,100,000 is what’s left of the loan discount.

Matt Olney, Analyst, Stephens: Perfect. Okay, guys. Thanks for your help.

Bob Franklin, CEO, Stellar Bancorp: Thanks, Matt. And

Audra, Conference Operator: that concludes our Q and A session. I will now turn the conference back over to Bob Franklin for closing remarks.

Bob Franklin, CEO, Stellar Bancorp: Thank you very much for joining our call today. And with that, we are adjourned.

Audra, Conference Operator: And this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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