Texas-based commercial bank Stellar Bancorp (NYSE: STEL) fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 2.5% year on year to $104.2 million. Its GAAP profit of $0.51 per share was 14.3% above analysts’ consensus estimates.
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Stellar Bancorp (STEL) Q2 CY2025 Highlights:
- Net Interest Income: $98.34 million vs analyst estimates of $99.71 million (3% year-on-year decline, 1.4% miss)
- Net Interest Margin: 4.2% vs analyst estimates of 4.2% (6 basis point year-on-year decrease, 4.6 bps miss)
- Revenue: $104.2 million vs analyst estimates of $104.9 million (2.5% year-on-year decline, 0.7% miss)
- Efficiency Ratio: 61.9% vs analyst estimates of 69% (7.1 percentage point beat)
- EPS (GAAP): $0.51 vs analyst estimates of $0.45 (14.3% beat)
- Market Capitalization: $1.62 billion
“We are pleased to report our second quarter results that reflect the efforts of our team beginning to add growth to the foundation we’ve built at Stellar Bank,” said Robert R. Franklin, Jr., Stellar’s Chief Executive Officer.
Company Overview
Created through strategic mergers to serve the growing Texas business community, Stellar Bancorp (NYSE: STEL) is a Texas bank holding company that provides commercial banking services primarily to small and medium-sized businesses and professionals.
Sales Growth
Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities.
Thankfully, Stellar Bancorp’s 21.6% annualized revenue growth over the last five years was incredible. Its growth beat the average bank company and shows its offerings resonate with customers.
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Stellar Bancorp’s recent performance shows its demand has slowed significantly as its revenue was flat over the last two years. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, Stellar Bancorp missed Wall Street’s estimates and reported a rather uninspiring 2.5% year-on-year revenue decline, generating $104.2 million of revenue.
Net interest income made up 97% of the company’s total revenue during the last five years, meaning Stellar Bancorp lives and dies by its lending activities because non-interest income barely moves the needle.
While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.
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Tangible Book Value Per Share (TBVPS)
Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.
This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.
Stellar Bancorp’s TBVPS declined at a 3.7% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 13.1% annually over the last two years from $15.60 to $19.94 per share.
Over the next 12 months, Consensus estimates call for Stellar Bancorp’s TBVPS to grow by 7.7% to $21.47, decent growth rate.
Key Takeaways from Stellar Bancorp’s Q2 Results
We enjoyed seeing Stellar Bancorp beat analysts’ EPS expectations this quarter. On the other hand, its net interest income slightly missed and its revenue fell slightly short of Wall Street’s estimates. Overall, this quarter was mixed. The stock remained flat at $31.53 immediately following the results.
So do we think Stellar Bancorp is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
