Earnings call transcript Q4 2022

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Operator

Good day and thank you for standing by. Welcome to the Stellar Bancorp Inc. Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. advised is be recorded. Please Instructions] today’s being conference [Operator

Bank. conference to your Chief I Stellar like the Accounting go over of Theriot, would now Courtney hand to ahead. to speaker Officer Please today

Courtney Theriot

Egge. by and and This today. would earnings morning’s will call call earnings morning joined to fourth CFO the led welcome We thank who call like all Good have Stellar’s to quarter Franklin our for you Paul to CEO Bob our you of be XXXX.

attendance Steve of the company Bank are in Executive company; of Bank. Ray Executive and the Credit of Also Executive Chairman Chief the Senior today Retzloff, of President West, Vitulli, the and and Officer Vice President Joe CEO

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

I Franklin. now our call over CEO, the turn to Bob

Robert Franklin

by Welcome ever to staff and is bank thanking effort Corp’s organization. organization. I good and fourth to working all begin responding This first is tirelessly Stellar our Stellar outstanding will combined the earnings an that make call is an team to Thank and you, challenge. Bank our our Courtney, morning. Bank quarter team dedicated

by integration a of our of We in an of February operating important we XXXX. in system this successful divided two solidifying are systems, the supporting in conversion engaged Completion fully two are is but step banks. combination

with statement, The The fourth sheet with our at into adjusted by associated look fourth market expenses. with provisions. purchase provide expenses along adjustments, insight with us first is accounting income merger X a balance one accounting quarter quarter which provides the for day valuations and both related dominated will merger our our and purchase

Our the core goal the of to a combination. earnings core our and our is reader guide franchise power help reveal by to created financials today

current the given decision business that have the in been making, economic We we credit. proactive best our Throughout rate current also our and the on and environment. liquidity, to fourth decisions focus fit capital make quarter, environment interest look

First more make we economic we challenging care of proper as took environment. reserves a turn all, to into

would that the indicated which certainty, to some those great of some at today credits, our CBTX net realize for values opting sell than value. term allowed challenge Secondly, to of securities opportune or marks. to credits, bolster been to credits challenge market and liquidity. our mark having market an we with transaction, the have us securities And felt own securities the greater for time allowed outcomes, uncertain portfolio We we classified sold and our decreased our longer more workouts which

that very environment interest interest rapid affected were increasing interest a between of approval Reserve by by was our in a moving team changes timing been Paul target. provide financials. purchase and Later, at and and the rates marks factor a the Federal final rate more the have detail to rates announcement our closing the to the will changed significantly aid the understanding key pace. approval, Regulatory Therefore,

majority a of done. results. And have work the is Today, chance we that had to review a

the more of We term this bullish have financial combination. long on success never been

deliver our in employees, customers, our to for better. our operate our constituencies, shareholders, never we ability which Our our communities has been and

know environment. of will unclear, However, previous effects term, on cannot vigilant end of learned interest our economy ignore as be the rate we contain economic to in the and near taking inflation. in Federal our cautious. and be The to to cycle but cycles remains actions we Reserve is the slow operating lessons the our customers this We from

bank liquidity capital, and stay our our disciplined continue managing will to Bank. in the we credit and as We our Stellar build

resides Our the robust of economies of one most franchise country. in the

determined is Our will stay future shareholder to bright, and value. we increase long-term

that belief promise. is is well that Bank to positioned deliver Stellar Our on

I will Paul call over now the Egge to turn

Paul Egge

Thanks Good Rob. morning, everybody.

a be are pleased our We October. first as very company combined to our quarter of effective reporting on the as first day went merger

the end all Stellar. purposes, transformative of questions. financial of comparative commentary contain Thinking information he'll year the operating performance and open ABTX turn outlook. our it combined the my of Bob what the our call relative all XXXX, with up nature condition our shares of Legacy the now most for financial to and For back what takeaways adjusted historical share at per merger to on salient Stellar, to are and numbers our believe we to I'll create merger. focus it results accounting will from Then means financial given the QX But for filings reporting the for and reverse I

amount other information. there's Before note adjustments, referencing of a while investor non-GAAP detail items, in I'll directly included merger be diving in, presentation and I accounting that won't regarding the the good accompanying presentation,

the with we purchase I'll executed impact the from the quarter. and our strategies financial accounting which So start condition, reflects in fourth

and quarter. year assets accounting for results with We ended merger the of $XX.X in operations after the for the billion

of losses was already securities accounted the to in merger. call, fair As the $XXX.X where we the from purchase to after book more the value the to time equity on combination $XX.X related. and loan But more given impact goodwill value rate tax. value was The yield led of merger, resulting the AOCI, were were value incrementally impact the effective of third over share. of million accounting for our totaled bringing curve as previewed interest in portfolio meaningful even the fair per CBTX items capital adjustments these tangible was portfolio loan amounting quarter million The the the mostly at in mark at significant in portfolio impacting fair

effectively XXX Going was core the that deposit next The million the through accounting loan pretty back increasing over acquired life significant merger purchase $XXX.X adjustment the land. counting mark of forward significant yield the loan in of will deposits, the earn X.XX% composition most and the created totaled high the This yield CBTX of merger. reflective the of intangible the of core deposit quality curve relatively at approximately which of franchise. high and nature is

through million for related merger XX year’s of will which provision the million, note $XX.X X an unfunded commitments loans The some significant The running accelerated loans a basis losses I'll on this over method. be with for loan item the along purchase last totaled is offset revenue years of using X income from accounting partial amortized statement. non-PCD on provision expense And beneficial digits a the Day increasing dynamic $X mart. Day represents resulting CDI of CECL, under the to loan

of around increase of loans I $XXX did allowance credit million. after run market billion not quarter, we merger during reflects -- what quarter million loan which the in losses over growth the with $X.XX loans, We loan represents quarters related which also PCD income lands, fair dynamics. quarter bought in appropriate like prior for an mentioned deceleration previously for the given on statement. in through the value we the progress ended from feel marked an on $X.X This current adjusting is over

way deposits. XX.X% our totaling of this deposit feel with an Even the we billion in saw million, at deposits. by noninterest-bearing came XXXX. XX noninterest-bearing deposits we the saw million deposits $X.XX being great decrease we During $XX from the of combined a at $XXX.X million of quarter composition our increase $X.XX quarter, of interest about decrease $X to incremental deposits $XXX.X bearing in billion transactional, though end

markets The market. cost has bearing our current increase continued deposit interest a competitive reflective industry and of of deposits to fiercely

we've XXXX, go-forward dynamics, speaking. sheet capital our we're very able relatively levels going Strategically strong really with a and good So how a particularly balance considering these healthy XX.X% been power into earnings solid loan ratio our support feel we to positioning manage pleased of quarter capital about deposit to bill.

[ph] were earnings, fourth quarter Failing our results noisy. the

in which ABTX obscure the were $X.XX bottom and Our Stellar the and non-recurring trends million headline numbers by operating CBTX positive merger items, continuation impacted income in EPS. to of combination. net $X.X many These both into is related translating brought line significantly

loan the funds this, Headline was proud Thanks margin market after revenue for was interest net adjusting and profile, adjusted scanning part, income counting after interest driving were our upward. But interest net to we're and in purchase increasing of strong. excluding X.XX%. X.XX% cost extremely margin accretion, dynamics for even net very of notwithstanding NIM First, yields.

purchase Purchase behavior counting be driven portfolio. paydown recognition in accretion million the of and The acquired accounting accretion quarter. scheduled future $X.X non-scheduled will with by in the

of are between accretion rate yield. expectations loans recognize that the $XX environment. lower our by early income purchase current in This be yielding Our into current will XXXX for $XX down will expectation pay accounting driven to million fewer partially and would million be interest

million amounted totaling provision million, economic outside our $XX.X note provision to $XX.X $X for on credit income reserves. We that provisioning hit provision But on our million. the reflective in to not and merger in to more PCD on changes down quarter growth $XX.X to that unfunded specific loan non-PCD excluding loan losses increasing on the Walking an million given and view commitments, conservative statement, after accounting it's the important it's uncertainty, of quarterly that this loans, for pay of discussion. in hard notice

X.X% allowance The at losses of total year the million, loans. or credit for $XX.X ended

of And came gains of the by mentioned net totaling I on, the this quarter, assets. $X strategic related earnings also with moving a that prior and $X.X These we the a mentioned, the charge-off into the sale which our again, good support than income, did most we the of proactive to was our marks sale came $XX.X million number remainder discussed more Before just gains this securities And these of totaling on liquidity higher to actual sale have million, segway loans This $XXX other we during million -- million usual meaningful sale that to came $X.X which million million. and in related and million should $X.X is profile. than these the call. month. October loan non-interest branch about netted sale that such over despite $X from in bolstered charge-off. acquired from we our note Bob

recognition the merger to to Moving merger into $XX.X the quarter. expense. the of elevated in million non-interest the due our introduction on totaled is $X.X CDI in which base, of expenses million This amortization in quarter for related expense

from operating since addition and of an expenses negative environment. to CDI expense, During merger the prior our of noise CBTX without result good XXXX inflationary $XX.X line analysis. the exceptional total doing in introduction an we're deals. feel being $X.X in the And fourth expenses scheduled on hindering M&A ABTX both able from the this to growth million CDI proud in do quarter, will million the a core the amortization of the amortization in otherwise very in expense aside very merger scheduled holding non-interest job about expense Holding amortization we CDI

related in standpoint, performance accounting non-recurring earnings of drive we Stellar pre-provision we remaining average overall amortization at be and operating the to merger good assets. of related at strong non-recurring, quarter CDI where the amortization, additive operating builds. will core this power, exceed earnings And our power to power expect bar related expenses, non-recurring that X.XX% fourth merger merger. We the items From we trades the when rapid -- earnings set for the purchase represents feel purchase capital noise you accretion since believe gains, CDI about subsides, our merger once and core adjusted will accretion merger $XX after excluding pretax, This in accounting million. very an the the accounting

we range and our credit, which combined we pretty In a economic feel liquidity, summary, wide good positioning scenarios. on know about will earnings, prepare of capital for us

XXXX positioned absolute we we into from strategic and can XXXX advance and financial We the look merger. notwithstanding hyper and well the relative focused feel gains our maintaining challenges As beyond, on business, advance our and to bring. potential are

I turn back Thank to you. will over And Bob. now call the

Robert Franklin

trying Thanks, Paul. be kind to answer we'll get questions quarter. And through folks happy of some noisy to around this help

for operator, So, questions. ready we're

Operator

Raymond with first comes David of our line And the [Operator Instructions] James. Feaster from question

Your line Please is open. go ahead.

David Feaster

give but economic Hey, was good some color maybe, the just us start economy's strong, us demand uncertain. hoping appetite backdrop trending? give for to also your credit. wanted Obviously, obviously, a you bit just I how then pulse from the economic backdrop of in on could on Houston. kind just if morning, client, everybody. your your I is with perspective the a is for you mean, loans could And I

So seeing this risk do adjusted ultimately, think seeing? good where And year? growth are about you how you for are you still Where loan returns?

Ray Vitulli

David, I'll start is that. This Ray. on

in strong good. On December. the don't that's looks maybe XXX,XXX be in And, the the a in for economic year. down numbers yet. tapered and Houston have But -- job We job But growth strong. expected a -- full that still, still year, background XX somewhere is bit is there's to had which little around

a the itself Our originations in through presented into was a so Think we quarter, pipeline the than combined that and on quarter. fourth strong. third then little was really XXX about or manifested fourth going in a in less it, basis. about less the but quarter still knew And about really prior And quarter. we the quarter, the fourth billion

did demand kind tapered our originations. in knowing a it just bit and little had that of that So the way pipeline, that manifest

probably message kind of let I'll how lending, that's even the a the we our as approach think the to still low of Bob. talk And overall, still turn the But, it pipeline, about digits, XX, mid-single think around but have uncertainties in of healthy economic kind but I in environment. in XXXX. growth that about Bob even over to all our we to about given think loan we've,

Robert Franklin

to in uncertainty. happen uncertainty, Yes, as likes for David, adjust I what which well, think future, may is us what the to we're nobody trying is

stuff. I to be of think front this need we in

continue trying rate making slows low the that get in rates rising rising they we're we're, see And at that these we things. So to rise a to customers underwriting, buy right do the first, our credit cap interest sure at down the interest find to -- are difficult enhancing also these very we they get these where cycles But things it bit. to it’s ignored, assets. start buy to then things are rates of sort rates, finance, and at the environments,

of cycles really start those So repricing you of to see assets.

the lot going now again. where are is down talk point to of hesitant, come the to get we then So people back because there's a when about rate

want So come maybe you people I'm borrow hold give to at off my on going project until rates down, to I X%. don't

we're a in a of there's of there's So that phase uncertainty. lot lot where

robust so to what in and pipeline. but have the move growth And not still that we as some in substantial want pretty we a we cycle, be decent but through around as as had XXXX, It's have loan we we cautious XXXX.

we think possibly the on going we Fed, and the a think to So quarter do continue to we have believe around Fed five that rates number. is

the for of be have that. to we prepared so effects And

watching So on. put we're watching we what our portfolio and

David Feaster

increased same identified that really the of that maybe to any could us you've that wanted the update that about And, and timing whether integration target. track, just any the and given to this overall I you other And the get makes makes and of opportune, decelerate there's to the on deal the expense I the was is then, upcoming. and is just so scale given maybe on along pull line, backdrop. still synergy change growth synergies timeline timing help whether of was just hoping conversion we the levers update, to that just think, an where Okay, I kind talked sense. economic

Robert Franklin

offsetting a has environment. what's inflationary in been It the change been synergy invaluable very in really No target.

and end we've from to pulled perhaps through this able As going things there to of success a you point lot way by to line hold compared mid-year. up prior calls, been know merger the relatively of savings will kind be really of at all to the on small almost that cost getting We're that's There's there. couple relatively the the overall a absolutely off finish to to, saves. items cost expense XXXX. low, of But drop

continue a of cost And to and these confront feel potentially just with the into we to because when also, to we times. more more off offense. off hitting scale merger, levers we'll get like uncertain combined pursue And savings. time on we're the merger And do gives lot additional better times it's when financial more uncertain we levers. appreciate be back on timing us to going flexibility, fortuitous I you're this have better

Ray Vitulli

And we are scheduled for conversion.

David Feaster

Terrific.

just CDI that's million a base so touched pretty And of a $XX core starting you run of basis. some but $XX kind on impacts, and that million, good the kind this those of on rates, this

Paul Egge

high. at kind I [Indiscernible] of look Actually, core expenses.

broad for right a of target, that opportunities. and that have a But shy along large introduction XXXX. or the XXX the going currently non-merger function year, our execution CDI from there's And coming probably in XXXX, the as not you But is be away quarters Naturally, chop that If Now related expense into that's and opportunities. run from give what's core to expenses people of you in by merger. us. will way over target non-redundant going investments fit. very or our see can you of coming to the take. We're [ph] come

David Feaster

Was that XXX or XXX?

Paul Egge

XXX [indiscernible], of course.

David Feaster

just then me, in million one wanted to touch sales. last on Got it. And loan $XX for I the

just was just you pool a potential What us issues, give if little backdrop just We're we some cleaning just deal Were in did want we're bit of back there the some curious, then side, this is kind some any given allegiance uncertain pull us you of that? up this ahead sell? on the things or that makes at the like kind Sounds or to you're saying of on bit CVPX maybe a getting color cautious And and on this But point? anything? where these anything both? something or or unique issues.

Robert Franklin

we hangover had, unique COVID. what's that to David, Yes basically it the them we have was is from

alive out. about for to what trying term really to were having credits, might rocking They were real was along, be on with be us as post struggling put anyway. we credits four we to were uncertainty But So that or heavy to were end the it at be. five And COVID. and had worked marks workouts long they still pretty still those going

So we able portfolios those inside to marks. were be. losses we opted for come around our certainty might those as And what

So did. piece of that's of that's clear really why sort the we COVID We that.

David Feaster

it. Got everybody. That sense. makes Thanks,

Robert Franklin

everybody. Thanks,

Operator

Thank one for question. moment our you. Brad the Piper from next And Sandler. of Milsaps question And line our next comes with

Please open. is go line Your ahead.

Brad Milsaps

Hey, as margin. the sense the think the could forward as hard Paul, an wanted and combined or loan or kind give interest asset maybe with NIM? Thanks kind your you impact beta morning, about bearing of for total well would good will Maybe going updated interest feel of, all core the, data what that company, earning deposit I the us be your the coordinate to of guys. color. start to maybe like how you at

Paul Egge

very the overall overall deposit down spring really in This the Certainly. up that if end betas different Well, cumulative And of had ways And really deposit this a certain holding of hanging from our benefited teens overall, cycle of where here been obviously relating large down of you is lot low and of calculated beta that cost data. point. hugely we're on the to actually to that measure portfolio. acceleration people powerful -- deposit a our base. but of quarter, we're that's in fourth kind proud funds the we've the cumulative in low is

be of betas loan giving as wait some are ultimately, loans to going we opportunities. our our to loans, a really, changed function And have repricing for to move And there. time for

a the little seen cost accelerate side. good kind Ray on overall of of can for of give the that portfolio. the start repricing loan to deposit little asset the on So more things probably the we're, the fact comment we've we of feel time more composition notwithstanding a pace to that But about

Ray Vitulli

the which least average the loans those for little of in way it a And of increase rate that the to loan on quarter. sell Loans from at yield a a fourth loans of on quarter there's the the the bit then of have on XXX. nice towards average color previous to on entire came XXX, write or quarter, And coming side little half just are was did quarter. the we at a -- kind last weighted

loan rate, new So feel far as really on loans. rate good the as notes about those originations where the are, that

Brad Milsaps

Ray, versus me reprise new fixed? profile helpful. variable of of us the breakdown can of Stuff That's kind all you a give changes? that kind would

Ray Vitulli

floating. of the with Yes, we I'd obviously, around came on kind floating don't so And combination, are in the a think have through. and XX% higher combined the I have portfolio. total basis of in on But floating the had fixed, community concentration on we breaking a to we’re where handy. XX% I that

Brad Milsaps

Yes, look in just mean, beta the XX% was like sure. looked under I like the it lone quarter.

takes place. you're basically, this some should repricing So of improve continue to that as that

Ray Vitulli

Right. Got it. it. Got

set Okay. is Paul, CDI of I correctly. have like you the you that that up? over million in you'll XXX it? It loans, little about And over think so about million recognize XXX about or to think just, looks that discount Is that's that you that loss in the heard total versus of a I then, way

Paul Egge

in a we've about presentation. gave the in on will way scheduled the how accelerated expense comments. through. as That's an mentioned will We guidance little investor been that that bit think we're included to of basis. And CDI. that to I And But that you my come amortizing

Brad Milsaps

the and And know you loans you had it? Got cleaned that sold quarter. then up this I

But about come they tackling load your the of they, marks, Can a about a to core because of know, little be So loss how just kind how lot provisioning? guys companies for you of provision, lot sort Right. a us maybe I marks probably period there's curious that will you sort etcetera. of think time. low think and really moving parts of that CECL with certain provision. have a core of higher help of A together, and drove bit

Paul Egge

growth I loan We at net sit keep is of budgeting, loans. a believe that on our little how think it. future. there's it. in looking we in a is how expectations of for went And for that's prior we me, to at growth and definitely were X.X% got into we, loan a now economy. where And of continue of was that as piece we're kind periods. But little moving the our rule that relative we If to think XXXX. of allowance credit parts leaned There a right overseeing to we pardon big our of the net appropriate. the go a in we'll to lot bit bit looking finger provision, more for that's thumb lot conservative losses pulse a appropriate And

Brad Milsaps

the And me, rate just combined expense be CDI? for would number, tax it. good for clarity. Got what company? And final The then does for just XXX combined two a include then that

Paul Egge

expenses we'll CDI, but of that right, includes and first the that non-M&A doesn't All rolling fourth it on include I should say. quarter, quarter in be so expenses, measure mostly

make to the of part it the last was So distinction need the that question?

Brad Milsaps

rate cash the the combined just No for company.

Paul Egge

I And function of largely will portfolio. dynamic that over right, under a XX. it All here security put be

Brad Milsaps

Got I appreciate very it. Okay. it? much. you Thank

Operator

Thank moment for question. you. And next one our

Matt with from comes Olney Stephens. line of question Next

ahead. go Please open. is line Your

Matt Olney

Thanks. Good morning, everybody.

see could following rest of up Bob, your expenses. from last estimate from we year. remaining for the on what's question expenses the noncore Brad of Just on the that

Robert Franklin

might less. million $X in front loaded, About come end

Matt Olney

liquidity. we'll And to on head then

guess the for last amount XXXX? that the immediately are in you of you mentioned looking on kind the your think here, me some of existing I that call closing. I in Remind flow deal from cash securities And portfolio you from of securities. following sold securities what

Paul Egge

XXX just that securities, flows, following CBTX in shorter approximating the couple that Sure in represented And looking years. annual of the portfolio $XXX first over. a about which million million cash about thanks. year, of a the We sold sale, we're XX% at hair over brought was after

in securities to out us. significant coming of cash we position portfolio of liquidity a flow So from the perspective term, the see near a source better

Matt Olney

here. XX%. have the capital, Okay, thanks Paul. you right considered front, pretty for then the CTXs that on thoughts like on It the like profitability that, capital And around actions capital given build now? could updated general any feels being quickly other any looks But,

Paul Egge

we first lower be -- capital industry to accounting capital action We Obviously, build, to as function merger byproduct than we're both these, we carrying say merger. foremost, it and in with the we're used built. builds line. a capital the -- we're and to forward deal adjustments first ended a that I'd than these down good foremost, and the can expected is we ratios lower other seeing But carrying that the up environment, But stand. that is. where trade of put we're to comes initial better first given economy, look great capital we more rate going got more and with in the strategies. we've But see to build stream earnings uncertainties forward of wouldn't hit that about here. But want We environment. the consider feel forward out relatively the that is flexibility obviously give strategic the of to from environment. by a capital We on kind did seeing the fine interest it, that looking transitory because all of rapidly to be where us we it coming a current such way, this financial more capital

Matt Olney

presentation, the thanks And exclude from that, that expense the XXXX, in additional the in a million include previously, CDI then prior I for from the guess $X from Paul. point million or Okay, the transaction expected think mentioned you did $XX.X clarification I deals?

Paul Egge

That excludes.

Matt Olney

Excludes.

Okay.

So we'll that add well. as

guys. all me. from Okay, that's Thanks,

Paul Egge

Matt. Thanks,

Operator

question next KBW. And Instructions] [Operator from comes you. line Thank of the Jones our with Will

Please ahead. go open. is line Your

Will Jones

wanted the sounds a new here. like here expand bit just the It peak Paul, in I overhead repricing guys. you the a optimistic expect is deposit to and morning, little from bit getting us like on the side has costs give could opportunities you're opportunity Good quarter, with margin, whole picture just from commentary some also accelerate not of thanks. that maybe great, feels on margin Hey, discussion. it good follow on a a little Paul, guys from maybe upcoming new to loans But deals loan up reading hoping coming little fourth on was to margin the proceeds you on. this your here.

Paul Egge

we've it's, our it built into not XXXX protecting the extent a But feel but a focused will more crazy. we, on what we superlative there We're And of profile. margin big business we task is the possibility go-forward, and model to piece additional real is managers in profile upside, a the this merger. Certainly, add be on can about on that. we feel this like protecting to beyond that. And really through is focused we're the for incrementally, NIM protecting advances that the is it's

current by we're So environment. humbled the industry

extremely two we our to it's the and advantages competitive maintain ability But about of strategic out solid. merging absolute companies and there. our are bullish So here creating

Will Jones

post for guys Thank left loans of whole, any the there minimal of happy terms the super then CBTX helpful. good of more and a That’s the obviously as selling bonds. to think positions, wholesale a lifting and sheet spot. It's you wind done with, cash about Great. there's balance And close with some that. do is really to down reliance you thinking Are in just restructuring. the be where When a you of balance sheet about pieces heavy lot great that landed, in it, though, some moving close,

of range, mid-single the the into be a flexibility, you mentioned given I end least rate, high year guys like just at loan built on low coming could balance then aggressive more come maybe that? a bit little sheet, added in digit the at growth the did think but feel growth you you've And you to you the

Paul Egge

sheet all ultimate capital, ourselves higher in We strategic flexibility. we'll be to in the we of keep we afford to ourselves on the flexibility are a be the in pitch to But in just of hero to on those need that. position end And don't find the for be want that, continue managing we category [ph] want market be financial don't liquidity of subject. to to or to to high balance ourselves and a and the We want relating end our important credit. to a isn't ultimately, where high this be

Robert Franklin

relationship is I think to think, I it's is, to a core and And that core institution. celebrated. get time of value this a since been this funded an as the And better a Well recognize something we Yes. funding opportunity finally while this has been shine banking it's franchise.

going So operate. take for as to in options to feel try well far our the we're is And like we're off capitalized. good what that future. of We place going uncertain. grow -- and to franchise to Texas we're do. right thing times, rather also the it Houston, more than as utilize help the we at no table we see of us is But that. advantage through And, provides us to least backdrop there's challenge economic to challenged that Nothing as have. just a the sort be a And the move I'd

Will Jones

it you in have before, Yes, that guys Thanks Is just The And talked understood. belt? we to see, that the being just here. buyback, come it about and again, tool guys. totally if sneak fruition something tool can more in. a one I

forma idea pro you that that have an have now the and just any great. you capital, be of thoughts about Now, would

Paul Egge

love focused having belt going in as building value and that the having in a tool. we that on capital. flexibility are be But the tool tool term, value of to Sure, near we're we our always

Will Jones

Appreciate Thanks, got color. guys. the it. Yes,

Paul Egge

Thanks.

Operator

with please. question And Thank you. moment, follow a And up we do one Stephens. Matt from have Olney

go Your reopened. has line Please ahead.

Matt Olney

ask on to jump for want core about follow taking commentary some thanks more the the around Yes, the I Paul just margin. of up. and

the want core And margin you curious any and can us we other Should uncertainty protecting from kind comment? give to we you should sensitive that’s can weight in loss or around entering the bank perspective assume the being you sure I XXXX. of we that interpret margin? about a that said more protect rate you pretty interpret color that make think of period of time asset of Paul how

Paul Egge

– income net you'll what benefited in virtue our conservative. we models is, risk and standpoint. see maybe we've XXK. our an models generally being current from our on strategic, put of our more said, out you preview neutral excess relatively That betas when by then interest of we interpret I it and actually, more give at the are that juncture, And of a

it a sensitive there's, legacy. So still that it's historically that would I pronounced as with asset not lien, is to there, was there adjust say but as necessarily

Matt Olney

with mentioned? would the rate you and you bank current potentially are that, Okay. suggesting the satisfied characterize positioning Or And additional is future? that you is the interest be lien could there in actions the

Paul Egge

manage absolute bonus, of And and interest, of income meaningfully to net now. real how We our direction net and our is feel We're we it a the right able continually income interest goal the the sheet protect value the and real margin. to we're grow. evaluating good balance the direction, about

Matt Olney

it. Thanks, got guys. Okay,

Operator

to sure for like I'm Franklin you. remarks. over any Thank questions CEO Bob the hand And and to no conference back further further I'd

Robert Franklin

for their in thank and Stellar interest Bancorp. everyone Michelle, thanks you

Operator

conference you concludes This call. for today's participating. Thank

may a Everyone great have disconnect. You day. now

Stellar Bancorp (STEL) 27 Jan 232022 Q4 Earnings call transcript