Second Quarter 2025 Earnings Presentation .2
Forward-Looking Statements and Non-GAAP Financial Measures 2 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, statements about future financial performance of Stellar Bancorp, Inc. (the “Company”), operating results, plans, business and growth strategies, objectives, expectations and intentions, and other statements that are not historical facts, including 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 the Company. 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. GAAP Reconciliation of Non-GAAP Financial Measures Stellar’s management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Stellar believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and that management and investors benefit from referring to these non-GAAP financial measures in assessing Stellar’s performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, Stellar reviews pre-tax, pre-provision income, pre- tax pre-provision ROAA, tangible book value per share, return on average tangible equity, tangible equity to tangible assets and net interest margin (tax equivalent) excluding PAA for internal planning and forecasting purposes. Stellar has included in this earnings release information relating to these non-GAAP financial measures for the applicable periods presented. These non-GAAP measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which Stellar calculates the non-GAAP financial measures may differ from that of other companies reporting measures with similar names.
3 (1) Deposit market share based on FDIC data as of June 30, 2024. (2) Houston Region defined as the Houston-Pasadena-The Woodlands and Beaumont-Port Arthur MSAs; Excludes non-retail branches. (3) Purchase accounting accretion (“PAA”). Refer to the calculation of this non-GAAP financial measure and a reconciliation to its most directly comparable GAAP financial measure in the appendix. Houston’s Largest Regionally Focused Bank Valuable franchise in one of the best markets in the U.S. • 6th in deposit market share for Houston region(1)(2) • 1st in deposit market share for Texas-based banks in the Houston region(1)(2) • 10th in deposit market share for Texas-based banks in the State of Texas(1) • Noninterest-bearing deposits to total deposits of 36.7% at June 30, 2025 Strong core earnings power and capital position for second quarter 2025 • Net interest margin (tax equivalent) of 4.18% • Net interest margin (tax equivalent) excluding purchase accounting adjustments of 3.95%(3) • Total capital ratio (to risk weighted-assets) of 15.98% Banking Centers Banking Centers 6/30/2025 3/31/2025 10,493,010$ 10,434,887$ 7,287,347 7,283,133 8,673,614 8,562,713 84.02% 85.06% 4.18% 4.20% 3.95% 3.97% 36.71% 37.44% 15.98% 15.97%Estimated Total capital ratio (to risk-weighted assets) Net interest margin (tax equivalent) Net interest margin (tax equivalent) excluding PAA(3) Noninterest-bearing deposits to total deposits (Dollars in thousands) Total assets Total loans Total deposits Total loans to total deposits
$30.1 $25.3 $13.2 $9.0 $8.6 $7.8 $5.7 $5.7 $5.7 $5.3 $3.4 $3.0 $2.6 $2.4 $2.3 $2.1 $1.9 JPMorgan Wells Fargo BofA Zions PNC Frost Prosperity Cadence Woodforest Capital One Third Coast Comerica Truist BOK Regions Texas Capital Texas Independent Focused on Serving the Houston Region 4 Note: Deposit market share based on FDIC data as of June 30, 2024. 1) Houston Region defined as the Houston-Pasadena-The Woodlands and Beaumont-Port Arthur MSAs; Excludes non-retail branches. Source: S&P Capital IQ Pro. Stellar Houston Region Market Share(1) Deposits (dollars in billions) $150.8 Houston Percent of Houston Total Assets Region(1) Company Region Market Name ($B) Deposits ($B) Deposits (%) Share (%) JPMorgan 4,143 150.8 7.5 47.4 Wells Fargo 1,940 30.1 2.1 9.5 BofA 3,258 25.3 1.3 7.9 Zions 88 13.2 17.8 4.1 PNC 557 9.0 2.1 2.8 Stellar 11 8.6 97.6 2.7 Frost 49 7.8 19.1 2.4 Prosperity 40 5.7 20.5 1.8 Cadence 48 5.7 15.1 1.8 Woodforest 10 5.7 70.9 1.8 Capital One 480 5.3 1.4 1.7 Third Coast 4 3.4 87.4 1.1 Comerica 80 3.0 4.8 1.0 Truist 520 2.6 0.7 0.8 BOK 50 2.4 6.5 0.8 Regions 154 2.3 1.8 0.7 Texas Capital 30 2.1 8.7 0.7 Texas Independent 2 1.9 100 0.6
5 Q2 2025 Highlights (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix. The calculation of return on average tangible equity has been adjusted from prior period disclosures. Solid Profitability: Net income for the second quarter of 2025 was $26.4 million, or diluted earnings per share of $0.51, which translated into an annualized return on average assets of 1.01%, an annualized return on average equity of 6.62% and an annualized return on average tangible equity of 12.16%(1). Strong Net Interest Margin: Tax equivalent net interest margin for the second quarter of 2025 was 4.18% compared to 4.20% for the first quarter of 2025. The tax equivalent net interest margin, excluding PAA, was 3.95%(1) for the second quarter of 2025 compared to 3.97%(1) for the first quarter of 2025. Strong Capital Position and Book Value Build: Total risk-based capital ratio increased to 15.98% at June 30, 2025, while book value per share increased to $31.20 at June 30, 2025 from $30.89 at March 31, 2025 and tangible book value per share increased to $19.94(1) at June 30, 2025 from $19.69(1) at March 31, 2025. Low Net Charge-offs: Net charge-offs of $370 thousand, or 0.01% of average loans, for the six months ended June 30, 2025 along with manageable asset quality, compared to $713 thousand, or 0.02% of average loans, for the six months ended June 30, 2024. Repurchase of Shares: Repurchased 791 thousand shares at a weighted average price of $26.08 per share during the second quarter of 2025 Tangible Book Value Per Share(1) Total Capital Ratio $14.02 $17.02 $19.05 $19.94 12/31/2022 12/31/2023 12/31/2024 6/30/2025 12.39% 14.02% 16.00% 15.98% 12/31/2022 12/31/2023 12/31/2024 6/30/2025
Deposit Summary 6 Deposit Portfolio Composition Deposits (in millions)(1) Maintaining Discipline Navigating Competitive Deposit Market As of June 30, 2025: • Noninterest-bearing deposits to total deposits: 36.71% • Cost of deposits: 1.97% • Cost of funds: 2.02% • Loan to deposit ratio: 84.02% • Brokered deposits: $163.2 million at June 30, 2025 down from $365.1 million at March 31, 2025 . (1) (1) Other includes changes in IB Demand and MMDA & Sav. deposits. Q2 2025 Q1 2025 Noninterest-bearing ("NIB") 3,183,693$ 3,205,619$ Interest-bearing demand ("IB Demand") 1,941,156 1,863,752 Money market and savings ("MMDA & Sav.") 2,393,767 2,248,616 Certificates and other time ("CD's") 1,154,998 1,244,726 Total deposits 8,673,614$ 8,562,713$ (Dollars in thousands) NIB 36.7% IB Demand 22.4% MMDA & Sav. 27.6% CD's 13.3% $8,563 ($22) ($90) $223 $8,674 3/31/2025 Change in NIB Change in CD's Change in Other 6/30/2025
Loan Summary 7 (1) Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the appendix. . Loan Portfolio Composition (1) (1) Q2 2025 Q1 2025 Commercial and Industrial (“C&I”) 1,346,744$ 1,362,266$ Nonowner-occupied Commercial Real Estate (“NOO CRE”) 1,579,848 1,587,456 Owner-occupied CRE (“OO CRE”) 1,805,487 1,823,044 Multifamily Real Estate (“MF”) 455,646 444,107 Total Commercial Real Estate 3,840,981 3,854,607 CRE Construction & Development (“CRE C&D”) 762,911 721,488 1-4 Family Residential (“1-4 Family”) 1,126,523 1,125,837 Residential Construction (“Resi. C&D”) 137,855 141,283 Consumer and other ("Other") 72,333 77,652 Total 7,287,347$ 7,283,133$ (In thousands) 1-4 Family 15.4% MF 6.3% Resi. C&D 1.9% Other 1.0%CRE C&D 10.4% NOO CRE 21.7% OO CRE 24.8% C&I 18.5% Average Yield Excl. PAA(1) Average Yield Excl. PAA(1) Interest-Earning Assets: Loans 7,282,609$ 121,814$ 6.71% 6.41% 7,344,298$ 120,640$ 6.66% 6.36% Securities 1,729,384 16,103 3.73% 1,817,286 16,960 3.78% Deposits in other financial institutions 436,596 4,782 4.39% 430,621 4,720 4.45% Total interest-earning assets 9,448,589$ 142,699$ 6.06% 5.83% 9,592,205$ 142,320$ 6.02% 5.79% Q2 2025 Q1 2025 (Dollars in thousands) Average Outstanding Balance Interest Earned Average Outstanding Balance Interest Earned
CRE and Office Detail: Q2 2025 8 (1) (1) CRE (incl. multifamily) by Property Type CRE - Office Retail 614,162$ 1,326$ 16.0% Warehouse 569,591 794 14.8% Multi-family 455,646 2,149 11.9% Convenience Store ("C-Store") 420,536 1,383 10.9% Office 388,488 821 10.1% Industrial 182,907 1,829 4.8% Restaurant / Bar 149,353 1,052 3.9% Church 129,841 941 3.4% Auto Sales / Repair 129,223 714 3.4% Healthcare 109,831 1,121 2.9% Hotel / Motel 105,899 3,309 2.7% Other 585,504 1,278 15.2% Total 3,840,981$ 1,158 100.0% (Dollars in thousands) Property Type Balance Average Loan Size % of Total Retail 16.0% Office 10.1% Warehouse 14.8% C-Store 10.9% Multi-family 11.9% Industrial 4.8% Hotel / Motel 2.7% Restaurant / Bar 3.9% Auto Sales / Repair 3.4% Church 3.4% Healthcare 2.9% Other 15.2% Owner- occupied 41.8% Non- owner occupied 58.2% Multi-Story Office Building 120 216,903$ 55.8% 1,808$ Single Story Office Building 284 125,646 32.4% 442 Flex Office Space 69 45,939 11.8% 666 Total 473 388,488$ 100.0% 821 0 - 12 months 72 40,112$ 10.3% 557$ 13 - 24 months 87 95,072 24.5% 1,093 25 - 36 months 54 55,649 14.3% 1,031 37 - 48 months 24 17,460 4.5% 728 49 + months 236 180,195 46.4% 764 Total 473 388,488$ 100.0% 821 Average Loan Size (Dollars in thousands) (Dollars in thousands) CRE - Office - Maturity Number BalanceCRE - Office - Collateral Type Number Balance % of Total % of Total Average Loan Size
9 Loans – Repricing and Maturity: Q2 2025 (1) Rates are as of June 30, 2025 and do not include purchase accounting accretion or fee income on loans. Floating-22.41% WA Rate-8.63% Variable-26.28% WA Rate-6.59% Fixed-51.31% WA Rate-5.98% Total Loans in thousands Commercial and industrial 689,671$ 133,833$ 221,195$ 211,667$ 62,228$ 28,151$ -$ 1,346,744$ Real Estate: Commercial real estate (including multi-family residential) 418,434 125,126 144,399 55,572 8,694 10,686 - 762,911 Commercial real estate construction and land development 996,823 453,078 1,558,518 452,677 221,317 146,069 12,499 3,840,981 1-4 family residential (including home equity) 105,107 117,158 257,010 262,679 91,444 24,958 268,167 1,126,523 Residential construction 83,049 15,050 4,657 9,975 24,187 937 - 137,855 Consumer and other 36,130 13,066 9,930 12,004 1,193 - 10 72,333 Total Loans 2,329,214$ 857,310$ 2,195,709$ 1,004,573$ 409,064$ 210,801$ 280,676$ 7,287,347$ % Total Loans 31.96% 11.76% 30.13% 13.79% 5.61% 2.89% 3.85% 100.00% Wtg Avg Rate 8.30% 5.96% 5.61% 7.36% 5.55% 5.26% 5.52% 6.33% Total Loans in thousands Commercial and industrial 555,805$ 218,846$ 572,093$ 1,346,744$ Real Estate: Commercial real estate (including multi-family residential) 255,709 189,326 317,876 762,911 Commercial real estate construction and land development 665,471 1,145,279 2,030,230 3,840,981 1-4 family residential (including home equity) 61,787 328,438 736,298 1,126,523 Residential construction 73,969 33,343 30,544 137,855 Consumer and other 20,731 - 51,602 72,333 Total Loans 1,633,472$ 1,915,232$ 3,738,643$ 7,287,347$ % Total Loans 22.42% 26.28% 51.30% 100.00% Wtg Avg Rate 8.63% 6.59% 5.98% 10-15 Years Over 15 Years Repricing Term Total3 Months or Less 3-12 Months 1-3 Years 3-5 Years 5-10 Years Rate Structure Floating Rate Variable Rate TotalFixed Rate
CRE Construction and Development: Q2 2025 10 (1) (1) • Total committed exposure for CRE construction loans was $1.24 billion at June 30, 2025 and $1.05 billion at March 31, 2025. • The largest category of CRE construction loans was Land – Commercial at $280.8 million outstanding, or 36.8%, of CRE construction loans at June 30, 2025. • Owner-occupied CRE construction loans were 13.4% of CRE construction loans at June 30, 2025. (1) Includes loans that are secured by commercial properties that are in some stage of construction, land with improvements but valued as and only with intent to remove and construct new structures in the future and raw land. (2) Multi-family community development loans (“CD”). CRE Construction Lending Highlights Number Balance Number Balance Land - Commercial(1) 391 280,812$ 718$ 406 283,521$ 698$ Multi-family - CD(2) 15 137,320 9,155 14 115,190 8,228 Other 87 92,540 1,064 82 70,154 856 Multi-family - Market Rate 9 62,518 6,946 7 67,873 9,696 Warehouse 30 71,448 2,382 24 66,466 2,769 Land - Residential Lot 215 47,969 223 220 49,188 224 Retail 13 37,384 2,876 13 35,798 2,754 Commercial Development 6 12,134 2,022 5 10,874 2,175 Residential Subdivision 9 20,786 2,310 8 22,424 2,803 Total 775 762,911$ 984 779 721,488$ 926 (Dollars in thousands) (Dollars in thousands) Loan Type Q2 2025 Q1 2025 Average Loan Size Average Loan Size Land - Commercial 36.8% Warehouse 9.4%Multi-family - CD 18.0% Multi-family - Market Rate 8.2% Residential Subdivision 2.7% Land - Residential Lot 6.3% Commercial Development 1.6% Retail 4.9% Other 12.1%
Asset Quality Summary 11 Nonperforming Loans by Type (1) Combined represents the simple addition of legacy balances for 2022; estimated. Nonperforming loans to total loans: • 0.69% at June 30, 2025 compared to 0.75% as of March 31, 2025 Allowance for credit losses on loans to nonperforming loans: • 164.67% at June 30, 2025 compared to 153.61% as of March 31, 2025 Allowance for credit losses on loans: • $83.2 million, or 1.14% of total loans, at June 30, 2025, compared to $83.7 million, or 1.15% of total loans, as of March 31, 2025 Q2 2025 Q1 2025 Total nonperforming loans 50,505$ 54,518$ Nonperforming loans to total loans 0.69% 0.75% Total nonperforming assets 58,157$ 59,672$ 0.55% 0.57% Net charge-offs (recoveries) 207$ 163$ 0.01% 0.01% (Dollars in thousands) Nonperforming assets to total assets Net charge-offs to average loans (annualized) C&I 26.5% Other 0.7% CRE 46.3% CRE C&D 6.8% 1-4 Family 19.7% Nonaccrual Loans with No Related Allowance Nonaccrual Loans with Related Allowance Total Nonaccrual Loans Commercial and industrial 6,320$ 7,075$ 13,395$ Commercial real estate (including multi-family residential) 11,626 11,733 23,359 Commercial real estate construction and land development 3,125 287 3,412 1-4 family residential (including equity) 6,600 3,365 9,965 Residential construction 176 — 176 Consumer and other 59 139 198 Total 27,906$ 22,599$ 50,505$ (In thousands)
Regulatory Capital Ratios 12 (1) Refer to the calculation of this non-GAAP financial measure and a reconciliation to its most directly comparable GAAP financial measure in the appendix. Minimum Required Plus Capital Conservation Buffer Consolidated Capital Ratios Estimated Total Capital Ratio (to risk-weighted assets) 15.98% 15.97% 10.50% Estimated Common Equity Tier 1 Capital Ratio (to risk-weighted assets) 14.06% 14.05% 7.00% Estimated Tier 1 Capital Ratio (to risk-weighted assets) 14.18% 14.17% 8.50% Estimated Tier 1 Leverage Ratio (to average tangible assets) 11.44% 11.20% 4.00% Tangible Equity to Tangible Assets (1) 10.34% 10.42% N/A Bank Capital Ratios Estimated Total Capital Ratio (to risk-weighted assets) 15.39% 15.40% 10.50% Estimated Common Equity Tier 1 Capital Ratio (to risk-weighted assets) 14.18% 14.20% 7.00% Estimated Tier 1 Capital Ratio (to risk-weighted assets) 14.18% 14.20% 8.50% Estimated Tier 1 Leverage Ratio (to average tangible assets) 11.44% 11.22% 4.00% June 30, 2025 March 31, 2025
13 Key Takeaways Excellent core funding profile Strong earnings power and franchise value in one of the best markets in the U.S. Key success factors: Credit performance and risk management Significant financial flexibility Positioned for continued strong internal capital generation
$5.7 $5.7 $5.7 $7.8 $8.6 $9.0 $13.2 $25.3 $30.1 $151 Woodforest Cadence Prosperity Frost Stellar PNC Zions BofA Wells Fargo JP Morgan 6.1% 5.6% 2.4% Houston MSA Texas USA 6.4% 6.0% 2.7% Houston MSA Texas USA Diverse and Strong Markets of Operation 14 Houston is Diverse, with Significant Economic TailwindsGreater Houston Market Houston’s 25.1% GDP growth from ’21 to ’23 ranked first out of the 20 most populus U.S. metro areas Houston has the 3rd lowest cost of living out of the top 20 most populous U.S. metro areas 23rd largest economy in the world – if ranked as a country 14th largest population in the U.S – if ranked as a state Port Houston is the busiest Gulf Coast container port, the Houston Ship Channel is #1 ranked U.S. port in total foreign and domestic waterborne tonnage Houston is home to the Texas Medical Center, the world's largest medical complex, which has 10 million annual patient encounters Business friendly: #3 among U.S. metro areas in Fortune 500 headquarters (24) Major business clusters in Beaumont-Port Arthur area include chemical and petroleum manufacturing, materials manufacturing and transportation Top 10 Bank by Deposits in Houston Region(1) ($B) Note: Deposit market share based on FDIC data as of June 30, 2024. 1) Houston Region defined as the Houston-Pasadena-The Woodlands and Beaumont-Port Arthur MSAs; Excludes non-retail branches. Source: S&P Capital IQ Pro, Houston.org, IMF, and Texas Medical Center. Est. Population Growth ’25-’30 Est. Number of Households Growth ’25-’30 Population Change (’20-’25) Median Household Income (’25) Significant Deposit Share Houston MSA: 7.7% Texas: 7.2% / U.S: 1.9% Houston MSA: $78,845 Texas: $76,585 / U.S: $78,770 Stellar has over $8.6 billion in deposits in the Houston region(1)
4.2% 2.1% (0.2)% 1.5% 2.0% (4.9)% 2.2% 1.4% 1.5% 1.7% 1.4% 1.8% 0.2% 6.6% Mining and Logging Private Education and Health Services Financial Activities Leisure and Hospitality Professional and Business Services Information Wholesale Trade Transportation, Warehousing, and Utilities Government Total Nonfarm Manufacturing Construction Retail Trade Other Services Professional and Business Services 16% Education and Health Services 13% Government 13% Leisure and Hospitality 10% Retail Trade 9% Manufacturing 7% Construction 7% Transportation, Warehousing, and Utilities 6% Financial Activities 5% Wholesale Trade 5% Other Services 4% Mining and Logging 2% Information 1% Diversified and Growing Economy 15 1) Data is preliminary as of January 2025 not seasonally adjusted, from the U.S. Bureau of Labor Statistics. Source: U.S. Bureau of Labor Statistics. Houston vs. U.S. Job Change by Industry (Jan ‘24 – Jan ‘25)(1) Diversified Economy by Job Sector(1) Commentary Houston’s economy has become much more diversified over the years, while remaining the energy capital of the United States Houston's largest job sector, professional and business services, recovered faster than U.S. and continues to show outsized sector growth Mining and logging, wholesale trade, and other services showed a large gain over the last year versus the United States United States Houston MSA
2.0 3.0 4.0 5.0 6.0 7.0 2.0 2.5 3.0 3.5 4.0 2007 2009 2011 2013 2015 2017 2019 2021 2023 Houston is a Resilient Market 16 Since the Great Recession, Houston has proven its resiliency, weathering economic cycles and natural disasters − Houston welcomed 2.2 million new residents and created over one million jobs since 2007 P op u lation (M ) O il Pr ic e D ec lin e G re at R ec es si on Ik e H ar ve y C O V ID -1 9 E m p lo ym en t ( M ) Employment Population1) Data is preliminary as of January 2025 not seasonally adjusted, from the U.S. Bureau of Labor Statistics. Source: U.S. Bureau of Labor Statistics, Texas Workforce Commission.
197,171 0 50,000 100,000 150,000 200,000 250,000 N ew Y or k H ou st on D al la s M ia m i W as hi ng to n Ph oe ni x O rla nd o At la nt a C hi ca go Se at tle Houston’s Growth Projected to Continue 17 Source: S&P Capital IQ Pro; U.S. Census Bureau. 2010-2025 Population Change (%) Houston had the second highest net migration in 2024 10 most populated metros 2.44% -0.43% -2.55% 31.40% 30.06% 24.26% 9.36% New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. • Houston has seen tremendous growth over the past ten years, aided by the relocation of multiple Fortune 500 companies • The continued growth of the Houston metro will strengthen and diversify the greater economy, benefiting the businesses and constituents Houston added ~198,000 people by net migration in 2024, second only to New York
$94,960 $91,380 $86,627 $88,783 $78,845 $76,585 $78,770 New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. $850,000 $1,072,000 $350,000 $395,000 $314,900 $334,900 $418,284 New York Los Angeles Chicago Dallas Houston Texas U.S. 9.0x 11.7x 4.0x 4.4x 4.0x 4.4x 5.3x New York MSA Los Angeles MSA Chicago MSA Dallas MSA Houston MSA Texas U.S. Housing Market and Cost of Living 18 • Cost of living in Houston is 5.3% less than that of the U.S. market average while the median household income is in line with U.S. median • Houston is #1 in U.S. annual new home construction 20 25 M ed ia n H ou se ho ld In co m e 20 25 M ed ia n H om e Pr ic e (1 ) M ed ia n H om e P ri ce to H H I R at io (1) Home price shown for each respective city. Source: S&P Capital IQ Pro; Redfin (March 2025); Houston.org.
Appendix: Non-GAAP Reconciliation(1) 19 (1) See the disclosure under the heading “GAAP Reconciliation of Non-GAAP Financial Measures” on slide 2 regarding the use of non-GAAP financial measures. (2) Interim periods annualized. (3) The calculation of return on average tangible equity has been adjusted from prior period disclosures. The periods presented above have been recalculated and disclosed under the same calculation. Total shareholders’ equity $ 1,603,834 $ 1,610,832 Less: Goodw ill and core deposit intangibles, net 578,786 584,325 Tangible shareholders’ equity $ 1,025,048 $ 1,026,507 Shares outstanding at end of period 51,398 52,141 Tangible book value per share $ 19.94 $ 19.69 Average shareholders’equity $ 1,595,540 $ 1,614,242 Less: Average goodw ill and core deposit intangibles, net 581,438 586,895 Average tangible shareholders’equity $ 1,014,102 $ 1,027,347 Net income $ 26,352 $ 24,702 Add:Core deposit amortization, net of tax 4,383 4,383 Adjusted net income $ 30,735 $ 29,085 Return on average tangible equity(2)(3) 12.16% 11.48% Total assets $ 10,493,010 $ 10,434,887 Less: Goodw ill and core deposit intangibles, net 578,786 584,325 Tangible assets $ 9,914,224 $ 9,850,562 Tangible equity to tangible assets 10.34% 10.42% Net interest income (tax equivalent) $ 98,427 $ 99,353 Less: Purchase accounting accretion 5,344 5,397 Adjusted net interest income (tax equivalent) $ 93,083 $ 93,956 Average earning assets $ 9,448,589 $ 9,592,205 Net interest margin (tax equivalent)(2) 4.18% 4.20% Net interest margin (tax equivalent) excluding PAA(2) 3.95% 3.97% Interest on loans, as reported $ 121,814 $ 120,640 Less: Purchase accounting accretion 5,344 5,397 Interest on loans w ithout loan accretion $ 116,470 $ 115,243 Average loans $ 7,282,609 $ 7,344,298 Loan yield, as reported 6.71% 6.66% Loan yield, w ithout loan accretion 6.41% 6.36% Interest on interest-earning assets, as reported $ 142,699 $ 142,320 Less: Purchase accounting accretion 5,344 5,397 Interest on interest-earnings assets w ithout loan accretion $ 137,355 $ 136,923 Average interest-earning assets $ 9,448,589 $ 9,592,205 Yield on interest-earnings assets, as reported 6.06% 6.02% Yield on interest-earnings assets, w ithout loan accretion 5.83% 5.79% Q2 2025 Q1 2025 (Dollars in thousands)
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