Stellar Bancorp, Inc. Files Amended Annual Report: Key Updates for Investors

Overview

Stellar Bancorp, Inc. (“the Company”) has filed Amendment No. 1 to its Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025. This amendment supplements the original filing, primarily to include information required under Items 10 through 14 of Part III of Form 10-K. This includes details on directors and executive officers, executive compensation, security ownership, and certain relationships and related transactions. The amendment also updates the cover page to reflect the latest outstanding share count as of April 10, 2026.

Key Highlights for Investors

• Updated Outstanding Shares: As of April 10, 2026, there are 50,910,698 shares of common stock outstanding. This figure is important for valuation and ownership calculations.
• Public Float: As of June 30, 2025, the aggregate market value of common stock held by non-affiliates was approximately \$1.30 billion, based on NYSE closing prices. This signals the Company’s significant market capitalization and liquidity.
• Filing Status: The Company is designated as a Large Accelerated Filer, indicating robust reporting and governance standards. Stellar Bancorp is not a shell company, and it has fully complied with SEC reporting requirements, including the submission of all Interactive Data Files.
• Internal Controls: The Company’s management’s assessment of internal controls over financial reporting has been attested to by its registered public accounting firm, with no corrections of prior financial statement errors reported. This signals strong financial governance and reliability of disclosures.
• Board and Governance Structure: The amendment outlines a flexible board structure, where the number of directors can be changed by board resolution. Vacancies are filled by a majority vote of remaining directors, ensuring governance continuity.

Price-Sensitive and Noteworthy Items

• 2025 Financial Performance:
  • Net income for 2025 was \$102.9 million, with diluted earnings per share of \$1.99.
  • Return on average assets was 0.97%, return on average equity 6.34%, and return on average tangible equity 11.48%.
  • The annual bonus for executives was paid at 105.2% of target, reflecting performance exceeding expectations.
• Executive Compensation Updates:
  • Modest salary increases (3-5%) for Named Executive Officers (NEOs) for 2025.
  • Adjustments to bonus targets for senior executives for competitive positioning.
  • The Company maintains a “pay-for-performance” culture, aligning executive pay with shareholder interests through a mix of short-term cash incentives and long-term equity awards.
  • Executives and directors are required to meet stock ownership guidelines—5x base salary for the CEO and 2x for other executive officers—to further align with shareholders.
  • Post-vest holding policy: Executives must hold shares from equity grants for at least one year post-vesting.
  • Clawback policy: Incentive-based compensation may be recouped if awarded erroneously due to financial misstatements.
• Governance and Compliance Enhancements:
  • Implementation of improved procedures and coordination among legal, equity administration, and payroll functions to avoid late SEC filings.
  • Code of Business Conduct and Ethics applies to all directors, officers, and employees. Any amendments or waivers are disclosed on the Company’s website.
  • Insider Trading Policy strictly prohibits short sales, hedging, or derivative transactions in Company securities by executives and directors. Pledging of Company shares is discouraged and requires prior notice.
• Strong Shareholder Engagement:
  • In 2025, 94.1% of voting shareholders approved the executive compensation program in an advisory vote (“say-on-pay”).
  • The Company conducted post-meeting outreach with its top sixteen institutional shareholders, covering 46.62% of outstanding shares, to solicit feedback and strengthen governance practices.
• Risk Management:
  • The Compensation Committee conducted a risk assessment of the 2025 incentive program and concluded it does not promote excessive risk-taking or pose material risk to the Company.
• Peer Group for Compensation Benchmarking:
  • The Company benchmarks executive compensation against a selected peer group of similarly sized and situated financial institutions, ensuring competitive and market-aligned pay practices.

Additional Details and Disclosures

• Late Section 16 Filings: There were a total of nine late Form 4 filings (mainly due to administrative delays in calculating tax withholding for equity vesting or obtaining EDGAR access codes) and two late Form 3 filings. The Company has taken steps to prevent recurrence.
• Compensation Philosophy: The program is designed to attract, retain, and motivate executive talent with a balance of fixed (base salary) and variable (incentive) pay. The majority of executive compensation is variable and performance-based.
• Clawback Policy: The Company has a clawback policy to recoup incentive compensation if it was awarded based on inaccurate financial statements.
• Insider Trading and Pledging: The Insider Trading Policy requires pre-clearance for securities transactions and generally discourages pledging of shares, with robust oversight from the Board committees.

Potential Impact on Share Price

The amendment contains several items that may influence investor sentiment and the Company’s share price:

• Strong 2025 financial performance and above-target executive bonuses could be seen as positive indicators of operational strength.
• Enhanced governance, compliance improvements, and robust shareholder engagement may bolster investor confidence, reduce perceived risk, and support valuation multiples.
• The introduction of stricter stock ownership and post-vest holding requirements aligns executive interests with those of shareholders, potentially increasing long-term value creation.
• The absence of restatements or significant internal control weaknesses reduces the risk of negative surprises.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should review the full SEC filings and consult their own advisors before making investment decisions. Stellar Bancorp, Inc.’s future performance is subject to various risks and uncertainties that could cause actual results to differ materially from those stated herein.

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