Stellar Bancorp, Inc. (NYSE:STEL), a Texas-based national commercial bank with a market capitalization of $1.62 billion, has entered into a significant financial agreement, as disclosed in a recent SEC filing. According to InvestingPro analysis, the company currently trades above its Fair Value. On December 13, 2024, the company secured a $75 million revolving line of credit with Frost Bank, updating its previous loan arrangement from December 13, 2022.
The newly amended agreement stipulates an interest rate for borrowings at 3-Month Term SOFR plus 2.75%, adjusted quarterly, with interest payments due every quarter starting March 13, 2025.
The principal, along with the interest, is set to be paid in equal quarterly installments after the Interest Only Period Expiration Date on December 13, 2026, leading up to the Maturity Date on December 13, 2033.
Stellar Bancorp has the option to prepay the principal without incurring any penalties. To secure this line of credit, the company has pledged all shares of capital stock of its wholly owned subsidiary, Stellar Bank, formerly known as Community Bank of Texas N.A.
The agreement includes standard covenants that require Stellar Bancorp to adhere to certain financial metrics and restrict its ability to incur additional debt while the line of credit remains active. The company maintains a healthy debt-to-equity ratio of 0.12, and InvestingPro data shows an overall GOOD financial health score. As of the date of the agreement, Stellar Bancorp has not drawn any funds from the new credit facility.
In a related financial move, Stellar Bank redeemed all $40 million of its Fixed-to-Floating Rate Subordinated Notes due December 15, 2027, on December 15, 2024. The redemption did not involve drawing from the new line of credit. The redemption price was 100% of the principal amount plus accrued interest up to the redemption date.
The company's stock has shown strong momentum with a 41% gain over the past six months. Discover more insights and 6 additional ProTips for Stellar Bancorp with an InvestingPro subscription, including exclusive access to comprehensive Pro Research Reports covering 1,400+ US stocks.
In other recent news, Stellar Bancorp has announced an increase in its quarterly cash dividend from $0.13 to $0.14 per common share, reflecting confidence in the company's financial stability and future performance. This adjustment comes as part of the company's commitment to returning value to its shareholders. In addition to the dividend increase, Stellar Bancorp has reported a significant rise in net income to $33.9 million, up from $29.8 million in the previous quarter, primarily due to a $6 million reversal of provision for credit losses.
The company has also initiated share repurchases and plans to redeem $40 million of subordinated debt, demonstrating a strategic approach to capital management and future growth.
On top of these developments, Stellar Bancorp has originated over $300 million in loans and improved its total risk-based capital ratio to 15.91%. However, the company anticipates challenges in loan growth due to economic uncertainty but aims for mid-single-digit growth in 2025.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.