Stellar Bancorp : Investor Presentation Q1 2023

First Quarter 2023 Earnings Presentation

Forward-Looking Statements and Non-GAAP Financial Measures

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 the benefits of the merger of equals (the "Merger") between Allegiance Bancshares, Inc. and CBTX, Inc. which became effective on October 1, 2022, including future financial performance and operating results, the Company's 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 Stellar to differ materially from any results expressed or implied by such forward-looking statements.

Such factors include, among others: the risk that the cost savings and any revenue synergies from the Merger may not be fully realized or may take longer than anticipated to be realized; disruption to our business as a result of the Merger; the risk that the integration of our operations following the Merger will be materially delayed or will be more costly or difficult than we expected or that we are otherwise unable to successfully integrate our legacy businesses; the amount of the costs, fees, expenses and charges related to the Merger; reputational risk and the reaction of our customers, suppliers, employees or other business partners to the Merger; 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 caused by recent bank failures, risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in the cost of our deposit insurance assessments and other actions of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking and legislative and regulatory actions and reforms.

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 https://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

The Company's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. The Company 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 the Company's performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, the Company reviews pre-tax,pre-provision income; pre-tax,pre-provision ROAA; adjusted pre-tax,pre-provision income; adjusted pre-tax,pre-provision ROAA; adjusted efficiency ratio; the ratio of tangible equity to tangible assets; net interest margin (tax equivalent) excluding PAA; and loan yield excluding accretion for internal planning and forecasting purposes. The Company has included in this presentation 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.

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Stellar Bancorp, Inc. - Snapshot

Combination of the Houston region's two largest regionally-focused banks

• Merger-of-equalsbetween CBTX, Inc. and Allegiance Bancshares, Inc. became effective October 1, 2022, with the combined company renamed Stellar Bancorp, Inc. (NASDAQ: STEL)
• Combination delivers scale, growth opportunities, and talent depth
• Principal banking subsidiary renamed Stellar Bank upon successful system conversion in February
• Strong core earnings power and capital position
• Valuable franchise in one of the best markets in the U.S.

		March 31, 2023	December 31, 2022
		(Dollars in millions)
Total assets	$	10,605	$	10,900
Total loans	$	7,886	$	7,755
Total deposits	$	8,739	$	9,268
Total loans to total deposits		90.24%		83.67%
Equity to assets		13.64%		12.69%
Tangible equity to tangible assets (1)		8.15%		7.24%

(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.

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Unparalleled Focus on Houston Region

Houston Region Market Share(1)

Deposits ($B)

	Total Assets	Houston Region(1)	Percent of Company
Name	($B)	Deposits ($B)	Deposits (%)

JPMorgan

Wells Fargo

BofA

Zions

PNC

StellarSte l

Frost

Capital One

Cadence

Prosperity

AllegianceAllegian

Woodforest

Comerica

CBTXCB

Texas Capital

Truist

$34.3

$29.7

$14.1 $11.9

$9.5 $8.4 $8.0 $7.6 $6.8

$5.9 $5.9 $3.9 $3.6

$2.9 $2.9

		JPMorgan	$3,841	$188.0	7.6%
$188.0
Wells Fargo	1,881	34.3	2.4%
		BofA	3,112	29.7	1.5%
		Zions	87.8	14.1	17.8%
		PNC	541	11.9	2.7%
		Stellar	11.1	9.5	98.1%
		Frost	51.8	8.4	18.4%
		Capital One	440	8.0	2.6%
		Cadence	47.7	7.6	18.9%
		Prosperity	37.4	6.8	22.6%
		Allegiance	6.7	5.9	100.0%
		Woodforest	9.6	5.9	70.4%
		Comerica	86.9	3.9	5.1%
		CBTX	4.3	3.6	95.1%
		Texas Capital	32.3	2.9	11.3%
		Truist	545	2.9	0.7%

Note: Deposit market share based on FDIC data as of June 30, 2022; Stellar deposits in the Houston Region are combined deposits as of June 30, 2022.

1. Houston Region defined as the Houston-TheWoodlands-Sugar Land and Beaumont-Port Arthur MSAs. Source: S&P Capital IQ Pro; Excludes non-retail branches.

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First Quarter Financial Highlights

Key Performance Indicators:

• Reported first quarter 2023 net income of $37.1 million, or $0.70 per diluted share, as compared to net income of $2.1 million, or $0.04 per share, for the fourth quarter 2022. The first quarter 2023 and fourth quarter 2022 results reflect significant nonrecurring items related to the Merger.
• • See slide 6 for additional detail of acquisition and merger-related adjustments.
• Strong Core Earnings Power: Return on average assets ("ROAA") of 1.38% and pre-tax,pre-provision ("PTPP") ROAA of 1.89%.(1)(4)
• • Adjusted for merger and nonrecurring adjustments, PTPP ROAA would have been 1.99%.(1)(2)(4)
• Strong Net Interest Margin ("NIM"): NIM of 4.80% and NIM excluding purchase accounting adjustments ("PAA") of 4.38%.(1)
• Excellent Core Funding: 44.4% noninterest-bearing deposits, 0.94% cost of deposits and 1.06% cost of funds.
• Strong Capital Build: Book value per share increased to $27.14 at March 31, 2023 from $26.12 at December 31, 2022 and tangible book value per share was $15.24(1) and $14.02(1) for those same periods. Equity to assets increased to 13.64% and tangible equity to tangible assets increased to 8.15%(1) at March 31, 2023 fr0m 12.69% and 7.24%(1) at December 31, 2022.

Q1 2023		Q4 2022

Actual		Adjusted(1)		Actual

(Dollars in thousands)

Adjusted(1)

Net interest margin (tax equivalent)(4)	4.80%		4.38%	4.71%		4.38%
Pre-tax, pre provision net income	$ 50,727(1)	$	53,469(2)	$ 46,627(1)	$	52,962(2)
Pre-tax, pre provision ROAA(4)	1.89%(1)		1.99%(2)	1.69%(1)		1.92%(2)
Efficiency ratio(3)	58.96%		52.69%(2)	65.14%		53.57%(2)

1. Refer to the calculation of these non-GAAP financial measures and a reconciliation to their most directly comparable GAAP financial measures in the append.
2. Adjusted results exclude acquisition and merger-related expenses, core deposit intangible amortization, purchase accounting adjustments and gains and losses on the sale of assets.
3. Represents total noninterest expense divided by the sum of net interest income and noninterest income, excluding gains and losses on the sale of assets.
4. Annualized.

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