DEF 14A: Stellar Bancorp Sets Date for 2024 Annual Shareholder Meeting, Outlines Key Proposals

Stellar Bancorp will hold its annual shareholder meeting on June 4, 2024, to elect directors, conduct a say-on-pay vote, and ratify the appointment of its independent accounting firm.

Summary

• Stellar Bancorp, Inc. will hold its 2024 Annual Meeting of Shareholders on June 4, 2024, in Houston, Texas.
• Shareholders of record as of April 29, 2024, are entitled to vote at the meeting.
• The meeting's agenda includes the election of five Class II directors to serve until the 2027 annual meeting, an advisory vote on executive compensation (Say-On-Pay), and the ratification of Crowe LLP as the independent registered public accounting firm for the year ending December 31, 2024.
• The Board recommends voting FOR the election of each director nominee, FOR the Say-On-Pay resolution, and FOR the ratification of Crowe LLP.
• The proxy statement and annual report are available online at www.edocumentview.com/STEL.
• The board consists of 14 members divided into three classes, with Class II directors' terms expiring at this meeting.
• The company's executive compensation program is designed to attract, motivate, and retain experienced executives, linking pay with shareholder interests and market practices.
• The Compensation Committee retained NFP Compensation Consulting to ensure the compensation program is competitive and aligns with the company's business strategy.
• In 2023, Stellar recorded net income of $130.5 million, with diluted earnings per share of $2.45.
• The company's total risk-based capital ratio increased to 14.02% at December 31, 2023, from 12.39% at December 31, 2022.
• Book value per share increased to $28.54 at December 31, 2023, compared to $26.12 at December 31, 2022, while tangible book value per share increased by $3.00, or 21.4%, from $14.02 at December 31, 2022 to $17.02 at December 31, 2023.

Sentiment

Score: 7

Explanation: The document is generally positive, highlighting growth in key financial metrics. However, it acknowledges industry challenges and some performance metrics falling short of targets, preventing a higher score.

Positives

• The company's total risk-based capital ratio increased to 14.02% at December 31, 2023, from 12.39% at December 31, 2022.
• Book value per share increased to $28.54 at December 31, 2023, compared to $26.12 at December 31, 2022, while tangible book value per share increased by $3.00, or 21.4%, from $14.02 at December 31, 2022 to $17.02 at December 31, 2023.
• In 2023, Stellar recorded net income of $130.5 million, with diluted earnings per share of $2.45.

Risks

• The document mentions challenges in the banking industry resulting from several high profile bank failures.
• The document mentions the ratio of non-interest expense to average assets (NIE/Avg. Assets) was 2.52% compared to the target of 2.45% to 2.35%.
• The document mentions the pre-tax pre-provision return on average assets (PTPP ROAA) was 1.58% compared to the target of 1.80% to 1.95%.

Future Outlook

The document does not contain specific forward-looking statements beyond the standard business operations.

Management Comments

• We believe our executive compensation program plays a significant role in our ability to attract, motivate and retain a highly-experienced team of executives who are critical to our success.
• The Compensation Committee concluded that our incentive compensation programs and policies are well-designed and do not encourage behaviors that would create material risk to us.

Industry Context

The document notes challenges in the banking industry due to high-profile bank failures, suggesting the company's performance is being viewed in light of these broader industry conditions.

Comparison to Industry Standards

• The Compensation Committee reviews the compensation of the Chief Executive Officer and our other NEOs relative to the compensation paid to similarly-situated executives at financial institutions that we determine to be peer companies.
• The peer group consists of financial institutions that have market capitalizations, total assets and annual net incomes that are between approximately 50% and 300% of Stellars market capitalization, total assets and annual net income.
• Stellars peer group for assessing 2023 compensation consisted of the following companies: 1st Source Corporation, Amerant Bancorp Inc., BancFirst Corporation, Banner Corporation, CVB Financial Corp., Enterprise Financial Services Corp., Heartland Financial USA, Inc., Independent Bank Group, Inc., International Bancshares Corporation, Origin Bancorp, Inc., Renasant Corporation, Seacoast Banking Corporation of Florida, FB Financial Corporation, First Bancorp, First Busey Corporation, First Foundation Inc., First Merchants Corporation, Home Bancshares, Inc., ServisFirst Bancshares, Inc., Southside Bancshares, Inc., Trustmark Corporation, Veritex Holdings, Inc.

Related Party Transactions

• Some of our officers, directors and principal shareholders and their affiliates are customers of the Bank.
• Such officers, directors and principal shareholders and their affiliates have had transactions in the ordinary course of business with the Bank, including borrowings, all of which were effected on substantially the same terms and conditions, including interest rate and collateral, as those prevailing from time to time for comparable transactions with unaffiliated persons and did not involve more than the normal risk of collectability or other unfavorable features.

Stakeholder Impact

• Shareholders are asked to vote on matters that directly impact the company's governance and executive compensation.
• The company's performance and executive compensation decisions affect employees, customers, and the communities it serves.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The Board and Compensation Committee will consider the voting results when making future decisions regarding executive compensation.

Key Dates

Keywords

annual meeting, proxy statement, directors, executive compensation, Stellar Bancorp, Crowe LLP, shareholders, governance, voting