STEL Stock Forecast & Price Target

Stellar Bancorp Inc. is positioned for positive growth, as management anticipates quarterly net interest margin (NIM) improvements of 1-2 basis points in the second half of 2025, aiming for a medium-term core NIM of 4% driven by potential Federal Reserve rate cuts. The company has demonstrated strong core deposit growth, with 50% of net new dollars attributed to new customers, indicating effective customer acquisition strategies. Additionally, loan originations reached $640 million, the highest level since 2022, with a diversified mix of commercial and industrial loans, supporting a healthy pipeline for sustained growth in the latter half of 2025.

Stellar Bancorp's net interest margin (NIM) has experienced a slight decline, falling to 4.18%, with the core NIM at 3.95%, both down by 2 basis points from the previous quarter. The ongoing accretion run-off poses a risk to overall earnings growth, limiting the company’s potential to generate more meaningful near-term earnings catalysts. These factors contribute to a negative outlook for Stellar Bancorp's stock, as the decrease in NIM and pressure on earnings are critical indicators of financial health.