STEL Stock Forecast & Price Target

Stellar Bancorp Inc. has demonstrated a positive outlook due to expected improvements in net interest margins (NIM), with management forecasting quarterly gains of 1–2 basis points in the second half of 2025, targeting a core NIM of 4% in the medium term, potentially bolstered by forthcoming Federal Reserve rate cuts. The company has experienced robust core deposit growth, with half of the net new dollars attributed to new customers, indicating a strong customer acquisition strategy. Additionally, loan originations have surged to $640 million, marking the highest level since 2022, driven by a balanced mix of commercial and industrial loans as well as selective commercial real estate and construction loans, which supports healthy pipeline growth for the upcoming quarters.

Stellar Bancorp's net interest margin (NIM) has experienced a slight decline, with the current NIM at 4.18% and core NIM at 3.95%, both reflecting a decrease of 2 basis points from the prior quarter. This dip in NIM is a concerning indicator of the company's profitability trends, particularly as the ongoing accretion run-off is expected to exert downward pressure on overall earnings growth. Furthermore, a lack of identified near-term catalysts for earnings improvement raises concerns about the company's future financial performance.