STEL Stock Forecast & Price Target

Stellar Bancorp is positioned for significant growth, with management projecting quarterly net interest margin (NIM) gains of 1-2 basis points in the second half of 2025, targeting a medium-term core NIM of 4% that could benefit from potential Federal Reserve rate cuts. The bank has demonstrated robust core deposit growth, with 50% of net new dollars coming from new customers, indicating strong customer acquisition. Additionally, loan originations reached $640 million, the highest level since 2022, with a healthy pipeline expected to support continued growth in the upcoming quarters.

The negative outlook on Stellar Bancorp's stock is primarily driven by a slight decline in the net interest margin (NIM), which fell to 4.18%, along with a core NIM of 3.95%, both decreasing by 2 basis points compared to the last quarter. The ongoing pressure from accretion run-off is expected to negatively impact earnings growth, as there appear to be no significant catalysts for earnings recovery in the near term. These factors indicate a challenging environment for Stellar Bancorp, potentially hindering its financial performance moving forward.