FINAL DEADLINE ALERT: Faruqi & Faruqi, LLP Investigates Claims on Behalf of Investors of Compass Diversified
As detailed below, the complaint alleges that the Company and its executives violated federal securities laws by making false and/or misleading statements Share
Faruqi & Faruqi is a leading national securities law firm with offices in New York, Pennsylvania, California and Georgia. The firm has recovered hundreds of millions of dollars for investors since its founding in 1995. See www.faruqilaw.com.
As detailed below, the complaint alleges that the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) the Company's subsidiary, Lugano Holdings, Inc., maintained unrecorded financing arrangements and irregularities in its sales, cost of sales, inventory, and accounts receivable; (2) the irregularities and undisclosed details in Lugano Holdings, Inc.'s financial statements rendered the financial statements of the Company as a whole unreliable, and would require restatement; (3) the Company failed to maintain adequate internal controls related to its financial statements; and (4) as a result, defendants' public statements were materially false and/or misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
On May 7, 2025, after the market closed, the Company disclosed that its financial statements for fiscal year 2024 should no longer be relied upon in response to an ongoing internal investigation into the Company's subsidiary, Lugano Holding, Inc. The Company revealed that the investigation 'has preliminarily identified irregularities in Lugano's non-CODI financing, accounting, and inventory practices' and that '[e]ffective May 7, 2025, Lugano's founder and CEO, Moti Ferder, resigned from all of his positions at Lugano and will not receive any severance compensation.'
On this news, Compass Diversified stock price fell 8% during after-hours trading on May 7, 2025, thereby injuring investors.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Compass' conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
To learn more about the Compass Diversified investigation, go to www.faruqilaw.com/CODI or call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310).
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Attorney Advertising. The law firm responsible for this advertisement is Faruqi & Faruqi, LLP (www.faruqilaw.com). Prior results do not guarantee or predict a similar outcome with respect to any future matter. We welcome the opportunity to discuss your particular case. All communications will be treated in a confidential manner.
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Lakeland Financial Reports Record Second Quarter Performance; Net Income Grows by 20% to $27.0 Million, as Net Interest Income Expands by 14%
WARSAW, Ind., July 25, 2025 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record second quarter net income of $27.0 million for the three months ended June 30, 2025, which represents an increase of $4.4 million, or 20%, compared with net income of $22.5 million for the three months ended June 30, 2024. Diluted earnings per share were $1.04 for the second quarter of 2025 and increased $0.17, or 20%, compared to $0.87 for the second quarter of 2024. On a linked quarter basis, net income increased $6.9 million, or 34%, from $20.1 million. Diluted earnings per share increased $0.26, or 33%, from $0.78 on a linked quarter basis. Pretax pre-provision earnings, which is a non-GAAP measure, were $35.9 million for the three months ended June 30, 2025, an increase of $528,000, or 1%, compared to $35.4 million for the three months ended June 30, 2024. Adjusted core operational profitability, a non-GAAP measure that excludes the impact of certain non-routine operating events that occurred during 2024, improved by $7.8 million, or 41%, from $19.2 million to $27.0 million for the three months ended June 30, 2024 and 2025, respectively. The company further reported net income of $47.1 million for the six months ended June 30, 2025, versus $46.0 million for the comparable period of 2024, an increase of $1.1 million, or 2%. Diluted earnings per share also increased 2% to $1.82 for the six months ended June 30, 2025, versus $1.78 for the comparable period of 2024. Pretax pre-provision earnings were $67.0 million for the six months ended June 30, 2025, an increase of $2.2 million, or 3%, compared to $64.7 million for the six months ended June 30, 2024. Adjusted core operational profitability improved by $5.2 million, or 12%, from $41.8 million to $47.1 million for the six months ended June 30, 2024 and 2025, respectively. 'We are pleased to report strong earnings momentum for the second quarter of 2025, which has benefited from double digit growth of net interest income and contributed to good overall performance in the first half of 2025,' observed David M. Findlay, Chairman and CEO. 'Importantly, our Lake City Bank Team continues to generate healthy loan and deposit growth. It's been a rewarding first six months of 2025 with this strong financial performance, healthy balance sheet growth and continued success on the business development front for all of our revenue producing teams.' Quarterly Financial Performance Second Quarter 2025 versus Second Quarter 2024 highlights: Return on average equity of 15.52%, compared to 14.19% Return on average assets of 1.57%, compared to 1.37% Tangible book value per share grew by $2.14, or 8%, to $27.48 Average loans grew by $194.8 million, or 4%, to $5.23 billion Core deposits grew by $423.9 million, or 8%, to $6.03 billion Net interest margin improved 25 basis points to 3.42% versus 3.17% Net interest income increased by $6.6 million, or 14% Provision expense of $3.0 million, compared to $8.5 million Watch list loans as a percentage of total loans improved to 3.67% from 5.31% Nonaccrual loans declined 46% to $30.6 million compared to $57.1 million Common equity tier 1 capital ratio improved to 14.73%, compared to 14.28% Total risk-based capital ratio improved to 15.86%, compared to 15.53% Tangible capital ratio improved to 10.15%, compared to 9.91% Average equity increased by $58.0 million, or 9% Second Quarter 2025 versus First Quarter 2025 highlights: Return on average equity of 15.52%, compared to 11.70% Return on average assets of 1.57%, compared to 1.20% Average loans grew by $43.7 million, or 1%, to $5.23 billion Core deposits grew by $191.6 million, or 3%, to $6.03 billion Net interest margin improved 2 basis points to 3.42% versus 3.40% Net interest income increased by $2.0 million, or 4% Pretax, pre-provision earnings increased $4.9 million, or 16% Provision expense of $3.0 million, compared to $6.8 million Nonaccrual loans declined 47% to $30.6 million compared to $57.4 million Watch list loans as a percentage of total loans improved to 3.67% from 4.13% Common equity tier 1 capital ratio of 14.73%, compared to 14.51% Total risk-based capital ratio of 15.86%, compared to 15.77% Tangible capital ratio of 10.15%, compared to 10.09% Capital Strength The company's total capital as a percentage of risk-weighted assets improved to 15.86% at June 30, 2025, compared to 15.53% at June 30, 2024 and 15.77% at March 31, 2025. These capital levels significantly exceeded the 10.00% regulatory threshold required to be characterized as "well capitalized" and reflect the company's robust capital base. The company's tangible common equity to tangible assets ratio, which is a non-GAAP financial measure, improved to 10.15% at June 30, 2025, compared to 9.91% at June 30, 2024 and 10.09% at March 31, 2025. Unrealized losses from available-for-sale investment securities were $185.3 million at June 30, 2025, compared to $194.9 million at June 30, 2024 and $188.3 million at March 31, 2025. Excluding the impact of accumulated other comprehensive income (loss) on tangible common equity and tangible assets, the company's ratio of adjusted tangible common equity to adjusted tangible assets, a non-GAAP financial measure, was 12.17% at June 30, 2025, compared to 12.18% at June 30, 2024, and 12.19% at March 31, 2025. As announced on July 8, 2025, the board of directors approved a cash dividend for the second quarter of $0.50 per share, payable on August 5, 2025, to shareholders of record as of July 25, 2025. The second quarter dividend per share represents a 4% increase from the $0.48 dividend per share paid for the second quarter of 2024. The company utilized its share repurchase program during the second quarter of 2025 and repurchased 30,300 shares of its common stock for $1.7 million at a weighted average price per share of $55.94. The company has $28.3 million of remaining availability under the board-approved share repurchase program. 'Our capital position is strong and provides capacity for continued organic growth of our balance sheet as well as continued growth of our common stock dividend to shareholders,' stated Kristin L. Pruitt, President. 'While we did utilize our share repurchase program during the second quarter, our priority for capital is to continue capital retention to support loan growth in our Indiana markets and provide for continued balance sheet growth opportunities.' Loan Portfolio Average total loans of $5.23 billion in the second quarter of 2025 increased $194.8 million, or 4%, from $5.03 billion for the second quarter of 2024 and increased $43.7 million, or 1%, from $5.19 billion for the first quarter of 2025. Average total loans for the six months ended June 30, 2025 were $5.21 billion, an increase of $205.0 million, or 4%, from $5.00 billion for the six months ended June 30, 2024. Total loans, excluding deferred fees and costs, increased by $173.8 million, or 3%, from $5.06 billion as of June 30, 2024, to $5.23 billion as of June 30, 2025. The increase in loans occurred across much of the portfolio, with our commercial real estate and multi-family residential loan portfolio growing by $177.0 million, or 7%, our consumer 1-4 family mortgage loan portfolio growing by $46.2 million, or 10%, and our other consumer loan portfolio growing by $6.0 million, or 6%. These increases were offset by contractions to our commercial and industrial loan portfolio of $32.5 million, or 2%, and our agri-business and agricultural loan portfolio of $21.6 million, or 6%. On a linked quarter basis, total loans, excluding deferred fees and costs, increased by $3.4 million, or less than 1%, from $5.23 billion at March 31, 2025. The linked quarter increase was primarily a result of growth in total commercial real estate and multi-family residential loans of $59.6 million, or 2%, and growth in total consumer loans of $17.5 million, or 3%. This growth was offset by contractions in total agri-business and agricultural loans of $44.3 million, or 12%, and total commercial and industrial loans of $29.8 million, or 2%. Commercial loan originations for the second quarter included approximately $390.0 million in loan originations, offset by approximately $404.0 million in commercial loan pay downs. Line of credit usage increased to 44% as of June 30, 2025, compared to 41% at June 30, 2024 and 43% as of March 31, 2025. Total available lines of credit contracted by $48.0 million, or 1%, as compared to a year ago, and line usage increased by $100.0 million, or 5%, over that period. The company has limited exposure to commercial office space borrowers, all of which are in the bank's Indiana markets. Loans totaling $106.9 million for this sector represented 2% of total loans at June 30, 2025, an increase of $6.4 million, or 6%, from March 31, 2025. Commercial real estate loans secured by multi-family residential properties and secured by non-farm non-residential properties were approximately 221% of total risk-based capital at June 30, 2025. 'We are pleased that commercial line utilization continues to improve with a utilization rate of 44% at the end of the second quarter 2025,' added Findlay. 'This marks the highest line utilization rate since 2020, and we are encouraged that borrower demand for working lines of capital has increased. During the second quarter, construction loans migrated as planned to the CRE multi-family segment. In addition, loan payoffs received during the second quarter impacted the owner occupied CRE and Agriculture segments.' Diversified Deposit Base The bank's diversified deposit base has grown on a year-over-year basis and on a linked quarter basis. (in thousands) June 30, 2025 March 31, 2025 June 30, 2024 Retail $ 1,755,750 28.4 % $ 1,787,992 30.0 % $ 1,724,777 29.9 % Commercial 2,256,620 36.6 2,336,910 39.2 2,150,127 37.3 Public funds 2,014,047 32.6 1,709,883 28.7 1,727,593 30.0 Core deposits 6,026,417 97.6 5,834,785 97.9 5,602,497 97.2 Brokered deposits 150,416 2.4 125,409 2.1 161,040 2.8 Total $ 6,176,833 100.0 % $ 5,960,194 100.0 % $ 5,763,537 100.0 % Total deposits increased $413.3 million, or 7%, from $5.76 billion as of June 30, 2024, to $6.18 billion as of June 30, 2025. The increase in total deposits was driven by an increase in core deposits (which excludes brokered deposits) of $423.9 million, or 8%. Total core deposits at June 30, 2025 were $6.03 billion and represented 98% of total deposits, as compared to $5.60 billion and 97% of total deposits at June 30, 2024. The increase in core deposits since June 30, 2024, reflects growth in all three core deposit segments. Public funds deposits grew annually by $286.5 million, or 17%, to $2.01 billion. Public funds deposits as a percentage of total deposits were 33%, up from 30% a year ago. Growth in public funds was positively impacted by the addition of new public funds customers in the Lake City Bank footprint, including their operating accounts. Commercial deposits grew annually by $106.5 million, or 5%, to $2.26 billion and remained at 37% as a percentage of total deposits. Retail deposits grew by $31.0 million, or 2%, to $1.76 billion. Retail deposits as a percentage of total deposits was 28% of total deposits, down from 30% a year ago. On a linked quarter basis, total deposits increased $216.6 million, or 4%, from $5.96 billion at March 31, 2025, to $6.18 billion at June 30, 2025. Core deposits increased by $191.6 million, or 3%, while brokered deposits increased by $25.0 million, or 20%. The linked quarter growth in core deposits, was positively impacted by the addition of new public funds customers. Offsetting this increase was a decrease in commercial deposits of $80.3 million, or 3%, and a decrease in retail deposits of $32.2 million, or 2%. Average total deposits were $6.10 billion for the second quarter of 2025, an increase of $276.5 million, or 5%, from $5.82 billion for the second quarter of 2024. Average interest-bearing deposits drove the increase in average total deposits and increased by $263.4 million, or 6%. Contributing to the overall growth of interest-bearing deposits was an increase to average interest-bearing checking accounts of $492.4 million, or 15%. Offsetting this increase was a reduction in average time deposits of $225.9 million, or 22%, and a decrease to average savings deposits of $3.2 million, or 1%. Average noninterest-bearing demand deposits increased by $13.2 million, or 1% to $1.2 billion. On a linked quarter basis, average total deposits increased by $221.8 million, or 4%, from $5.87 billion for the first quarter of 2025 to $6.10 billion for the second quarter of 2025. Average interest bearing deposits drove the increase to total average deposits, which increased by $236.1 million, or 5%. Average interest bearing checking accounts were responsible for the increase, growing by $281.5 million, or 8%. Offsetting this increase were decreases to total average time deposits of $47.4 million, or 6%, and average noninterest bearing demand deposits decreased by $14.3 million, or 1%. Checking account trends as of June 30, 2025 compared to June 30, 2024 include growth of $352.1 million, or 23%, in aggregate public fund checking account balances, growth of $93.4 million, or 5%, in aggregate commercial checking account balances, and growth of $52.2 million, or 6%, in aggregate retail checking account balances. The number of accounts has also grown for all three segments, with growth of 9% for public funds accounts, 2% for commercial accounts and 1% for retail accounts during the prior twelve months. 'Deposit growth is strong in many measurable ways. All deposit segments have grown on a year over year basis, and the bank continues to add new public fund customers and their operating accounts,' commented Lisa M. O'Neill, Executive Vice-President and Chief Financial Officer. Deposits not covered by FDIC deposit insurance as a percentage of total deposits were 59% as of June 30, 2025, compared to 57% at March 31, 2025, and 58% at June 30, 2024, reflecting growth in public fund deposits over those periods. Deposits not covered by FDIC deposit insurance or the Indiana Public Deposit Insurance Fund, which insures public funds deposits in Indiana, were 27% of total deposits at June 30, 2025, compared to 29% at March 31, 2025, and 29% at June 30, 2024. At June 30, 2025, 98% of deposit accounts had deposit balances less than $250,000. Net Interest Margin Net interest margin was 3.42% for the second quarter of 2025, representing a 25 basis point increase from 3.17% for the second quarter of 2024. This improvement was driven by a reduction in the company's funding costs, with interest expense as a percentage of average earning assets falling by 49 basis points from 2.90% for the second quarter of 2024 to 2.41% for the second quarter of 2025. Offsetting the decrease in funding costs was a decrease to earning asset yields of 24 basis points from 6.07% for the second quarter of 2024 to 5.83% for the second quarter of 2025. During the second quarter of 2025, the company recorded a prepayment fee of $541,000 from the early payment of a fixed rate commercial loan, which was recorded as part of interest income. The prepayment fee benefited net interest margin by 3 basis points for the second quarter. Excluding the impact of the prepayment penalty, net interest margin improved by 22 basis points. The easing of monetary policy by the Federal Reserve Bank, which began in September of 2024, drove the reduction in funding costs that provided for the net interest margin expansion through deposit repricing as compared to the prior year quarter. Net interest margin expanded by 2 basis points to 3.42% for the second quarter of 2025, compared to 3.40% for the linked first quarter of 2025. Average earning asset yields increased by 6 basis points from 5.77% to 5.83% on a linked quarter basis and interest expense as a percentage of average earning assets increased 4 basis points from 2.37% to 2.41%. Excluding the impact of the prepayment penalty, net interest margin contracted by 1 basis point compared to the linked first quarter. The cumulative loan beta for the current rate-easing cycle that began in September 2024 is 29% compared to the deposit beta of 50% and has resulted in net interest margin expansion which has benefited net interest income. Net interest income was $54.9 million for the second quarter of 2025, representing an increase of $6.6 million, or 14%, as compared to $48.3 million for the second quarter of 2024. On a linked quarter basis, net interest income increased $2.0 million, or 4%, from $52.9 million for the first quarter of 2025. Net interest income increased by $12.0 million, or 13%, from $95.7 million for the six months ended June 30, 2024, to $107.8 million for the six months ended June 30, 2025. O'Neill noted, 'We are pleased to report healthy net interest margin expansion of 25 basis points as compared to a year ago. In this higher-for-longer interest rate environment, we continue to benefit from fixed rate loan repricing and new loan origination activity. In addition, we are pleased that our core deposits represent 98% of our total funding needs compared to 97% a year ago. Core deposit growth has outpaced our loan growth in 2025, which has strengthened our liquidity position. We have begun to reinvest some maturing investment securities into higher yielding investment securities with short duration, which is also benefiting net interest margin.' Asset Quality The company recorded a provision for credit losses of $3.0 million in the second quarter of 2025, a decrease of $5.5 million as compared to $8.5 million in the second quarter of 2024. On a linked quarter basis, the provision expense decreased by $3.8 million, from $6.8 million for the first quarter of 2025. Provision expense for the second quarter and for the six months ended June 30, 2025, was primarily driven by an increase in the specific allocation for a previously disclosed $43.3 million nonperforming credit for an industrial company in Northern Indiana as well as loan growth. During the second quarter of 2025, the non-performing borrower reached an agreement to sell and liquidate the business to two unrelated entities. The transactions are expected to close in the third quarter of 2025. As a result of the pending sale and liquidation, the company recognized a charge off of $28.6 million during the second quarter, which was fully allocated at the time of the charge off. The company expects to collect the remainder of the outstanding principal balance from sale and liquidation proceeds and proceeds from the personal guarantee from the borrower. The ratio of allowance for credit losses to total loans was 1.27% at June 30, 2025, down from 1.60% at June 30, 2024, and 1.77% at March 31, 2025. The decrease in the allowance coverage was due to a significant reduction of 46%, or $26.5 million, in nonaccrual loans, which were $30.6 million at June 30, 2025 versus $57.1 million at June 30, 2024. Net charge offs in the second quarter of 2025 were $28.9 million, compared to $949,000 in the second quarter of 2024 and $327,000 during the linked first quarter of 2025. Annualized net charge offs to average loans were 2.22% for the second quarter of 2025, compared to 0.08% for the second quarter of 2024 and 0.03% for the linked first quarter of 2025. Annualized net charge offs to average loans were 1.13% for the six months ended June 30, 2025 compared to 0.05% for the six months ended June 30, 2024. Nonperforming assets decreased $26.5 million, or 46%, to $31.1 million as of June 30, 2025, versus $57.6 million as of June 30, 2024. On a linked quarter basis, nonperforming assets decreased $26.8 million, or 46%, compared to $57.9 million as of March 31, 2025. The ratio of nonperforming assets to total assets at June 30, 2025 decreased to 0.45% from 0.88% at June 30, 2024, and decreased from 0.84% at March 31, 2025. Total individually analyzed and watch list loans decreased by $76.6 million, or 29%, to $191.6 million as of June 30, 2025, versus $268.3 million as of June 30, 2024. On a linked quarter basis, total individually analyzed and watch list loans decreased by $23.9 million, or 11%, from $215.6 million at March 31, 2025. Watch list loans as a percentage of total loans were 3.67% at June 30, 2025, a decrease of 164 basis points compared to 5.31% at June 30, 2024, and 46 basis points from 4.13% at March 31, 2025. 'We are pleased to have reached a resolution on the nonperforming loan that we have been working through for the past several quarters,' stated Findlay. 'Importantly, our semi-annual loan portfolio reviews with all loan officers of the bank affirmed that asset quality is stable and that economic conditions in our footprint are contributing to new business development opportunities. We continue to monitor the impact of tariffs on our borrowers. It is too early to quantify the impact of U.S. trade policy on our borrowers' businesses, although there appears to be less concern on the impact of tariffs that we heard from borrowing clients previously.' Investment Portfolio Overview Total investment securities were $1.13 billion at June 30, 2025, reflecting an increase of $5.5 million, or less than 1%, as compared to $1.12 billion at June 30, 2024. Investment securities represented 16% of total assets on June 30, 2025, as compared to 17% and June 30, 2024 and March 31, 2025. The company anticipates receiving principal and interest cash flows of approximately $54.5 million during the remainder of 2025 from the investment securities portfolio and plans to use that liquidity to fund loan growth as well as to fund reinvestments to the investment securities portfolio. Tax equivalent adjusted effective duration for the investment portfolio was 5.9 years at June 30, 2025, compared to 6.5 years at June 30, 2024 and unchanged from 5.9 years at March 31, 2025. Noninterest Income The company's noninterest income decreased $9.0 million, or 44%, to $11.5 million for the second quarter of 2025, compared to $20.4 million for the second quarter of 2024. Noninterest income was elevated during the second quarter of 2024 as compared to the second quarter of 2025 as a result of the net gain on Visa shares of $9.0 million that was recorded in the second quarter of 2024. Adjusted core noninterest income, a non-GAAP financial measure that excludes the effect of the net gain on Visa shares and an insurance recovery, increased $58,000, or less than 1%, from $11.4 million during the second quarter of 2024. Bank owned life insurance income increased $150,000, or 17%, primarily as a result of increased general account bank owned life insurance income from the purchase of insurance policies during the second quarter of 2025. Mortgage banking income increased $101,000 due to growth in the company's mortgage pipeline, which favorably impacted secondary market loan sale gains and mortgage rate lock income. Wealth advisory fees increased $70,000, or 3%, driven by continued growth in customers and assets under management. Investment brokerage fees increased $72,000, or 15%, due to increased volume and product mix. Offsetting these increases was a decrease to other income of $296,000, or 43%, primarily driven by reduced limited partnership investment income. Noninterest income for the second quarter of 2025 increased by $558,000, or 5%, on a linked quarter basis from $10.9 million during the first quarter of 2025. Bank owned life insurance income increased $718,000, or 223%, primarily as a result of improved market performance of the bank's variable owned life insurance policies and increased general account bank owned life insurance income from the purchase of insurance policies during the second quarter of 2025. Loan and service fee income increased $122,000, or 4%, from increased interchange fee income. Mortgage banking income increased $175,000, as a result of income derived from secondary mortgage sales and pipeline growth. Investment brokerage fees income increased $98,000, or 22%. Offsetting these increases was a decrease to other income of $460,000, or 54%, primarily a result of reduced limited partnership investment income. Wealth advisory fees, which benefited in the linked first quarter of 2025 from significant estate settlement fee income decreased $200,000, or 7%. 'The linked quarter improvement of noninterest income of 5% is encouraging as we continue to focus on growing our fee-based businesses,' noted Findlay. 'We are particularly pleased with the continued growth of our Wealth Advisory Management area, which has recently added revenue generating employees in our footprint with a focus in Indianapolis. Assets under management in this area have reached nearly $3.0 billion at quarter end.' Noninterest income decreased by $10.6 million, or 32%, to $22.4 million for the six months ended June 30, 2025, compared to $33.1 million for the prior year six-month period. Noninterest income was elevated during the first six months of 2024 as compared to the comparable period of 2025 primarily because of the net gain on Visa shares of $9.0 million and a $1.0 million insurance recovery. Adjusted core noninterest income, a non-GAAP financial measure that excludes the impact of these non-routine events, declined $626,000, or 3%, from $23.0 million for the six months ended June 30, 2024. Other income decreased $1.6 million, or 56%, as other income during the first six months of 2024 benefited from the $1.0 million insurance recovery. Reduced limited partnership investment income further contributed to the decline between the periods. Bank owned life insurance income decreased $564,000, or 29%, primarily as a result of reduced market performance from the bank's variable bank owned life insurance policies, which correlate to returns in the equities markets. Offsetting these decreases were increases to wealth advisory fees of $482,000, or 10%, and service charges on deposit accounts of $104,000, or 2%. The increase in wealth advisory fees was primarily driven by continued growth in customers and assets under management. Noninterest Expense Noninterest expense decreased $2.9 million, or 9%, to $30.4 million for the second quarter of 2025, compared to $33.3 million during the second quarter of 2024. Noninterest expense was elevated during the second quarter of 2024 as compared to 2025 due to a $4.5 million accrual that was recorded from the resolution of a legal matter. Adjusted core noninterest expense, which excludes the impact of the legal accrual, increased $1.6 million, or 6%, from $28.8 million for the second quarter of 2024. Salaries and benefits expense increased by $938,000, or 6%. The primary drivers for the increase to salaries and benefits expense were increased salaries expense of $756,000 and increased health insurance expense of $127,000. Additionally, data processing fees and supplies expense increased $340,000, or 9%, from continued investment in customer-facing and operational technology solutions. Offsetting these increases were decreases to other expense of $3.8 million, or 62%, professional fees of $417,000, or 20%, and corporate and business development expense of $105,000, or 8%. The decrease to other expense was driven by the legal accrual recorded during the second quarter of 2024. The decrease to professional fees was primarily driven by reduced technology implementation consulting fees and swap collateral fees. Corporate and business development expense decreased primarily as a result of lower advertising expense. On a linked quarter basis, noninterest expense decreased by $2.3 million, or 7%, from $32.8 million during the first quarter of 2025. The primary drivers for the decrease to noninterest expense was a decrease to salaries and employee benefits of $806,000, or 5%, due to a reduction in HSA contributions expense of $441,000, resulting from the timing of the annual employer contribution to employee accounts, and a reduction in performance-based compensation accruals. Professional fees decreased $674,000, or 28%, and were primarily driven by reduced technology implementation consulting fees and swap collateral interest expense. Other expense decreased $353,000, or 13%, as other expense was elevated in the linked first quarter of 2025 from the timing of semiannual director share awards. Corporate and business development expense decreased by $246,000, or 18%, due to reduced advertising expense, primarily driven by the timing of when advertisement television spots were purchased and utilized. Net occupancy expense decreased $233,000, or 12%, due to reductions in seasonal expenses. Data processing fees and supplies expense decreased $113,000, or 3%. Noninterest expense decreased by $843,000, or 1%, for the six months ended June 30, 2025 to $63.2 million compared to $64.0 million for the six months ended June 30, 2024. Adjusted core noninterest expense, which excludes the impact of the $4.5 million legal accrual, increased $3.7 million, or 6%, from $59.5 million for the six months ended June 30, 2024. Salaries and benefits expense increased by $2.0 million, or 6%. Data processing fees and supplies and expense increased $766,000, or 10%. Net occupancy expense increased $289,000, or 8%, as a result of increased occupancy expense from the continued expansion of the company's branch network and improvements to existing facilities. Offsetting these increases were decreases to other expense of $3.4 million, or 41%, and professional fees of $500,000, or 11%. The company's efficiency ratio was 45.9% for the second quarter of 2025, compared to 48.5% for the second quarter of 2024 and 51.4% for the linked first quarter of 2025. The company's adjusted core efficiency ratio, a non-GAAP financial measure, was 48.2% for the second quarter of 2024. The company's efficiency ratio was 48.6% for the six months ended June 30, 2025, compared to 49.7% for the comparable period in 2024. The company's adjusted core efficiency ratio was 50.1% for the six months ended June 30, 2024. Findlay added, 'We are pleased with the improvement in our efficiency ratio, which has benefited from strong core revenue growth of 10% on a year-over-year basis. Our growth in noninterest expense is focused on continued investments in human capital, technology solutions and organic expansion of our banking footprint, particularly in Indianapolis.' Information regarding Lakeland Financial Corporation may be accessed on the home page of its subsidiary, Lake City Bank, at The company's common stock is traded on the Nasdaq Global Select Market under "LKFN." Lake City Bank, a $7.0 billion bank headquartered in Warsaw, Indiana, was founded in 1872 and serves Central and Northern Indiana communities with 54 branch offices and a robust digital banking platform. Lake City Bank's community banking model prioritizes building in-market long-term customer relationships while delivering technology-forward solutions for retail and commercial clients. This document contains, and future oral and written statements of the company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the company's management and on information currently available to management, are generally identifiable by the use of words such as "believe," "expect," "anticipate," "continue," "plan," "intend," "estimate," "may," "will," "would," "could," "should" or other similar expressions. The company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statements made by the company. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the company undertakes no obligation to update any statement in light of new information or future events. Numerous factors could cause the company's actual results to differ from those reflected in forward-looking statements, including the effects of economic, business and market conditions and changes, particularly in our Indiana market area, including prevailing interest rates and the rate of inflation; governmental trade, monetary and fiscal policies; the risks of changes in interest rates on the levels, composition and costs of deposits, loan demand and the values and liquidity of loan collateral, securities and other interest sensitive assets and liabilities; and changes in borrowers' credit risks and payment behaviors, as well as those identified in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. LAKELAND FINANCIAL CORPORATIONSECOND QUARTER 2025 FINANCIAL HIGHLIGHTS Three Months Ended Six Months Ended (Unaudited – Dollars in thousands, except per share data) June 30, March 31, June 30, June 30, June 30, END OF PERIOD BALANCES 2025 2025 2024 2025 2024 Assets $ 6,964,301 $ 6,851,178 $ 6,568,807 $ 6,964,301 $ 6,568,807 Investments 1,129,346 1,132,854 1,123,803 1,129,346 1,123,803 Loans 5,226,827 5,223,221 5,052,341 5,226,827 5,052,341 Allowance for Credit Losses 66,552 92,433 80,711 66,552 80,711 Deposits 6,176,833 5,960,194 5,763,537 6,176,833 5,763,537 Brokered Deposits 150,416 125,409 161,040 150,416 161,040 Core Deposits (1) 6,026,417 5,834,785 5,602,497 6,026,417 5,602,497 Total Equity 709,987 694,509 654,590 709,987 654,590 Goodwill Net of Deferred Tax Assets 3,803 3,803 3,803 3,803 3,803 Tangible Common Equity (2) 706,184 690,706 650,787 706,184 650,787 Adjusted Tangible CommonEquity (2) 866,758 854,585 820,534 866,758 820,534 AVERAGE BALANCES Total Assets $ 6,904,681 $ 6,762,970 $ 6,642,954 $ 6,834,217 $ 6,598,711 Earning Assets 6,570,607 6,430,804 6,295,281 6,501,092 6,256,105 Investments 1,125,597 1,136,404 1,118,776 1,130,970 1,138,639 Loans 5,229,646 5,185,918 5,034,851 5,207,903 5,002,935 Total Deposits 6,096,504 5,874,725 5,819,962 5,986,227 5,725,196 Interest Bearing Deposits 4,852,446 4,616,381 4,589,059 4,735,066 4,472,693 Interest Bearing Liabilities 4,886,943 4,716,465 4,666,136 4,802,175 4,599,136 Total Equity 696,976 696,053 638,999 696,517 642,003 INCOME STATEMENT DATA Net Interest Income $ 54,876 $ 52,875 $ 48,296 $ 107,751 $ 95,712 Net Interest Income-Fully Tax Equivalent 55,986 53,983 49,493 109,970 98,176 Provision for Credit Losses 3,000 6,800 8,480 9,800 10,000 Noninterest Income 11,486 10,928 20,439 22,414 33,051 Noninterest Expense 30,432 32,763 33,333 63,195 64,038 Net Income 26,966 20,085 22,549 47,051 45,950 Pretax Pre-Provision Earnings (2) 35,930 31,040 35,402 66,970 64,725 PER SHARE DATA Basic Net Income Per Common Share $ 1.05 $ 0.78 $ 0.88 $ 1.83 $ 1.79 Diluted Net Income PerCommon Share 1.04 0.78 0.87 1.82 1.78 Cash Dividends Declared Per Common Share 0.50 0.50 0.48 1.00 0.96 Dividend Payout 48.08 % 64.10 % 55.17 % 54.95 % 53.93 % Book Value Per Common Share (equity per share issued) $ 27.63 $ 26.99 $ 25.49 $ 27.63 $ 25.49 Tangible Book Value Per Common Share (2) 27.48 26.85 25.34 27.48 25.34 Market Value – High $ 62.39 $ 71.77 $ 66.62 $ 71.77 $ 73.22 Market Value – Low 50.00 58.24 57.59 50.00 57.59 Three Months Ended Six Months Ended (Unaudited – Dollars in thousands, except per share data) June 30, March 31, June 30, June 30, June 30, KEY RATIOS 2025 2025 2024 2025 2024 Basic Weighted Average Common Shares Outstanding 25,707,233 25,714,818 25,678,231 25,711,004 25,667,647 Diluted Weighted Average Common Shares Outstanding 25,776,205 25,802,865 25,742,871 25,782,817 25,746,773 Return on Average Assets 1.57 % 1.20 % 1.37 % 1.39 % 1.40 % Return on Average Total Equity 15.52 11.70 14.19 13.62 14.39 Average Equity to Average Assets 10.09 10.29 9.62 10.19 9.73 Net Interest Margin 3.42 3.40 3.17 3.41 3.16 Efficiency (Noninterest Expense/Net Interest Incomeplus Noninterest Income) 45.86 51.35 48.49 48.55 49.73 Loans to Deposits 84.62 87.64 87.66 84.62 87.66 Investment Securities to Total Assets 16.22 16.54 17.11 16.22 17.11 Tier 1 Leverage (3) 12.21 12.30 11.98 12.21 11.98 Tier 1 Risk-Based Capital (3) 14.73 14.51 14.28 14.73 14.28 Common Equity Tier 1 (CET1) (3) 14.73 14.51 14.28 14.73 14.28 Total Capital (3) 15.86 15.77 15.53 15.86 15.53 Tangible Capital (2) 10.15 10.09 9.91 10.15 9.91 Adjusted Tangible Capital (2) 12.17 12.19 12.18 12.17 12.18 ASSET QUALITY Loans Past Due 30 - 89 Days $ 1,648 $ 4,288 $ 1,615 $ 1,648 $ 1,615 Loans Past Due 90 Days or More 7 7 26 7 26 Nonaccrual Loans 30,627 57,392 57,124 30,627 57,124 Nonperforming Loans 30,634 57,399 57,150 30,634 57,150 Other Real Estate Owned 284 284 384 284 384 Other Nonperforming Assets 183 193 90 183 90 Total Nonperforming Assets 31,101 57,876 57,624 31,101 57,624 Individually Analyzed Loans 52,069 81,346 78,533 52,069 78,533 Non-Individually Analyzed Watch List Loans 139,548 134,218 189,726 139,548 189,726 Total Individually Analyzed and Watch List Loans 191,617 215,564 268,259 191,617 268,259 Gross Charge Offs 29,111 508 1,076 29,619 1,580 Recoveries 230 181 127 411 319 Net Charge Offs/(Recoveries) 28,881 327 949 29,208 1,261 Net Charge Offs/(Recoveries) to Average Loans 2.22 % 0.03 % 0.08 % 1.13 % 0.05 % Credit Loss Reserve to Loans 1.27 1.77 1.60 1.27 1.60 Credit Loss Reserve to Nonperforming Loans 217.25 161.04 141.23 217.25 141.23 Nonperforming Loans to Loans 0.59 1.10 1.13 0.59 1.13 Nonperforming Assets to Assets 0.45 0.84 0.88 0.45 0.88 Total Individually Analyzed and Watch List Loans to Total Loans 3.67 % 4.13 % 5.31 % 3.67 % 5.31 % Three Months Ended Six Months Ended (Unaudited – Dollars in thousands, except per share data) June 30, March 31, June 30, June 30, June 30 KEY RATIOS 2025 2025 2024 2025 2024, OTHER DATA Full Time Equivalent Employees 675 647 653 675 653 Offices 54 54 53 54 53 (1 ) Core deposits equals deposits less brokered deposits. (2 ) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures". (3 ) Capital ratios for June 30, 2025 are preliminary until the Call Report is filed. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) June 30,2025 December 31,2024 (Unaudited) ASSETS Cash and due from banks $ 97,413 $ 71,733 Short-term investments 212,767 96,472 Total cash and cash equivalents 310,180 168,205 Securities available-for-sale, at fair value 996,957 991,426 Securities held-to-maturity, at amortized cost (fair value of $107,979 and $113,107, respectively) 132,389 131,568 Real estate mortgage loans held-for-sale 1,637 1,700 Loans, net of allowance for credit losses of $66,552 and $85,960 5,160,275 5,031,988 Land, premises and equipment, net 61,449 60,489 Bank owned life insurance 127,399 113,320 Federal Reserve and Federal Home Loan Bank stock 21,420 21,420 Accrued interest receivable 29,109 28,446 Goodwill 4,970 4,970 Other assets 118,516 124,842 Total assets $ 6,964,301 $ 6,678,374 LIABILITIES Noninterest bearing deposits $ 1,261,740 $ 1,297,456 Interest bearing deposits 4,915,093 4,603,510 Total deposits 6,176,833 5,900,966 Borrowings Federal Home Loan Bank advance 1,200 0 Other borrowings 5,000 0 Total borrowings 6,200 0 Accrued interest payable 9,996 15,117 Other liabilities 61,285 78,380 Total liabilities 6,254,314 5,994,463 STOCKHOLDERS' EQUITY Common stock: 90,000,000 shares authorized, no par value 26,016,494 shares issued and 25,525,105 outstanding as of June 30, 2025 25,978,831 shares issued and 25,509,592 outstanding as of December 31, 2024 130,664 129,664 Retained earnings 757,739 736,412 Accumulated other comprehensive income (loss) (161,121 ) (166,500 ) Treasury stock, at cost (491,389 shares and 469,239 shares as of June 30, 2025 and December 31, 2024, respectively) (17,384 ) (15,754 ) Total stockholders' equity 709,898 683,822 Noncontrolling interest 89 89 Total equity 709,987 683,911 Total liabilities and equity $ 6,964,301 $ 6,678,374 CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 NET INTEREST INCOME Interest and fees on loans Taxable $ 84,418 $ 84,226 $ 166,158 $ 166,268 Tax exempt 291 632 583 1,532 Interest and dividends on securities Taxable 3,457 3,104 6,846 6,143 Tax exempt 3,917 3,932 7,827 7,879 Other interest income 2,302 1,842 3,426 2,948 Total interest income 94,385 93,736 184,840 184,770 Interest on deposits 39,111 44,363 75,569 85,527 Interest on short-term borrowings 398 1,077 1,520 3,531 Total interest expense 39,509 45,440 77,089 89,058 NET INTEREST INCOME 54,876 48,296 107,751 95,712 Provision for credit losses 3,000 8,480 9,800 10,000 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 51,876 39,816 97,951 85,712 NONINTEREST INCOME Wealth advisory fees 2,667 2,597 5,534 5,052 Investment brokerage fees 550 478 1,002 1,000 Service charges on deposit accounts 2,827 2,806 5,601 5,497 Loan and service fees 3,006 3,048 5,890 5,900 Merchant and interchange fee income 854 892 1,676 1,755 Bank owned life insurance income 1,040 890 1,362 1,926 Interest rate swap fee income 20 0 20 0 Mortgage banking income (loss) 124 23 73 75 Net securities gains (losses) 0 0 0 (46 ) Net gain on Visa shares 0 9,011 0 9,011 Other income 398 694 1,256 2,881 Total noninterest income 11,486 20,439 22,414 33,051 NONINTEREST EXPENSE Salaries and employee benefits 17,096 16,158 34,998 32,991 Net occupancy expense 1,747 1,698 3,727 3,438 Equipment costs 1,437 1,343 2,819 2,755 Data processing fees and supplies 4,152 3,812 8,417 7,651 Corporate and business development 1,160 1,265 2,566 2,646 FDIC insurance and other regulatory fees 839 816 1,639 1,605 Professional fees 1,706 2,123 4,086 4,586 Other expense 2,295 6,118 4,943 8,366 Total noninterest expense 30,432 33,333 63,195 64,038 INCOME BEFORE INCOME TAX EXPENSE 32,930 26,922 57,170 54,725 Income tax expense 5,964 4,373 10,119 8,775 NET INCOME $ 26,966 $ 22,549 $ 47,051 $ 45,950 BASIC WEIGHTED AVERAGE COMMON SHARES 25,707,233 25,678,231 25,711,004 25,667,647 BASIC EARNINGS PER COMMON SHARE $ 1.05 $ 0.88 $ 1.83 $ 1.79 DILUTED WEIGHTED AVERAGE COMMON SHARES 25,776,205 25,742,871 25,782,817 25,746,773 DILUTED EARNINGS PER COMMON SHARE $ 1.04 $ 0.87 $ 1.82 $ 1.78 LAKELAND FINANCIAL CORPORATIONLOAN DETAIL(unaudited, in thousands) June 30,2025 March 31,2025 June 30,2024 Commercial and industrial loans: Working capital lines of credit loans $ 717,484 13.7 % $ 716,522 13.7 % $ 697,754 13.8 % Non-working capital loans 776,278 14.9 807,048 15.5 828,523 16.4 Total commercial and industrial loans 1,493,762 28.6 1,523,570 29.2 1,526,277 30.2 Commercial real estate and multi-family residential loans: Construction and land development loans 552,998 10.6 623,905 12.0 658,345 13.0 Owner occupied loans 780,285 14.9 804,933 15.4 830,018 16.4 Nonowner occupied loans 869,196 16.6 852,033 16.3 762,365 15.1 Multifamily loans 477,910 9.1 339,946 6.5 252,652 5.0 Total commercial real estate and multi-family residential loans 2,680,389 51.2 2,620,817 50.2 2,503,380 49.5 Agri-business and agricultural loans: Loans secured by farmland 150,934 2.9 156,112 3.0 161,410 3.2 Loans for agricultural production 188,501 3.6 227,659 4.3 199,654 4.0 Total agri-business and agricultural loans 339,435 6.5 383,771 7.3 361,064 7.2 Other commercial loans 95,442 1.8 94,927 1.8 96,703 1.9 Total commercial loans 4,609,028 88.1 4,623,085 88.5 4,487,424 88.8 Consumer 1-4 family mortgage loans: Closed end first mortgage loans 273,287 5.2 265,855 5.1 259,094 5.1 Open end and junior lien loans 226,114 4.4 217,981 4.2 197,861 3.9 Residential construction and land development loans 16,667 0.3 16,359 0.3 12,952 0.3 Total consumer 1-4 family mortgage loans 516,068 9.9 500,195 9.6 469,907 9.3 Other consumer loans 103,880 2.0 102,254 1.9 97,895 1.9 Total consumer loans 619,948 11.9 602,449 11.5 567,802 11.2 Subtotal 5,228,976 100.0 % 5,225,534 100.0 % 5,055,226 100.0 % Less: Allowance for credit losses (66,552 ) (92,433 ) (80,711 ) Net deferred loan fees (2,149 ) (2,313 ) (2,885 ) Loans, net $ 5,160,275 $ 5,130,788 $ 4,971,630 LAKELAND FINANCIAL CORPORATIONDEPOSITS AND BORROWINGS(unaudited, in thousands) June 30,2025 March 31,2025 June 30,2024 Noninterest bearing demand deposits $ 1,261,740 $ 1,296,907 $ 1,212,989 Savings and transaction accounts: Savings deposits 283,976 293,768 283,809 Interest bearing demand deposits 3,841,703 3,554,310 3,274,179 Time deposits: Deposits of $100,000 or more 584,165 602,577 776,314 Other time deposits 205,249 212,632 216,246 Total deposits $ 6,176,833 $ 5,960,194 $ 5,763,537 FHLB advances and other borrowings 6,200 108,200 55,000 Total funding sources $ 6,183,033 $ 6,068,394 $ 5,818,537 LAKELAND FINANCIAL CORPORATIONAVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS(UNAUDITED) Three Months Ended June 30, 2025 Three Months Ended March 31, 2025 Three Months Ended June 30, 2024 (fully tax equivalent basis, dollars in thousands) Average Balance Interest Income Yield (1)/Rate Average Balance Interest Income Yield (1)/Rate Average Balance Interest Income Yield (1)/Rate Earning Assets Loans: Taxable (2)(3) $ 5,204,006 $ 84,418 6.51 % $ 5,160,031 $ 81,740 6.42 % $ 4,993,270 $ 84,226 6.78 % Tax exempt (1) 25,640 359 5.62 25,887 361 5.66 41,581 783 7.57 Investments: (1) Securities 1,125,597 8,416 3.00 1,136,404 8,338 2.98 1,118,776 8,082 2.91 Short-term investments 2,832 28 3.97 2,964 28 3.83 2,836 35 4.96 Interest bearing deposits 212,532 2,274 4.29 105,518 1,096 4.21 138,818 1,807 5.24 Total earning assets $ 6,570,607 $ 95,495 5.83 % $ 6,430,804 $ 91,563 5.77 % $ 6,295,281 $ 94,933 6.07 % Less: Allowance for credit losses (93,644 ) (87,477 ) (74,166 ) Nonearning Assets Cash and due from banks 66,713 71,004 64,518 Premises and equipment 61,280 60,523 58,702 Other nonearning assets 299,725 288,116 298,619 Total assets $ 6,904,681 $ 6,762,970 $ 6,642,954 Interest Bearing Liabilities Savings deposits $ 285,944 $ 43 0.06 % $ 283,888 $ 42 0.06 % $ 289,107 $ 48 0.07 % Interest bearing checking accounts 3,767,903 31,499 3.35 3,486,447 28,075 3.27 3,275,502 33,323 4.09 Time deposits: In denominations under $100,000 208,770 1,745 3.35 212,934 1,832 3.49 217,146 1,871 3.47 In denominations over $100,000 589,829 5,824 3.96 633,112 6,509 4.17 807,304 9,121 4.54 Other short-term borrowings 33,297 398 4.79 99,830 1,122 4.56 77,077 1,077 5.62 Long-term borrowings 1,200 0 0.00 254 0 0.00 0 0 0.00 Total interest bearing liabilities $ 4,886,943 $ 39,509 3.24 % $ 4,716,465 $ 37,580 3.23 % $ 4,666,136 $ 45,440 3.92 % Noninterest Bearing Liabilities Demand deposits 1,244,058 1,258,344 1,230,903 Other liabilities 76,704 92,108 106,916 Stockholders' Equity 696,976 696,053 638,999 Total liabilities and stockholders' equity $ 6,904,681 $ 6,762,970 $ 6,642,954 Interest Margin Recap Interest income/average earning assets 95,495 5.83 % 91,563 5.77 % 94,933 6.07 % Interest expense/average earning assets 39,509 2.41 37,580 2.37 45,440 2.90 Net interest income and margin $ 55,986 3.42 % $ 53,983 3.40 % $ 49,493 3.17 % (1 ) Tax exempt income was converted to a fully taxable equivalent basis at a 21 percent tax rate. The tax equivalent rate for tax exempt loans and tax-exempt securities acquired after January 1, 1983, included the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") adjustment applicable to nondeductible interest expenses. Taxable equivalent basis adjustments were $1.11 million, $1.11 million and $1.20 million in the three-month periods ended June 30, 2025, March 31, 2025, and June 30, 2024, respectively. (2 ) Loan fees, which are immaterial in relation to total taxable loan interest income for the three-month periods ended June 30, 2025, March 31, 2025, and June 30, 2024, are included as taxable loan interest income. (3 ) Nonaccrual loans are included in the average balance of taxable loans. Reconciliation of Non-GAAP Financial Measures Tangible common equity, adjusted tangible common equity, tangible assets, adjusted tangible assets, tangible book value per common share, tangible common equity to tangible assets, adjusted tangible common equity to adjusted tangible assets, and pretax pre-provision earnings are non-GAAP financial measures calculated based on GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of equity, net of deferred tax. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets, net of deferred tax. Adjusted tangible assets and adjusted tangible common equity remove the fair market value adjustment impact of the available-for-sale investment securities portfolio in accumulated other comprehensive income (loss) ("AOCI"). Tangible book value per common share is calculated by dividing tangible common equity by the number of shares outstanding less true treasury stock. Pretax pre-provision earnings is calculated by adding net interest income to noninterest income and subtracting noninterest expense. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. However, management considers these measures of the company's value meaningful to understanding of the company's financial information and performance. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data). Three Months Ended Six Months Ended Jun. 30, 2025 Mar. 31, 2025 Jun. 30, 2024 Jun. 30, 2025 Jun. 30, 2024 Total Equity $ 709,987 $ 694,509 $ 654,590 $ 709,987 $ 654,590 Less: Goodwill (4,970 ) (4,970 ) (4,970 ) (4,970 ) (4,970 ) Plus: DTA Related to Goodwill 1,167 1,167 1,167 1,167 1,167 Tangible Common Equity 706,184 690,706 650,787 706,184 650,787 Market Value Adjustment in AOCI 160,574 163,879 169,747 160,574 169,747 Adjusted Tangible Common Equity 866,758 854,585 820,534 866,758 820,534 Assets $ 6,964,301 $ 6,851,178 $ 6,568,807 $ 6,964,301 $ 6,568,807 Less: Goodwill (4,970 ) (4,970 ) (4,970 ) (4,970 ) (4,970 ) Plus: DTA Related to Goodwill 1,167 1,167 1,167 1,167 1,167 Tangible Assets 6,960,498 6,847,375 6,565,004 6,960,498 6,565,004 Market Value Adjustment in AOCI 160,574 163,879 169,747 160,574 169,747 Adjusted Tangible Assets 7,121,072 7,011,254 6,734,751 7,121,072 6,734,751 Ending Common Shares Issued 25,697,093 25,727,393 25,679,066 25,697,093 25,679,066 Tangible Book Value Per Common Share $ 27.48 $ 26.85 $ 25.34 $ 27.48 $ 25.34 Tangible Common Equity/Tangible Assets 10.15 % 10.09 % 9.91 % 10.15 % 9.91 % Adjusted Tangible Common Equity/Adjusted Tangible Assets 12.17 % 12.19 % 12.18 % 12.17 % 12.18 % Net Interest Income $ 54,876 $ 52,875 $ 48,296 $ 107,751 $ 95,712 Plus: Noninterest Income 11,486 10,928 20,439 22,414 33,051 Minus: Noninterest Expense (30,432 ) (32,763 ) (33,333 ) (63,195 ) (64,038 ) Pretax Pre-Provision Earnings $ 35,930 $ 31,040 $ 35,402 $ 66,970 $ 64,725 Adjusted core noninterest income, adjusted core noninterest expense, adjusted earnings before income taxes, core operational profitability, core operational diluted earnings per common share and adjusted core efficiency ratio are non-GAAP financial measures calculated based on GAAP amounts. These adjusted amounts are calculated by excluding the impact of the net gain on Visa shares, legal accrual and 2023 wire fraud loss insurance recoveries for the periods presented below. Management considers these measures of financial performance to be meaningful to understanding the company's core business performance for these periods. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data). Three Months Ended Six Months Ended Jun. 30, 2025 Mar. 31, 2025 Jun. 30, 2024 Jun. 30, 2025 Jun. 30, 2024 Noninterest Income $ 11,486 $ 10,928 $ 20,439 $ 22,414 $ 33,051 Less: Net Gain on Visa Shares 0 0 (9,011 ) 0 (9,011 ) Less: Insurance Recovery 0 0 0 0 (1,000 ) Adjusted Core Noninterest Income $ 11,486 $ 10,928 $ 11,428 $ 22,414 $ 23,040 Noninterest Expense $ 30,432 $ 32,763 $ 33,333 $ 63,195 $ 64,038 Less: Legal Accrual 0 0 (4,537 ) 0 (4,537 ) Adjusted Core Noninterest Expense $ 30,432 $ 32,763 $ 28,796 $ 63,195 $ 59,501 Earnings Before Income Taxes $ 32,930 $ 24,240 $ 26,922 $ 57,170 $ 54,725 Adjusted Core Impact: Noninterest Income 0 0 (9,011 ) 0 (10,011 ) Noninterest Expense 0 0 4,537 0 4,537 Total Adjusted Core Impact 0 0 (4,474 ) 0 (5,474 ) Adjusted Earnings Before Income Taxes 32,930 24,240 22,448 57,170 49,251 Tax Effect (5,964 ) (4,155 ) (3,261 ) (10,119 ) (7,414 ) Core Operational Profitability (1) $ 26,966 $ 20,085 $ 19,187 $ 47,051 $ 41,837 Diluted Earnings Per Common Share $ 1.04 $ 0.78 $ 0.87 $ 1.82 $ 1.78 Impact of Adjusted Core Items 0.00 0.00 (0.13 ) 0.00 (0.16 ) Core Operational Diluted Earnings Per Common Share $ 1.04 $ 0.78 $ 0.74 $ 1.82 $ 1.62 Adjusted Core Efficiency Ratio 45.86 % 51.35 % 48.22 % 48.55 % 50.11 % (1 ) Core operational profitability was $3.4 million lower than reported net income for the three months ended June 30, 2024 and $4.1 million lower for the six months ended June 30, 2024. 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Stellar Bancorp, Inc. Reports Second Quarter 2025 Results
HOUSTON, July 25, 2025--(BUSINESS WIRE)--Stellar Bancorp, Inc. (the "Company" or "Stellar") (NYSE: STEL) today reported net income of $26.4 million, or diluted earnings per share of $0.51, for the second quarter of 2025, compared to net income of $24.7 million, or diluted earnings per share of $0.46, for the first quarter of 2025. "We are pleased to report our second quarter results that reflect the efforts of our team beginning to add growth to the foundation we've built at Stellar Bank," said Robert R. Franklin, Jr., Stellar's Chief Executive Officer. "Our bankers made meaningful progress on originations during the second quarter after experiencing elevated payoff activity. We believe that the momentum we saw at the end of the second quarter will continue, which sets us up for loan and deposit growth over the remainder of the year," Mr. Franklin continued. "We also anticipate that the President's spending bill will provide some tail wind for the Houston economy. The Stellar message is resonating with our customer base, and we are seeing great progress with our prospects. Our pipelines are building and Stellar Bank is well-positioned to gain market share in the vibrant Texas markets we serve," Mr. Franklin concluded. Financial Highlights Solid Profitability: Net income for the second quarter of 2025 was $26.4 million, or diluted earnings per share of $0.51, which translated into an annualized return on average assets of 1.01%, an annualized return on average equity of 6.62% and an annualized return on average tangible equity of 12.16%(1). Strong Net Interest Margin: Tax equivalent net interest margin for the second quarter of 2025 was 4.18% compared to 4.20% for the first quarter of 2025. The tax equivalent net interest margin, excluding purchase accounting accretion ("PAA"), was 3.95%(1) for the second quarter of 2025 compared to 3.97%(1) for the first quarter of 2025. Strong Capital Position and Book Value Build: Total risk-based capital ratio increased to 15.98% at June 30, 2025, while book value per share increased to $31.20 at June 30, 2025 from $30.89 at March 31, 2025 and tangible book value per share increased to $19.94(1) at June 30, 2025 from $19.69(1) at March 31, 2025. Low Net Charge-offs: Net charge-offs of $370 thousand, or 0.01% of average loans, for the six months ended June 30, 2025 along with manageable asset quality, compared to $713 thousand, or 0.02% of average loans, for the six months ended June 30, 2024. Repurchase of Shares: Repurchased 791 thousand shares at a weighted average price per share of $26.08 during the second quarter of 2025. Second Quarter 2025 Results Net interest income in the second quarter of 2025 decreased $923 thousand, or 0.9%, to $98.3 million from $99.3 million for the first quarter of 2025. The net interest margin on a tax equivalent basis decreased to 4.18% for the second quarter of 2025 from 4.20% for the first quarter of 2025. The decrease in the net interest margin from the prior quarter was primarily due to the impact of increased rates on interest-bearing liabilities along with the decrease in average interest-earning assets partially offset by higher rates on loans. Net interest income for the second quarter of 2025 benefited from $5.3 million of income from PAA compared to $5.4 million in the first quarter of 2025. Excluding PAA, net interest income (tax equivalent) for the second quarter of 2025 would have been $93.1 million(1) and the tax equivalent net interest margin would have been 3.95%(1). Noninterest income for the second quarter of 2025 was $5.8 million, an increase of $286 thousand, or 5.2%, compared to $5.5 million for the first quarter of 2025. Noninterest income increased in the second quarter of 2025 compared to the first quarter of 2025 primarily due to the increase in other noninterest income partially offset by the loss on sale of assets during the second quarter. A significant driver of the increase in other noninterest income was $490 thousand in Federal Reserve Bank dividends as a result of Stellar Bank becoming a member of the Federal Reserve System effective in April 2025. Noninterest expense for the second quarter of 2025 decreased $162 thousand, or 0.2%, to $70.0 million compared to $70.2 million for the first quarter of 2025. The decrease in noninterest expense in the second quarter of 2025 compared to the first quarter of 2025 was primarily due to a decrease in salaries and employee benefits of $865 thousand along with a decrease in professional fees of $499 thousand partially offset by a $473 thousand increase in net occupancy and equipment, a $385 thousand increase in advertising expense and a $567 thousand increase in other noninterest expense. The efficiency ratio was 61.87% for the second quarter of 2025 compared to 61.93%(1) for the first quarter of 2025. Annualized returns on average assets, average equity and average tangible equity were 1.01%, 6.62% and 12.16%(1) for the second quarter of 2025, respectively, compared to 0.94%, 6.21% and 11.48%(1) for the first quarter of 2025, respectively. Financial Condition Total assets at June 30, 2025 were $10.49 billion, an increase of $58.1 million compared to $10.43 billion at March 31, 2025. The increase in total assets was largely due to an increase in Federal Reserve Bank stock along with increases in cash and securities, all of which were funded largely by core deposit growth. Total loans at June 30, 2025 increased $4.2 million to $7.29 billion compared to $7.28 billion at March 31, 2025. At June 30, 2025, the remaining balance of the purchase accounting accretion ("PAA") on loans was $62.9 million. Total deposits at June 30, 2025 increased $110.9 million to $8.67 billion compared to $8.56 billion at March 31, 2025 primarily due to increases in demand and money market and savings deposits partially offset by decreases in certificates and other time and noninterest-bearing deposits. Certificates and other time deposits decreased primarily due to the reduction in brokered deposits. Asset Quality Nonperforming assets totaled $58.2 million, or 0.55% of total assets, at June 30, 2025, compared to $59.7 million, or 0.57% of total assets, at March 31, 2025. The allowance for credit losses on loans as a percentage of total loans was 1.14% at June 30, 2025 compared to 1.15% at March 31, 2025. The provision for credit losses was $1.1 million for the second quarter of 2025 compared to $3.6 million for the first quarter of 2025. Net charge-offs for the second quarter of 2025 were $206 thousand, or 0.01% (annualized) of average loans, compared to net charge-offs of $163 thousand, or 0.01% (annualized) of average loans, for the first quarter of 2025. GAAP Reconciliation of Non-GAAP Financial Measures Stellar's management uses certain non-GAAP financial measures to evaluate its performance. Please refer to the GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures on page 10 of this earnings release for a reconciliation of these non-GAAP financial measures. Conference Call Stellar's management team will host a conference call and webcast on Friday, July 25, 2025 at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to discuss its results for the second quarter of 2025. Participants may register for the conference call at conference ID 63586 to receive the dial-in numbers and unique PIN to access the call. If you need assistance in obtaining a dial-in number, please contact ir@ A simultaneous webcast is available at and requires pre-registration. If you are unable to participate during the live webcast, the webcast will be accessible via the Investor Relations section of the Company's website at _____________________ (1) Refer to the calculation of this non-GAAP financial measure on page 10 of this earnings release. The calculation of returns on average tangible equity and the efficiency ratio have been adjusted from prior period disclosures. About Stellar Bancorp, Inc. Stellar Bancorp, Inc. is a bank holding company headquartered in Houston, Texas. Stellar's principal banking subsidiary, Stellar Bank, provides a diversified range of commercial banking services primarily to small- to medium-sized businesses and individual customers across Houston, Dallas, Beaumont and surrounding communities in Texas. Forward-Looking Statements 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, 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: 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; risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators; legislative changes, executive orders, regulatory actions and reforms of the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Texas Department of Banking. 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 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. Stellar Bancorp, Inc. Financial Highlights (Unaudited) 2025 2024 June 30 March 31 December 31 September 30 June 30 (Dollars in thousands) ASSETS: Cash and due from banks $ 136,060 $ 130,932 $ 419,967 $ 103,735 $ 110,341 Interest-bearing deposits at other financial institutions 442,044 429,643 491,249 412,482 379,909 Total cash and cash equivalents 578,104 560,575 911,216 516,217 490,250 Available for sale securities, at fair value 1,729,684 1,719,371 1,673,016 1,691,752 1,630,971 Loans held for investment 7,287,347 7,283,133 7,439,854 7,551,124 7,713,897 Less: allowance for credit losses on loans (83,165 ) (83,746 ) (81,058 ) (84,501 ) (94,772 ) Loans, net 7,204,182 7,199,387 7,358,796 7,466,623 7,619,125 Accrued interest receivable 35,537 37,669 37,884 39,473 43,348 Premises and equipment, net 108,615 109,750 111,856 113,742 113,984 Federal Reserve Bank and Federal Home Loan Bank stock 47,099 20,902 8,209 20,123 15,089 Bank-owned life insurance 108,726 108,108 107,498 106,876 106,262 Goodwill 497,318 497,318 497,318 497,318 497,318 Core deposit intangibles, net 81,468 87,007 92,546 98,116 104,315 Other assets 102,277 94,800 107,451 79,537 103,001 Total assets $ 10,493,010 $ 10,434,887 $ 10,905,790 $ 10,629,777 $ 10,723,663 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits: Noninterest-bearing $ 3,183,693 $ 3,205,619 $ 3,576,206 $ 3,303,048 $ 3,308,441 Interest-bearing Demand 1,941,156 1,863,752 1,845,749 1,571,504 1,564,405 Money market and savings 2,393,767 2,248,616 2,253,193 2,280,651 2,213,031 Certificates and other time 1,154,998 1,244,726 1,453,236 1,587,398 1,639,426 Total interest-bearing deposits 5,489,921 5,357,094 5,552,178 5,439,553 5,416,862 Total deposits 8,673,614 8,562,713 9,128,384 8,742,601 8,725,303 Accrued interest payable 7,607 9,856 17,052 16,915 12,327 Borrowed funds 69,925 119,923 — 60,000 240,000 Subordinated debt 70,165 70,135 70,105 110,064 109,964 Other liabilities 67,865 61,428 82,389 74,074 70,274 Total liabilities 8,889,176 8,824,055 9,297,930 9,003,654 9,157,868 SHAREHOLDERS' EQUITY: Common stock 514 521 534 535 536 Capital surplus 1,185,048 1,202,628 1,240,050 1,238,619 1,238,477 Retained earnings 529,216 510,072 492,640 474,905 447,948 Accumulated other comprehensive loss (110,944 ) (102,389 ) (125,364 ) (87,936 ) (121,166 ) Total shareholders' equity 1,603,834 1,610,832 1,607,860 1,626,123 1,565,795 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 10,493,010 $ 10,434,887 $ 10,905,790 $ 10,629,777 $ 10,723,663 Stellar Bancorp, Inc. Financial Highlights (Unaudited) Three Months Ended Six Months Ended 2025 2024 2025 2024 June 30 March 31 December 31 September 30 June 30 June 30 June 30 (Dollars in thousands, except per share data) INTEREST INCOME: Loans, including fees $ 121,814 $ 120,640 $ 128,738 $ 132,372 $ 135,885 $ 242,454 $ 270,570 Securities: Taxable 15,293 16,148 14,789 13,898 11,923 31,441 21,216 Tax-exempt 810 812 814 814 816 1,622 1,634 Deposits in other financial institutions 4,782 4,720 5,681 4,692 3,555 9,502 7,182 Total interest income 142,699 142,320 150,022 151,776 152,179 285,019 300,602 INTEREST EXPENSE: Demand, money market and savings deposits 31,097 27,574 27,877 29,440 28,399 58,671 55,929 Certificates and other time deposits 11,459 13,527 16,830 18,073 18,758 24,986 33,842 Borrowed funds 407 517 235 840 1,700 924 3,474 Subordinated debt 1,401 1,444 2,123 1,916 1,912 2,845 3,829 Total interest expense 44,364 43,062 47,065 50,269 50,769 87,426 97,074 NET INTEREST INCOME 98,335 99,258 102,957 101,507 101,410 197,593 203,528 Provision for (reversal of) credit losses 1,090 3,632 942 (5,985 ) (1,935 ) 4,722 2,163 Net interest income after provision for credit losses 97,245 95,626 102,015 107,492 103,345 192,871 201,365 NONINTEREST INCOME: Service charges on deposit accounts 1,561 1,584 1,590 1,594 1,648 3,145 3,246 (Loss) gain on sale of assets (57 ) 417 (112 ) 432 (64 ) 360 449 Bank-owned life insurance 618 610 622 614 591 1,228 1,178 Debit card and interchange income 566 520 570 551 543 1,086 1,070 Other 3,103 2,374 2,362 3,111 2,698 5,477 5,769 Total noninterest income 5,791 5,505 5,032 6,302 5,416 11,296 11,712 NONINTEREST EXPENSE: Salaries and employee benefits 40,927 41,792 43,797 41,123 39,061 82,719 80,437 Net occupancy and equipment 4,399 3,926 4,401 4,570 4,503 8,325 8,893 Depreciation 1,992 1,995 1,984 1,911 1,948 3,987 3,912 Data processing and software amortization 5,620 5,682 5,551 5,706 5,501 11,302 10,395 Professional fees 1,287 1,786 3,428 1,714 1,620 3,073 4,282 Regulatory assessments and FDIC insurance 1,561 1,733 1,636 1,779 2,299 3,294 4,153 Amortization of intangibles 5,548 5,548 5,581 6,212 6,215 11,096 12,427 Communications 861 847 807 827 847 1,708 1,784 Advertising 1,167 782 1,593 878 891 1,949 1,656 Other 6,642 6,075 6,488 6,346 8,331 12,717 14,687 Total noninterest expense 70,004 70,166 75,266 71,066 71,216 140,170 142,626 INCOME BEFORE INCOME TAXES 33,032 30,965 31,781 42,728 37,545 63,997 70,451 Provision for income taxes 6,680 6,263 6,569 8,837 7,792 12,943 14,551 NET INCOME $ 26,352 $ 24,702 $ 25,212 $ 33,891 $ 29,753 $ 51,054 $ 55,900 EARNINGS PER SHARE Basic $ 0.51 $ 0.46 $ 0.47 $ 0.63 $ 0.56 $ 0.98 $ 1.05 Diluted $ 0.51 $ 0.46 $ 0.47 $ 0.63 $ 0.56 $ 0.97 $ 1.04 Stellar Bancorp, Inc. Financial Highlights (Unaudited) Three Months Ended Six Months Ended 2025 2024 2025 2024 June 30 March 31 December 31 September 30 June 30 June 30 June 30 (Dollars and share amounts in thousands, except per share data) Net income $ 26,352 $ 24,702 $ 25,212 $ 33,891 $ 29,753 $ 51,054 $ 55,900 Earnings per share, basic $ 0.51 $ 0.46 $ 0.47 $ 0.63 $ 0.56 $ 0.98 $ 1.05 Earnings per share, diluted $ 0.51 $ 0.46 $ 0.47 $ 0.63 $ 0.56 $ 0.97 $ 1.04 Dividends per share $ 0.14 $ 0.14 $ 0.14 $ 0.13 $ 0.13 $ 0.28 $ 0.26 Return on average assets(A) 1.01 % 0.94 % 0.94 % 1.27 % 1.13 % 0.98 % 1.06 % Return on average equity(A) 6.62 % 6.21 % 6.21 % 8.49 % 7.78 % 6.42 % 7.33 % Return on average tangible equity(A)(B)(D) 12.16 % 11.48 % 11.53 % 15.61 % 14.94 % 11.82 % 14.28 % Net interest margin (tax equivalent)(A)(C) 4.18 % 4.20 % 4.25 % 4.19 % 4.24 % 4.19 % 4.25 % Net interest margin (tax equivalent) excluding PAA(A)(B)(C) 3.95 % 3.97 % 3.94 % 3.91 % 3.82 % 3.96 % 3.86 % Efficiency ratio(B)(E) 61.87 % 61.93 % 64.46 % 60.40 % 60.81 % 61.90 % 60.62 % Capital Ratios Stellar Bancorp, Inc. (Consolidated) Equity to assets 15.28 % 15.44 % 14.74 % 15.30 % 14.60 % 15.28 % 14.60 % Tangible equity to tangible assets(B)(E) 10.34 % 10.42 % 9.87 % 10.27 % 9.53 % 10.34 % 9.53 % Estimated Total capital ratio (to risk-weighted assets) 15.98 % 15.97 % 16.00 % 15.85 % 15.30 % 15.98 % 15.30 % Estimated Common equity Tier 1 capital (to risk weighted assets) 14.06 % 14.05 % 14.14 % 13.57 % 12.95 % 14.06 % 12.95 % Estimated Tier 1 capital (to risk-weighted assets) 14.18 % 14.17 % 14.26 % 13.69 % 13.06 % 14.18 % 13.06 % Estimated Tier 1 leverage (to average tangible assets) 11.44 % 11.20 % 11.31 % 11.10 % 10.77 % 11.44 % 10.77 % Stellar Bank Estimated Total capital ratio (to risk-weighted assets) 15.39 % 15.40 % 15.28 % 15.02 % 14.61 % 15.39 % 14.61 % Estimated Common equity Tier 1 capital (to risk-weighted assets) 14.18 % 14.20 % 14.13 % 13.58 % 13.08 % 14.18 % 13.08 % Estimated Tier 1 capital (to risk-weighted assets) 14.18 % 14.20 % 14.13 % 13.58 % 13.08 % 14.18 % 13.08 % Estimated Tier 1 leverage (to average tangible assets) 11.44 % 11.22 % 11.21 % 11.01 % 10.78 % 11.44 % 10.78 % Other Data Weighted average shares: Basic 51,529 53,146 53,422 53,541 53,572 52,333 53,457 Diluted 51,569 53,197 53,471 53,580 53,608 52,376 53,506 Period end shares outstanding 51,398 52,141 53,429 53,446 53,564 51,398 53,564 Book value per share $ 31.20 $ 30.89 $ 30.09 $ 30.43 $ 29.23 $ 31.20 $ 29.23 Tangible book value per share(B) $ 19.94 $ 19.69 $ 19.05 $ 19.28 $ 18.00 $ 19.94 $ 18.00 Employees - full-time equivalents 1,062 1,054 1,037 1,040 1,045 1,062 1,045 (A) Interim periods annualized. (B) Refer to the calculation of these non-GAAP financial measures on page 10 of this Earnings Release. (C) Net interest margin represents net interest income divided by average interest-earning assets. (D) The calculation of return on average tangible equity has been adjusted from prior period disclosures. All periods presented above have been recalculated and disclosed under the same calculation. (E) The calculation of the efficiency ratio has been adjusted from prior period disclosures. All periods presented above have been recalculated and disclosed under the same calculation. Stellar Bancorp, Inc. Financial Highlights (Unaudited) Three Months Ended June 30, 2025 March 31, 2025 June 30, 2024 AverageBalance InterestEarned/InterestPaid AverageYield/Rate AverageBalance InterestEarned/InterestPaid AverageYield/Rate AverageBalance InterestEarned/InterestPaid AverageYield/Rate (Dollars in thousands) Assets Interest-Earning Assets: Loans $ 7,282,609 $ 121,814 6.71 % $ 7,344,298 $ 120,640 6.66 % $ 7,808,320 $ 135,885 7.00 % Securities 1,729,384 16,103 3.73 % 1,817,286 16,960 3.78 % 1,549,638 12,739 3.31 % Deposits in other financial institutions 436,596 4,782 4.39 % 430,621 4,720 4.45 % 258,916 3,555 5.52 % Total interest-earning assets 9,448,589 $ 142,699 6.06 % 9,592,205 $ 142,320 6.02 % 9,616,874 $ 152,179 6.36 % Allowance for credit losses on loans (83,700 ) (81,166 ) (96,306 ) Noninterest-earning assets 1,099,268 1,100,652 1,103,297 Total assets $ 10,464,157 $ 10,611,691 $ 10,623,865 Liabilities and Shareholders' Equity Interest-Bearing Liabilities: Interest-bearing demand deposits $ 1,952,004 $ 14,399 2.96 % $ 1,911,625 $ 12,392 2.63 % $ 1,545,096 $ 12,213 3.18 % Money market and savings deposits 2,371,221 16,698 2.82 % 2,234,571 15,182 2.76 % 2,227,393 16,186 2.92 % Certificates and other time deposits 1,201,903 11,459 3.82 % 1,296,972 13,527 4.23 % 1,694,536 18,758 4.45 % Borrowed funds 34,427 407 4.74 % 45,795 517 4.58 % 112,187 1,700 6.09 % Subordinated debt 70,151 1,401 8.01 % 70,121 1,444 8.35 % 109,910 1,912 7.00 % Total interest-bearing liabilities 5,629,706 $ 44,364 3.16 % 5,559,084 $ 43,062 3.14 % 5,689,122 $ 50,769 3.59 % Noninterest-Bearing Liabilities: Noninterest-bearing demand deposits 3,160,791 3,346,066 3,308,633 Other liabilities 78,120 92,299 87,986 Total liabilities 8,868,617 8,997,449 9,085,741 Shareholders' equity 1,595,540 1,614,242 1,538,124 Total liabilities and shareholders' equity $ 10,464,157 $ 10,611,691 $ 10,623,865 Net interest rate spread 2.90 % 2.88 % 2.77 % Net interest income and margin $ 98,335 4.17 % $ 99,258 4.20 % $ 101,410 4.24 % Net interest income and margin (tax equivalent) $ 98,427 4.18 % $ 99,353 4.20 % $ 101,482 4.24 % Cost of funds 2.02 % 1.96 % 2.27 % Cost of deposits 1.97 % 1.90 % 2.16 % Stellar Bancorp, Inc. Financial Highlights (Unaudited) Six Months Ended June 30, 2025 2024 AverageBalance InterestEarned/Interest Paid AverageYield/Rate AverageBalance InterestEarned/ Interest Paid AverageYield/Rate (Dollars in thousands) Assets Interest-Earning Assets: Loans $ 7,313,283 $ 242,454 6.69 % $ 7,873,572 $ 270,570 6.91 % Securities 1,773,092 33,063 3.76 % 1,495,726 22,850 3.07 % Deposits in other financial institutions 433,625 9,502 4.42 % 261,911 7,182 5.51 % Total interest-earning assets 9,520,000 $ 285,019 6.04 % 9,631,209 $ 300,602 6.28 % Allowance for credit losses on loans (82,440 ) (93,959 ) Noninterest-earning assets 1,099,956 1,118,077 Total assets $ 10,537,516 $ 10,655,327 Liabilities and Shareholders' Equity Interest-Bearing Liabilities: Interest-bearing demand deposits $ 1,931,926 $ 26,791 2.80 % $ 1,621,154 $ 24,491 3.04 % Money market and savings deposits 2,303,273 31,880 2.79 % 2,189,099 31,438 2.89 % Certificates and other time deposits 1,249,175 24,986 4.03 % 1,569,292 33,842 4.34 % Borrowed funds 40,079 924 4.65 % 123,293 3,474 5.67 % Subordinated debt 70,136 2,845 8.18 % 109,859 3,829 7.01 % Total interest-bearing liabilities 5,594,589 $ 87,426 3.15 % 5,612,697 $ 97,074 3.48 % Noninterest-Bearing Liabilities: Noninterest-bearing demand deposits 3,252,917 3,417,196 Other liabilities 85,171 92,223 Total liabilities 8,932,677 9,122,116 Shareholders' equity 1,604,839 1,533,211 Total liabilities and shareholders' equity $ 10,537,516 $ 10,655,327 Net interest rate spread 2.89 % 2.80 % Net interest income and margin $ 197,593 4.19 % $ 203,528 4.25 % Net interest income and margin (tax equivalent) $ 197,780 4.19 % $ 203,688 4.25 % Cost of funds 1.99 % 2.16 % Cost of deposits 1.93 % 2.05 % Stellar Bancorp, Inc. Financial Highlights (Unaudited) Three Months Ended 2025 2024 June 30 March 31 December 31 September 30 June 30 (Dollars in thousands) Period-end Loan Portfolio: Commercial and industrial $ 1,346,744 $ 1,362,266 $ 1,362,260 $ 1,350,753 $ 1,396,064 Real estate: Commercial real estate (including multi-family residential) 3,840,981 3,854,607 3,868,218 3,976,296 4,029,671 Commercial real estate construction and land development 762,911 721,488 845,494 890,316 922,805 1-4 family residential (including home equity) 1,126,523 1,125,837 1,115,484 1,112,235 1,098,681 Residential construction 137,855 141,283 157,977 161,494 200,134 Consumer and other 72,333 77,652 90,421 60,030 66,542 Total loans held for investment $ 7,287,347 $ 7,283,133 $ 7,439,854 $ 7,551,124 $ 7,713,897 Deposits: Noninterest-bearing $ 3,183,693 $ 3,205,619 $ 3,576,206 $ 3,303,048 $ 3,308,441 Interest-bearing Demand 1,941,156 1,863,752 1,845,749 1,571,504 1,564,405 Money market and savings 2,393,767 2,248,616 2,253,193 2,280,651 2,213,031 Certificates and other time 1,154,998 1,244,726 1,453,236 1,587,398 1,639,426 Total interest-bearing deposits 5,489,921 5,357,094 5,552,178 5,439,553 5,416,862 Total deposits $ 8,673,614 $ 8,562,713 $ 9,128,384 $ 8,742,601 $ 8,725,303 Asset Quality: Nonaccrual loans $ 50,505 $ 54,518 $ 37,212 $ 32,140 $ 50,906 Accruing loans 90 or more days past due — — — — — Total nonperforming loans 50,505 54,518 37,212 32,140 50,906 Foreclosed assets 7,652 5,154 1,734 2,984 2,548 Total nonperforming assets $ 58,157 $ 59,672 $ 38,946 $ 35,124 $ 53,454 Net charge-offs (recoveries) $ 206 $ 163 $ 2,016 $ 3,933 $ (1 ) Nonaccrual loans: Commercial and industrial $ 13,395 $ 11,471 $ 8,500 $ 9,718 $ 18,451 Real estate: Commercial real estate (including multi-family residential) 23,359 26,383 16,459 10,695 18,094 Commercial real estate construction and land development 3,412 2,027 3,061 4,183 1,641 1-4 family residential (including home equity) 9,965 14,550 9,056 7,259 12,454 Residential construction 176 — — 121 155 Consumer and other 198 87 136 164 111 Total nonaccrual loans $ 50,505 $ 54,518 $ 37,212 $ 32,140 $ 50,906 Asset Quality Ratios: Nonperforming assets to total assets 0.55 % 0.57 % 0.36 % 0.33 % 0.50 % Nonperforming loans to total loans 0.69 % 0.75 % 0.50 % 0.43 % 0.66 % Allowance for credit losses on loans to nonperforming loans 164.67 % 153.61 % 217.83 % 262.92 % 186.17 % Allowance for credit losses on loans to total loans 1.14 % 1.15 % 1.09 % 1.12 % 1.23 % Net charge-offs to average loans (annualized) 0.01 % 0.01 % 0.11 % 0.21 % 0.00 % Stellar Bancorp, Inc. GAAP Reconciliation and Management's Explanation of Non-GAAP Financial Measures (Unaudited) Stellar's management uses certain non-GAAP (generally accepted accounting principles) financial measures to evaluate its performance. Stellar 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 Stellar's performance and when planning, forecasting, analyzing and comparing past, present and future periods. Specifically, Stellar reviews pre-tax, pre-provision income, pre-tax pre-provision ROAA, tangible book value per share, return on average tangible equity, tangible equity to tangible assets and net interest margin (tax equivalent) excluding PAA for internal planning and forecasting purposes. Stellar has included in this earnings release 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. Three Months Ended Six Months Ended 2025 2024 2025 2024 June 30 March 31 December 31 September 30 June 30 June 30 June 30 (Dollars and share amounts in thousands, except per share data) Net income $ 26,352 $ 24,702 $ 25,212 $ 33,891 $ 29,753 $ 51,054 $ 55,900 Add: Provision for (reversal of) credit losses 1,090 3,632 942 (5,985 ) (1,935 ) 4,722 2,163 Add: Provision for income taxes 6,680 6,263 6,569 8,837 7,792 12,943 14,551 Pre-tax, pre-provision income $ 34,122 $ 34,597 $ 32,723 $ 36,743 $ 35,610 $ 68,719 $ 72,614 Total average assets $ 10,464,157 $ 10,611,691 $ 10,649,175 $ 10,626,266 $ 10,623,865 $ 10,537,516 $ 10,655,327 Pre-tax, pre-provision return on average assets(A) 1.31 % 1.32 % 1.22 % 1.38 % 1.35 % 1.32 % 1.37 % Total shareholders' equity $ 1,603,834 $ 1,610,832 $ 1,607,860 $ 1,626,123 $ 1,565,795 $ 1,603,834 $ 1,565,795 Less: Goodwill and core deposit intangibles, net 578,786 584,325 589,864 595,434 601,633 578,786 601,633 Tangible shareholders' equity $ 1,025,048 $ 1,026,507 $ 1,017,996 $ 1,030,689 $ 964,162 $ 1,025,048 $ 964,162 Shares outstanding at end of period 51,398 52,141 53,429 53,446 53,564 51,398 53,564 Tangible book value per share $ 19.94 $ 19.69 $ 19.05 $ 19.28 $ 18.00 $ 19.94 $ 18.00 Average shareholders' equity $ 1,595,540 $ 1,614,242 $ 1,614,762 $ 1,587,918 $ 1,538,124 $ 1,604,839 $ 1,533,211 Less: Average goodwill and core deposit intangibles, net 581,438 586,895 592,471 598,866 604,722 584,152 607,935 Average tangible shareholders' equity $ 1,014,102 $ 1,027,347 $ 1,022,291 $ 989,052 $ 933,402 $ 1,020,687 $ 925,276 Net income $ 26,352 $ 24,702 $ 25,212 $ 33,891 $ 29,753 $ 51,054 $ 55,900 Add: Core deposit intangibles amortization, net of tax 4,383 4,383 4,409 4,907 4,910 8,766 9,817 Adjusted net income $ 30,735 $ 29,085 $ 29,621 $ 38,798 $ 34,663 $ 59,820 $ 65,717 Return on average tangible equity(A)(B) 12.16 % 11.48 % 11.53 % 15.61 % 14.94 % 11.82 % 14.28 % Total assets $ 10,493,010 $ 10,434,887 $ 10,905,790 $ 10,629,777 $ 10,723,663 $ 10,493,010 $ 10,723,663 Less: Goodwill and core deposit intangibles, net 578,786 584,325 589,864 595,434 601,633 578,786 601,633 Tangible assets $ 9,914,224 $ 9,850,562 $ 10,315,926 $ 10,034,343 $ 10,122,030 $ 9,914,224 $ 10,122,030 Tangible equity to tangible assets 10.34 % 10.42 % 9.87 % 10.27 % 9.53 % 10.34 % 9.53 % Net interest income (tax equivalent) $ 98,427 $ 99,353 $ 103,039 $ 101,578 $ 101,482 $ 197,780 $ 203,688 Less: Purchase accounting accretion 5,344 5,397 7,555 6,795 10,098 10,741 18,649 Adjusted net interest income (tax equivalent) $ 93,083 $ 93,956 $ 95,484 $ 94,783 $ 91,384 $ 187,039 $ 185,039 Average earning assets $ 9,448,589 $ 9,592,205 $ 9,653,162 $ 9,643,629 $ 9,616,874 $ 9,520,000 $ 9,631,209 Net interest margin (tax equivalent) excluding PAA(A) 3.95 % 3.97 % 3.94 % 3.91 % 3.82 % 3.96 % 3.86 % Noninterest expense $ 70,004 $ 70,166 $ 75,266 $ 71,066 $ 71,216 $ 140,170 $ 142,626 Less: Core deposit intangibles amortization 5,548 5,548 5,581 6,212 6,215 11,096 12,427 Adjusted noninterest expense $ 64,456 $ 64,618 $ 69,685 $ 64,854 $ 65,001 $ 129,074 $ 130,199 Net interest income $ 98,335 $ 99,258 $ 102,957 $ 101,507 $ 101,410 $ 197,593 $ 203,528 Noninterest income 5,791 5,505 5,032 6,302 5,416 11,296 11,712 Less: (Loss) gain on sale of assets (57 ) 417 (112 ) 432 (64 ) 360 449 Adjusted noninterest income 5,848 5,088 5,144 5,870 5,480 10,936 11,263 Net interest income plus adjusted noninterest income $ 104,183 $ 104,346 $ 108,101 $ 107,377 $ 106,890 $ 208,529 $ 214,791 Efficiency ratio(C) 61.87 % 61.93 % 64.46 % 60.40 % 60.81 % 61.90 % 60.62 % (A) Interim periods annualized. (B) The calculation of return on average tangible equity has been adjusted from prior period disclosures. All periods presented above have been recalculated and disclosed under the same calculation. (C) The calculation of the efficiency ratio has been adjusted from prior period disclosures. All periods presented above have been recalculated and disclosed under the same calculation. View source version on Contacts Investor Relations ir@
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Phillips 66 Reports Second-Quarter Results
Reported second-quarter earnings of $877 million or $2.15 per share; adjusted earnings of $973 million or $2.38 per share; including $239 million of pre-tax accelerated depreciation on Los Angeles Refinery Operated at 98% capacity utilization in Refining with 86% clean product yield Completed Midstream acquisition of EPIC NGL, now renamed Coastal Bend Announced sale of 65% interest in our Germany and Austria retail marketing business Generated $845 million of net operating cash flow, $1.9 billion excluding working capital Returned $906 million to shareholders through dividends and share repurchases HOUSTON, July 25, 2025--(BUSINESS WIRE)--Phillips 66 (NYSE: PSX) announced second-quarter earnings. "Phillips 66 delivered strong financial and operating results across our integrated value chain, reflecting the continued execution of our strategy. During the quarter, Refining ran at the highest utilization since 2018, achieved its lowest cost per barrel since 2021, strong market capture and record year-to-date clean product yield. Our results were made possible through disciplined execution and investment," said Mark Lashier, chairman and CEO of Phillips 66. "We also continued our strong growth trajectory in Midstream, which generated approximately $1 billion of adjusted EBITDA following the acquisition of Coastal Bend. The Dos Picos II gas processing plant in the Midland Basin recently came online ahead of schedule and on budget. These assets further our stable earnings growth, enhance returns and increase shareholder value as we progress our wellhead-to-market strategy. Looking ahead, we are focused on organic Midstream growth as we advance toward our 2027 targets." Financial Results Summary(in millions of dollars, except as indicated) 2Q 2025 1Q 2025 Earnings $ 877 487 Adjusted Earnings (Loss)1 973 (368) Adjusted EBITDA1 2,501 736 Earnings (Loss) Per Share Earnings Per Share - Diluted 2.15 1.18 Adjusted Earnings (Loss) Per Share - Diluted1 2.38 (0.90) Cash Flow From Operations 845 187 Cash Flow From Operations, Excluding Working Capital1 1,920 259 Capital Expenditures & Investments 587 423 Acquisitions, net of cash acquired 2,220 — Return of Capital to Shareholders 906 716 Repurchases of common stock 419 247 Dividends paid on common stock 487 469 Cash and Cash Equivalents, including cash classified within Assets held for sale2 1,144 1,489 Debt 20,935 18,803 Debt-to-capital ratio 42% 40% Net debt-to-capital ratio1 41% 38% 1 Represents a non-GAAP financial measure. Reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure are included within this release. 2 Includes cash and cash equivalents of $92 million classified within Assets held for sale at June 30, 2025. Segment Financial and Operating Highlights(Millions of dollars, except as indicated) 2Q 2025 1Q 2025 Change Earnings (Loss)1 $ 877 487 390 Midstream 731 751 (20) Chemicals 20 113 (93) Refining 359 (937) 1,296 Marketing and Specialties 571 1,282 (711) Renewable Fuels (133) (185) 52 Corporate and Other (428) (376) (52) Income tax (expense) benefit (212) (122) (90) Noncontrolling interests (31) (39) 8 Adjusted Earnings (Loss)1,2 $ 973 (368) 1,341 Midstream 731 683 48 Chemicals 20 113 (93) Refining 392 (937) 1,329 Marketing and Specialties 660 265 395 Renewable Fuels (133) (185) 52 Corporate and Other (383) (355) (28) Income tax (expense) benefit (283) 78 (361) Noncontrolling interests (31) (30) (1) Adjusted EBITDA2 $ 2,501 736 1,765 Midstream 972 885 87 Chemicals 148 244 (96) Refining 867 (452) 1,319 Marketing and Specialties 718 315 403 Renewable Fuels (110) (162) 52 Corporate and Other (94) (94) — Operating Highlights Pipeline Throughput - Y-Grade to Market (MB/D)3 956 704 252 Chemicals Global O&P Capacity Utilization 92% 100% (8%) Refining Turnaround Expense4 53 270 (217) Realized Margin ($/BBL)2 11.25 6.81 4.44 Crude Capacity Utilization 98% 80% 18% Clean Product Yield 86% 87% (1%) Renewable Fuels Produced (MB/D) 40 44 (4) 1 Segment reporting is pre-tax. 2 Represents a non-GAAP financial measure. Reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure are included within this release. 3 Represents volumes delivered to fractionation hubs, including Mont Belvieu, Sweeny and Conway. Includes 100% of DCP Midstream Class A Segment and Phillips 66's direct interest in DCP Sand Hills Pipeline, LLC and DCP Southern Hills Pipeline, LLC. 4 Excludes turnaround expense of all equity affiliates. Second-Quarter 2025 Financial Results Reported earnings were $877 million for the second quarter of 2025 versus $487 million in the first quarter of 2025. Second-quarter earnings included pre-tax special item adjustments of $(89) million in the Marketing and Specialties segment, $(45) million impacting Corporate and Other and $(33) million in the Refining segment. Adjusted earnings for the second quarter were $973 million versus an adjusted loss of $368 million in the first quarter. Midstream second-quarter 2025 adjusted pre-tax income increased compared with the first quarter mainly due to higher volumes, largely driven by the acquisition of Coastal Bend, partially offset by seasonal maintenance expense and property taxes. Chemicals adjusted pre-tax income decreased mainly due to lower margins driven by lower sales prices. Refining adjusted pre-tax results increased mainly due to higher realized margins resulting from improved market crack spreads, as well as higher volumes and lower costs. Marketing and Specialties adjusted pre-tax income increased primarily due to higher margins and volumes. Renewable Fuels pre-tax results improved primarily due to higher realized margins including inventory impacts, as well as increased credits. Corporate and Other adjusted pre-tax loss increased mainly due to higher net interest expense, partially offset by impacts from our investment in NOVONIX. As of June 30, 2025, the company had $1.1 billion of cash and cash equivalents and $3.7 billion of committed capacity available under credit facilities. Business Highlights and Strategic Priorities Progress Advanced NGL wellhead-to-market strategy by acquiring Coastal Bend and nearing completion of a related pipeline expansion project, expected to increase capacity from 175 MBD to 225 MBD Expanded natural gas gathering and processing capacity with the startup of Dos Picos II, a 220 MMCF/D plant in the Midland Basin Maintained disciplined operations in Refining and achieved $5.46 per barrel in Refining Adjusted Controllable Costs1, excluding adjusted turnaround expense in the second quarter and $6.17 per barrel year-to-date Achieved a record year-to-date clean product yield of 87%, reflecting a 2% increase from the same period in 2024 On track to cease operations at the Los Angeles Refinery, as well as complete the Germany and Austria transaction by year-end. 1 Represents a non-GAAP financial measure. Reconciliations of non-GAAP financial measures to the most comparable GAAP financial measure are included within this release. Investor Webcast Members of Phillips 66 executive management will host a webcast at noon ET to provide an update on the company's strategic initiatives and discuss the company's second-quarter performance. To access the webcast and view related presentation materials, go to and click on "Events & Presentations." For detailed supplemental information, go to About Phillips 66 Phillips 66 (NYSE: PSX) is a leading integrated downstream energy provider that manufactures, transports and markets products that drive the global economy. The company's portfolio includes Midstream, Chemicals, Refining, Marketing and Specialties, and Renewable Fuels businesses. Headquartered in Houston, Phillips 66 has employees around the globe who are committed to safely and reliably providing energy and improving lives while pursuing a lower-carbon future. For more information, visit or follow @Phillips66Co on LinkedIn. Use of Non-GAAP Financial Information—This news release includes the terms "adjusted earnings (loss)," "adjusted pre-tax income (loss)," "adjusted EBITDA," "adjusted earnings (loss) per share," "adjusted controllable cost," "cash from operations, excluding working capital," "net debt-to-capital ratio," and "realized refining margin per barrel." These are non-GAAP financial measures that are included to help facilitate comparisons of operating performance across periods, to help facilitate comparisons with other companies in our industry and to help facilitate determination of enterprise value. Where applicable, these measures exclude items that do not reflect the core operating results of our businesses in the current period or other adjustments to reflect how management analyzes results. Reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure are included within this release. References in the release to earnings refer to net income attributable to Phillips 66. Basis of Presentation— Effective April 1, 2024, we changed the internal financial information reviewed by our chief executive officer to evaluate performance and allocate resources to our operating segments. This included changes in the composition of our operating segments, as well as measurement changes for certain activities between our operating segments. The primary effects of this realignment included establishment of a Renewable Fuels operating segment, which includes renewable fuels activities and assets historically reported in our Refining, Marketing and Specialties (M&S), and Midstream segments; change in method of allocating results for certain Gulf Coast distillate export activities from our M&S segment to our Refining segment; reclassification of certain crude oil and international clean products trading activities between our M&S segment and our Refining segment; and change in reporting of our investment in NOVONIX from our Midstream segment to Corporate and Other. Accordingly, prior period results have been recast for comparability. In the third quarter of 2024, we began presenting the line item "Capital expenditures and investments" on our consolidated statement of cash flows exclusive of acquisitions, net of cash acquired. Accordingly, prior period information has been reclassified for comparability. Cautionary Statement for the Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995—This news release contains forward-looking statements within the meaning of the federal securities laws relating to Phillips 66's operations, strategy and performance. Words such as "anticipated," "estimated," "expected," "planned," "scheduled," "targeted," "believe," "continue," "intend," "will," "would," "objective," "goal," "project," "efforts," "strategies" and similar expressions that convey the prospective nature of events or outcomes generally indicate forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements included in this news release are based on management's expectations, estimates and projections as of the date they are made. These statements are not guarantees of future events or performance, and you should not unduly rely on them as they involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include: changes in governmental policies relating to NGL, crude oil, natural gas, refined petroleum or renewable fuels products pricing, regulation or taxation, including exports; our ability to timely obtain or maintain permits, including those necessary for capital projects; fluctuations in NGL, crude oil, refined petroleum products, renewable fuels, renewable feedstocks and natural gas prices, and refined product, marketing and petrochemical margins; the effects of any widespread public health crisis and its negative impact on commercial activity and demand for our products; changes to government policies relating to renewable fuels and greenhouse gas emissions that adversely affect programs including the renewable fuel standards program, low carbon fuel standards and tax credits for biofuels; liability resulting from pending or future litigation or other legal proceedings; liability for remedial actions, including removal and reclamation obligations under environmental regulations; unexpected changes in costs or technical requirements for constructing, modifying or operating our facilities or transporting our products; our ability to successfully complete, or any material delay in the completion of, any asset disposition, acquisition, shutdown or conversion that we may pursue, including receipt of any necessary regulatory approvals or permits related thereto; unexpected technological or commercial difficulties in manufacturing, refining or transporting our products, including chemical products; the level and success of producers' drilling plans and the amount and quality of production volumes around our midstream assets; risks and uncertainties with respect to the actions of actual or potential competitive suppliers and transporters of refined petroleum products, renewable fuels or specialty products; changes in the cost or availability of adequate and reliable transportation for our NGL, crude oil, natural gas and refined petroleum and renewable fuels products; failure to complete definitive agreements and feasibility studies for, and to complete construction of, announced and future capital projects on time or within budget; our ability to comply with governmental regulations or make capital expenditures to maintain compliance; limited access to capital or significantly higher cost of capital related to our credit profile or illiquidity or uncertainty in the domestic or international financial markets; damage to our facilities due to accidents, weather and climate events, civil unrest, insurrections, political events, terrorism or cyberattacks; domestic and international economic and political developments including armed hostilities, such as the war in Eastern Europe, instability in the financial services and banking sector, excess inflation, expropriation of assets and changes in fiscal policy, including interest rates; international monetary conditions and exchange controls; changes in estimates or projections used to assess fair value of intangible assets, goodwill and properties, plants and equipment and/or strategic decisions or other developments with respect to our asset portfolio that cause impairment charges; substantial investments required, or reduced demand for products, as a result of existing or future environmental rules and regulations, including greenhouse gas emissions reductions and reduced consumer demand for refined petroleum products; changes in tax, environmental and other laws and regulations (including alternative energy mandates) applicable to our business; political and societal concerns about climate change that could result in changes to our business or increase expenditures, including litigation-related expenses; the operation, financing and distribution decisions of our joint ventures that we do not control; the potential impact of activist shareholder actions or tactics; and other economic, business, competitive and/or regulatory factors affecting Phillips 66's businesses generally as set forth in our filings with the Securities and Exchange Commission. Phillips 66 is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Earnings (Loss) Millions of Dollars 2025 2024 2Q 1Q Jun YTD 2Q Jun YTD Midstream $ 731 751 1,482 767 1,321 Chemicals 20 113 133 222 427 Refining 359 (937 ) (578 ) 302 518 Marketing and Specialties 571 1,282 1,853 415 781 Renewable Fuels (133 ) (185 ) (318 ) (55 ) (110 ) Corporate and Other (428 ) (376 ) (804 ) (340 ) (662 ) Pre-Tax Income (Loss) 1,120 648 1,768 1,311 2,275 Less: Income tax expense (benefit) 212 122 334 291 494 Less: Noncontrolling interests 31 39 70 5 18 Phillips 66 $ 877 487 1,364 1,015 1,763 Adjusted Earnings (Loss) Millions of Dollars 2025 2024 2Q 1Q Jun YTD 2Q Jun YTD Midstream $ 731 683 1,414 753 1,366 Chemicals 20 113 133 222 427 Refining 392 (937 ) (545 ) 302 615 Marketing and Specialties 660 265 925 415 722 Renewable Fuels (133 ) (185 ) (318 ) (55 ) (110 ) Corporate and Other (383 ) (355 ) (738 ) (340 ) (662 ) Pre-Tax Income (Loss) 1,287 (416 ) 871 1,297 2,358 Less: Income tax expense (benefit) 283 (78 ) 205 278 504 Less: Noncontrolling interests 31 30 61 35 48 Phillips 66 $ 973 (368 ) 605 984 1,806 Millions of Dollars Except as Indicated 2025 2024 2Q 1Q Jun YTD 2Q Jun YTD Reconciliation of Consolidated Earnings to Adjusted Earnings (Loss) Consolidated Earnings $ 877 487 1,364 1,015 1,763 Pre-tax adjustments: Impairments — 21 21 224 387 Net (gain) loss on asset dispositions1 89 (1,085 ) (996 ) (238 ) (238 ) Legal accrual 33 — 33 — — Legal settlement — — — — (66 ) Professional advisory fees 45 — 45 — — Tax impact of adjustments2 (40 ) 200 160 13 (10 ) Other tax impacts (31 ) — (31 ) — — Noncontrolling interests — 9 9 (30 ) (30 ) Adjusted earnings (loss) $ 973 (368 ) 605 984 1,806 Earnings per share of common stock (dollars) $ 2.15 1.18 3.32 2.38 4.10 Adjusted earnings (loss) per share of common stock (dollars) $ 2.38 (0.90 ) 1.47 2.31 4.21 Adjusted Weighted-Average Diluted Common Shares Outstanding (thousands) 407,934 409,182 409,012 425,734 429,003 Reconciliation of Segment Pre-Tax Income (Loss) to Adjusted Pre-Tax Income (Loss) Midstream Pre-Tax Income $ 731 751 1,482 767 1,321 Pre-tax adjustments: Impairments — — — 224 283 Net gain on asset dispositions1 — (68 ) (68 ) (238 ) (238 ) Adjusted pre-tax income $ 731 683 1,414 753 1,366 Chemicals Pre-Tax Income $ 20 113 133 222 427 Pre-tax adjustments: None — — — — — Adjusted pre-tax income $ 20 113 133 222 427 Refining Pre-Tax Income (Loss) $ 359 (937 ) (578 ) 302 518 Pre-tax adjustments: Impairments — — — — 104 Legal settlement — — — — (7 ) Legal accrual 33 — 33 — — Adjusted pre-tax income (loss) $ 392 (937 ) (545 ) (302 ) (615 ) Marketing and Specialties Pre-Tax Income $ 571 1,282 1,853 415 781 Pre-tax adjustments: Net (gain) loss on asset dispositions1 89 (1,017 ) (928 ) — — Legal settlement — — — — (59 ) Adjusted pre-tax income $ 660 265 925 415 722 Renewable Fuels Pre-Tax Loss $ (133 ) (185 ) (318 ) (55 ) (110 ) Pre-tax adjustments: None — — — — — Adjusted pre-tax loss ... $ (133 ) (185 ) (318 ) (55 ) (110 ) Corporate and Other Pre-Tax Loss $ (428 ) (376 ) (804 ) (340 ) (662 ) Pre-tax adjustments: Impairments — 21 21 — — Professional advisory fees 45 — 45 — — Adjusted pre-tax loss $ (383 ) (355 ) (738 ) (340 ) (662 ) 1. Gain on disposition of our 49% non-operated equity interest in Coop Mineraloel AG in 1Q 2025. In connection with our pending disposition of our Germany and Austria retail marketing business, in the second quarter of 2025 we recognized a before-tax unrealized loss from foreign currency derivatives. 2. We generally tax effect taxable U.S.-based special items using a combined federal and state annual statutory income tax rate of approximately 24%. Taxable special items attributable to foreign locations likewise generally use a local statutory income tax rate. Nontaxable events reflect zero income tax. These events include, but are not limited to, most goodwill impairments, transactions legislatively exempt from income tax, transactions related to entities for which we have made an assertion that the undistributed earnings are permanently reinvested, or transactions occurring in jurisdictions with a valuation allowance. Millions of Dollars Except as Indicated 2025 2Q 1Q Reconciliation of Consolidated Net Income to Adjusted EBITDA Attributable to Phillips 66 Net Income $ 908 526 Plus: Income tax expense 212 122 Net interest expense 230 187 Depreciation and amortization 816 791 Phillips 66 EBITDA $ 2,166 1,626 Special Item Adjustments (pre-tax): Impairments — 21 Net (gain) loss on asset dispositions 89 (1,085 ) Legal accrual 33 — Professional advisory fees 45 — Total Special Item Adjustments (pre-tax) 167 (1,064 ) Change in Fair Value of NOVONIX Investment 2 15 Phillips 66 EBITDA, Adjusted for Special Items and Change in Fair Value of NOVONIX Investment $ 2,335 577 Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes 17 18 Proportional share of selected equity affiliates net interest 15 14 Proportional share of selected equity affiliates depreciation and amortization 184 187 Adjusted EBITDA attributable to noncontrolling interests (50 ) (60 ) Phillips 66 Adjusted EBITDA $ 2,501 736 Reconciliation of Segment Income before Income Taxes to Adjusted EBITDA Midstream Income before income taxes $ 731 751 Plus: Depreciation and amortization 260 233 Midstream EBITDA $ 991 984 Special Item Adjustments (pre-tax): Net gain on asset dispositions — (68 ) Midstream EBITDA, Adjusted for Special Items $ 991 916 Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes 4 3 Proportional share of selected equity affiliates net interest 3 3 Proportional share of selected equity affiliates depreciation and amortization 24 23 Adjusted EBITDA attributable to noncontrolling interests (50 ) (60 ) Midstream Adjusted EBITDA $ 972 885 Chemicals Income before income taxes $ 20 113 Plus: None — — Chemicals EBITDA $ 20 113 Special Item Adjustments (pre-tax): None — — Chemicals EBITDA, Adjusted for Special Items $ 20 113 Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes 13 13 Proportional share of selected equity affiliates net interest (1 ) (1 ) Proportional share of selected equity affiliates depreciation and amortization 116 119 Chemicals Adjusted EBITDA $ 148 244 Refining Income (loss) before income taxes $ 359 (937 ) Plus: Depreciation and amortization 443 456 Refining EBITDA $ 802 (481 ) Special Item Adjustments (pre-tax): Legal accrual 33 — Refining EBITDA, Adjusted for Special Items $ 835 (481 ) Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes — — Proportional share of selected equity affiliates net interest 3 2 Proportional share of selected equity affiliates depreciation and amortization 29 27 Refining Adjusted EBITDA $ 867 (452 ) Marketing and Specialties Income before income taxes $ 571 1,282 Plus: Depreciation and amortization 33 20 Marketing and Specialties EBITDA $ 604 1,302 Special Item Adjustments (pre-tax): Net gain on asset disposition 89 (1,017 ) Marketing and Specialties EBITDA, Adjusted for Special Items $ 693 285 Other Adjustments (pre-tax): Proportional share of selected equity affiliates income taxes — 2 Proportional share of selected equity affiliates net interest 10 10 Proportional share of selected equity affiliates depreciation and amortization 15 18 Marketing and Specialties Adjusted EBITDA $ 718 315 Renewable Fuels Loss before income taxes $ (133 ) (185 ) Plus: Depreciation and amortization 23 23 Renewable Fuels EBITDA $ (110 ) (162 ) Special Item Adjustments (pre-tax): None — — Renewable Fuels EBITDA, Adjusted for Special Items $ (110 ) (162 ) Corporate and Other Loss before income taxes $ (428 ) (376 ) Plus: Net interest expense 230 187 Depreciation and amortization 57 59 Corporate and Other EBITDA $ (141 ) (130 ) Special Item Adjustments (pre-tax): Impairments — 21 Professional advisory fees 45 — Total Special Item Adjustments (pre-tax) 45 21 Change in Fair Value of NOVONIX Investment 2 15 Corporate EBITDA, Adjusted for Special Items and Change in Fair Value of NOVONIX Investment $ (94 ) (94 ) Millions of Dollars Except as Indicated June 30, 2025 March 31, 2025 Debt-to-Capital Ratio Total Debt $ 20,935 18,803 Total Equity 28,626 28,353 Debt-to-Capital Ratio 42 % 40 % Cash and Cash Equivalents, including cash classified within Assets held for sale1 1,144 1,489 Net Debt-to-Capital Ratio 41 % 38 % 1. Includes cash and cash equivalents of $92 million classified within Assets held for sale at June 30, 2025. Millions of Dollars Except as Indicated 2025 2Q 1Q Reconciliation of Refining Income (Loss) Before Income Taxes to Realized Refining Margins Income (loss) before income taxes $ 359 (937 ) Plus: Taxes other than income taxes 94 110 Depreciation, amortization and impairments 446 457 Selling, general and administrative expenses 32 46 Operating expenses 848 1,074 Equity in earnings of affiliates 2 105 Other segment expense, net (47 ) (5 ) Proportional share of refining gross margins contributed by equity affiliates 234 141 Special items: None — — Realized refining margins $ 1,968 991 Total processed inputs (thousands of barrels) 152,005 124,453 Adjusted total processed inputs (thousands of barrels)* 174,772 145,559 Income (loss) before income taxes (dollars per barrel)** $ 2.36 (7.53 ) Realized refining margins (dollars per barrel)*** $ 11.25 6.81 *Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate. **Income (loss) before income taxes divided by total processed inputs. ***Realized refining margins per barrel, as presented, are calculated using the underlying realized refining margin amounts, in dollars, divided by adjusted total processed inputs, in barrels. As such, recalculated per barrel amounts using the rounded margins and barrels presented may differ from the presented per barrel amounts. Millions of Dollars Except as Indicated 2025 2Q 1Q June YTD Reconciliation of Refining Operating and SG&A Expenses to Refining Adjusted Controllable Costs Turnaround expenses $ 53 270 323 Other operating expenses 795 804 1,599 Total operating expenses 848 1,074 1,922 Selling, general and administrative expenses 32 46 78 Refining Controllable Costs 880 1,120 2,000 Plus: Proportional share of equity affiliate turnaround expenses1 24 27 51 Proportional share of equity affiliate other operating and SG&A expenses1 161 173 334 Total proportional share of equity affiliate operating and SG&A expenses1 185 200 385 Special item adjustments (pre-tax): Legal accrual (33 ) — (33 ) Refining Adjusted Controllable Costs 1,032 1,320 2,352 Total processed inputs (MB) 152,005 124,453 276,458 Adjusted total processed inputs (MB)2 174,772 145,559 320,331 Refining turnaround expense ($/BBL)3 0.35 2.17 1.17 Refining controllable costs, excluding turnaround expense ($/BBL)3 5.44 6.83 6.07 Refining Controllable Costs per Barrel ($/BBL)3 5.79 9.00 7.24 Refining adjusted turnaround expense ($/BBL)4 0.44 2.04 1.17 Refining adjusted controllable costs, excluding adjusted turnaround expense ($/BBL)4 5.46 7.03 6.17 Refining Adjusted Controllable Costs ($/BBL)4 5.90 9.07 7.34 1. Represents proportional share of operating and SG&A of equity affiliates for our Refining segment that are reflected as a component of equity in earnings of affiliates on our consolidated statement of income. 2. Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate. 3. Denominator is total processed inputs. 4. Denominator is adjusted total processed inputs. Millions of Dollars Except as Indicated 2024 2023 2022 2021 Reconciliation of Refining Operating and SG&A Expenses to Refining Adjusted Controllable Costs Turnaround expenses $ 484 538 772 497 Other operating expenses 3,243 3,707 3,958 3,663 Total operating expenses 3,727 4,245 4,730 4,160 Selling, general and administrative expenses 209 169 152 131 Refining Controllable Costs 3,936 4,414 4,882 4,291 Plus: Proportional share of equity affiliate turnaround expenses1 68 93 118 118 Proportional share of equity affiliate other operating and SG&A expenses1 626 641 721 619 Total proportional share of equity affiliate operating and SG&A expenses1 694 734 839 737 Special item adjustments (pre-tax): Hurricane-related (costs) recovery — — 21 (40 ) Winter-storm-related costs — — — (17 ) Alliance shutdown-related costs — — (20 ) (32 ) Legal accrual (22 ) (30 ) — — Los Angeles Refinery cessation costs (44 ) — — — Refining Adjusted Controllable Costs 4,564 5,118 5,722 4,939 Total processed inputs (MB) 588,316 607,958 612,741 638,145 Adjusted total processed inputs (MB)2 680,043 685,435 691,855 715,780 Refining turnaround expense ($/BBL)3 0.82 0.88 1.26 0.78 Refining controllable costs, excluding turnaround expense ($/BBL)3 5.87 6.38 6.71 5.95 Refining Controllable Costs per Barrel ($/BBL)3 6.69 7.26 7.97 6.72 Refining adjusted turnaround expense ($/BBL)4 0.81 0.92 1.29 0.86 Refining adjusted controllable costs, excluding adjusted turnaround expense ($/BBL)4 5.90 6.55 6.98 6.04 Refining Adjusted Controllable Costs ($/BBL)4 6.71 7.47 8.27 6.90 1. Represents proportional share of operating and SG&A of equity affiliates for our Refining segment that are reflected as a component of equity in earnings of affiliates on our consolidated statement of income. 2. Adjusted total processed inputs include our proportional share of processed inputs of an equity affiliate. 3. Denominator is total processed inputs. 4. Denominator is adjusted total processed inputs. View source version on Contacts Jeff Dietert (investors) Owen Simpson (investors) Al Ortiz (media) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
