UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

~~CBTX,~~Stellar Bancorp, Inc.

(Name of Registrant as Specified inIn Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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No fee required.

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Fee paid previously with preliminary materials

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Fee computed on table ~~below~~in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and ~~0-11.~~0-11

~~(1)~~

~~Title of each class of securities to which transaction applies:~~

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~~Aggregate number of securities to which transaction applies:~~

~~(3)~~

~~Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):~~

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~~Proposed maximum aggregate value of transaction:~~

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~~Total fee paid:~~

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~~Fee paid previously with preliminary materials.~~

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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~~Amount Previously Paid:~~

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[MISSING IMAGE: lg_stellarbancorpinc-pn.jpg]

April ~~14, 2021~~24, 2023

Dear Fellow Shareholder:

On behalf of our Board of Directors, I invite you to attend the ~~2021~~2023 Annual Meeting of Shareholders to be held at The Houstonian Hotel, 111 North Post Oak Lane, Houston, Texas 77024 on Thursday, May 25, 2023, at 10:00 a.m., Central Time.

We are excited to host the ~~office~~2023 Annual Meeting which is our first shareholders’ meeting since completing the combination of two of the largest independent banks in Houston, Texas: Allegiance Bank and CommunityBank of Texas, N.A.~~, located at 5999 Delaware Street, Beaumont, Texas 77706,~~ on ~~Wednesday, May 19, 2021, at 10:00 a.m. Central Time.~~

October 1, 2022. The purposes of the meeting are set forth in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement.

Whether or not you plan to attend the meeting, it is important that your shares be represented. Please take a moment to complete, date, sign and return the enclosed proxy card as soon as possible, or use Internet or telephone voting according to the instructions on the proxy card. ~~You may also attend and vote in person at the meeting.~~

We appreciate your continued support of our company and look forward to ~~seeing you~~your participation at ~~the 2021~~our 2023 Annual Meeting.

Sincerely,

[MISSING IMAGE: sg_stevenfretzloff-bw.jpg]

~~Robert R. Franklin, Jr.~~
Steven F. Retzloff
Chairman ~~President and Chief Executive Officer~~of the Board

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9 Greenway Plaza, Suite 110

Houston, Texas 77046

(713) ~~210-7600~~499-1800

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the shareholders of ~~CBTX,~~Stellar Bancorp, Inc.:

The ~~2021~~2023 Annual Meeting of Shareholders (the “annual meeting”) of ~~CBTX,~~Stellar Bancorp, Inc. (the “Company”) will be held at The Houstonian Hotel, 111 North Post Oak Lane, Houston, Texas 77024, on ~~Wednesday,~~Thursday, May ~~19, 2021,~~25, 2023, at 10:00 a.m., Central Time, at the office of CommunityBank of Texas, N.A., located at 5999 Delaware Street, Beaumont, Texas 77706,* for the following purposes:

Toto elect ~~three (3)~~four Class ~~III~~I directors to serve on the ~~board~~Board of ~~directors~~Directors of the Company until the Company’s ~~2024~~2026 annual meeting of shareholders; and each until their respective successor or successors are duly elected and qualified or until their earlier death, resignation or removal;

Toto conduct an advisory, non-binding vote regarding the compensation paid to our named executive officers as disclosed in the accompanying proxy statement (“Say-On-Pay”);

to conduct an advisory, non-binding vote regarding a resolution to approve the frequency of future advisory votes on the compensation of our named executive officers (“Say-On-Frequency”);

to ratify the appointment of ~~Grant Thornton~~Crowe LLP as the independent registered public accounting firm of the Company for the year ending December 31, ~~2021;~~2023; and

3.
5.

Toto transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof.

Only shareholders of record at the close of business on ~~March 30, 2021, the record date,~~April 18, 2023, will be entitled to receive notice of and to vote at the annual meeting. For instructions on voting, please refer to the enclosed proxy card or voting information form. A list of shareholders entitled to vote at the annual meeting will be available for inspection by any shareholder at the principal office of the Company during ordinary business hours for a period of ten days prior to the annual meeting. This list also will be available to shareholders at the annual meeting. ~~If we decide to hold our annual meeting by remote communication, a list of our shareholders of record will be made available to shareholders during the meeting at the annual meeting.~~

By Order of the Board of Directors,

~~Robert R. Franklin, Jr.~~
Steven F. Retzloff

Chairman ~~President and Chief Executive Officer~~of the Board

Houston, Texas

April ~~14, 2021~~24, 2023

Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to Be Held on May ~~19, 2021:~~25, 2023: This proxy statement and our Annual Report for the year ended December 31, ~~2020~~2022 are available at ~~www.communitybankoftx.com under “Investor Relations”.~~

www.edocumentview.com/STEL.

We are sensitive to the public health and travel concerns related to the coronavirus (COVID-19) and accordingly may announce alternative arrangements for the annual meeting, including holding the annual meeting solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be available on our website at www.communitybankoftx.com under “Investor Relations”.

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Your Vote is Important

A proxy card is enclosed. Whether or not you plan to attend the annual meeting, please vote by completing, signing and dating the proxy card and promptly mailing it in the enclosed envelope or via the Internet or ~~via~~ telephone pursuant to the instructions provided on the enclosed proxy card. You may revoke your proxy in the manner described in the proxy statement at any time before it is exercised. See “About the Annual Meeting” for more information on how to vote your shares or revoke your proxy.

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9 Greenway Plaza, Suite 110

Houston, Texas 77046
~~(713) 210-7600~~

PROXY STATEMENT FOR
~~2021~~
2023 ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY ~~19, 2021~~25, 2023

Unless the context otherwise requires, references in this proxy statement to “we,” “us,” “our,” “our ~~company,~~Company,” the “Company” or ~~“CBTX”~~“Stellar” refer to ~~CBTX,~~Stellar Bancorp, Inc., a Texas corporation, and its consolidated subsidiary as a whole; references to the “Bank” refer to ~~CommunityBank of Texas N.A.,~~Stellar Bank, a wholly-owned subsidiary of ~~the Company.~~Stellar Bancorp, Inc. In addition, unless the context otherwise requires, references to “shareholders” are to the holders of outstanding shares of our common stock, par value $0.01 per share (the “common stock”).

~~This proxy statement~~The Board of Directors of Stellar Bancorp, Inc. (the “Board”) is ~~being furnished in connection with the solicitation of~~soliciting proxies ~~by the board of directors of the Company (the “board”) for use~~to be used at the ~~2021 Annual Meeting~~2023 annual meeting of ~~Shareholders~~shareholders of the Company to be held at The Houstonian Hotel, 111 North Post Oak Lane, Houston, Texas 77024 on ~~Wednesday,~~Thursday, May ~~19, 2021~~25, 2023, at 10:00 a.m., Central Time, at the office of CommunityBank of Texas, N.A. located at 5999 Delaware Street, Beaumont, Texas 77706,* and any adjournments or postponements thereof (the “annual meeting”) ~~for the purposes set forth in this proxy statement and the accompanying notice of the meeting.~~. This proxy statement ~~the notice of the meeting, the annual report to shareholders on Form 10-K for the year ended December 31, 2020, and the enclosed proxy card (collectively, the “proxy materials”) are~~is first being sent to shareholders on or about April ~~14, 2021.~~27, 2023. You should read the entire ~~proxy statement~~Proxy Statement carefully before ~~voting.~~voting your shares of Stellar common stock.

~~Important Notice Regarding the Availability of~~IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2023 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON THURSDAY, MAY 25, 2023.

This Proxy ~~Materials~~Statement for the ~~2021~~2023 Annual Meeting of Shareholders and our 2022 Annual Report to ~~Be Held on May 19, 2021~~Shareholders are available at our proxy materials website at www.edocumentview.com/STEL. This website does not use any functions that identify you as a visitor to the website, and thus protects your privacy.

You have the option to vote and submit your proxy by the Internet. If you have Internet access, we encourage you to record your vote by the Internet. We believe it will be convenient for you, and it saves postage and processing costs. In addition, when you vote by the Internet, your vote is recorded immediately, and there is no risk that postal delays will cause your vote to arrive late and therefore not be counted. Submitting your proxy by the Internet or telephone will not affect your right to vote in person if you decide to attend the annual meeting.

Pursuant to the rules promulgated by the Securities and Exchange Commission (the “SEC”), the Company is providing access to its proxy materials ~~both~~ by sending you a full set of proxy ~~materials~~materials.

Merger of Equals

On October 1, 2022, Allegiance Bancshares, Inc. (“Allegiance”) and ~~making copies~~CBTX, Inc. (“CBTX”) merged (the “Merger”) with CBTX as the surviving corporation that was renamed Stellar Bancorp, Inc. and the ticker symbol changed to “STEL.” Immediately following the Merger, CommunityBank of ~~these materials available~~Texas, N.A. (“CommunityBank”), a national banking association and a wholly owned subsidiary of CBTX, merged with and into Allegiance Bank, a wholly owned subsidiary of Allegiance (the “Bank Merger”), with Allegiance Bank as the surviving bank. In connection with the operational conversion during the first quarter of 2023, Allegiance Bank changed its name to Stellar Bank on February 18, 2023. After the ~~Internet at~~ ~~www.communitybankoftx.com~~ ~~under “Investor Relations”. This website is not a form for voting and presents only an overview~~Merger, the Company became one of the ~~more~~largest banks based in Houston. A complete ~~proxy materials. Shareholders are encouraged to access and review~~description of the ~~proxy materials before voting. This site will also have directions to attend~~Merger can be found in the ~~meeting and vote in person and does not use functions that identify you as a visitor to~~Form 8-K filed by the ~~website.~~Company with the SEC on October 3, 2022.

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ABOUT THE ANNUAL MEETING

When and where will the annual meeting be held?

The annual meeting is scheduled to take place at 10:00 a.m., Central Time, on Thursday, May ~~19, 2021,~~25, 2023 at ~~the office of CommunityBank of~~The Houstonian Hotel, 111 North Post Oak Lane, Houston, Texas ~~N.A. located at 5999 Delaware Street, Beaumont, Texas 77706.~~77024.

What is the purpose of the annual meeting?

At the 2023 annual meeting, shareholders will act upon the matters outlined in the notice, including the following:

Toto conduct an advisory, non-binding vote regarding the compensation paid to our named executive officers as disclosed in the accompanying proxy statement (“Say-On-Pay”);

to conduct an advisory, non-binding vote regarding a resolution to approve the frequency of future advisory votes on the compensation of our named executive officers (“Say-On-Frequency”);

to ratify the appointment of ~~Grant Thornton~~Crowe LLP as the independent registered public accounting firm of the Company for the year ending December 31, ~~2021;~~2023; and

3.
5.

Toto transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof.

Who are the nominees for ~~Class III~~ directors?

The following ~~three (3) persons~~individuals have been nominated by the Board for election as Class ~~III~~I directors of the Company:

	John Beckworth			Fred S. Robertson
	Joseph B. Swinbank			William E. Wilson, Jr.

~~Sheila G. Umphrey~~
~~John E. Williams, Jr.~~
~~William E. Wilson, Jr.~~All of the nominees are currently directors of the Company.

Who is entitled to vote at the annual meeting?

The holders of record of the ~~Company’s~~ outstanding shares of common stock on April 18, 2023, which is the date that the Board has fixed as of the ~~close of business on March 30, 2021~~record date for the annual meeting (the “record date”) ~~will be~~, are entitled to vote at the annual meeting. ~~Each holder of~~The record ofdate is established by the Board as required by the Company’s ~~outstanding common stock on the record date will be entitled to one vote for each share held on all matters to be voted upon at the annual meeting.~~bylaws and Texas law. On the record date, ~~there were 24,594,299~~53,302,130 shares of common stock ~~outstanding and entitled~~were outstanding.

What is a proxy?

A proxy is another person that you legally designate to ~~vote.~~

~~How do I vote?~~

~~You may~~ vote your shares of common ~~stock either~~stock. If you designate someone as your proxy in ~~person~~a written document, that document is also called a “proxy” or a “proxy card.”

How do I vote my shares?

You may vote using any of the following methods:

•

By Internet: You can vote by the Internet at www.envisionreports.com/STEL by following the ~~annual meeting~~instructions on the proxy card.

•

By Telephone: You can vote over the telephone by following the instructions on the proxy card.

•

By Mail: You may vote by completing, signing and dating the accompanying proxy or voting instruction card and returning it in the prepaid envelope. If you are a shareholder of record and return

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your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by ~~proxy. The process for voting~~ your ~~shares depends on how your shares are held~~proxy card as ~~described below.~~recommended by our Board.

•

At the Annual Meeting: If you are a record holder on the record date for the annual meeting, you may vote by proxy or you may attend the annual meeting and vote in ~~person. If you are a record holder and want to vote your shares by proxy, you may vote using any of the following methods:~~

•

indicate on the proxy card applicable to your common stock how you want to vote and sign, date and mail your proxy card in the enclosed pre-addressed postage-paid envelope as soon as possible to ensure that it will be received in advance of the annual meeting;person

•

~~go to the website~~ ~~www.envisionreports.com/CBTX~~ ~~and follow the instructions for Internet voting on that website; or~~

•

~~vote over the telephone by following the instructions on the proxy card.~~

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The Company must receive your vote no later than the time the polls close for voting at the annual meeting for your vote to be counted at the annual meeting. Please note that Internet voting will close at 1:00 a.m., Central Time, on May ~~19, 2021.~~25, 2023.

Voting your shares by proxy will enable your shares of common stock to be represented and voted at the annual meeting if you do not attend the annual meeting and vote your shares in person. By following the voting instructions in the materials you receive, you will direct the designated persons (known as “proxies”) to vote your common stock at the annual meeting in accordance with your instructions. The ~~board~~Board has appointed Steven F. Retzloff and Robert R. Franklin, Jr. ~~and J. Pat Parsons~~ to serve as the proxies for the annual meeting. If you vote by the Internet or telephone, you do not have to return your proxy or voting instruction card.

If your shares of common stock are held in “street name,” your ability to vote ~~over~~by the Internet depends on your broker’s voting process. When your shares are held in a brokerage account or by a bank or other nominee, the nominee is considered the record holder of those shares. You ~~should follow~~are considered the ~~instructions on~~beneficial owner of these shares, and your ~~broker’s~~shares are held in “street name.” This proxy statement has been provided to you by your broker, bank or ~~intermediary’s~~other holder of record. As the beneficial owner, you have the right to direct your nominee concerning how to vote your shares by using the voting instruction ~~card.~~card or by following its instructions for voting by telephone or by the Internet.

To vote the shares that you hold in “street name” in person at the annual meeting, you must bring a legal proxy from your broker, bank or other nominee, (1) confirming that you were the beneficial owner of those shares as of the close of business on the record date, (2) stating the number of shares of which you were the beneficial owner that were held for your benefit at that time by that broker, bank or other nominee, and (3) appointing you as the record holder’s proxy to vote the shares covered by that proxy at the annual meeting. If you fail to bring a nominee-issued proxy to the annual meeting, you will not be able to vote your nominee-held shares in person at the annual meeting.

~~What is the difference between a shareholder of record and a “street name” holder?~~

If your shares are registered directly in your name with Computershare Trust Company, N.A., the Company’s stock transfer agent, you are considered the “shareholder of record” with respect to those shares. This proxy statement and the proxy card have been sent directly to you by Computershare Trust Company, N.A. at the Company’s request.

If your shares are held in a brokerage account or by a bank or other nominee, the nominee is considered the record holder of those shares. You are considered the beneficial owner of these shares, and your shares are held in “street name.” This proxy statement and the proxy card or voting instruction card have been forwarded to you by your nominee. As the beneficial owner, you have the right to direct your nominee concerning how to vote your shares by using the voting instructions your nominee included in the mailing or by following its instructions for voting.

What constitutes a quorum for the annual meeting?

A quorum will be present at a meeting of shareholders if the holders of shares having a majority of the voting power represented by all of the issued and outstanding shares entitled to vote at the meeting are present in person or represented by proxy at the meeting.

What are the voting rights of the shareholders?

Each record holder of shares of common stock is entitled to one vote for each share of common stock registered, on the record date, in such holder’s name on the books of the Company on all matters to be acted upon at the annual meeting. The Company’s certificate of formation prohibits cumulative voting.

What is a broker non-vote?

A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. Your broker has discretionary authority to vote your shares with respect to the ratification of the appointment of ~~Grant Thornton~~Crowe LLP as our independent registered public accounting firm (Proposal 2)4). In the absence of specific instructions from you, your broker does not have discretionary authority to vote your shares with respect to the election of ~~Class III~~ directors to the ~~board~~Board (Proposal 1), the Say-On-Pay resolution (Proposal 2) or the Say-On-Frequency resolution (Proposal 3).

Who counts the votes?

All votes will be tabulated by the inspector of election appointed for the annual meeting. Votes for each proposal will be tabulated separately.

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What should I do if I receive more than one set of voting materials?

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in

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more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. Similarly, if you are a shareholder of record and hold shares in a brokerage account, you will receive a proxy card for shares held in your name and a voting instruction card for shares held in “street name.” Please complete, sign, date and return each proxy card and voting instruction card that you receive to ensure that all your shares are voted.

What are the ~~board��s~~Board’s recommendations on how I should vote my shares?

The ~~board~~Board recommends that you vote your shares as follows:

Proposal 1 —FOR the election of each nominee for ~~Class III director; and~~director.

Proposal 2 —FOR the Say-On-Pay resolution.

Proposal 3 —1 YEAR for the Say-On-Frequency resolution.

Proposal 4 —FOR the ratification of the appointment of ~~Grant Thornton~~Crowe LLP.

How will my shares be voted if I return a signed and dated proxy card, but don’t specify how my shares will be voted?

If you are a “street name” holder and do not provide voting instructions on one or more proposals, your bank, broker or other nominee will be unable to vote those shares in the election of directors (Proposal 1), the Say-On-Pay resolution (Proposal 2) or the Say-On-Frequency resolution (Proposal 3), but will have discretion to vote on the ratification of the appointment of Crowe LLP (Proposal 4).

If you are a record holder who returns a completed proxy card that does not specify how you want to vote your shares on one or more proposals, the proxies will vote your shares for each proposal as to which you provide no voting instructions, and such shares will be voted in accordance with the ~~following manner:~~Board’s recommendations.

~~Proposal 1 —FOR~~ ~~the election of each nominee for Class III director; and~~

~~Proposal 2 —FOR~~ ~~the ratification of the appointment of Grant Thornton LLP.~~

If you are a “street name” holder and do not provide voting instructions on one or more proposals, your bank, broker or other nominee will be unable to vote those shares, except that such nominee will have discretion to vote on the ratification of the appointment of Grant Thornton LLP (Proposal 2).

What are my choices when voting?

In the election of ~~Class III~~ directors, you may vote for all ~~Class III~~ director nominees or you may withhold your vote as to one or more director nominees. With respect to the ~~proposal~~proposals to approve the Say-On-Pay resolution and to ratify the appointment of ~~Grant Thornton~~Crowe LLP, you may vote for the proposal, against the proposal or abstain from voting on the proposal. With respect to the Say-On-Frequency proposal, you may vote for one (1) year, two (2) years, three (3) years or abstain.

May I change my vote after I have submitted my proxy card?

~~Yes,~~Yes. Regardless of the method used to cast a vote, if you ~~own common stock of~~are a record holder, you may ~~revoke your proxy or~~ change your ~~voting instructions at any time before your shares are voted at the annual meeting~~vote by:

•

delivering to the Company prior to the annual meeting a written notice of revocation addressed to: ~~CBTX,~~Stellar Bancorp, Inc., 9 Greenway Plaza, Suite 110, Houston, Texas 77046, Attn: ~~Corporate Secretary;~~Justin M. Long, General Counsel

•

~~completing, signing and returning~~delivering a ~~new~~valid, later-dated proxy, ~~card with~~or a ~~later date than your original proxy card, prior to such time that~~later-dated vote by telephone or by the ~~proxy card for any such holder of common stock must be received, and any earlier proxy will be revoked automatically;~~Internet, in a timely manner;

•

logging onto the Internet website specified on your proxy card or voting instruction card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card or voting instruction card, in each case if you are eligible to do so and following the instructions indicated on the proxy card or voting instruction card; or

•

attending the annual meeting and voting in person, and any earlier proxy will be revoked. However, attending the annual meeting without voting in person will not revoke your proxy.

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If your shares are held in “street name” and you desire to change any voting instructions you have previously given to the record holder of the shares of which you are the beneficial owner, you should contact the broker, bank or other nominee holding your shares in “street name” in order to direct a change in the manner your shares will be voted.

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What percentage of the vote is required to approve each proposal?

Assuming the presence of a ~~quorum,~~quorum:

Proposal 1 — The four (4) Class I director nominees who receive the most votes from the holders of the outstanding shares of common stock for their election will be elected — i.e., the affirmative vote of the holders of a plurality of the votes cast at the annual meeting is required for the election of the director ~~nominees (Proposal 1). The three (3) Class III director nominees who receive the most votes from the holders~~nominees.

Proposal 2 — Approval of the ~~outstanding shares of our common stock for their election will be elected.~~

~~The ratification of Grant Thornton LLP’s appointment as the Company’s independent registered public accounting firm (Proposal 2) will require~~Say-On-Pay resolution requires the affirmative vote of the holders of a majority of the votes cast at the annual meeting.

Proposal 3 — Because the Say-On-Frequency resolution seeks the input of shareholders and provides the Company’s shareholders with the option to vote to hold a Say-On-Pay vote once every one, two or three years, assuming the presence of quorum, the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled to vote on such matter and present in person or represented by proxy at the annual meeting ~~regarding~~may not be reached for any of the frequency options presented. If the proposal is not approved by the required vote of shareholders, the Board will evaluate the votes cast and consider the frequency option that ~~proposal.~~receives the highest number of shareholder votes as the recommendation of the shareholders.

Proposal 4 — The ratification of Crowe LLP’s appointment as the Company’s independent registered public accounting firm requires the affirmative vote of the holders of a majority of the votes cast at the annual meeting.

How are broker non-votes and abstentions treated?

Quorum —Broker non-votes ~~as long as there is one routine matter to be voted on at the meeting, such as the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered accounting firm,~~ and abstentions are counted for purposes of determining the presence or absence of a quorum.

Proposal 1 — A broker non-vote or a withholding of authority to vote with respect to one or more nominees for director will not have the effect of a vote against such nominee or ~~nominees (Proposal 1).~~nominees.

Proposals 2 and 3 — Any abstentions will not have the effect of a vote against the proposals with respect to the Say-On-Pay and Say-On-Frequency votes. The advisory, nonbinding votes on the Say-On-Pay resolution and Say-On-Frequency resolution are considered non-routine matters and, as such, broker non-votes will not be deemed votes cast on these matters, will not count as votes for or against these proposals and will not be included in calculating the number of votes necessary for approval of such matters.

Proposal 4 —Because the ratification of the appointment of the independent registered public accounting firm is considered a routine matter and a broker or other nominee may generally vote on routine matters, no broker non-votes are expected to occur in connection with the proposal to ratify the appointment of ~~Grant Thornton~~Crowe LLP as the Company’s independent registered accounting firm. Any abstentions will not have the effect of a vote against the proposal to ratify the appointment of ~~Grant Thornton~~Crowe LLP as the Company’s independent registered public accounting ~~firm (Proposal 2).~~firm.

What are the solicitation expenses and who pays the cost of this proxy solicitation?

The ~~board~~Board is asking for your proxy, and we will pay all of the costs of soliciting shareholder proxies. In addition to the solicitation of proxies via mail, our officers, directors and employees may solicit proxies personally or by other means of communication, without being paid additional compensation for such services. The Company will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding the proxy materials to beneficial owners of common stock.

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Are there any other matters to be acted upon at the annual meeting?

Management does not intend to present any business at the annual meeting for a vote other than the matters set forth in the notice, and management has no information that others will do so. The proxy also confers on the proxies the discretionary authority to vote with respect to any matter properly presented at the annual meeting. If other matters requiring a vote of the shareholders properly come before the annual meeting, it is the intention of the persons named in the accompanying form of proxy to vote the shares represented by the proxies held by them in accordance with applicable law and their judgment on such matters.

Where can I find voting results?

The Company will publish the voting results in a current report on Form 8-K, which will be filed with the SEC within four business days following the annual meeting.

How can I communicate with the ~~board?~~Board?

To communicate with the ~~board,~~Board, shareholders or other interested parties should submit their comments by sending written correspondence via mail or courier to ~~CBTX,~~Stellar Bancorp, Inc., 9 Greenway Plaza, Suite 110, Houston, Texas 77046, Attn: ~~Corporate Secretary;~~Justin M. Long, General Counsel; or via email at ~~CorpSecretary@cbotx.com. Shareholder communications~~ir@stellarbancorpinc.com. Communications will be sent directly to the specific director or directors of the Company indicated in the communication or to all members of the ~~board~~Board if not specified.

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PROPOSAL 1. ELECTION OF DIRECTORS

~~Number~~Classification of ~~Directors; Term of Office~~the Company’s Directors

~~Our board of directors consists of eleven (11) members.~~ In accordance with the ~~Company’s bylaws,~~terms of the Company’s ~~board~~certificate of formation, the Company’s Board is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms as follows:

•

The Class I directors are ~~Mr. Robert R. Franklin, Jr., Mr. J. Pat Parsons, Mr. Michael A. Havard, and Mr. Tommy W. Lott, and their term will expire at the annual meeting of shareholders to be held in 2022;~~

•

~~The Class II directors are Mr. Glen W. Morgan, Mr. Joe E. Penland, Sr., Mr. Reagan A. Reaud, and Mr.~~John Beckworth, Fred S. Robertson, Joseph B. Swinbank and ~~their term will expire at the annual meeting of shareholders to be held in 2023; and~~

•

~~The Class III directors are Ms. Sheila G. Umphrey, Mr. John E. Williams, Jr., and Mr.~~ William E. Wilson, Jr., and their ~~term~~terms will expire at the 2023 annual meeting.

~~Our board has nominated Ms. Sheila Umphrey, Mr.~~•

The Class II directors are Jon-Al Duplantier, George Martinez, William S. Nichols, III, Joe E. Penland, Sr. and John E. Williams, Jr., and ~~Mr.~~their terms will expire at the 2024 annual meeting.

•

The Class III directors are Robert R. Franklin, Jr., Michael A. Havard, Frances H. Jeter, Reagan A. Reaud and Steven F. Retzloff, and their terms will expire at the 2025 annual meeting.

Election Procedures; Term of Office

The Corporate Governance and Nominating Committee has recommended to the Board, and the Board has approved, the nomination of John Beckworth, Fred S. Robertson, Joseph B. Swinbank and William E. Wilson, Jr. asto fill the four expiring Class I director positions.

The four Class I nominees, ~~for election as Class III directors~~if elected at the annual ~~meeting. Each nominee currently serves as a Class III director. If elected, all nominees~~meeting, will serve ~~for a term commencing on the date of~~until the annual meeting of shareholders in 2026 and ~~continuing~~ until ~~the 2024 annual meeting~~their respective successor or successors are duly elected and qualified or until ~~each person’s successor is duly elected, or until such director’s~~their earlier death, resignation or removal. ~~Any additional directorships resulting~~

The affirmative vote of a plurality of the votes cast at an annual meeting at which a quorum is present is required for the election of each of the nominees for director. This means that the four Class I director nominees who receive the most votes from ~~an increase in~~ the ~~number~~holders of the outstanding shares of common stock for their election at this year’s annual meeting will be elected.

Unless the authority to vote for the election of directors is withheld as to one or more of the nominees, all shares of common stock represented by proxy will be ~~distributed among~~voted FOR the ~~three classes so that, as nearly as possible, each class will consist of one-third~~election of the ~~directors.~~nominees. If the authority to vote for the election of directors is withheld as to one or more but not all of the nominees, all shares of common stock represented by any such proxy will be voted FOR the election of the nominee or nominees, as the case may be, as to whom such authority is not withheld.

If a nominee becomes unavailable to serve as a director for any reason before the election, the shares represented by proxy will be voted for such other person, if any, as may be designated by the Board. The Board has no reason to believe that any nominee will be unavailable to serve as a director, and all of the nominees have consented to being named herein and to serve if elected.

Nominees for Election

The following table sets forth certain information with respect to the ~~name, age,~~Company’s Class I director nominees. The business address for all of these individuals is 9 Greenway Plaza, Suite 110, Houston, Texas 77046:

Name	Age	Position with the Company and the Bank	Director Since
John Beckworth	65	Class I Director of the Company	2022(1)
Fred S. Robertson	73	Class I Director of the Company; Director of the Bank	2022(1)
Joseph B. Swinbank	71	Class I Director of the Company; Director of the Bank	2013
William E. Wilson, Jr.	67	Class I Director of the Company	2017

(1)

Mr. Beckworth and ~~positions with~~Mr. Robertson served as directors of Allegiance prior to the ~~Company for each nominee for election as a Class III director~~Merger. At the effective time of the ~~Company:~~Merger, Mr. Beckworth and Mr. Robertson became directors of the Company.

Name of Nominee Age Position Director Since
Sheila G. Umphrey 81 Director 2017
John E. Williams, Jr. 66 Director 2007
William E. Wilson, Jr. 65 Director 2017

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The following is a brief discussion of the business and banking background and experience of our ~~Class III~~ director nominees.

~~Sheila G. Umphrey.~~ ~~Ms. Umphrey, 81,~~John Beckworth. Mr. Beckworth has served as the lead independent director of the Company since the completion of the Merger in 2022 and is a member of the Company’s Corporate Governance and Nominating Committee. He previously served as a director of Allegiance beginning in 2009 until the completion of the Merger. Mr. Beckworth practiced law in Houston for thirty years from 1983 until 2013. He was an associate and partner at Fulbright & Jaworski LLP before leaving to start his own law firm in 1994. From 2013-2018, Mr. Beckworth served as an associate dean at The University of Texas School of Law in Austin. Since 2018, Mr. Beckworth has continued in the school as a member of the law faculty. Also in 2018, Mr. Beckworth became affiliated as of counsel at Jackson Walker LLP in Austin. He has served as a trustee of The University of Texas Law School Foundation, and he is a former president and chairman of the Board of The University of Texas Ex Students Association. Mr. Beckworth is a member of the Texas and American Bar Associations, and he is a life fellow of the Houston and Texas Bar Foundations. He is an associate member of the American Board of Trial Advocates and he is Board certified by the Texas Board of Legal Specialization in Oil, Gas and Mineral Law. Mr. Beckworth is a director of the LBJ Foundation and is a life trustee emeritus and former chairman of the Board of the Kinkaid School in Houston. Mr. Beckworth also operates family ranching, oil and gas and investment interests. He received his Bachelor of Arts, with high honors, and Juris Doctor degrees from The University of Texas at Austin and The University of Texas School of Law. He is a past president of the Law School’s alumni association and a recipient of its Honorary Order of the Coif award. In 2017, Mr. Beckworth became a National Association of Corporate Directors (“NACD”) Board leadership fellow. As an experienced attorney and administrator, Mr. Beckworth provides service to the Board and management as lead independent director and as a member of the Corporate Governance and Nominating Committee.

Fred S. Robertson. Mr. Robertson has served as a director of the Company since ~~2017. Ms. Umphrey~~the completion of our Merger with Allegiance in 2022 and is ~~the owner~~a member of The Decorating Depot Inc., an interior and exterior design firm, where she has served as President since 1990. Ms. Umphrey has served on the board of Christus St. Elizabeth Hospital, as well as the Foundations Board of Christus St. Elizabeth, the Education Board at Lamar University Port Arthur, and the Board of ~~Gift of Life Beaumont, which is a charitable organization. She is also active with~~ the Humane Society of Beaumont. Ms. Umphrey studied Fine Arts at the University of Colorado and Commercial Art at Lamar University. Ms. Umphrey brings vast business and management experience as a business owner for over 30 years, as well as deep knowledge of the communities that we serve through her active involvement with local charities and on numerous boards and foundations.

~~John E. Williams, Jr.~~ ~~Mr. Williams, 66, has~~Bank. He previously served as a director of Allegiance beginning in 2011 until the ~~Company~~completion of the Merger. Mr. Robertson has over 30 years of experience overseeing institutional and ~~the Bank since 2007.~~retail investments. He has ~~served as Chairman of~~managed fixed income investments and designed extensive quantitative models for bond management. For the ~~Company’s Corporate Governance and Nominating Committee since 2017.~~past five years, Mr. Williams is the Managing Partner of Williams Hart Law Firm, L.L.P. in Houston, Texas, where he practices in the area of mass tort cases. Mr. Williams currently serves on the Board of Directors for the Houston Astros, and the Houston Police Foundation, and serves on the Board of Advisors for the James A. Baker III Institute for Public Policy at Rice University. Mr. Williams is listed in Top Attorneys in Texas, Best Attorneys in Texas, The Best Lawyers in America, and Texas’ Best Lawyers, and heRobertson has been ~~selected as~~managing his personal investments. Mr. Robertson holds a ~~Super Lawyer every year since 2003.~~number of non-profit Board appointments and volunteers with many organizations in Houston. Mr. ~~Williams~~Robertson received a ~~B.B.A.~~Bachelor of Science from ~~Baylor~~Cornell University and a ~~J.D.~~Masters of Business Administration in finance from ~~Baylor School~~The College of ~~Law, where he graduated first~~William and Mary. Mr. Robertson’s significant experience in the banking industry and leadership skills qualify him to serve on our Board. Mr. Robertson utilizes his ~~class. Mr. Williams has significant risk~~

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knowledge of investment and fund management ~~and strategic planning skills. In addition, he brings strong legal, lending and~~as Chair of the Bank Board’s Balance Sheet Risk Committee. His financial ~~skills important~~expertise provides additional benefit to the ~~oversight~~Company as he serves as a member of ~~our enterprise and operational risk management.~~the Compensation Committee.

~~William E. Wilson, Jr.~~Joseph B. Swinbank. Mr. ~~Wilson, 65,~~Swinbank has served as a director of the Company since ~~2017.~~2013, is a member of the Company’s Risk Oversight Committee and a member of the Board of the Bank. He previously served as a director of CBTX, Inc. and CommunityBank of Texas, N.A. beginning in 2013, and in 2017, he began serving on the Company’s Audit Committee, the Company’s Corporate Governance and Nominating Committee, and the Company’s Compensation Committee. Mr. Swinbank served as a director of VB Texas, Inc. and Vista Bank Texas from 2006 until the merger of equals with the Company and the Bank in 2013. Mr. Swinbank is the co-founder of The Sprint Companies, Inc., a Houston based sand and gravel company, and is Partner of Sprint Ft. Bend County Landfill, Sprint Sand & Clay, Sprint Waste Services, and Sprint Transports. In 2014, he became a Partner of River Aggregates and A&B Valves. Mr. Swinbank received his B.S. in Agricultural Economics from Texas A&M University in 1974. Mr. Swinbank brings a wealth of business experience, as well as a sharp focus on the financial efficiency and profitability of the Company’s customers, to the Board of Directors.

William (Bill) E. Wilson, Jr. Mr. Wilson has served as a director of the ~~Bank~~Company since ~~2007.~~2007 and is the Chairman of the Company’s Audit Committee. He previously served as a director of CBTX, Inc., and served as Chairman of its Audit Committee beginning in 2017. He also served as a director of CommunityBank of Texas, N.A. beginning in 2007 and became Chairman of the Bank’s Audit Committee in ~~2008, and Chairman of the Company’s Audit Committee in 2017.~~2008. Since 1979, Mr. Wilson has served as President and Chief Executive Officer of Bar CC. Ranch Company, retiring in 2019 as President and assuming the role of Chairman of the Board. The Bar C. Ranch

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Company is a real estate development company developing and investing in industrial, commercial and office properties in Texas. He has served as Manager and General Partner of Wilson Realty, Ltd., an owner of industrial buildings in Beaumont, Texas, since 1977. As Trustee of the Caldwell McFaddin Mineral Trust and the Rosine Blount McFaddin Mineral Trust, Mr. Wilson has managed large oil and gas mineral holdings across the State of Texas, creating operating leases and purchasing minerals on behalf of the trusts. Mr. Wilson founded Wilson Realty, Ltd. and Wilson & Company, a brokerage and management company. He is a ~~licensed~~retired Real Estate Broker in the State of Texas and has served as a director and President of the Beaumont Board of Realtors and a director of Texas Association of Realtors. Mr. Wilson has also served on numerous civic and charitable ~~boards~~Boards in the southeast Texas region. He joined the ~~board~~Board of ~~directors~~Directors of First Security National Bank of Beaumont in 1979 and joined its audit committee in 1981, serving First Security National Bank of Beaumont and its holding company until the bank was acquired by First City Bancorporation of Texas. ~~From 1994 until 2004, he was a director of CommunityBank of Texas, serving on the loan committee and investment committee and as Chairman of the audit committee.~~ Mr. Wilson received his B.B.A. in Accounting from The University of Texas at Austin in 1976 and is a licensed Certified Public Accountant. Mr. Wilson’s service as a bank director at other institutions, coupled with his investment, accounting and financial skills adds administration and operational management experiences, as well as corporate governance expertise to ~~our board~~the Board of ~~directors.~~Directors. In addition, as a Certified Public Accountant, Mr. Wilson brings extensive accounting, management, strategic planning and financial skills important to the oversight of ~~our~~the Company’s financial reporting, enterprise and operational risk management.

~~Election Procedures~~

The affirmative vote of a plurality of the votes cast at the annual meeting at which a quorum is present is required for the election of each of the nominees for Class III director. This means that the three (3) Class III director nominees who receive the most votes from the holders of the outstanding shares of common stock for their election at this year’s annual meeting will be elected.

~~Unless the authority to vote for the election of Class III directors is withheld as to one or more of the nominees, all shares of common stock represented by proxy will be voted~~ ~~FOR~~ the election of the nominees. If the authority to vote for the election of Class III directors is withheld as to one or more but not all of the nominees, all shares of common stock represented by any such proxy will be voted ~~FOR~~ ~~the election of the nominee or nominees, as the case may be, as to whom such authority is not withheld.~~

If a nominee becomes unavailable to serve as a Class III director for any reason before the election, the shares represented by proxy will be voted for such other person, if any, as may be designated by the board. The board has no reason to believe that any nominee will be unavailable to serve as a Class III director. All of the nominees have consented to being named herein and to serve if elected.

THE BOARD RECOMMENDS A VOTE ~~“FOR”~~“FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE FOR ELECTION TO THE BOARD.

CONTINUING DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the Company’s Class II and Class III directors whose terms of office do not expire at the annual meeting, and the executive officers of the Company who are not also a director. The business address for all of these individuals is 9 Greenway Plaza, Suite 110, Houston, Texas 77046.

Name	Age	Position with the Company and the Bank
Directors:
Jon-Al Duplantier	56	Class II Director of the Company
George Martinez	81	Class II Director of the Company; Director of the Bank
William S. Nichols, III	71	Class II Director of the Company; Director of the Bank
Joe E. Penland, Sr.	72	Class II Director of the Company
John E. Williams, Jr.	68	Class II Director of the Company
Robert R. Franklin, Jr.	68	Class III Director and CEO of the Company; Director and Executive Chairman of the Bank
Michael A. Havard	66	Class III Director of the Company
Frances H. Jeter	66	Class III Director of the Company
Reagan A. Reaud	44	Class III Director of the Company
Steven F. Retzloff	67	Class III Director and Executive Chairman of the Company; Director and Senior Executive Chairman of the Bank
Executive officers who are not also directors:
Okan I. Akin	52	Chief Risk Officer of the Company and the Bank
Paul P. Egge	44	Chief Financial Officer of the Company and the Bank
Justin M. Long	48	General Counsel and Secretary of the Company and the Bank
Ramon A. Vitulli, III	54	President of the Company and CEO of the Bank
Joe F. West	68	Chief Credit Officer of the Company and the Bank

The following is a brief discussion of the ~~business and banking~~professional background and experience of our continuing directors ~~that will stand for re-election at the annual meeting of shareholders to be held in 2022 or 2023, as applicable.~~

~~Class I Directors with a Term Expiring in 2022~~

~~Robert R. Franklin, Jr.~~ ~~Mr. Franklin, 66, serves as our Chairman, President~~ and ~~Chief Executive Officer and has served as a director~~executive officers. All officers of the Company are elected by the Board and serve at the Bank since 2013. Mr. Franklin joined the Company in 2013 in connection with our merger of equals with VB Texas, Inc. From June 2013 until January 2014, Mr. Franklin served as the Co-Chief Executive Officerdiscretion of the ~~Company and the Bank. In~~Board.

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~~January 2014, he became Chief Executive Officer of the Bank and the Company. He became Chairman of the Bank in January 2015 and Chairman and President of the Company in December 2015.~~Jon-Al Duplantier. Mr. Franklin began his 39-year Houston banking career working for a small community bank in Houston upon graduation from the University of Texas. He then moved to a large, regional bank before gravitating back to his primary interest of community banking. He became President of American Bank in 1988, where he served until the bank was sold to Whitney Holding Corp. in early 2001. Mr. Franklin and his team then joined Horizon Capital Bank, where Mr. Franklin raised sufficient capital to match the bank’s existing capital and took the position of President of Horizon Capital Bank. He served as President until the bank was sold to Cullen/Frost Bankers, Inc. in 2005. Mr. Franklin then started VB Texas, Inc. in November of 2006 as Chairman, President and Chief Executive Officer, serving until a merger of equals between VB Texas, Inc. and the Company in 2013. Mr. Franklin graduated from the University of Texas in 1977 with a B.B.A. in Finance. He is currently serving on the Board of Junior Achievement of Southeast Texas and previously served on the Board of the Texas Bankers Association. Mr. Franklin has actively served various charitable organizations over the years, along with serving on the board of a local private school. Mr. Franklin adds financial services experience, especially lending, oil and gas expertise and asset liability management to our board of directors, as well as a deep understanding of the Company’s business and operations. Mr. Franklin also brings risk and operations management and strategic planning expertise to our board of directors, skills that are important as we continue to implement our business strategy and acquire and integrate growth opportunities.

~~J. Pat Parsons.~~ Mr. Parsons, 72, serves as Vice Chairman of the Company and the Bank. Mr. Parsons was one of the original founders of the Company and has served as a director of the Company and the Bank since 2007. He served as President and Chief Executive Officer of the Company from 2007 until 2013. Mr. Parsons also served as the Bank’s Chairman and Chief Executive Officer from 2007 until 2013. From June 2013 until January 2014, Mr. Parsons served as the Co-Chief Executive Officer of the Company and Chairman and Co-Chief Executive Officer of the Bank. In January 2014, he became Chairman of the Bank and President of the Company. In January 2015, Mr. Parsons was named Vice Chairman of the Company and the Bank. He began his banking career in 1973 with First City National Bank of Houston as a Management Trainee and has served in various capacities at numerous commercial banks within our market areas, including Community Bank & Trust, SSB, as President and Chief Operating Officer. From 1992 until its sale to Texas Regional Bancshares, Inc. in 2004, Mr. Parsons oversaw Community Bank & Trust’s expansion, through organic growth and five acquisitions, to over $1.1 billion in assets and a network spanning 15 Southeast Texas communities. He currently serves on the board of directors of the Lamar University Foundation. Mr. Parsons earned a B.B.A. in Accounting from Lamar University in 1971 and an M.B.A. in Finance from the University of Houston in 1973. With more than 45 years of experience working in the banking industry in Texas and serving as chief executive officer of several institutions, Mr. Parsons brings significant leadership skills and a deep understanding of the local banking market and issues facing the banking industry to our board of directors.

~~Michael A. Havard.~~ ~~Mr. Havard, 64,~~Duplantier has served as a director of the Company since ~~2017~~2022 and is ~~Chairman of the Company’s Compensation Committee and~~ a member of the Company’s Audit Committee and ~~Corporate Governance and Nominating~~Compensation Committee. ~~In addition, Mr. Havard has~~He previously served as a director of Allegiance beginning in 2021 until the ~~Bank since 2007,~~completion of the Merger. Mr. Duplantier enjoyed a 25-year career in the oil and gas industry with Conoco Inc., ConocoPhillips and Parker Drilling Company. Most recently, he served as Parker Drilling’s President, Rental Tools and Well Services, a position he held from April 2018 until his departure in July 2020. In December 2018, Parker Drilling Company commenced voluntary chapter 11 proceedings and filed a prearranged plan of reorganization under the U.S. Bankruptcy Code. Prior to that role, Mr. Duplantier held a series of executive positions at Parker Drilling where he had responsibilities across more than a dozen countries, and his roles included management and oversight of legal affairs, corporate compliance and governance, human resources, environmental, safety and procurement from 2009 to 2018. Prior to joining Parker Drilling, Mr. Duplantier worked for ConocoPhillips from 2002 to 2009, where he held legal and management roles. From 1995 to 2002, Mr. Duplantier served in multiple roles of increasing responsibility at Conoco Inc. Mr. Duplantier holds a Juris Doctorate from Louisiana State University and a Bachelor of Science degree from Grambling State University. Mr. Duplantier serves on the Board of Directors of Brigham Minerals, Inc. (NYSE: MNRL), where he is a member of ~~its Audit, Budget~~the Compensation Committee and ~~Compensation~~the Nominating and ~~Funds Management Committees.~~Governance Committee. Mr. ~~Havard has been a practicing attorney since 1988 and~~Duplantier also serves on the Board of Directors of AltaGas Ltd. (TSX: ALA), where he ~~handles commercial litigation and complex business transactions and~~ is a member of ~~numerous professional organizations~~the Human Resources and societies. Prior to his legal career, Mr. Havard was an auditor with a prominent national accounting firm and currently is a licensed Certified Public Accountant. He also serves as a director of several private companies. Mr. Havard graduated from Lamar University in 1979 with a B.B.A. in Accounting and received his J.D. from the University of Houston Law Center in 1988. Mr. Havard’s prior experience as a Certified Public Accountant and auditor, which included performing audits for various banks in the Houston marketplace,Compensation Committee as well as the Governance Committee. Mr. Duplantier’s broad experience across commercial, governance and legal aspects of business along with his professional and leadership experience ~~as an attorney,~~ qualify him to serve on our ~~board. His knowledge accumulated from serving on the Company’s Audit, Compensation, Corporate Governance and Nominating Committees~~Board, as well as ~~various Bank committees provide him with a unique perspective of~~on the ~~inner workings of our organization.~~Audit Committee and the Compensation Committee.

~~Tommy W. Lott.~~George Martinez. Mr. ~~Lott, 84,~~Martinez has served as a director of the Company ~~and~~since 2022, is the ~~Bank since 2013, and since 2017, he has served on~~Charmain of the Company’s ~~Audit~~Risk Oversight Committee, a member of the ~~Company’s Corporate Governance~~Board and

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~~Nominating Committee,~~ a Vice Chairman of the Bank. Mr. Martinez is one of the organizers of Allegiance Bank and was the ~~Company’s Compensation Committee. Mr. Lott~~Chairman of Allegiance’s Board of Directors from 2008 until the completion of the Merger in 2022. He served as ~~a director~~Chief Executive Officer of ~~VB Texas, Inc. and Vista Bank Texas from 2006 until the merger of equals with~~ the Company and the Bank from the formation of each through 2019 and assumed the role of Vice Chairman of the Bank in ~~2013. From 2014 to 2019,~~2020. Mr. Martinez began his banking career in 1974 as a co-founder of Sterling Bank, where he was a consultant for Acosta, Inc., a company that provides sales, marketing and retail merchandising solutions to consumer-packaged goods companies and retailers in the U.S. and Canada. Mr. Lott founded Lott Marketing, Inc. in 1970 and served as ~~its Chairman~~an Executive Vice President from 1974 to 1980, and then as Chief Executive Officer ~~until its sale~~of Sterling Bancshares, Inc. from 1980 to ~~Acosta Inc. in 2012. Lott Marketing, Inc. was a sales~~2001 and ~~marketing agency representing a wide array of food and nonfood products~~as Chairman from 1992 to ~~the food service industry.~~2004. From 1998 to 2008, Mr. ~~Lott has~~Martinez served as President of Chrysalis Partners, LLC, a ~~director~~leadership consulting firm. From 2003 to 2020, he served on the Board of ~~Horizon Bank~~Directors of Cornerstone Building Brands, Inc., a leading provider of exterior commercial and ~~currently serves~~residential building products, as well as on the Board of Directors of Landmark Worldwide Enterprises, Inc., a ~~director of Enviro Water Minerals Company, Inc. Mr. Lott also has been a partner~~personal and ~~developer of apartment~~professional growth, training and ~~independent living complexes~~development firm. Active in the Houston ~~area during~~community, he serves as an Emeritus Member of the ~~last 20 years. Mr. Lott received~~Board of Advisors for the Jesse H. Jones Graduate School of Business at Rice University. He was inducted into the Texas Bankers Hall of Fame in April 2017 and recognized for his ~~B.B.A.~~valuable contributions to the Texas banking industry. In 2004, he was awarded the Ethical Leadership in ~~Marketing~~Action Award from the University of ~~Houston~~St. Thomas Center for Business Ethics and in ~~1959.~~2022 he was a recipient of the Texas Bankers Association 50-Year Banker Award. Mr. ~~Lott’s broad~~Martinez received a Bachelor of Business Administration and Economics degree from Rice University in 1963. Mr. Martinez’s significant banking experience ~~serving~~as a director and executive officer, including risk management skills experience, qualify him to serve on ~~boards of banks and other companies provide us with important skills regarding the oversight of~~ our ~~business.~~Board.

~~Class II Directors with a Term Expiring in 2023~~

~~Glen W. Morgan.~~William S. Nichols, III. Mr. ~~Morgan, 67,~~Nichols has served as a director of the Company ~~and the Bank~~ since ~~2007,~~2022 and since 2017, he has served on the Company’s Corporate Governance and Nominating Committee. Mr. Morgan has been the managing partner of Reaud, Morgan & Quinn, L.L.P. since 1996, where he has practiced since 1978. Mr. Morgan is a trial lawyer who specializes in personal injury and business litigation. Mr. Morgan has been named a Super Lawyer by the Texas Monthly’s Super Lawyer Section Top Texas Lawyers from 2004 to 2017. He has been listed in Best Lawyers in America since 2006 and National Law Journal Top 50 Verdicts. He is a member of the ~~Texas Bar Association, Jefferson County Bar Association, State Bar of Texas, Association of Trial Lawyers of America,~~Company’s Audit Committee and ~~a Life Fellow~~Risk Oversight Committee. Mr. Nichols was one of the organizers of Allegiance Bank and served on Allegiance’s Board of Directors beginning in 2008 until the completion of the Merger and the Board of Directors of the Allegiance Bank beginning 2007. Mr. Nichols retired in 2017 as the President of Suncor Companies, LLC, a real estate development company that primarily focused on the development of freestanding retail facilities throughout the United States. From 1974 to 1984, he worked as an audit principal at Ernst & Young. He has held numerous Board appointments, including advisory director at Community Bank, Katy, Texas. Additionally, he is the founder and director of the Nichols Foundation, a foundation to provide college scholarships to students on a need basis. He also serves on the Development Council of the Mays Business School at Texas ~~Bar Foundation. In addition to his leadership of many organizations in his profession,~~A&M University. Mr. ~~Morgan has served as~~Nichols is a ~~board~~Certified Public Accountant and is a member of the ~~Lamar University Foundation~~American Institute of Certified Public Accountants and the ~~Lamar University College~~Texas Society of ~~Education and Human Development Advisory Board, and is an honorary member~~Certified Public Accountants. He received a Bachelor of Business Administration degree from Texas A&M University. Mr. Nichols’ understanding of the ~~International Brotherhood~~Houston business market and leadership experience qualify him to serve on our Board. Mr. Nichols makes good use of ~~Electrical Workers’ Local 479, Beaumont Professional Firefighters Local 399, Beaumont Police Officers Association~~both his experience in the real estate industry and ~~Texas State Building and Construction Trades Association. A strong supporter of Lamar University,~~as a CPA as he contributes ~~to Cardinal Athletics, the Cardinal Club, and Friends~~by serving as a director of the Arts. He also established the Donald E. Morgan Scholarship at Lamar University in honor of his father, created the Morgan Charitable Fund, and established and is a permanent board member of the Cris E. Quinn Charitable Foundation. Mr. Morgan earned a B.B.A. from Lamar University and a J.D. from South Texas College of Law. Mr. Morgan has significant management, risk management and strategic planning skills important to the oversight of our enterprise and operational risk management.Bank.

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Joe E. Penland, Sr. Mr. Penland ~~70,~~ has served as a director of the Company since 2007. He previously served as a director of CBTX, Inc. and ~~the Bank since~~CommunityBank of Texas, N.A. beginning in 2007, and ~~since 2017, he has~~ served on ~~the Company’s~~CBTX, Inc.’s Corporate Governance and Nominating Committee and the Company’s Compensation Committee. Mr. Penland founded Quality Mat Company, based in Beaumont, Texas, and served as its President from 1974 until August of 2019, when he assumed the title of Chief Executive Officer. Quality Mat Company is one of the largest mat producers in the world and is one of the oldest companies in the business, with the capabilities of producing everything from logging mats to temporary road matting. Quality Mat Company’s products carry exclusive patents that serve a variety of major industries. Mr. Penland started the Penland Foundation in 2006, a foundation that helps local organizations in his community. Mr. Penland has significant experience serving on both public and private ~~boards~~Boards of directors for community banks. Prior to joining ~~our board~~the Company’s Board of ~~directors,~~Directors, Mr. Penland served as a director of Texas Regional Bancshares, Inc., a Nasdaq listed bank holding company, from 2004 until its merger with BBVA in 2006, and as a director of Southeast Texas Bancshares, Inc. prior to its acquisition by Texas Regional Bancshares, Inc. Mr. Penland brings key leadership, risk management, operations, strategic planning and oil and gas industry expertise that assists ~~our board~~the Board of ~~directors~~Directors in overseeing the Company’s operations in addition to his knowledge of the communities ~~we serve.~~the Company serves.

~~Joseph B. Swinbank.~~John E. Williams, Jr. Mr. ~~Swinbank, 69,~~Williams has served as a director of the Company since 2007 and is a member of the Company’s Compensation Committee and Corporate Governance and Nominating Committee. He previously served as a director of CBTX, Inc. and CommunityBank of Texas, N.A. beginning in 2007. He served as Chairman of CBTX, Inc.’s Corporate Governance and Nominating Committee beginning in 2017. Mr. Williams is the managing partner of Williams Hart Law Firm, L.L.P. in Houston, Texas, where he practices in the area of mass tort litigation. Mr. Williams currently serves on the Board of Directors for the Houston Astros, and the ~~Bank since 2013,~~Houston Police Foundation, and ~~since 2017,~~serves on the Board of Advisors for the James A. Baker III Institute for Public Policy at Rice University. Mr. Williams is listed in Top Attorneys in Texas, Best Attorneys in Texas, The Best Lawyers in America, and Texas’ Best Lawyers, and he has been selected as a Super Lawyer every year since 2003. Mr. Williams received a B.B.A. from Baylor University and a J.D. from Baylor School of Law, where he graduated first in his class. Mr. Williams has significant risk management and strategic planning skills. In addition, he brings strong legal, lending and financial skills important to the oversight of the Company’s enterprise and operational risk management.

Robert R. Franklin, Jr. Mr. Franklin serves as Executive Chairman of Stellar Bank and Chief Executive Officer of Stellar Bancorp, Inc. and serves as a director of the Company and Bank. Mr. Franklin previously served as Chairman, President and Chief Executive Officer of CBTX, Inc. from 2013 until the completion of the Merger. Mr. Franklin began his more than 40-year Houston banking career working for a small community bank in Houston upon graduation from the University of Texas. He then moved to a large, regional bank before gravitating back to his primary interest of community banking. He became President of American Bank in 1988, where he served until the bank was sold to Whitney Holding Corp. in early 2001. Mr. Franklin then joined Horizon Capital Bank, where Mr. Franklin raised sufficient capital to match the bank’s existing capital and took the position of President of Horizon Capital Bank. He served as President until the bank was sold to Cullen/Frost Bankers, Inc. in 2005. Mr. Franklin then started VB Texas, Inc. in November of 2006 as Chairman, President and Chief Executive Officer, serving until a merger of equals between VB Texas, Inc. and CBTX, Inc. in 2013. Mr. Franklin graduated from the University of Texas in 1977 with a B.B.A. in Finance. He is currently serving on the Board of Directors of Junior Achievement of Southeast Texas and previously served on the Board of Directors of the Texas Bankers Association. Mr. Franklin has actively served various charitable organizations over the years, along with serving on the Board of Directors of a local private school. Mr. Franklin adds financial services experience, especially lending, oil and gas expertise and asset liability management to the Company’s Board of Directors, as well as a deep understanding of the Company’s business and operations. Mr. Franklin also brings risk and operations management and strategic planning expertise to the Board of Directors, skills that are important as the Company continues to implement its business strategy and acquire and integrate growth opportunities.

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Michael A. Havard. Mr. Havard has served as a director of the Company since 2017 and is Chairman of the Company’s Compensation Committee and a member of the Company’s Audit Committee. He previously served as CBTX, Inc.’s Chairman of the Compensation Committee and a member of the Company’s Audit Committee and Corporate Governance. In addition, Mr. Havard served as a director of CommunityBank of Texas, N.A. beginning in 2007, and was a member of its Audit, Budget and Compensation and Funds Management Committees. Mr. Havard has been a practicing attorney since 1988 and he handles commercial litigation and complex business transactions and is a member of numerous professional organizations and societies, including the State Bar of Texas, American Institute of Certified Public Accountants, Texas Society of Certified Public Accountants and the Association of Trial Lawyers of America. Prior to his legal career, Mr. Havard was an auditor with a prominent national accounting firm and has been a licensed Certified Public Accountant since 1982. He also serves as a director of several private companies. Mr. Havard graduated from Lamar University in 1979 with a B.B.A. in Accounting and received his J.D. from the University of Houston Law Center in 1987. Mr. Havard’s prior experience as a Certified Public Accountant and auditor, which included performing audits for various banks in the Houston marketplace, as well as his experience as an attorney, qualify him to serve on the Company’s Board. His knowledge accumulated from serving on company’s Audit, Compensation, Corporate Governance and Nominating Committees as well as various bank committees which provide him with a unique perspective of the inner workings of the Company’s organization.

Frances H. Jeter. Ms. Jeter has served as a director of the Company since 2022 and is the Chairman of the Company’s Corporate Governance and Nominating ~~Committee, and the Company’s Compensation~~ Committee. ~~Mr. Swinbank~~She previously served as a director of ~~VB Texas, Inc. and Vista Bank Texas from 2006~~Allegiance beginning in 2014 until the ~~merger~~completion of ~~equals with~~the Merger. She has more than 25 years of experience in marketing, public affairs and business and nonprofit management. Ms. Jeter is a Partner and head of the Houston office for FGS Global, a strategic communications firm. Ms. Jeter previously served as Group Vice President of Internal and External Affairs for Spectra Energy. Before joining Spectra Energy, Ms. Jeter served as Chief Marketing Officer for Bracewell & Giuliani LLP and served as Vice President of Public Affairs for Duke Energy Gas Transmission, a predecessor company of Spectra Energy. She is a Life Trustee Emerita and a past Chair of the Board of Trustees of the Kinkaid School in Houston and a former Trustee of The Hockaday School in Dallas. She is the founding Chair of Houston’s The Fay School and is also a former member of the Board of Directors of the Greater Houston Community Foundation and St. Luke’s Episcopal Health Charities, among a number of other non-profit organizations. Ms. Jeter received a Bachelor of Arts degree from the University of North Carolina at Chapel Hill. Her extensive experience in the public company arena is leveraged to assist the organization in all areas of investor relations, governance and strategic communications. Her attention to detail and working knowledge of corporate and Board governance matters are well-suited to her participation on the Board and Corporate Governance and Nominating Committee.

Reagan A. Reaud. Mr. Reaud has served as a director of the Company since 2020 and is a member of the Company’s Risk Oversight Committee and Corporate Governance and Nominating Committee. He previously served as a director of CBTX, Inc. beginning in 2020, and in 2022, he began serving on CBTX, Inc.’s Audit Committee and the ~~Bank in 2013.~~Compensation Committee. Mr. ~~Swinbank is the co-founder of The Sprint Companies, Inc., a Houston based sand and gravel company, and is Partner of Sprint Ft. Bend County Landfill, Sprint Sand & Clay,~~

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Sprint Waste Services, and Sprint Transports. In 2014, he became a Partner of River Aggregates and A & B Valves. Mr. Swinbank received his B.S. in Agricultural Economics from Texas A&M University in 1974. Mr. Swinbank brings a wealth of business experience, as well as a sharp focus on the financial efficiency and profitability of our customers, to our board of directors.

~~Reagan A.~~ Reaud~~. Mr. Reaud, 42,~~ is the founder and CEO of Privateer Capital Management, LP which was formed in 2013. Privateer is a family-owned, multi-strategy investment company headquartered in Austin, Texas. He is also the founder and Chairman of the Lucena Group, which provides security and intelligence solutions to individuals and large corporations around the world. Mr. Reaud attended college at Washington and Lee University, where he studied European History, graduating Magna Cum Laude. After college, Mr. Reaud enrolled in the University of Texas School of Law, from which he received a ~~Juris Doctor~~J.D. with honors. He served as a law clerk to Justice Harriet O’Neill of the Texas Supreme Court. He then worked as a prosecutor for the Travis County Attorney’s Office. Mr. Reaud left his position as a prosecutor to attend the Wharton School of the University of Pennsylvania, where he earned an MBA with a double major in Finance and Strategic Management. Mr. Reaud sits on the ~~boards~~Boards of three charitable foundations, The Reaud Foundation, the Beaumont Foundation of America, and the University of Texas Law School Foundation. He is also a trustee of the Austin Symphony, a member of Business Executives for National Security, and a Life Fellow of the American Bar Foundation. Mr. Reaud’s excellent credentials, ~~board-level~~Board-level experience, and knowledge of the Texas market enhances ~~our~~the Company’s risk management and assists in identifying and executing strategic business goals.

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~~PROPOSAL 2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~Pursuant to~~Steven F. Retzloff. Mr. Retzloff serves as Senior Executive Chairman of Stellar Bank and Executive Chairman of Stellar Bancorp, Inc. He joined the ~~recommendation~~Company in connection with the Merger in 2022. Mr. Retzloff previously served as Chairman of Allegiance Bank and CEO of Allegiance and was one of the ~~Audit~~organizers of the Bank. Mr. Retzloff has over 39 years of business experience and 30 years of Houston Banking experience. He served as a director of Sterling Bancshares, Inc., a publicly traded multi-billion dollar financial institution, and Sterling Bank from 1987 to 2006, including terms as Chairman of the Board of Sterling Bancshares from 1990 to 1992 and from 2004 to 2005. He is currently Chairman and Chief Executive Officer of Retzloff Industries, Inc. and is an advisory director to Pharos Capital Partners III. Prior to co-founding Allegiance Bank, Mr. Retzloff owned and managed Travis Body & Trailer, Inc., a nationwide manufacturer of specialized truck trailers. His past work experience also includes General Motors, Bristol Myers and Retzloff Capital Corporation. Mr. Retzloff received an Industrial Engineering degree from The Georgia Institute of Technology and a Master of Business Administration degree (with distinction) from the Babcock Graduate School of Management at Wake Forest University. Mr. Retzloff currently serves as a director of the Independent Bankers Association of Texas, Faith in Practice, The Open Door Mission, the Greater Houston Partnership and, since 2022, the Houston Food Bank also serving as a member of its finance committee. He also serves as Chairman of the Finance Committee for the ~~board~~Greater Houston Partnership. He previously served as Vice President of the Kinkaid School Investments Foundation and previously served as trustee of Pines Presbyterian Church and on the advisory Board for the Mays School Banking Program at Texas A&M University and Fuller Texas School of Theology. Mr. Retzloff’s significant experience as a director and officer of community banks and his extensive leadership skills qualify him to serve on our Board.

Executive Officers Who Are Not Also Directors

Okan I. Akin. Mr. Akin has ~~appointed Grant Thornton LLP~~over a 25-year career in the banking industry and he is currently serving as Senior Executive Vice President and Chief Risk Officer of Stellar Bank and Chief Risk Officer of Stellar Bancorp, Inc. Previously, he held the ~~independent registered public accounting firm~~positions of President and Chief Risk Officer at Allegiance Bank and Executive Vice President and Chief Risk Officer at Allegiance. Mr. Akin’s banking career as an executive started when he joined Independence Bank in 2002 as Senior Credit Officer and was eventually promoted to President in 2009. Between 2010 and 2013, Mr. Akin also served as CEO of Independence Bank until joining Allegiance Bank following a merger. Mr. Akin has since assumed the roles of Regional President, Deputy Chief Credit Officer, and Chief Administration Officer at Allegiance Bank. Mr. Akin holds an MBA from the University of Houston and a Bachelor of Arts in Finance & Marketing from the same institution.

Paul P. Egge. Mr. Egge serves as Senior Executive Vice President and Chief Financial Officer of the Company ~~for~~and Stellar Bank. He previously served as Executive Vice President and Chief Financial Officer of Allegiance Bank and Allegiance prior to the ~~year ending December 31, 2021. The board is seeking ratification~~completion of the ~~appointment~~Merger. He has over 20 years of ~~Grant Thornton~~financial services experience, mostly as an investment banker focused on providing strategic and capital markets advisory services to banks and specialty finance companies. Prior to joining Allegiance in 2016, he served as Director of Capital Planning and Corporate Development for Cadence Bank, a $9.4 billion asset regional bank at the time. He graduated cum laude with a bachelor’s degree in Economics and Finance from the College of William & Mary and holds an MBA from the Kellogg School of Management at Northwestern University.

Justin M. Long. Mr. Long serves as Senior Executive Vice President, General Counsel and Corporate Secretary of Stellar Bancorp, Inc. and Stellar Bank. He previously served as Senior Executive Vice President, General Counsel and Corporate Secretary of CommunityBank of Texas and CBTX, Inc. beginning April 2019. Mr. Long served as a partner at Norton Rose Fulbright US LLP ~~for~~from 2016 to 2019 where he represented financial institutions in corporate and regulatory matters, including the ~~2021 fiscal year. Shareholder ratification~~CBTX, Inc.’s initial public offering. Prior to joining Norton Rose Fulbright, he was a partner at Bracewell LLP where he represented financial institutions in corporate and regulatory matters. Mr. Long received a bachelor’s degree in Finance from the University of Texas and graduated from the University of Texas School of Law.

Ramon A. Vitulli, III. Mr. Vitulli serves as Chief Executive Officer of Stellar Bank and President of Stellar Bancorp. He previously served as Chief Executive Officer and director of Allegiance Bank and a director and President of Allegiance prior to the completion of the ~~selection~~Merger. He has over 30 years of Grant Thornton LLP as our independent registered public accounting firm for the 2021 fiscal year is not required by our bylaws, state law or otherwise. However, the board is submitting the selection of Grant Thornton LLP to our shareholders for ratification as a matter of good corporate governance. If the shareholders fail to ratify the selection, the Audit Committee will consider this information when determining whether to retain Grant Thornton LLP for future services.

At the annual meeting, shareholders will be asked to consider and act upon a proposal to ratify the appointment of Grant Thornton LLP. Assuming a quorum is present, the ratification of such appointment will require the affirmative vote of the holders of a majority of the votes cast at the annual meeting. Representatives of Grant Thornton LLP are expected to be in attendance at the annual meeting and will be afforded the opportunity to make a statement. The representatives will also be available to respond to questions.

~~THE BOARD RECOMMENDS A VOTE “FOR” THE PROPOSAL TO RATIFY THE APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2021.~~banking

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experience, getting his start as a loan review examiner at Charter National Bank in Houston, then moving to Sterling Bank until joining Allegiance Bank in 2007, prior to the bank’s opening. Mr. Vitulli serves on the Boards of Texas Bankers Association and CHRISTUS Foundation for HealthCare and previously served on the Board of the St. Pius X High School Foundation. He is a graduate of The University of Texas at Austin with a BBA in Finance.

Joe F. West. Mr. West serves as Senior Executive Vice President and Chief Credit Officer of Stellar Bank. He previously served as Senior Executive Vice President and Chief Credit Officer of CommunityBank of Texas since 2013. Mr. West joined CommunityBank of Texas in 2013 via the merger of CBTX, Inc. and Vista Bank Texas where he was Executive Vice President and Senior Credit Officer since 2006. Prior to Vista Bank Texas, Mr. West served as Senior Credit Officer at Horizon Capital Bank in Houston. In his capacity as Chief Credit Officer, he is responsible for loan asset quality, loan policy and the Bank’s loan approval process. Mr. West has over 40 years of experience in banking and graduated with a BBA in Accounting from Baylor University in 1978 and is a licensed Certified Public Accountant.

BOARD DIVERSITY DISCLOSURE

Board Diversity Matrix

We believe that it is important that our Board is composed of individuals reflecting the diversity of our employees, shareholders and the communities we serve. In recent years, our Corporate Governance and Nominating Committee has taken this priority to heart, and the diversity of our Board has grown. We provide the below enhanced disclosure regarding the diversity of our Board, utilizing the template in accordance with The Nasdaq Stock Market LLC’s (“Nasdaq”) Board diversity listing standards.

Board Diversity Matrix (As of April 24, 2023)
Total Number of Directors	14
	Female		Male		Non-Binary		Did Not Disclose Gender
Part I: Gender Identity
Directors		1		12		—		1
Part II: Demographic Background
African American or Black		—		1		—		—
Alaskan Native or Native American		—		—		—		—
Asian		—		—		—		—
Hispanic or Latinx		—		1		—		—
Native Hawaiian or Pacific Islander		—		—		—		—
White		1		10		—		—
Two or More Races or Ethnicities		—		—		—		—
LGBTQ+		—		—		—		—
Did Not Disclose Demographic Background		—		—		1		—

BOARD AND COMMITTEE MATTERS

Board Meetings

Our ~~board~~Board met ~~eight~~nine times during ~~the 2020 fiscal year~~2022 (including regularly scheduled and special meetings). During ~~fiscal year 2020, each director participated in~~2022, all of our directors except two attended at least 75% or more of the aggregate of (i) the total number of meetings of the ~~board~~Board (held during the period for which he or she was a director) and (ii) the total number of meetings of all committees of the ~~board~~Board on which he or she served (during the period that he or she served). Former director, Sheila G. Umphrey attended five of the eight meetings of the Board of Directors prior to the Merger. Former director, Glen Morgan did not attend Board or committee meetings during 2022.

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Director Attendance at Annual Meeting

The ~~board~~Board encourages all directors to attend the annual meeting of shareholders. ~~Three~~Two of our directors attended the ~~2020~~2022 annual meeting of shareholders. ~~We anticipate all~~

Board Leadership Structure

Our Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board, as the Board believes that it is in the best interests of the Company to make that determination from time to time based on the position and direction of the Company and the membership of the Board. Until October 1, 2022, the roles of Chairman of the Board and Chief Executive Officer of the Company were held by the same person, Robert R. Franklin, Jr. In connection with the consummation of the Merger, Steven F. Retzloff became Executive Chairman of the Company on October 1, 2022. Mr. Franklin remained as a director and continues to serve as our ~~nominees~~Chief Executive Officer.

Additionally, in connection with consummation of the Merger, the independent directors elected John Beckworth to serve as Lead Director beginning on October 1, 2022. The Lead Director chairs each executive session; will meet with any director who is not adequately performing his or her duties as a member of the Board or any committee; facilitates communications between other members of the Board and the Executive Chairman or Chief Executive Officer; monitors, with the assistance of the Company’s General Counsel, communications from shareholders and other interested parties and provides copies or summaries to the other directors as he considers appropriate; works with the Executive Chairman in the preparation of the agenda for ~~election will attend~~Board meetings and in determining the ~~upcoming annual meeting.~~need for special meetings of the Board; and otherwise consults with the Executive Chairman of the Board, the Chief Executive Officer and members of the Corporate Governance and Nominating Committee on matters relating to corporate governance and Board performance.

Our Board ~~Composition~~believes that its current structure, with separate Chairman and Chief Executive Officer roles and a Lead Independent Director is in the best interests of the Company and its shareholders at this time.

Executive Sessions

The ~~size~~independent directors of ~~our board is~~the Company hold executive sessions from time to time without the Chief Executive Officer or any management director present. The Company’s Corporate Governance Guidelines adopted October 1, 2022, provide that the Company’s independent directors will meet at least twice a year in executive session. During 2022, one executive session was held.

Board Composition and Special Period Governance

The Board currently ~~set at 11~~consists of 14 members. In accordance with the Company’s bylaws, members of the ~~board~~Board are divided into three classes, Class I, Class II and Class III. The members of each class are elected for a term of office to expire at the third succeeding annual meeting of shareholders following their election. The term of office of the current Class I directors expires at the annual meeting. The terms of the Class II and Class III directors ~~will~~ expire at the annual ~~shareholders’~~ meeting of shareholders in 2024 and 2025, respectively. Accordingly, if the four Class I director nominees are elected at the annual meeting, the composition of our Board of Directors will be four Class I directors, five Class II directors and five Class III directors.

In accordance with our bylaws, until the third anniversary of the effective time of the Merger (the “Specified Period”), the Board shall be comprised of fourteen (14) Directors, of which seven (7) shall be directors that were serving as directors of CBTX, Inc. immediately prior to the effective time of the Merger (“Legacy CBTX Directors”) (one of whom shall be ~~held~~Mr. Franklin), and seven (7) shall be directors that were serving as directors of Allegiance immediately prior to the effective time of the Merger (“Legacy Allegiance Directors”) (one of whom shall be Mr. Retzloff). The Legacy CBTX Directors and the Legacy Allegiance Directors shall be, as nearly evenly as is practicably possible, evenly apportioned among the different classes of the Board of the Company in ~~2022, 2023~~accordance with the terms of the bylaws of the Company.

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Until the second anniversary of the Merger, (a) no vacancy on the Board created by the cessation of service of a director shall be filled by the Board and ~~2024, respectively. There~~the Board shall not nominate any individual to fill such vacancy, unless (i) such individual would be an independent director of the Company (unless such predecessor director was not an independent director), (ii) in the case of a vacancy created by the cessation of service of a Legacy CBTX Director, not less than a majority of the Legacy CBTX Directors have approved the appointment or nomination (as applicable) of the individual appointed or nominated (as applicable) to fill such vacancy, in which case the Legacy Allegiance Directors shall vote to approve the appointment or nomination (as applicable) of such individual, and (iii) in the case of a vacancy created by the cessation of service of a Legacy Allegiance Director, not less than a majority of the Legacy Allegiance Directors have approved the appointment or nomination (as applicable) of the individual appointed or nominated (as applicable) to fill such vacancy, in which case the Legacy CBTX Directors shall vote to approve the appointment or nomination (as applicable) of such individual; provided that any such appointment or nomination pursuant to clause (ii) or (iii) shall be made in accordance with applicable law and the rules of The Nasdaq Stock Market, LLC (“Nasdaq”) (or other national securities exchange on which the Company’s securities are ~~no family relationships of first cousin or closer among our directors or officers by blood, marriage or adoption.~~

~~Any director vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause,~~listed); and (b) subject to applicable law, newly created directorships resulting from any increase in the authorized number of directors may be filled only by the affirmative vote of at least seventy-five percent (75%) of the remaining directors, even though less than a quorum of the Board, and in the event that there is only one director remaining in office, by such sole remaining director, and directors so chosen shall hold office until such director’s successor shall have been duly elected and qualified.

Subject to the requirements described above, any director vacancy existing on or occurring after the election may be filled by a majority vote of the remaining directors, even if the remaining directors constitute less than a quorum of the full board, and in the event that there is only one director remaining in office, by such sole remaining director. In accordance with the Company’s bylaws, a director appointed to fill a vacancy will be appointed to serve until such director’s successor shall have been duly elected and qualified. During a period between two successive annual meetings of shareholders, our board cannot fill more than two vacancies created by an increase in the number of directors. Notwithstanding the foregoing, a vacancy to be filled because of an increase in theBoard. The number of directors may be ~~filled~~changed only by ~~election at an annual or special meeting~~resolution of ~~shareholders called for that purpose.~~the Board.

As discussed in greater detail below, the ~~board~~Board has affirmatively determined that 911 of our 1114 current directors qualify as independent directors under the applicable rules of ~~the NASDAQ Global Select Market~~Nasdaq and the SEC.

Director Independence

Under ~~the~~Nasdaq rules, ~~of the NASDAQ Global Select Market,~~ a majority of the members of our ~~board~~Board are required to be independent. The rules of ~~the NASDAQ Global Select Market,~~Nasdaq, as well as those of the SEC, also impose several other requirements with respect to the independence of our directors.

Our ~~board~~Board has evaluated the independence of each director and each unaffiliated nominee for director based upon these rules. Applying these rules, our ~~board~~Board has affirmatively determined that, with the exception of Messrs. Franklin, Martinez and ~~Parsons,~~Retzloff, each of our current directors ~~qualifies~~qualify as an independent director under applicable rules. In making these determinations, our ~~board~~Board considered the current and prior relationships that each director has and has had with the Company and all other facts and circumstances our ~~board~~Board deemed relevant in determining their independence, including the beneficial ownership of common stock by each director, and the transactions described under the section titled “Certain Relationships and Related Person ~~Transactions” in this proxy statement.~~

Transactions.” The Board ~~Leadership Structure~~

~~Robert R. Franklin Jr. currently serves as our Chairman, President~~also considered whether there were any transactions or relationships between directors or any member of their immediate family (or any entity of which a director or an immediate family member is an executive officer, general partner or significant equity holder) and ~~Chief Executive Officer. Mr. Franklin joined the Company in 2013 in connection with our merger of equals with VB Texas, Inc. He~~

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~~became Chairman and President~~members of the ~~Company in December 2015. Mr. Franklin’s primary duties are~~Company’s senior management or their affiliates. The purpose of this review was to ~~lead our board in establishing~~determine whether any such relationships or transactions existed that were inconsistent with a determination that the ~~Company’s overall vision and strategic plan and to lead the Company’s management in carrying out that plan.~~director is independent.

Our board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board, as the board believes that it is in the best interests of the Company to make that determination from time to time based on the position and direction of the Company and the membership of the board. The board has determined that having our Chief Executive Officer serve as Chairman of the Board is in the best interests of our shareholders at this time. This structure makes best use of the Chief Executive Officer’s extensive knowledge of the Company and the banking industry. The board views this arrangement as also providing an efficient nexus between the Company and the board, enabling the board to obtain information pertaining to operational matters expeditiously and enabling our Chairman to bring areas of concern before the board in a timely manner. The board does not have a lead or presiding independent director.

Risk Management and Oversight

Our ~~board~~Board is responsible for oversight of management and the business and affairs of the Company, including those relating to management of risk. Our full ~~board~~Board determines the appropriate risk for us generally, assesses the specific risks faced by us and reviews the steps taken by management to manage those risks. While our full ~~board~~Board maintains the ultimate oversight responsibility for the risk management process, its committees oversee risk in certain specified areas as described in the section entitled “— Committees of the Board.”

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Director Nominations

The Corporate Governance and Nominating Committee considers nominees to serve as directors of the Company and recommends such persons to the ~~board.~~Board. The Corporate Governance and Nominating Committee also considers director candidates recommended by shareholders who appear to be qualified to serve on the ~~board~~Board and meet the criteria for nominees considered by such committee. The Corporate Governance and Nominating Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the ~~board~~Board and the Corporate Governance and Nominating Committee does not perceive a need to increase the size of the ~~board.~~Board. In order to avoid the unnecessary use of the Corporate Governance and Nominating Committee’s resources, it will consider only those director candidates ~~proposed by shareholders that are~~ recommended in accordance with the procedures set forth ~~in our bylaws, which are summarized generally~~ in the section titled “— Procedures to be Followed by Shareholders ~~for~~For Director Nominations.”

Criteria for Director Nominees

The ~~Corporate Governance and Nominating Committee~~Company has adopted a set of criteria that itthe Corporate Governance and Nominating Committee considers when it ~~identifies and recommends~~selects individuals to be ~~selected by our board as nominees~~nominated for election to the ~~board.~~Board, which are set forth in our Corporate Governance Guidelines. In addition to reviewing the background and qualifications of the individuals considered in the selection of candidates, the Corporate Governance and Nominating Committee looks at a number of attributes and criteria, including: experience, skills, expertise, diversity, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, conflicts of interest and such other relevant factors that the Corporate Governance and Nominating Committee considers appropriate in the context of the needs of the ~~board.~~Board. The Corporate Governance and Nominating Committee does not have a formal policy with respect to diversity; however, the ~~board~~Board and Corporate Governance and Nominating Committee believe that it is essential that the ~~board~~Board’s members represent diverse viewpoints.

The Corporate Governance and Nominating Committee may weigh the foregoing criteria differently in different situations, depending on the composition of the Board at the time. The Corporate Governance and Nominating Committee will strive to maintain at least one director who meets the definition of “audit committee financial expert” under the regulations of the SEC.

In addition, prior to nominating an existing director for re-election to the ~~board,~~Board, the Corporate Governance and Nominating Committee considers and reviews ~~such~~an existing director’s ~~board~~Board and committee attendance and performance; length of ~~board~~Board service; experience, skills and contributions that the existing director brings to the ~~board; independence;~~Board; and ~~any significant change in the director’s status, including the attributes considered for initial membership on our board of directors.~~

independence.

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Process for Identifying and Evaluating Director Nominees

Pursuant to the Corporate Governance and Nominating Committee ~~Charter~~charter and the Corporate Governance Guidelines, each as approved by the ~~board,~~Board, the Corporate Governance and Nominating Committee is responsible for the process relating to director nominations, including identifying, ~~recommending,~~recruiting, interviewing and selecting individuals who may be nominated for election to the ~~board.~~Board.

The process that the Corporate Governance and Nominating Committee follows when it identifies and evaluates individuals to be nominated for election to the ~~board~~Board is set forth below.

Identification. For purposes of identifying nominees for the ~~board,~~Board, the Corporate Governance and Nominating Committee will rely on personal contacts of the members of the ~~board~~Board as well as their knowledge of members of the communities served by the Company. The Corporate Governance and Nominating Committee will also consider director candidates recommended by shareholders in accordance with the policy and procedures set forth ~~in our bylaws and which are summarized generally~~ below in the section titled “—Procedures to be Followed by Shareholders ~~for~~For Director Nominations.” The Corporate Governance and Nominating Committee has not previously used an independent search firm in identifying nominees.

Evaluation. In evaluating potential nominees, the Corporate Governance and Nominating Committee ~~will review~~determines whether the ~~qualifications~~candidate is eligible and ~~independence of individuals being considered as director candidates, including persons proposed~~qualified for service on the Board by ~~shareholders or others.~~evaluating the candidate

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under the selection criteria set forth above. In addition, for any new director nominee, the Corporate Governance and Nominating Committee will conduct a check of the individual’s background and interview the candidate.

Procedures to be Followed by Shareholders ~~for~~For Director Nominations

Any shareholder of the Company entitled to vote in the election of directors may recommend to the Corporate Governance and Nominating Committee one or more persons as a nominee for election as director at a meeting only if such shareholder has given timely notice in proper written form of such shareholder’s intent to make such nomination or nominations. To be timely ~~a shareholder’s notice given~~ in ~~the context of~~connection with an annual meeting, ~~of shareholders~~a shareholder’s notice must be delivered to or mailed and received at the principal executive ~~office~~offices of the Company not less than 120 ~~calendar days~~ nor more than 150 calendar days prior to the first anniversary of the preceding year’s annual ~~meeting. However,~~meeting; provided, however, that in the event that the date of the annual meeting is advanced more than 30 calendar days prior to such anniversary date or delayed more than 60 calendar days after such anniversary date then to be timely ~~the~~such notice must be received by the Company no later than the later of 70 calendar days prior to the date of the annual meeting or the close of business on the ~~seventh~~7th calendar day following the earlier of the date on which notice of the annual meeting is first mailed by or on behalf of the Company or the day on which public announcement is first made of the date of the annual meeting. ~~Any~~In no event shall any adjournment or postponement of an annual meeting ~~will not~~or the announcement thereof commence a new time period for the ~~purposes~~giving of ~~giving notice.~~the notice required by the bylaws.

To be in proper written form, a shareholder’s notice to the Secretary of the Company must set ~~forth:~~forth the information summarized below and otherwise comply with the terms of the Company’s bylaws:

•

as to each person whom the shareholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director, if elected;

•

as to the shareholder giving the notice, the name and address of such shareholder and any shareholder associated person; the class and number of shares of the Company and other economic and voting interests or similar positions, securities or interests held by such shareholder or shareholder associated person;

•

a description of any material relationships, including financial transactions and compensation, between the shareholder giving the notice and any shareholder associated person, on the one hand, and the proposed nominee or nominees, and such nominee’s affiliates and associates, or others acting in concert with the nominee, on the other hand;

•

a completed independence questionnaire regarding the proposed nominee or nominees;

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a written representation from such proposed nominee or nominees that they do not have, nor will they have, any undisclosed voting commitments or other arrangements with respect to their actions as a director;

•

a written representation from such proposed nominee or nominees that they comply with all applicable corporate governance policies and eligibility requirements; and

•

any other information reasonably requested by the Company.

Shareholder nominations should be ~~submitted~~addressed to the ~~Corporate~~ Secretary ~~and the Chairman~~ of ~~the Corporate Governance and Nominating Committee of CBTX,~~Stellar Bancorp, Inc., ~~Attn: Corporate Secretary,~~ 9 Greenway Plaza, Suite 110, Houston, Texas 77046.

A nomination not made in compliance with the foregoing procedures will not be eligible to be voted upon by the shareholders at the meeting. The Corporate Governance and Nominating Committee has the power and duty to determine whether a nomination was made in accordance with procedures set forth above and, if any nomination is not in compliance with the procedures set forth above, to declare that such defective nomination will be disregarded.

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Committees of the Board

Our ~~board~~Board has established an Audit Committee, a Compensation Committee, ~~and~~ a Corporate Governance and Nominating Committee and a Risk Oversight Committee. Below is a summary of our current committee structure and membership information:

Audit
Committee

Compensation
Committee

Corporate
Governance and
Nominating
Committee

Risk
Oversight
Committee

John Beckworth

Jon-Al Duplantier

Robert R. Franklin, Jr.

Michael A. Havard

Frances H. Jeter

George Martinez

William S. Nichols, III

Joe E. Penland, Sr.

Reagan A. Reaud

Steven F. Retzloff

Fred S. Robertson

Joseph B. Swinbank

John E. Williams, Jr.

William E. Wilson, Jr.

C; FE

C = Chairperson; FE = Financial Expert

Our ~~board~~Board may establish additional committees as it deems appropriate, in accordance with applicable law and regulations and our certificate of formation and bylaws.

Audit Committee

The members of ~~our~~the Audit Committee are ~~Messrs.~~Jon-Al Duplantier, Michael A. Havard, William S. Nichols, III and William E. Wilson, Jr. ~~(Chairman)~~, ~~Michael A. Havard, Reagan A. Reaud and Joseph B. Swinbank.~~with Mr. ~~Reagan Reaud joined the Audit Committee in March 2021, replacing Mr. Tommy Lott.~~Wilson serving as chairperson. Our ~~board~~Board has evaluated the independence of each of the members of the Audit Committee and has affirmatively determined that (i) each ~~(i) is~~of the members meets the definition of an “independent director” under ~~NASDAQ Global Select Market rules,~~applicable Nasdaq rules; (ii) each of the members satisfies the additional independence standards under applicable SEC rules for audit committee ~~service,~~service; and (iii) each of the members has the ability to read and understand fundamental financial statements. In addition, ~~our board of directors~~the Board has affirmatively determined that each of Mr. Wilson, ~~is a financial expert~~Mr. Havard and ~~has~~Mr. Nichols have the requisite financial sophistication ~~required of at least one member of the Audit Committee by the rules of the NASDAQ Global Select Market~~ due to ~~his~~their respective experience and ~~background. Our board of directors has also determined that Mr. Wilson qualifies~~background to qualify as an “audit committee financial expert” ~~under~~as defined by the ~~rules~~SEC and ~~regulations of the SEC.~~as required by Nasdaq rules. The Audit Committee met ~~six~~nine times in ~~2020.~~2022.

The purpose of the Audit Committee is to oversee the accounting and financial reporting processes of the Company and the audits of the Company’s financial statements and, in that regard, assist the ~~board~~Board in ~~fulfilling~~ its oversight ~~responsibilities with respect to~~ of:

•

the ~~following, among other things:~~

•

~~selecting and reviewing~~integrity of the ~~performance of our independent auditor and approving, in advance, all engagements and fee arrangements;~~Company’s financial statements;

•

~~reviewing reports from~~the selection, engagement and management of the independent ~~auditor regarding its internal quality control procedures~~registered public accounting firm (the “Independent Auditor”) that audits and ~~any material issues raised by~~reports on the ~~most recent internal quality-control or peer review or by governmental or professional authorities, and any steps taken to deal with such issues;~~

•

reviewing the independence of our independent auditor and setting policies for hiring employees or former employees of our independent auditor and for independent auditor rotation in accordance with applicable laws, rules and regulations;

•

~~resolving any disagreements regarding~~Company’s consolidated financial ~~reporting between management and the independent auditor, and reviewing with our independent auditor any audit problems, disagreements or difficulties and management’s response thereto;~~

•

~~overseeing our internal audit function;~~statements;

15
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•

~~reviewing operating and control issues identified in~~the performance of the Company’s internal audit ~~reports, management letters, examination~~function and the Independent Auditor;

•

the review of reports of bank regulatory agencies and monitoring management’s compliance with recommendations contained in those reports;

•

the Company’s compliance with legal and regulatory requirements related to its financial statements and reporting; and

•

~~meeting~~such other matters assigned to the Audit Committee.

The Audit Committee is responsible for oversight of Company risks relating to accounting matters, financial reporting and legal and regulatory compliance. To satisfy these oversight responsibilities, the Audit Committee separately meets with ~~management~~the Company’s executive officers, internal and external counsel, independent registered public accounting firm and management. The Audit Committee also receives reports regarding issues such as the status and findings of audits being conducted by the internal auditors and the independent ~~auditor to review~~registered public accounting firm, the ~~effectiveness~~status of ~~our system of internal control~~material litigation and ~~internal~~accounting changes that could affect the Company’s financial statements and proposed audit ~~procedures, and to address any deficiencies in such procedures.~~adjustments, if any.

The Audit Committee has adopted a written charter, which sets forth the Audit Committee’s duties and responsibilities. The Audit Committee charter is available on our website at ~~www.communitybankoftx.com~~www.stellar.bank under ~~“Investor Relations —~~ Investor Relations/Corporate Governance/Governance ~~— Documents and Charters”.~~Documents.

Compensation Committee

The members of ~~our~~the Compensation Committee are ~~Messrs.~~Jon-Al Duplantier, Michael A. Havard, ~~(Chairman)~~Fred S. Robertson and John E. Williams, Jr., ~~Tommy W. Lott, Joe E. Penland, Sr., Reagan A. Reaud and Joseph B. Swinbank.~~with Mr. ~~Reagan A. Reaud joined the Compensation Committee in March 2021.~~Havard serving as chairperson. Our ~~board of directors~~Board has evaluated the independence of each of the members of ~~our~~the Compensation Committee and has affirmatively determined that each ~~of the members of our Compensation Committee~~ meets the definition of an “independent director” under ~~NASDAQ Global Select Market~~the applicable Nasdaq and SEC rules. ~~Our board of directors has also determined that each of the~~The members of the Compensation Committee ~~qualifies as a “nonemployee director” within~~also satisfy the ~~meaning of~~independence requirements and additional independence criteria under Rule ~~16b-3~~10C-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)., qualify as “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act. The Compensation Committee met ~~three~~six times in ~~2020.~~2022. The Compensation Committee charter requires the Compensation Committee to meet at least ~~once annually.~~twice each year.

The purpose of the Compensation Committee is to assist the ~~board~~Board in its oversight ~~of our~~of:

•

the Company’s overall compensation structure, policies and programs and ~~assessing~~assessment of whether ~~such~~the compensation structure establishes appropriate incentives to officers and employees and meets ~~our~~the Company’s corporate ~~objectives, the compensation of our executive officers and the administration of our compensation and benefit plans.~~

~~The Compensation Committee has responsibility for, among other things:~~

•

~~reviewing and recommending the annual compensation, annual incentive opportunities and any other matter relating to the compensation of our executive officers;~~objectives;

•

reviewing and making recommendations to the board with respect to all employment agreements, severance or termination agreements, change in control agreements or similar agreements between an executive officer and the Company;

•

reviewing and recommending the establishment of performance measures and the applicable performance targets for each performance-based cash and equity incentive award to be made under any benefit plan;

•

~~taking all actions required or permitted under the terms of our~~ compensation ~~and benefit plans, with separate but concurrent authority, and reviewing at least annually the overall performance, operation and administration of our compensation and benefit plans;~~

•

~~reviewing and recommending action by the board with respect to various other matters in connection with each of our compensation and benefit plans;~~

•

~~consulting with the Chief Executive Officer and/or other members~~ of the ~~management team regarding equity-based incentive compensation and incentive-based compensation payable to employees other than our executive officers;~~

•

~~consulting with the Chief Executive Officer regarding a succession plan for our executive officers, including our~~Company’s Chief Executive Officer and his or her direct reports, any officer that may be designated by the ~~review~~Committee from time to time, and any other officer of ~~our leadership development process for senior management positions;~~the Company that meets the definition of an “officer” under Rule 16a-1(f) under the Exchange Act;

•

~~reviewing~~administration of the ~~performance of our~~Company’s equity-based compensation plans for all employees (including the executive officers ~~for each fiscal year;~~of the Company); and

•

~~reviewing and making recommendations~~such other matters assigned to the ~~board with respect to non-management directors for their service on the board and board committees.~~Compensation Committee.

After due consideration of factors set forth in the Compensation Committee’s charter, the Compensation Committee may retain a compensation consultant, legal counsel or other experts or advisers as it deems appropriate to carry out its duties. The compensation consultant, NFP Compensation Consulting, was retained in 2022 to provide services related to a peer group compensation study, which was used in the Compensation Committee’s review and determination of 2022 director and named executive officer compensation. NFP Compensation Consulting provided services to the Company in 2022. There are no known conflicts of interests between NFP Compensation Consulting and the Company.

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The Compensation Committee has adopted a written charter, which sets forth the Compensation Committee’s duties and responsibilities. The Compensation Committee charter is available on our website at ~~www.communitybankoftx.com~~www.stellar.bank under ~~“Investor Relations —~~ Investor Relations/Corporate Governance/Governance ~~— Documents and Charters”.~~Documents.

During 2020, the Compensation Committee engaged Longnecker & Associates (“Longnecker”) as an independent compensation consultant to obtain objective, expert advice on the Company’s executive compensation program and practices. Pursuant to the engagement, Longnecker provided the Compensation Committee with information regarding the competitive market for executive talent and marketplace compensation trends, assisted the Compensation Committee with the identification and approval of an appropriate peer group against which to benchmark the Company’s executive compensation program practices, and provided recommendations for revisions to the Company’s existing compensation for its officers. The Compensation Committee has assessed the independence of Longnecker pursuant to the rules of the SEC and concluded that Longnecker’s work for the Compensation Committee did not raise any conflicts of interest during 2020.

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Corporate Governance and Nominating Committee

The members of our Corporate Governance and Nominating Committee are ~~Messrs.~~John Beckworth, Frances H. Jeter, Reagan A. Reaud and John E. Williams, Jr. ~~(Chairman)~~, ~~Michael A. Havard, Tommy W. Lott, Glen W. Morgan, Joe E. Penland, Sr., and Joseph B. Swinbank.~~with Ms. Jeter serving as chairperson. Our ~~board of directors~~Board has evaluated the independence of each of the members of ~~our~~the Corporate Governance and Nominating Committee and has affirmatively determined that each of the members ~~of our Corporate Governance and Nominating Committee~~ meets the definition of an “independent director” under ~~NASDAQ Global Select Market~~the applicable Nasdaq and SEC rules. The Corporate Governance and Nominating Committee ~~was formed in September 2017 and first~~ met ~~in February 2018. The Corporate Governance and Nominating Committee met two~~four times in ~~2020.~~2022. The Corporate Governance and Nominating Committee did not retain the services of any ~~independent search firm~~third party to identify, evaluate or assist in identifying or evaluating potential Board nominees during ~~2020.~~2022.

The purpose of the Corporate Governance and Nominating Committee ~~has responsibility~~is to assist the Board by:

•

identifying individuals qualified to become Board members and to recommend to the Board the director nominees for ~~among other things:~~the next annual meetings of shareholders or for filling vacancies arising on the Board;

•

~~reviewing~~•

evaluating the ~~performance~~tendered resignation of ~~our board~~any director and providing a recommendation to the Board on whether to accept such resignation;

•

overseeing the corporate governance of the Company, including recommending to the Board Corporate Governance Guidelines;

•

recommending to the Board director nominees for each standing committee of ~~its~~such Board;

•

advising the Board with respect to Board composition, procedures and committees;

•

~~identifying, assessing and determining~~overseeing the ~~qualification, attributes and skills~~evaluation of ~~and recommending, persons to be nominated by our board for election as directors and to fill any vacancies on our board of directors;~~the Board;

•

~~reviewing~~supporting the Company’s commitment to environmental, social and ~~recommending~~corporate governance matters relevant to ~~our board each director’s suitability for continued service as a director upon~~ the ~~expiration of his or her term and upon any material change in his or her status;~~Company; and

•

~~reviewing~~attending to such other responsibilities assigned to the ~~size~~Corporate Governance and ~~composition of our board as a whole and recommending any appropriate changes to reflect the appropriate balance of required independence, knowledge, experience, skills, expertise and diversity.~~Nominating Committee.

Our Corporate Governance and Nominating Committee has adopted a written charter, which sets forth the Corporate Governance and Nominating Committee’s duties and responsibilities. The Corporate Governance and Nominating Committee charter is available on our website at ~~www.communitybankoftx.com~~www.stellar.bank under ~~“Investor Relations —~~ Investor Relations/Corporate Governance/Governance ~~— Documents and Charters.”~~Documents.

Our Corporate Governance and Nominating Committee will consider shareholder recommendations for nominees, provided that such shareholder complies with the procedures described in the section titled “— Procedures to be Followed by Shareholders ~~for~~For Director Nominations.”

~~Certain~~Risk Oversight Committee

In connection with the Merger, the Board established the Risk Oversight Committee and the members are George Martinez, William S. Nichols, III, Reagan A. Reaud and Joseph B. Swinbank, with Mr. Martinez serving as chairperson. The Risk Oversight Committee, which was established with the Merger, met two times in 2022.

The purpose of the Risk Oversight Committee is to assist the Board in fulfilling its oversight responsibilities with regard to the enterprise risk management (“ERM”) of the Company and its subsidiaries, including the Bank (the “Bank”), and the compliance framework and governance structure that supports it.

Our Risk Oversight Committee has adopted a written charter, which sets forth the Risk Oversight Committee’s duties and responsibilities. The Risk Oversight Committee charter is available on our website at www.stellar.bank under Investor Relations/Corporate Governance/Governance Documents.

Director Compensation

We pay our directors annual retainers and fees based on their participation in Board meetings held throughout the year. In addition, the Company pays annual retainers and fees based on participation in

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committee meetings as described below. Directors who are employed by us, the Bank or both do not receive remuneration for serving as a director of the Bank or us, but are compensated in their capacity as employees. For the period from January 1, 2022 to October 1, 2022 (which was the closing date of the Merger), each Company director who was not employed by us or the Bank received $15,000, the pro rata portion of the $20,000 annual cash retainer in effect, and $750 for each Board meeting attended. Annual retainers were paid in arrears and based on attendance at 75% or more of Board and committee meetings. For the period from October 1, 2022 through December 31, 2022, each Company director who was not employed by us or the Bank received $5,000, the pro rata portion of the $20,000 annual cash retainer in effect, and $750 for each Board meeting attended. In addition, the Lead Director received a payment of $3,750 representing the pro rata portion of an annual retainer of $15,000.

For the period of January 1, 2022 to October 1, 2022, we paid $7,500 to the Chairman of the Audit Committee and $5,625 to members of the Audit Committee, each amount being the pro rata portion of the respective $10,000 annual cash retainer and $7,500 annual cash retainer for the Chairman and members of that committee. Audit Committee members were also paid $500 for each committee meeting attended. For the period from October 1, 2022 through December 31, 2022, we paid $750 to committee members for meetings attended, and $2,500 to the Chairman of the Audit Committee and $1,875 to members of the Audit Committee, each amount being the pro rata portion of the respective annual cash retainer.

For the period of January 1, 2022 to October 1, 2022, we paid $5,625 to the Chairman of the Compensation Committee and $1,875 to members of the Compensation Committee, each amount representing the pro rata portion of the respective $7,500 annual cash retainer and $2,500 annual cash retainer for the Chairman and members of that committee. Audit Committee members were also paid $450 for each committee meeting attended. For the period from October 1, 2022 through December 31, 2022, we paid $750 to committee members for meetings attended, and $1,875 to the Chairman of the Compensation Committee and $625 to members of the Compensation Committee, each amount being the pro rata portion of the respective annual cash retainer amounts of $7,500 and $2,500.

For the period of January 1, 2022 to October 1, 2022, we paid $3,750 to the Chairman of the Corporate Governance ~~Matters~~and Nominating Committee and $1,875 to members of the Corporate Governance and Nominating Committee, each amount representing the pro rata portion of the respective $5,000 annual cash retainer and $2,500 annual cash retainer for the Chairman and members of that committee. Corporate Governance and Nominating Committee members were also paid $350 for each committee meeting attended. For the period from October 1, 2022 through December 31, 2022, we paid $750 to committee members for meetings attended, and $1,250 to the Chairman of the Corporate Governance and Nominating Committee and $625 to members of the Corporate Governance and Nominating Committee, each amount being the pro rata portion of the respective annual cash retainer amounts of $5,000 and $2,500.

In connection with consummation of the Merger, the Board of Directors established the Risk Oversight Committee. For the period from October 1, 2022, through December 31, 2022, we paid $750 to committee members for meetings attended, and $625 to members of the Risk Oversight Committee, such amount being the pro rata portion of the annual cash retainer amount of $2,500. Mr. Martinez, a director employed by the Bank, is the Chairman of that committee.

Additionally, for the period from January 1, 2022, through October 1, 2022, each director received an annual award of restricted stock having a target value of $47,500 (prorated for new directors based on the date of appointment). The directors were awarded 1,591 shares on February 1, 2022. The restricted stock awards provided for vesting on December 31 in the year granted, subject to the director’s continuing service with the Company or any of its subsidiaries through the applicable vesting date. In connection with the Merger, the directors received accelerated prorated vesting with respect to the director’s February 1, 2022, restricted stock award based on the number of calendar days that elapsed between January 1, 2022, and the date on which the Merger occurred.

For the period following the Merger, each director received an annual award of restricted stock having a target value of $60,000. The directors were each awarded 1,248 shares on March 15, 2023, representing the pro rata portion of the annual award intended to cover the period from October 1, 2022, through May 1, 2023. These restricted stock awards vest on May 1, 2023, subject to the director’s continuing service with the Company or any of its subsidiaries through the vesting date. The Company anticipates that annual awards

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of restricted stock having a target value of $60,000 will be made to directors in conjunction with the annual meeting of shareholders, expected to occur annually in the month of May. The terms of the annual restricted stock awards are expected to provide for vesting on May 1 in the year following the grant, subject to the director’s continuing service with the Company or any of its subsidiaries through the applicable vesting date.

The following table sets forth compensation paid or earned during 2022 to each of the directors other than Robert R. Franklin, Jr., and Steven F. Retzloff, whose compensation is described above in “Summary Compensation Table.” Mr. Parsons and Mr. Martinez serve as Vice Chairman of the Bank, and they are not named executive officers. Their respective compensation is included in the “Fees Earned or Paid in Cash” column in the table below.

The table also includes compensation earned by each director that is attributable to their service as a director of the Company and Bank.

Name	Fees Earned or Paid in Cash ($)(3)		Stock Awards ($)(6)		All Other Compensation ($)(9)		Total Compensation ($)
John Beckworth(1)		7,125		—(7)		—		7,125
Jon-Al Duplantier(1)		9,750		—(7)		—		9,750
Michael A. Havard		66,975(a)		34,778(7)		464		102,217
Frances H. Jeter(1)		7,750		—(7)		—		7,750
Tommy W. Lott(2)		40,650(b)		34,778		464		75,892
George Martinez(1)		154,756(4)		—		12,980(10)		167,736
Glen W. Morgan(2)		1,250(c)		34,778		—		36,028
William S. Nichols, III(1)		16,950(d)		— (7)		—		16,950
J. Pat Parsons(2)		450,000(5)		30,009(8)		378,493(11)		858,502
Joe E. Penland, Sr.		45,525(e)		34,778(7)		464		80,767
Reagan A. Reaud		51,475(f)		34,778(7)		464		86,717
Fred S. Robertson(1)		12,875(g)		—(7)		—		12,875
Joseph B. Swinbank		73,200(h)		34,778(7)		464		108,442
Sheila G. Umphrey(2)		8,750		34,778(7)		464		43,992
John E. Williams, Jr.		38,050(i)		34,778(7)		464		73,292
William E. Wilson, Jr.		54,100(j)		34,778(7)		464		89,342

(1)

Began service as a director of the Company at the effective time of the merger on October 1, 2022.

(2)

Ceased serving as a director of the Company at the effective time of the merger on October 1, 2022.

(3)

The amounts shown in this column include, for each director other than Mr. Martinez and Mr. Parsons, annual retainer and meeting fees for serving on the Company’s and the Bank’s Board of Directors and any of their respective committees.

Consists of $53,775 in fees paid for service to the Company and $13,200 in fees paid for service to the Bank.

Consists of $27,750 in fees paid for service to the Company and $12,900 in fees paid for service to the Bank.

Consists of $1,250 in fees paid for service to the Company.

Consists of $10,500 in fees paid for service to the Company and $6,450 in fees paid for service to the Bank.

Consists of $36,525 in fees paid for service to the Company and $9,000 in fees paid for service to the Bank.

Consists of $43,475 in fees paid for service to the Company and $8,000 in fees paid for service to the Bank.

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Consists of $7,125 in fees paid for service to the Company and $5,750 in fees paid for service to the Bank.

Consists of $45,400 in fees paid for service to the Company and $27,800 in fees paid for service to the Bank.

Consists of $32,050 in fees paid for service to the Company and $6,000 in fees paid for service to the Bank.

Consists of $41,500 in fees paid for service to the Company and $12,600 in fees paid for service to the Bank.

(4)

The amount shown in this column for Mr. Martinez consists of (a) $72,500 in base salary that he received for service in his capacity as Vice Chairman of Allegiance Bank during the portion of fiscal 2022 that began at the effective time of the merger on October 1, 2022, and (b) $82,256 in bonuses. Mr. Martinez received a bonus in October 2022 following closing of the merger in the amount equal to $65,943, which was calculated as the amount of his fiscal 2022 bonus under the Allegiance Annual Incentive Plan, pro-rated for the period that began on January 1, 2022, and ended on the date of the merger. This bonus amount was paid by Stellar in October 2022 following the merger and is included in this table. Mr. Martinez received a bonus from Stellar in March 2023 in the amount of $16,313, which was calculated under the terms of the Allegiance Annual Incentive Plan based on full-year results for fiscal 2022, reduced by the amount of the pro-rated bonus Stellar paid to him in October 2022.

(5)

The amount shown in this column for Mr. Parsons consists of (a) $300,000 in base salary and (b) a $150,000 discretionary bonus, each of which he received for service in his capacity as Vice Chairman of the CommunityBank during the portion of fiscal 2022 that began on January 1, 2022, and ended at the effective time of the Bank Merger, and thereafter as Vice Chairman of Allegiance Bank during the portion of fiscal 2022 that began at the effective time of the Bank Merger.

(6)

For each director with an amount shown in this column other than Mr. Martinez and Mr. Persons, the amount represents taxable gain related to restricted stock awards which were granted by CBTX on February 1, 2022, and vested on a pro-rated basis on October 1, 2022, in connection with the Merger.

(7)

Does not include 1,248 shares of restricted stock awarded by Stellar on March 15, 2023 to each director other than Messrs. Martinez and Parsons, representing the pro rata portion of the annual director award intended to cover the period from October 1, 2022, through May 1, 2023.

(8)

The amount shown in this column for Mr. Parsons represents the 1,005 shares of restricted stock awarded by CBTX on February 1, 2022, in connection with his service as Vice Chairman of CommunityBank.

(9)

For each director with an amount shown in this column other than Mr. Martinez and Mr. Parsons, the amount shown as “all other compensation” represents dividends earned on unvested shares of restricted stock, which are paid (without interest) at vesting.

(10)

All other compensation for Mr. Martinez represents the sum of: (a) $8,993 contributed to the Allegiance Bank 401(k) plan as part of the Allegiance Bancshares, Inc. profit share plan; and (b) $3,987 in matching contributions to the Allegiance Bank 401(k) plan.

(11)

All other compensation for Mr. Parsons represents the sum of: (a) $11,976 in respect of value of his personal use of a company car; (b) $239,745 in respect of cash payment of bonuses earned but held back (and credited with interest at the rate of 4% per year (7% per year for periods before January 1, 2021)) in accordance with the terms of CBTX’s holdback bonus program, which amount was paid in a single lump sum in accordance with the terms of CBTX’s holdback bonus program (for the period of fiscal 2022 that began on January 1, 2022, and ended at the effective time of the Merger, the aggregate amount of $4,068 in interest was credited on Mr. Parsons’ holdback bonus amounts); (c) $18,300 in matching contributions to the CommunityBank 401(k) plan; $7,787 in respect of life insurance premiums; (e) $100,000 in deferred compensation payments and (f) $685 for his home security system.

All non-employee directors have been and will continue to be reimbursed for their reasonable out-of-pocket travel expenses incurred in attending meetings of our Board or any committees thereof. Directors are also entitled to the protection provided by the indemnification provisions in our certificate of formation and bylaws, as well as the certificate of formation and bylaws of the Bank if a Bank director, and separate indemnification agreements between each director and the Company. Additionally, the Company maintains a directors and officers insurance policy.

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CERTAIN CORPORATE GOVERNANCE MATTERS

Code of Business Conduct and Ethics

We have a Code of Business Conduct and Ethics in place that applies to all of our directors, officers and employees. The Code of Business Conduct and Ethics sets forth specific standards of conduct and ethics that we expect all of our directors, officers and employees to follow, including the Company’s ~~President,~~

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~~Chairman and~~ Chief Executive Officer and senior financial officers. The Code of Business Conduct and Ethics is available on our website at ~~www.communitybankoftx.com~~www.stellar.bank under ~~“Investor Relations —~~ Investor Relations/Corporate Governance/Governance ~~— Documents and Charters.”~~Documents. Any amendments to the Code of Business Conduct and Ethics, or any waivers of requirements thereof, will be disclosed on our website within four ~~business~~ days of such amendment or waiver.

Corporate Governance Guidelines

We have adopted Corporate Governance Guidelines to assist the ~~board~~Board in the exercise of its fiduciary duties and responsibilities and to serve the best interests of the Company and our shareholders. The Corporate Governance Guidelines are available on our website at ~~www.communitybankoftx.com~~www.stellar.bank under ~~“Investor Relations —~~ Investor Relations/Corporate Governance/Governance ~~— Documents~~Documents.

Compensation Committee Interlocks and ~~Charters.”~~Insider Participation

None of our executive officers served as (1) a member of a compensation committee (or other Board committee performing equivalent functions or, in the absence of any such committee, the entire Board) of another entity, one of whose executive officers served on the Company’s Compensation Committee, (2) a director of another entity, one of whose executive officers served on the Company’s Compensation Committee or (3) a member of the compensation committee (or other Board committee performing equivalent functions or, in the absence of any such committee, the entire Board) of another entity, one of whose executive officers served as a director of the Company. In addition, none of the members of the Compensation Committee (a) was an officer or employee of the Company or any of its subsidiaries in 2022, (b) was formerly an officer or employee of the Company or any of its subsidiaries or (c) had any relationship that required disclosure under the section titled “Certain Relationships and Related Person Transactions.” During the year ended December 31, 2022, Michael A. Havard, Tommy W. Lott, Joe E. Penland, Sr., Joseph B. Swinbank and Reagan A. Reaud were the members of the Compensation Committee prior to the Merger. Following the Merger, the members of our Compensation Committee were Jon-Al Duplantier, Michael A. Havard, Fred S. Robertson and John E. Williams, Jr.

Independent Auditors

The Audit Committee has recommended, and the ~~board~~Board appointed, ~~Grant Thornton~~Crowe LLP as our independent auditors to audit the consolidated financial statements of the Company for the ~~2021~~2023 fiscal year. ~~Grant Thornton~~Crowe LLP has served as ~~our~~the independent auditors of Allegiance beginning 2014 and for the ~~2020 fiscal year~~Company beginning 2022, and reported on the Company’s consolidated financial statements of Allegiance for ~~that~~the 2014 through 2021 fiscal years and the Company for the 2022 fiscal year.

Fees Paid to Independent Registered Public Accounting Firm

The ~~Audit Committee has reviewed~~table below summarizes the ~~following~~fees for professional audit services provided by (i) Crowe LLP for audit services and ~~non-audit fees billed to~~other services provided for the ~~Company by~~year ended December 31, 2022, and (ii) Grant Thornton LLP for ~~2020~~audit services and ~~2019~~other services provided for ~~purposes of considering whether such fees are compatible with maintaining~~ the ~~auditor’s independence and concluded that such fees did not impair Grant Thornton LLP’s independence.~~year ended December 31, 2021. The policy of the Audit Committee is to pre-approve all audit and non-audit services performed by ~~Grant Thornton LLP~~the Company’s auditor before the services are performed, including all of the services described under “Audit Fees” and “Audit-Related Fees”~~, “Tax Fees” and “All Other Fees”~~ below.

The Audit Committee ~~has~~ pre-approved all of the services provided by Crowe LLP and Grant Thornton LLP in accordance with the policies and procedures described in the section titled “— Audit Committee Pre-Approval.”

~~Fees paid to our independent auditors for the periods shown below were as follows:~~

2020 2019
Audit fees(1)
$ 589,677 $ 637,628
Audit-related fees — —
Tax fees — —
All other fees — —
Total fees $ 589,677 $ 637,628

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	2022(3)			2021(4)
Audit Fees(1)		$	1,614,226		$	611,583
Audit-Related Fees			—			—
Tax Fees			—			—
All Other Fees(2)			37,268			—
Total Fees		$	1,651,494		$	611,583

(1)

Audit fees ~~consist of~~reflect the aggregate fees billed for ~~professional~~ services ~~rendered for (i)~~related to the reviews of our quarterly reports filed on Form 10-Q, the audit of ~~our annual~~the consolidated financial statements ~~included in our Annual Report on Form 10-K~~of the Company and a review of financial statements included in our Quarterly Reports on Form 10-Q, and (ii) services that are normally provided in connection with statutory and regulatory filings or engagements for those years.other SEC filings.

(2)

All other fees reflect fees billed for a benchmarking analysis, loan valuation services (performed for CBTX during 2021 and paid in 2022) and access to an accounting research database in 2022.

(3)

Reflect fees billed by Crowe LLP.

(4)

Reflect fees billed by Grant Thornton LLP.

Audit Committee Pre-Approval

The Audit Committee’s charter establishes a policy and related procedures regarding the Audit Committee’s authority to approve, in advance, all auditing services (which, if applicable, may include providing comfort letters in connection with securities underwritings), and non-audit services that are otherwise permitted by law (including tax services, if any) that are provided to the Company by its independent ~~auditors.~~auditors (which approval is made after receiving input from the Company’s management, if desired). The Audit Committee may also delegate to one or more of its members the authority to pre-approve auditing services and non-audit services that are otherwise permitted by law, provided that each such preapproval decision is presented to the full Audit Committee at ~~or before its next~~a scheduled meeting. In addition, the Audit Committee is directly responsible for the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The Audit Committee has the sole authority and direct responsibility to appoint, retain, compensate, evaluate and, where appropriate, replace the independent auditor (subject to shareholder ratification if required or sought by the Board), and will advise the Board on these matters. The independent auditor and each other independent registered public accounting firm engaged for the Company are accountable to the Board and the Committee and will report directly to the Committee.

Additional Information Regarding Change of Independent Registered Public Accounting Firm

As reported on the Company Current Report on Form 8-K, dated August 17, 2022, as amended on September 26, 2022, in connection with the Merger, the Audit Committee of the Board of Directors of the Company approved the selection of Crowe LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022 and dismissed Grant Thornton LLP as the Company’s independent registered public accounting firm.

The audit report of Grant Thornton LLP on the Company’s consolidated financial statements as of and for the years ended December 31, 2021 and 2020 did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended December 31, 2021 and 2020, and through August 17, 2022, there have been no (a) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with Grant Thornton LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Grant Thornton LLP’s satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report on the Company’s financial statements, or (b) any reportable events requiring disclosure pursuant to Item 304(a)(1)(v) of Regulation S-K. The Company provided a copy of the foregoing disclosures to Grant Thornton LLP and requested that Grant Thornton LLP furnish the Company with a letter addressed to the SEC stating

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whether Grant Thornton LLP agrees with the above statements. A copy of Grant Thornton LLP’s letter to the SEC, dated August 22, 2022, is filed as Exhibit 16.1 to the Company’s Form 8-K dated August 17, 2022.

During the fiscal years ended December 31, 2021 and 2020, and through September 23, 2022, neither the Company, nor anyone on its behalf, consulted with Crowe LLP regarding: (i) either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements; or (ii) any matter that was either the subject of a “disagreement,” as described in Item 304(a)(1)(iv) of Regulation S-K, or any “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K.

EXECUTIVE COMPENSATION AND OTHER MATTERS

Compensation Discussion and Analysis

This Compensation Discussion & Analysis (“CD&A”) provides a description of the material elements of our 2022 executive compensation programs as well as perspective and context for the 2022 compensation decisions for our executive officers named in the Summary Compensation Table referred to in this CD&A and in subsequent tables as our named executive officers (“Named Executive Officers” or “NEOs”).

Executive Compensation Highlights

The Merger of CBTX and Allegiance to Form Stellar

On October 1, 2022, CBTX and Allegiance combined to form Stellar. For purposes of this CD&A, “Legacy CBTX” refers to CBTX and CommunityBank as they existed before the Merger, and “Legacy Allegiance” refers to Allegiance and Allegiance Bank as they existed before the Merger.

Effective upon the consummation of the Merger, several changes impacted our executive leadership team and Board of Directors, including:

•

Steven F. Retzloff, the former Chief Executive Officer and director of Legacy Allegiance, was appointed as a director and as Executive Chairman of Stellar and Senior Executive Chairman of Stellar Bank;

•

Ramon A. Vitulli, III, previously the President and a director of Legacy Allegiance, was appointed as President of Stellar and Chief Executive Officer of Stellar Bank;

•

Paul P. Egge, previously the Executive Vice President and Chief Financial Officer of Legacy Allegiance, was appointed Executive Vice President and Chief Financial Officer of Stellar and Stellar Bank; and

•

Robert T. Pigott ceased to serve as Legacy CBTX’s Chief Financial Officer and Senior Executive Vice President, and was appointed Senior Vice President of Stellar. Mr. Pigott subsequently resigned on November 10, 2022.

As discussed further below, the consummation of the Merger influenced executive compensation decisions in several areas. Prior to the Merger, which closed on October 1, 2022, Legacy CBTX and Legacy Allegiance operated as standalone companies, each with its own executive compensation and benefit programs. Because the Merger occurred shortly before the fiscal year end, the companies generally retained separate compensation programs for 2022. Specifically, the executive officers of Stellar generally continued through year-end to be participants in the compensation and benefit programs of Legacy CBTX and Legacy Allegiance, respectively. Due to the timing of the closing of the Merger, compensation decisions made for Legacy CBTX by its Compensation Committee in 2022 are disclosed in this proxy statement, along with year-end decisions that were made by the Stellar Compensation Committee on and after October 1, 2022.

Merger-Related Events Affecting 2022 Compensation

The following additional Merger-related compensation actions were taken for the Legacy CBTX Named Executive Officers in 2022:

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•

Legacy CBTX replaced existing employment agreements with new ones for Robert R. Franklin, Jr. and Travis Jaggers on March 17, 2022, and August 26, 2022, respectively, which set forth the terms and conditions of their respective employment following the Merger.

•

In connection with the closing of the Merger, Legacy CBTX’s Compensation Committee approved payment to Mr. Franklin of $425,333 to fully fund his expected future benefit under his 2017 Salary Continuation Agreement (i.e., $200,000 per year for 10 years commencing at age 70). This payment was made in addition to the ~~Audit Committee has~~$1,089,246 that was accrued by CommunityBank as of the ~~authority~~effective time of the Merger and payable to ~~review~~him under his 2017 Salary Continuation Agreement upon consummation of Merger. Mr. Franklin’s 2017 Salary Continuation Agreement was terminated upon closing of the Merger.

•

At the Effective Time, Robert T. Pigott, Jr. ceased to serve as Legacy CBTX’s Chief Financial Officer and ~~approve~~Senior Executive Vice President, and was appointed Senior Vice President of Stellar. Mr. Pigott entered into a change in ~~advance the Company’s independent auditors’ annual engagement letter, including the proposed fees contained therein.~~

~~CURRENT EXECUTIVE OFFICERS~~

~~The following table~~control severance agreement with Legacy CBTX on March 17, 2022, which sets forth his terms of employment following the ~~name, age~~consummation of the Merger. Mr. Pigott resigned from Stellar effective November 10, 2022.

•

Stellar assumed the Legacy Allegiance Change in Control Severance Plan (since renamed the Stellar Bancorp, Inc. Change in Control Severance Plan) and ~~position~~added Mr. Franklin as a participant with a 3.0 severance multiplier.

•

In connection with the ~~Company~~Merger, Legacy CBTX adopted and its shareholders approved the Stellar Bancorp, Inc. 2022 Omnibus Incentive Plan (the “2022 Plan”). As a result, from and after the effective time of ~~each~~the Merger, no further grants may be made under any of the CBTX, Inc. 2017 Omnibus Incentive Plan, as amended (the “CBTX 2017 LTIP”), the CBFH, Inc. 2014 Stock Option Plan, as amended, the Allegiance Bancshares, Inc. 2015 Stock Awards and Incentive Plan, as amended, the Allegiance Bancshares, Inc. 2019 Amended and Restated Stock Awards and Incentive Plan, as amended, or the Post Oak Bancshares, Inc. Stock Option Plan, as amended (collectively, the “Prior Equity Plans”).

Merger-Related Equity Awards

In connection with the significant integration planning for the Merger and the need to retain key talent at both Legacy CBTX and Legacy Allegiance through the integration process, one-time equity awards were granted to select key executives at both companies shortly following the Merger. The equity awards granted to the Legacy CBTX Named Executive Officers were approved by the Legacy CBTX Compensation Committee and were provided for under the employment agreements entered into in anticipation of the Merger. The equity awards granted to the Legacy Allegiance Named Executive Officers were approved by the Legacy Allegiance Compensation Committee, and provided for under the employment agreements entered into in anticipation of the Merger. In determining the size and design of the awards, the respective compensation committees gave consideration to the combined company’s retention objectives in connection with the successful completion of the Merger integration process. These awards were designed to facilitate continuity and retention of the executives responsible for critical roles and to compensate for the significant transition requirements of such a transformational Merger.

Named Executive Officers

Our Named Executive Officers include the Chief Executive Officer, the Chief Financial Officer and our ~~named~~next three most highly-compensated executive officers. ~~The business address~~Our NEOs for ~~all~~2022 are identified in the table below. For purposes of ~~these individuals is 9 Greenway Plaza, Suite 110, Houston, Texas 77046.~~determining whether any Legacy Allegiance executive officers qualified as NEOs for 2022 as one of the three most highly-compensated executive officers (other than the CEO and CFO), only compensation earned or paid as an executive officer of Stellar from October 1, 2022, the closing date of the Merger, through the end of the year was taken into account. This resulted in two Legacy Allegiance executive officers (Messrs. Retzloff and Vitulli) being a NEO.

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Name ~~of Named Executive Officer~~	~~Position~~Title	~~Age~~Years of Service at Stellar
Robert R. Franklin, Jr.	Chief Executive Officer and Executive Chairman of Stellar		16
Steven F. Retzloff	Executive Chairman of Stellar and Senior Executive Chairman of Stellar Bank		15(1)
Paul P. Egge	Senior Executive Vice President and Chief Financial Officer of Stellar and Stellar Bank		6(1)
Ramon A. Vitulli, III	President of Stellar and Chief Executive Officer of Stellar Bank		15(1)
Robert T. Pigott, Jr.(2)	Former Senior Executive Vice President and Chief Financial Officer	66	11(2)
~~J. Pat Parsons~~Travis Jaggers	~~Vice Chairman~~President of Stellar Bank	72	11

(1)

Reflects combined years of service at Stellar and Legacy Allegiance.

(2)

Mr. Pigott stepped down as Legacy CBTX’s Chief Financial Officer at the effective time of the Merger, and resigned from Stellar effective November 10, 2022.

The compensation disclosed with respect to NEOs who are Legacy CBTX executives includes the compensation related to their service with both Legacy CBTX and Stellar during 2022. The compensation discussed in this CD&A primarily reflects the decisions made by Legacy CBTX’s Compensation Committee. Once the Merger closed on October 1, 2022, committee responsibilities shifted to the Stellar Compensation Committee to approve Legacy CBTX incentive payouts and set pay for the new Stellar executive team.

Compensation Program, Philosophy and Objectives

We believe our executive compensation program plays a significant role in our ability to attract, motivate and retain a highly-experienced team of executives who are critical to our success. We believe the program is structured in a manner that supports us and our business objectives as well as our culture and the traditions that have allowed us to meet the needs of our shareholders, customers and employees and to support the communities in which we operate.

Our Compensation Committee regularly reviews our executive compensation program to ensure it achieves the desired goals of linking the compensation that our executive officers may earn with our shareholders’ interests and current market practices, while avoiding the encouragement of unnecessary or excessive risk-taking. Under this program, our Named Executive Officers are generally rewarded for the achievement of specific annual, long-term and strategic goals, the attainment of corporate goals and the realization of increased shareholders value.

The Committee retained NFP Compensation Consulting (“NFP”) to assist with the design of our executive compensation program to ensure that it is competitive with market practices, aligns executive pay with performance and reinforces business strategy to create value for shareholders in 2022 and beyond.

In 2022, the Compensation Committee also conducted a risk assessment of all of our compensation programs, including executive and broad-based employee compensation programs and policies to identify any aspect that could encourage inappropriate risk taking. The Compensation Committee concluded that our incentive compensation programs and policies are well-designed and do not encourage behaviors that would create material risk to us. The incentive compensation programs contain drivers that align with corporate objectives and have plan design features that minimize organizational risk. After reviewing the findings of the risk assessment, we believe there is an appropriate balance in the structure of our incentive compensation programs, and that our incentive compensation plans and policies include terms designed to mitigate any potential material risks created by the performance-based metrics used in the incentive compensation plans.

Shareholders Engagement and Say on Pay

Shareholders engagement is important to us. We are open to shareholders comments year-round and engage with shareholders on compensation and other matters as those inquiries are made of us either at scheduled group meetings or on an individual basis.

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In 2021, we were an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and previously were not required to hold shareholder advisory votes on say-on-pay or say-on-frequency. As of December 31, 2022, we are no longer an “emerging growth company,” and at the Annual Meeting to which this proxy statement relates, we will be conducting our first advisory votes on both say-on-pay and say-on-frequency. More details on each of these proposals, including our Board of Directors voting recommendation, can be found later in this proxy statement in the sections titled “Proposal 2. Advisory Vote on the Compensation of the Company’s Named Executive Officers” and “Proposal 3. Advisory Vote on the Frequency of Future Advisory Votes on the Compensation of our Named Executive Officers.” Although these are non-binding advisory votes, we value the opinions of our shareholders, and our Board and Compensation Committee will consider the outcome of the say-on-pay vote and the related say-on-frequency vote, in addition to other relevant stockholder feedback that may be received throughout the year, when making compensation decisions for our Named Executive Officers. For more information on the say-on-pay and say-on-frequency votes, please review the proposals set forth earlier in this proxy statement.

Compensation Overview

The Compensation Committee administers our executive compensation program. The Compensation Committee is composed entirely of directors who are independent under the listing standards of the NASDAQ, our Director Independence Standards, and Exchange Act Rule 16b-3. The charter of the Compensation Committee is available on our Investor Relations webpage at https://ir.stellarbancorpinc.com/ under the caption “Corporate Governance — Documents and Charters.” The charter is reviewed annually by the Compensation Committee and was most recently revised in 2022 in connection with the Merger.

The Compensation Committee has adopted a process intended to provide appropriate oversight and to make compensation decisions designed to promote achievement of Stellar’s financial goals and the successful execution of Stellar’s strategic business plans. The Compensation Committee typically meets four times per year and more often if necessary. Prior to each regular meeting, the materials are provided to each Compensation Committee member, including minutes of the previous meeting, an agenda, recommendations for the upcoming meeting and other materials relevant to the agenda items. Historically, the Chief Executive Officer has attended Compensation Committee meetings to provide information to the Compensation Committee concerning the performance of executive officers, discuss performance measures relating to executive officer compensation and to make recommendations to the Compensation Committee concerning the compensation of executive officers and following the Merger, the Executive Chairman did the same. The Compensation Committee holds executive sessions consisting only of Compensation Committee members and periodically meets in executive session with the independent compensation consultant retained by the Compensation Committee for advice on executive compensation. Neither the Chief Executive Officer nor Executive Chairman engages in discussions with the Compensation Committee regarding his own compensation, except to respond to questions posed by Compensation Committee members outside of executive session deliberations.

Compensation Practices

Our principal measures of success in achieving our financial goals and strategic business objectives are total stockholder return, net income, asset quality, efficiency ratio, return on average equity, loan growth, deposit growth and fee income. The variable, performance-based elements of our executive compensation program are designed to reward our executive officers based on our overall performance in achieving defined performance goals relative to these measures.

Through our executive compensation program, we seek to provide:

•

Base salaries at levels that will attract, motivate and permit us to retain qualified executives;

•

Compensation that differentiates pay on the basis of performance;

•

Incentive compensation opportunities that will motivate executive officers to achieve both our short-term and long-term business objectives and that will provide compensation commensurate with our performance achievements; and

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•

Total compensation that is competitive with that of comparable financial institutions within the context of our performance.

Our executive compensation program consists of the following primary elements:

•

Base salary is intended to provide a foundation element of compensation that is relatively secure and that reflects the skills and experience that an executive brings to us; we seek to pay base salaries that are competitive with those paid to executive officers in comparable positions at comparable financial institutions;

•

Cash bonuses (annual incentive compensation) to incentivize our Named Executive Officers to achieve our financial and operational objectives and reward exceptional individual performance;

•

Long-term equity incentive compensation is a variable, equity element that provides an emphasis on long-term performance goals, stock price performance, ongoing improvement and continuity of performance;

•

Employee benefits are intended to provide reasonable levels of security with respect to retirement, medical, death and disability protection and paid time off; and

•

Certain perquisites are used on a limited basis and supplement the other elements of compensation, facilitating the attraction, motivation and retention of executive officers of the caliber we believe necessary to remain competitive.

The Compensation Committee uses the variable compensation elements of our executive compensation program (i.e., annual incentive compensation and long-term incentive compensation) to encourage performance that furthers our business objectives and to reward executives who meet those goals. While increases to annual base salaries also take individual and our overall performance into consideration, they are not predicated solely on performance achievements and are not subject to the same degree of variability as the performance-based incentives. The variable elements of compensation are intended to align the interests of our NEOs with shareholder interests by focusing executives’ attention on key measures of performance that we believe either drive shareholder return or directly reflect our stock price performance.

The allocation of compensation across each of the elements of our executive compensation program is based on the following considerations:

•

The need to provide a level of basic compensation (e.g., base salary and employee benefits) necessary to enable us to attract and retain high-quality executives, regardless of external business conditions;

•

The goal of providing a mix of short-term and long-term compensation opportunities through performance-based and variable-compensation vehicles;

•

The goal of reflecting reasonable compensation practices of comparable financial institutions within the context of our performance achievements; and

•

The desire to align our executives’ and our shareholders’ interests through the use of equity-based compensation vehicles that are tied to our performance.

The Compensation Committee does not, however, target a specific percentage of total compensation for base salary, cash bonuses, annual incentive compensation, long-term equity incentive compensation, benefits or perquisites under our executive compensation program.

As illustrated below, the majority of our CEO’s and our other NEO’s total direct compensation opportunity is variable (“at-risk”). The chart below depicts the mix of total target direct compensation (salary, target annual incentives, restricted stock and performance shares at grant date fair value) set for our CEO and the other NEOs for 2022, excluding Mr. Pigott who resigned effective November 10, 2022.

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Name	Base Salary(2)		Target Annual Incentive Compensation(3)		Target Long-Term Incentive Compensation(4)		Total		At-Risk
Robert R. Franklin Jr.		20%		31%		49%		100%		80%
Steven F. Retzloff(1)		10%		11%		79%		100%		90%
Paul P. Egge(1)		14%		16%		71%		100%		86%
Ramon A. Vitulli, III(1)		13%		16%		71%		100%		87%
Travis Jaggers		39%		57%		4%		100%		61%

(1)

Messrs. Retzloff, Egge and Vitulli were employed by Stellar following the Merger on October 1, 2022, and prior to that date their compensation decisions were made by the compensation committee of Legacy Allegiance. Their salaries were adopted and awards were assumed by Stellar; however, the original decisions regarding their 2022 compensation were made by Legacy Allegiance.

(2)

Base salary percentages are based on the amounts disclosed in the “Summary Compensation Table” for Named Executive Officers. The amounts shown in this column for Messrs. Retzloff, Egge and Vitulli reflect amounts in respect of base salaries paid by Steller during the period that began on October 1, 2022 (i.e., the closing date of the Merger) and ended December 31, 2022, and do not include any payments in respect of base salaries paid by Legacy Allegiance before the Merger.

(3)

For more information, see the heading “Annual Incentive Compensation” below. The target annual incentive compensation for Messrs. Franklin and Jaggers is equal to the bonuses they received for 2022 performance because their bonuses were entirely discretionary and not targeted to specific amounts.

(4)

For more information, see the heading “Long-Term Incentive Plan” below. The amounts shown in this column for Messrs. Retzloff, Egge and Vitulli reflect the equity awards granted by Stellar during the period that began on October 1, 2022 (i.e., the closing date of the Merger) and ended December 31, 2022, and do not include any long-term incentive compensation granted or paid by Legacy Allegiance before the closing date of the Merger.

Review of Peer Group Data

The Compensation Committee reviews the compensation of the Chief Executive Officer and our other NEOs relative to the compensation paid to similarly-situated executives at financial institutions that we determine to be peer companies. Because this peer group analysis is just one of the analytical tools used in setting the compensation of our NEOs, the Committee has discretion in determining the nature and extent of its use.

The Compensation Committee conducted its customary process by reviewing publicly-available compensation information that is furnished by reporting companies the Compensation Committee deemed to be in our peer group. The peer group generally consists of financial institutions that have market capitalizations, total assets and annual net incomes that are between approximately 50% and 300% of our market capitalization, total assets and annual net income. The peer group used by Legacy CBTX in early 2022 to set executive compensation for Messrs. Franklin, Pigott and Jaggers consisted of Allegiance Bancshares, Inc., Business First Bancshares, Inc., Capital City Bank Group, Inc., CapStar Financial Holdings, Inc., Equity Bancshares, Inc., First Community Bankshares, Inc., First Guaranty Bankshares, Inc., Guaranty Bancshares, Inc., Investar Holding Corporation, MidWestOne Financial Group, Inc., Red River Bancshares, Inc., Southside Bancshares, Inc., The First Bancshares, Inc., Triumph Bancorp, Inc., and Veritex Holdings, Inc.

Following the Merger, the Compensation Committee conducted a new peer group analysis, with the assistance of NFP, to determine the compensation peer group for Stellar. The new peer group also consists of financial institutions that have market capitalizations, total assets and annual net incomes that are between approximately 50% and 300% of Stellar’s market capitalization, total assets and annual net income. The new peer group for the combined Company includes Home Bancshares, Inc., Heartland Financial USA, Inc., Independent Bank Group, Inc., First Merchants Corporation, Trustmark Corporation, Renasant Corporation, Banner Corporation, CVB Financial Corp., International Bancshares Corporation, ServisFirst

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Bancshares, Inc., Enterprise Financial Services Corp., First Busey Corporation, BancFirst Corporation, First Foundation Inc., FB Financial Corporation, Veritex Holdings, Inc., First Bancorp, Seacoast Banking Corporation of Florida, Origin Bancorp, Inc., Amerant Bancorp Inc., 1st Source Corporation, and Southside Bancshares, Inc.

2022 Compensation Decisions

In determining executive compensation, the Compensation Committee focuses both on the mix of individual components that make up each executive’s total compensation as well as the amount of total compensation itself. Each of the components of compensation is discussed in more detail below. Only Mr. Franklin, Mr. Pigott and Mr. Jaggers were employed by Legacy CBTX at the time compensation decisions for 2022 were made. The other NEOs were employed by Legacy Allegiance, and decisions regarding their compensation for that period were made by the Legacy Allegiance Compensation Committee.

Base Salary

For 2022, the base salaries for our NEOs is set forth in the table below:

Name	Base Salary as of December 31, 2022			Base Salary as of December 31, 2021			Percent Increase from 2021 Base Salary
Robert R. Franklin, Jr.(1)		$	645,000		$	550,000		17%
Steven F. Retzloff		$	550,000			—		—
Paul P. Egge		$	470,000			—		—
Ramon A. Vitulli, III		$	540,000			—		—
Robert T. Pigott, Jr.(2)			—		$	327,059		—
Travis Jaggers(3)		$	375,000		$	339,841		10%

(1)

Mr. Franklin’s annual base salary was $550,000 from January 1, 2022 through September 30, 2022, and, pursuant to his employment agreement, increased to $645,000 at the effective time of the Merger.

(2)

Mr. Pigott resigned effective November 10, 2022.

(3)

Mr. Jagger’s annual base salary was $339,841 from January 1, 2022 through September 30, 2022, and, pursuant to his employment agreement, increased to $375,000 at the effective time of the Merger.

(4)

Messrs. Retzloff, Egge, and Vitulli began employment with Stellar in connection with the Merger on October 1, 2022. They are included in each chart because they are NEOs. The amounts shown reflect their annual base salaries as of the effective time of the Merger, as set forth in their respective employment agreements with Legacy Allegiance, which were assumed by Stellar. Their base salaries were determined by the Legacy Allegiance Compensation Committee prior to the Merger. In certain instances, there are dashes to indicate no relevant information is applicable for a given year.

In determining the base salaries of Mr. Franklin and Mr. Jaggers effective upon consummation of the Merger, the Legacy CBTX Compensation Committee considered the increased size and complexity of the new organization following completion of the Merger and the significant effort that will be required to achieve the overall financial goals of the Merger going forward.

Annual Incentive Compensation

Legacy CBTX Named Executive Officers

Legacy CBTX has historically awarded discretionary annual cash bonus awards after the end of each year based on an overall assessment of performance for the year in light of overall market conditions and the individual performance of the Named Executive Officers. Under the terms of his employment agreement, Mr. Franklin was entitled to receive a prorated cash bonus for performance during the period beginning January 1, 2022 and ending at the effective time of the Merger, with the amount determined by the Board

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consistent with Legacy CBTX’s historical past practices. Accordingly, the Board approved a cash bonus for Mr. Franklin in the amount of $600,000, which was paid to him in the fourth quarter of 2022. In making this determination, the Board considered (a) Legacy CBTX’s financial and operational performance through September 30, 2022 and (b) the significant effort required by Mr. Franklin to successfully consummate the Merger while successfully managing the ongoing business and operations of Legacy CBTX.

Based on Stellar’s and Mr. Franklin’s performance for the period beginning October 1, 2022 and ending December 31, 2022, the Board in February 2023 approved a bonus in the amount of $300,000, which was paid to Mr. Franklin in March 2023. In making this determination, the Board considered the full-year operational performance of Stellar/Legacy CBTX and Mr. Franklin’s extraordinary contributions to the integration of Legacy CBTX and Legacy Allegiance following the Merger.

In February 2023, the Compensation Committee approved a cash bonus for Mr. Jaggers in the amount of $500,000, based on Stellar’s/Legacy CBTX’s performance and Mr. Jagger’s individual performance for 2022. This bonus was paid to Mr. Jaggers in March 2023.

Legacy Allegiance Named Executive Officers

The 2022 cash incentive bonuses paid by Stellar to the Legacy Allegiance NEOs were comprised of three components: (a) a pre-Merger 2022 bonus, (b) a post-Merger 2022 bonus, and (c) a discretionary bonus. The pre-Merger 2022 bonus was determined as the amount payable under the Legacy Allegiance Annual Incentive Plan, prorated through the date immediately preceding the Merger date. For 2022, the Legacy Allegiance compensation committee adopted the following target cash incentive opportunities based on the performance metrics shown below:

Legacy Allegiance NEO	Legacy Allegiance 2022 Target Bonus Opportunity
Steven F. Retzloff		$	162,756
Paul P. Egge		$	137,230
Ramon A. Vitulli, III		$	162,000

Performance Metric

Weight

Minimum
(0%)

Target
(100%)

Maximum
(150%)

Legacy Allegiance
Actual Results
(as of date
of Merger)

Pre-Tax Pre-Provision Return on Average Assets

25.00%

1.10%

1.35% to 1.45%

1.70%

1.52%

Return on Average Tangible Common Equity

50.00%

7.00%

11.50% to 13.50%

15.00%

15.33%

Ratio of Non-Performing Assets (excluding TDR) to Total Assets

12.50%

80 bps

40 to 30 bps

20 bps

32 bps

Ratio of Net Charge Offs to Average Loans

12.50%

30 bps

15 to 10 bps

5 bps

2 bps

Shortly before the completion of the Merger, the Legacy Allegiance Compensation Committee evaluated the progress of each of their executives toward the goals as of September 30, 2022 and estimated the full-year results. The Legacy Allegiance Compensation Committee determined that the annual incentive opportunity was earned at 134.75% of the opportunity for each of the Legacy Allegiance NEOs. Stellar reviewed, confirmed and accepted the results of the Legacy Allegiance analysis and assumed the obligation to pay the earned pre-Merger 2022 bonuses promptly following closing of the Merger.

The post-Merger 2022 bonus was calculated assuming full-year 2022 performance for each of the performance metrics above at the level achieved as of the date of the Merger. The full-year bonus amount determined pursuant to this calculation was then reduced by the amount of the pre-Merger bonus to determine the post-Merger 2022 bonus payable to each Legacy Allegiance NEO. In determining the amount of the post-Merger 2022 bonus, the Compensation Committee approved and added one-time discretionary bonuses

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for the Legacy Allegiance NEOs in the amount of $75,000 for Mr. Retzloff, $35,000 for Mr. Egge, and $50,000 for Mr. Vitulli. These discretionary bonuses were made in recognition of their extraordinary efforts in executing on the integration of Legacy CBTX and Legacy Allegiance, and to more closely align their total compensation with the competitive market data. The post-Merger 2022 and discretionary bonuses to the Legacy Allegiance NEOs were paid in March 2023.

The table below sets forth, for each Legacy Allegiance NEO, his (a) pre-Merger 2022 bonus, (b) post-Merger 2022 bonus, (c) discretionary bonus, and (d) full-year 2022 bonus (which is the sum of the applicable NEO’s pre-Merger 2022 bonus, post-Merger 2022 bonus and discretionary bonus). The full-year 2022 bonus for each Legacy Allegiance NEO is reported in the Summary Compensation Table because Stellar assumed the obligation to pay the pre-Merger 2022 bonuses following the Merger.

Legacy Allegiance NEO	Pre-Merger 2022 Bonus (a)(1)			Post-Merger 2022 Bonus (b)			Discretionary Bonus (c)			Full-Year 2022 Bonus (a) + (b) + (c)
Steven F. Retzloff		$	164,485		$	61,875		$	75,000		$	301,360
Paul P. Egge		$	138,688		$	50,000		$	35,000		$	223,688
Ramon A. Vitulli, III		$	163,721		$	67,500		$	50,000		$	281,221

(1)

The Legacy Allegiance Compensation Committee estimated the full-year results to determine the amount earned. Payment of those amounts was made by Stellar following the completion of the Merger and, as a result, is also reflected in the Summary Compensation Table.

Long-Term Equity Incentive Compensation

Long-term incentive compensation is another important part of our executive compensation program and provides equity-based awards to reward performance in executive roles and to align more closely the interests of our executives with those of our shareholders. It is a variable equity element that provides an emphasis on long-term performance goals, common stock price performance, ongoing improvement and continuity of performance. Under the relevant shareholders-approved plans, the Compensation Committee may grant non-qualified stock options, incentive stock options, performance shares, restricted stock and restricted stock units. The Compensation Committee’s approach has been to provide annual awards of long-term equity incentive compensation to our executives and other employees through grants of restricted stock and performance shares. We believe the level of long-term equity incentive compensation should reflect the competitive employment market and the relative internal responsibilities of each executive’s position. The Compensation Committee considers long-term incentive compensation for executive officers at comparable financial institutions within the context of the competitive market data.

2022 Annual Restricted Stock Awards

Legacy CBTX granted the following restricted stock awards to the Messrs. Franklin, Pigott, and Jaggers in February 2022 in recognition of individual performance in 2021. These restricted stock awards were scheduled to vest in approximately equal installments on February 1, 2023, 2024 and 2025, subject to the holder’s continued employment through such vesting dates; however, pursuant to the terms of these restricted stock awards, vesting accelerated in full upon consummation of the Merger.

Name	Restricted Shares
Robert R. Franklin, Jr.		2,679
Robert T. Pigott, Jr.	~~Chief Financial Officer and Senior Executive Vice President~~		66502

~~Background of our Named Executive Officer who is not also a Director~~

~~Robert T. Pigott, Jr.~~ Mr. Pigott serves as Senior Executive Vice President and Chief Financial Officer of the Company and the Bank. He also serves as an advisory director on the boards of directors for the Company and the Bank. He served as Chief Financial Officer and a director of VB Texas, Inc. and Vista Bank Texas from 2010 to 2013 and was appointed to his current positions with the Company and the Bank in 2013 following the Company’s merger of equals with VB Texas, Inc. and Vista Bank Texas. In his capacity, he oversees all finance activities, including accounting, financial reporting, investments, and interest rate risk management. Mr. Pigott has over 35 years of financial services experience, having served as Chief Financial Officer for both privately held and publicly-traded institutions in the Houston, Dallas/Fort Worth, Austin and McAllen, Texas markets, including Texas Regional Bancshares, Inc. He also spent six years in public accounting with Arthur Andersen & Co., a national accounting firm. Mr. Pigott graduated from the University of Mississippi, with a B.B.A. in Accounting, in 1976 and is a licensed Certified Public Accountant.

~~Other Executive Officers~~

~~The following table sets forth information regarding our executive officers who, in addition to Messrs. Franklin, Parsons and Pigott, are members of the executive committee of the Bank.~~

~~Name of Executive Officer~~	~~Position~~		~~Age~~
Travis Jaggers	~~President~~	1,172		72
~~Deborah Dinsmore~~	~~Senior Executive Vice President and Chief Information Officer~~		61
~~Justin M. Long~~	~~Senior Executive Vice President, General Counsel and Corporate Secretary~~		46
~~Cambrea R. Merriwether~~	~~Senior Executive Vice President and Chief Human Resources Officer~~		46
~~James L. Sturgeon~~	~~Senior Executive Vice President and Chief Risk Officer~~		70
~~Tawn G. Vandenberg~~	~~Senior Executive Vice President and Chief Administration Officer~~		48
~~Joe F. West~~	~~Senior Executive Vice President and Chief Credit Officer~~		66

~~Travis L. Jaggers.~~One-Time Merger-Related Awards

Following the Merger, the Compensation Committee issued special, one-time equity awards to each of our Named Executive Officers, other than Mr. Pigott and Mr. Jaggers, ~~has served as President~~under the 2022 Plan. The equity awards granted to Mr. Franklin and Mr. Retzloff were comprised of the Bank since December 2011 and oversees our loan and treasury activities. He provides strategic vision and direction to the commercial lending group and designs and implements strategies to ensure asset quality, growth and profitability. Mr. Jaggers reviews, recommends and approves all lending and treasury activities and serves on all key operational and management committees of the Bank. Mr. Jaggers graduated from the University of Houston with a B.B.A. in Accounting and received a Master of Science degree in Finance from the University of Houston.

~~Deborah Dinsmore.~~ Ms. Dinsmore has served as Senior Executive Vice President and Chief Information Officer of the Bank since 2015. Prior to that, she served as the Chief Operations Officer and Chief Information Officer at Integrity Bank from 2012 through 2015. Ms. Dinsmore is responsible for oversight of aligning technology strategy with corporate strategies, leveraging system capabilities to optimize performance, managing risks associated with technology and loan operations, and oversight of certain operational areas. She graduated from Alvin Community College with an A.A.S. degree in Business.50% performance-based restricted stock

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~~Justin M. Long.~~awards (“PSAs”) and 50% time-based restricted stock awards (“RSAs”). The equity awards granted to Messrs. Egge and Vitulli were 100% RSAs.

On October 21, 2022, Mr. ~~Long has served as Senior Executive Vice President, General Counsel~~Franklin and ~~Corporate Secretary~~Mr. Retzloff each received PSAs covering a target number of 13,265 and 11,311, performance shares, respectively. The performance shares are 100% performance-based and between 0% and 300% of the target number of performance shares covered by these PSAs will cliff vest on December 31, 2023, with the number of performance shares earned determined based on level of achievement with respect to the specified performance goals.

	Number of Earned Performance Shares (Based on Performance)
Name	Threshold (50% of Target No. of Performance Shares)		Target (100% of Target No. of Performance Shares)		Maximum Amount (100% of Target No. of Performance Shares)
Robert R. Franklin, Jr		6,632		13,265		39,794
Steven F. Retzloff		5,655		11,311		33,933

The Compensation Committee established the three performance metrics and targets set forth in the table below with respect to the PSAs granted to Mr. Franklin and Mr. Retzloff. The number of performance shares earned under these PSAs is determined based on the highest payout achieved with respect to any one of the three performance metrics, provided that if Stellar’s total shareholder return is negative for the performance period that began November 1, 2021 and ends December 31, 2023, the number of earned performance shares cannot exceed 100% of the target number of performance shares:

Performance Metric	Applicable Performance Period	Number of Earned Performance Shares (% of Target No. of Performance Shares)(1)
Stellar Total Shareholder Return (“TSR”) relative to Average TSR of S&P U.S. SmallCap Bank Index (“Peer Group Avg. TSR”)(2)	November 1, 2021 through December 31, 2023	— 0% if Stellar’s TSR is less than 15% higher than Peer Group Avg. TSR — 50% if Stellar TSR is at least 15% higher, but less than 20% higher than Peer Group Avg. TSR — 100% if Stellar TSR is at least 20% higher, but less than 25% higher than Peer Group Avg. TSR — 200% if Stellar TSR is at least 25% higher, but less than 30% higher than Peer Group Avg. TSR — 300% if Stellar TSR is at least 30% higher than Peer Group Avg. TSR
Stellar’s Relative Return on Average Tangible Common Equity (ROATCE) Relative to Companies in S&P U.S. SmallCap Bank Index (Peer Companies)(3)	Two (2)-consecutive-fiscal-quarter period that ends on December 31, 2023	— 0% if Stellar’s ROACTE ranks below the 25th percentile of Peer Companies — 50% if Stellar’s ROACTE ranks at or above the 25th percentile, but below 50th

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Performance Metric	Applicable Performance Period	Number of Earned Performance Shares (% of Target No. of Performance Shares)(1)
		percentile of Peer Companies — 100% if Stellar’s ROACTE ranks at or above the 50th percentile, but below 75th percentile of Peer Companies
		— 200% if Stellar’s ROACTE ranks at or above the 75th percentile, but below 90th percentile of Peer Companies — 300% if Stellar’s ROACTE ranks at or above the 90th percentile of Peer Companies
Stellar’s Efficiency Ratio relative to Efficiency Ratio of Peer Companies(4)	Two (2)-consecutive-fiscal-quarter period that ends on December 31, 2023	— 0% if Stellar’s Efficiency Ratio ranks below the 25th percentile of Peer Companies — 50% if Stellar’s Efficiency Ratio ranks at or above the 25th percentile, but below 50th percentile of Peer Companies — 100% if Stellar’s Efficiency Ratio ranks at or above the 50th percentile, but below 75th percentile of Peer Companies — 200% if Stellar’s Efficiency Ratio ranks at or above the 75th percentile, but below 90th percentile of Peer Companies — 300% if Stellar’s Efficiency Ratio ranks at or above the 90th percentile of Peer Companies

(1)

Straight-line interpolation is used to determined number of earned performance shares if performance is achieved between any performance level.

(2)

TSR for Stellar is determined using the average closing price for the twenty (20) trading days ending on (a) the last trading day before November 1, 2021, and (b) December 31, 2023. In addition, dividends are treated as reinvested in Steller or the S&P U.S. SmallCap Bank Index (as applicable) at the end of each calendar quarter.

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(3)

ROATCE is calculated by dividing net earnings applicable to common shareholders by average monthly tangible common shareholders’ equity. Stellar’s and each Peer Company’s ROATCE is determined by reference to their respective publicly filed financial statements averaged over the ~~Company since April 2019. Prior~~two applicable fiscal quarters. The ROATCE for Stellar will be adjusted to ~~joining~~exclude M&A expenses and non-recurring items as approved by the ~~Bank,~~Compensation Committee.

(4)

Efficiency Ratio is calculated by dividing (a) non-interest expense (GAAP) by (y) the sum of net interest income (GAAP) and non-interest income (GAAP). Stellar’s and each Peer Company’s Efficiency Ratio is determined by the Compensation Committee in its sole discretion by reference to their respective publicly filed financial statements for each of the two applicable fiscal quarters.

If Mr. ~~Long served~~ Franklin is terminated without “cause” or resigns for “good reason” (as those terms are defined in his employment agreements), Mr. Franklin will be deemed to have satisfied the service-based vesting condition applicable to his PSA and will vest in the number of performance shares earned based on actual performance, as measured as of December 31, 2023 (i.e., the last day of the performance period).

If a ~~partner at Norton Rose Fulbright US LLP from 2016~~change of control (as defined in the 2022 Plan) occurs, performance will be measured as of the date that is ten business days immediately preceding the date of such change of control, with the number of performance shares earned by Mr. Franklin or Mr. Retzloff, as applicable, determined based on performance as of such date.

The RSAs granted to ~~2019 where he represented financial institutions~~Messrs. Franklin, Retzloff, Egge and Vitulli will vest one-third on each of the first, second and third anniversaries of the Merger date, generally subject to their continuing employment or service through each applicable vesting date. The table below sets forth the number of RSAs granted by Stellar to the aforementioned NEOs following completion of the Merger:

Name	No. of Time-Vested Restricted Shares
Robert R. Franklin, Jr.		13,265
Steven F. Retzloff		11,311
Paul P. Egge		18,632
Ramon A. Vitulli, III		22,211

If Mr. Franklin is terminated without “cause” or resigns for “good reason” (as those terms are defined in ~~corporate~~his employment agreement), Mr. Franklin will be fully vested in his RSAs. For the other NEOs, if the NEO is terminated other than for cause, death or disability (as defined in the applicable NEO’s employment agreement), the NEO will be immediately vested in the next scheduled vesting tranche.

Executive Benefits

We provide our executive officers with benefits in amounts that we believe are reasonable, competitive and ~~regulatory matters,~~consistent with our executive compensation program. We believe such benefits help us to attract, motivate and retain executive officers of the caliber we believe necessary to remain competitive. We offer group life, disability, medical, dental and vision insurance to all of our employees, including our NEOs. We also maintain retirement benefit programs that are discussed in detail below in the section entitled “Retirement Benefits.”

Perquisites

We provide our executive officers with only limited perquisites in amounts that we believe help us attract and retain highly-qualified leaders. For certain executives, including the ~~Company’s initial public offering. Prior~~NEOs, we provide a company automobile or an automobile allowance and reimbursement of country club dues and cellular phone expenses.

Employment Agreements

In anticipation of and in connection with the Merger, on March 17, 2022, Legacy CBTX and CommunityBank entered into a new employment agreement with Robert R. Franklin, Jr. (the “Franklin employment agreement”), that became effective at the effective time of the Merger. Until the effective time

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of the Merger, Mr. Franklin’s employment with Legacy CBTX and CommunityBank was governed by the terms of his amended and restated employment agreement dated October 28, 2017 (the “prior Franklin employment agreement”). At the effective time of the Merger, the Franklin employment agreement superseded and replaced the prior Franklin employment agreement.

Similarly, in anticipation of and in connection with the Merger, on August 26, 2022, CommunityBank entered into a new employment agreement with Travis Jaggers (the “Jaggers employment agreement”) that became effective at the effective time of the Merger. Until the effective time of the Merger, Mr. Jaggers’ employment with CommunityBank was governed by the terms of his amended and restated employment agreement, dated January 4, 2016 (the “prior Jaggers employment agreement”). At the effective time of the Merger, the Jaggers employment agreement superseded and replaced the prior Jaggers employment agreement.

Legacy Allegiance entered into employment agreements with Messrs. Retzloff, Egge and Vitulli on March 17, 2022, which were assumed by Stellar upon consummation of the Merger.

We believe that employment agreements foster retention and succession planning, provided for competitive terms and condition of employment, and protect the business with restrictive covenants, such as non-competition, non-solicitation and confidentiality provisions. Employment agreements also provide for severance pay in the event of the involuntary termination of the NEO’s employment without cause (or, where applicable, termination for good reason), which allows our NEOs to ~~joining Norton Rose Fulbright,~~remain focused on Stellar’s interests and, where applicable, serves as consideration for the restrictive covenants in their employment agreements.

The keys terms of each of these employment agreements are summarized as follows:

	Mr. Franklin
	Term			The period beginning at the effective time of the Merger and ending on the third anniversary of the effective time of the Merger, subject to successive one-year renewals unless either party gives the other notice of non-renewal at least 60 days before the expiration of the then-applicable term.
	Base Salary			$645,000 per year (minimum)
	Target Annual Bonus Opportunity			85% of base salary
	Target Annual Equity Award			125% of base salary
	Severance (upon termination without “cause”, resignation for “good reason”, disability or non-renewal)			• A lump sum cash amount equal to the greater of $1.5 million or two times Mr. Franklin’s base salary; • Payment of the incentive bonus, if any, that Mr. Franklin would have earned for the calendar year in which the date of termination of his employment occurs based on achievement of the applicable performance goals for such year at target, prorated based on Mr. Franklin’s termination date; • A lump sum payment in cash in an amount equal to eighteen (18) months of the full monthly COBRA cost of premiums; and • Mr. Franklin will be deemed to have satisfied all service-based vesting conditions with respect to (a) the PSAs and RSAs granted on October 21, 2022, and (b) any unvested and outstanding equity awards on his termination date that were granted more than one year before his termination date. Mr. Franklin’s vested performance-based equity awards (including any such performance-based equity awards that vest in connection with Mr. Franklin’s termination) will remain outstanding and will be earned or forfeited by Mr. Franklin based on actual performance through the end of the applicable performance period.

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				The foregoing severance benefits are subject to Mr. Franklin’s execution of a separation and release agreement in a customary form prescribed by Stellar and Mr. Franklin’s compliance with the restrictive covenants of the Franklin employment agreement. If Mr. Franklin’s termination of employment entitles him to severance payments and benefits under the Stellar Change of Control Severance Plan, then any severance payments or benefits payable under the Stellar Change of Control Severance Plan will be reduced by the amounts payable as severance under the Franklin employment agreement.
	Non-competition			For the term of his employment and for two years thereafter, Mr. Franklin is subject to a non-competition restrictive covenant that applies within a fifty (50) mile radius of any combined bank office, branch, loan production office, or deposit production office that existed at any time during the noncompete period or exists as of the date of Mr. Franklin’s termination of employment.
	Non-solicitation			Mr. Franklin is subject to a customer non-solicitation agreement and an employee non-solicitation agreement that runs during the term of his employment and for two years thereafter.
	Confidentiality			Perpetual

	Mr. Retzloff
	Term			The period beginning at the effective time of the Merger and ending on the second anniversary of the effective time of the Merger.
	Base Salary			$550,000 per year (minimum)
	Target Annual Bonus Opportunity			45% of base salary
	Target Annual Equity Award			50% of base salary
	Severance (upon termination without “cause” or resignation for “good reason”)			• A lump sum cash amount equal to two times base salary; • Payment of the incentive bonus, if any, that executive would have earned for the calendar year in which the date of termination of his employment occurs based on achievement of the applicable performance goals for such year at target, prorated based on executive’s termination date; and • A lump sum payment in cash in an amount equal to eighteen (18) months of the full monthly COBRA cost of premiums. The foregoing severance benefits are subject to executive’s execution of a separation and release agreement in a customary form prescribed by Stellar and executive’s compliance with the restrictive covenants in the employment agreement. If executive’s termination of employment entitles him to severance payments and benefits under the Stellar Change of Control Severance Plan, then any severance payments or benefits payable under the Stellar Change of Control Severance Plan will be reduced by the amounts payable as severance under the employment agreement.
	Non-competition			For the two-year period following the Merger, executive is subject to a non-competition restrictive covenant that applies within a fifty (50) mile radius of any combined bank office, branch, loan production office, or deposit production office that existed at any time during the noncompete period or exists as of the date of executive’s termination of employment.

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	Non-solicitation			Executive is subject to a customer non-solicitation agreement and an employee non-solicitation agreement that runs until the later of the second anniversary of the Merger or the first anniversary of executive’s termination of employment.
	Confidentiality			Perpetual

	Mr. Egge
	Term			The period beginning at the effective time of the Merger and ending on the second anniversary of the effective time of the Merger.
	Base Salary			$470,000 per year (minimum)
	Target Annual Bonus Opportunity			42.55% of base salary
	Target Annual Equity Award			44.68% of base salary
	Severance (upon termination without “cause” or resignation for “good reason”)			• A lump sum cash amount equal to two times base salary; • Payment of the incentive bonus, if any, that executive would have earned for the calendar year in which the date of termination of his employment occurs based on achievement of the applicable performance goals for such year at target, prorated based on executive’s termination date; and • A lump sum payment in cash in an amount equal to eighteen (18) months of the full monthly COBRA cost of premiums. The foregoing severance benefits are subject to executive’s execution of a separation and release agreement in a customary form prescribed by Stellar and executive’s compliance with the restrictive covenants in the employment agreement. If executive’s termination of employment entitles him to severance payments and benefits under the Stellar Change of Control Severance Plan, then any severance payments or benefits payable under the Stellar Change of Control Severance Plan will be reduced by the amounts payable as severance under the employment agreement.
	Non-competition			For the two-year period following the Merger, executive is subject to a non-competition restrictive covenant that applies within a fifty (50) mile radius of any combined bank office, branch, loan production office, or deposit production office that existed at any time during the noncompete period or exists as of the date of executive’s termination of employment.
	Non-solicitation			Executive is subject to a customer non-solicitation agreement and an employee non-solicitation agreement that runs until the later of the second anniversary of the Merger or the first anniversary of executive’s termination of employment.
	Confidentiality			Perpetual

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	Mr. Vitulli
	Term			The period beginning at the effective time of the Merger and ending on the second anniversary of the effective time of the Merger.
	Base Salary			$540,000 per year (minimum)
	Target Annual Bonus Opportunity			50% of base salary
	Target Annual Equity Award			60% of base salary
	Severance (upon termination without “cause” or resignation for “good reason”)			• A lump sum cash amount equal to two times base salary; • Payment of the incentive bonus, if any, that executive would have earned for the calendar year in which the date of termination of his employment occurs based on achievement of the applicable performance goals for such year at target, prorated based on executive’s termination date; and • A lump sum payment in cash in an amount equal to eighteen (18) months of the full monthly COBRA cost of premiums. The foregoing severance benefits are subject to executive’s execution of a separation and release agreement in a customary form prescribed by Stellar and executive’s compliance with the restrictive covenants in the employment agreement. If executive’s termination of employment entitles him to severance payments and benefits under the Stellar Change of Control Severance Plan, then any severance payments or benefits payable under the Stellar Change of Control Severance Plan will be reduced by the amounts payable as severance under the employment agreement.
	Non-competition			For the two-year period following the Merger, executive is subject to a non-competition restrictive covenant that applies within a fifty (50) mile radius of any combined bank office, branch, loan production office, or deposit production office that existed at any time during the noncompete period or exists as of the date of executive’s termination of employment.
	Non-solicitation			Executive is subject to a customer non-solicitation agreement and an employee non-solicitation agreement that runs until the later of the second anniversary of the Merger or the first anniversary of executive’s termination of employment.
	Confidentiality			Perpetual

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	Mr. Jaggers
	Term			The period beginning at the effective time of the Merger and ending on December 31, 2023.
	Base Salary			$375,000 per year (minimum)
	Annual Bonus			At the discretion of the Compensation Committee
	Annual Equity Award			At the discretion of the Compensation Committee
	Severance (upon termination without “cause” or resignation for “good reason”)			A lump sum cash amount equal to one times base salary.
	Non-competition			For the non-compete term (defined below), executive is subject to a non-competition restrictive covenant that applies within a one hundred (100) mile radius of any facility owned/operated by Stellar Bank during the twelve (12) months preceding termination date, and covers any business conducted by Stellar Bank related to community banking and/or financial activities at any time in twelve (12) months preceding employment termination or that Stellar Bank has places to engage in at the time of employment termination. The “non-compete term” is the term of employment plus the ninety-day period following termination (or one-year period following termination if termination occurs during 180-day period following a change of control); provided, however, that the non-compete term will terminate if executive is terminated without cause or resigns for good reason.
	Non-solicitation			Executive is subject to a customer non-solicitation agreement and an employee non-solicitation agreement that runs during the noncompete term.
	Confidentiality			Perpetual

Pigott Change in Control Severance Agreement

On March 17, 2022, in anticipation of the Merger, Legacy CBTX entered into a Change in Control Severance Agreement with Robert T. Pigott, Jr. (the “Pigott CIC severance agreement”). The Pigott CIC severance agreement provided for severance compensation in the event that Mr. ~~Long~~Pigott’s employment terminated without cause (as defined in the Pigott CIC severance agreement), Mr. Pigott resigned for good reason (as defined in the Pigott CIC severance agreement), or Mr. Pigott’s employment ended due to his death or disability, in each case at any time during the period that begins on the date of the agreement and ends eighteen (18) months following the effective time of the Merger. The severance compensation provided to Mr. Pigott following a qualifying termination is as follows: (i) a cash severance payment in the amount equal to $960,000; (ii) a lump sum payment of Mr. Pigott’s pro-rated annual bonus for the year of termination, with the amount determined based on actual performance for the year of termination; (iii) accelerated vesting of all outstanding equity awards, assuming for this purpose target-level performance for any performance-based equity awards; (iv) a lump sum payment in cash equal to twenty-four (24) times the full monthly cost of premiums Mr. Pigott would pay in the first calendar month immediately following the calendar month that includes his date of termination if he timely elected to continue such coverage under COBRA; and (v) termination of Mr. Pigott’s non-competition agreement (as set forth in Mr. Pigott’s employment agreement with Legacy CBTX) upon the date of his qualifying termination. Severance payable to Mr. Pigott under the Pigott CIC severance agreement was (x) in lieu of and not in addition to any severance payable to Mr. Pigott under his employment agreement with Legacy CBTX, and (y) subject to Mr. Pigott’s execution and non-revocation of a ~~partner~~release and waiver of claims and his compliance with the applicable restrictive covenants.

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Mr. Pigott’s CIC severance agreement also included a non-solicit agreement, a non-disparagement agreement, and other customary restrictive covenants. The non-solicit agreement runs from the effective time of the Merger through the date that is one (1) year after the date of Mr. Pigott’s termination of employment.

On November 10, 2022, Mr. Pigott resigned from Stellar under circumstances entitling him to the severance payments and benefits under the Pigott CIC Severance Agreement.

Franklin and Jaggers Holdback Bonus Arrangements

The amount equal to twenty-five percent of the annual bonuses earned by Messrs. Franklin and Jaggers for 2019 and 2020 performance was held back by Legacy CBTX (the “holdback bonuses”) and made payable (plus interest at ~~Bracewell LLP where he represented financial institutions~~the rate of 4% per year from January 1 of the calendar year immediately following the calendar year for which the discretionary bonuses were earned) in ~~corporate~~June 15, 2022. As a result, Messrs. Franklin and ~~regulatory matters.~~Jaggers received payment of their holdback bonuses (plus accrued interest) in the aggregate amounts of $277,796 and $217,950, respectively. For the period beginning January 1, 2022, and ending June 15, 2022, Messrs. Franklin and Jaggers were credited with interest on their holdback bonuses in the amount of $5,023 and $3,941, respectively.

Stellar Bancorp, Inc. Change in Control Severance Plan

Upon consummation of the Merger, Stellar assumed the Legacy Allegiance Change in Control Severance Plan and renamed it the Stellar Bancorp, Inc. Change in Control Severance Plan (the “CIC Severance Plan”). The CIC Severance Plan promotes retention of qualified employees and a stable work environment, and provides economic security to eligible employees, including certain of our Named Executive Officers, in the event of certain terminations of employment in connection with a change in control. We believe that it is in the best interest of our shareholders to encourage these employees to remain with Stellar up to and through the consummation of such strategic acquisition in order to ensure a stable management team through the consummation of such transaction. If an involuntary termination of employment (other than for death, disability or “cause”) or a resignation by the eligible employee for “good reason” occurs three months prior to the consummation of a change in control or within 18 months following such change in control, the Named Executive Officer will be entitled to (a) a payment equal to a multiple (the “severance multiple”) of the sum of (i) the Named Executive Officer’s annual base salary and (ii) the Named Executive Officer’s target bonus, (b) a payment equal to a pro-rata portion of the Named Executive Officer’s target bonus for the year in which the termination occurs, and (c) a payment equal to 18 times Stellar’s monthly contribution to the cost of medical, dental and vision coverage for the Named Executive Officer and his or her dependents. The Named Executive Officer will also be entitled to outplacement services not to exceed $25,000. Mr. ~~Long~~Franklin was added as participant under the CIC Severance Plan upon consummation of the Merger and give a 3.0 severance multiple. Messrs. Retzloff, Egge, and Vitulli also participate in the CIC Severance Plan, each with a 2.0 severance multiple. Mr. Jaggers is not a participant in the CIC Severance Plan.

Franklin 2017 Salary Continuation Agreement

In October 2017, Legacy CBTX entered into a salary continuation agreement (the “SERP”) with Mr. Franklin. Under the SERP, Mr. Franklin was to receive an annual payment of $200,000 per year for ten years commencing at age 70 (the “Normal Retirement Benefit”). The SERP provided for a lump-sum cash benefit (in lieu of any other SERP benefit) — in the amount equal to the amount accrued by Legacy CBTX in respect of the SERP — payable immediately after a change in control (as defined in the SERP, and which included the consummation of the Merger). Accordingly, upon consummation of the Merger, Mr. Franklin received a ~~bachelor’s degree~~lump sum payment of $1,089,246, which was the amount accrued by Legacy CBTX in ~~finance from The University~~respect of ~~Texas and graduated from The University of Texas School of Law.~~

~~Cambrea R. Merriwether.~~ ~~Mrs. Merriwether has served~~its obligations under the SERP as ~~Senior Executive Vice President and Chief Human Resources Officer~~ of the ~~Bank since May 2020. She specializes in leading the Human Resources function by developing and executing human resources strategies, policies and programs in support~~date of the ~~overall business plan and strategic direction~~Merger. In connection with the closing of the ~~Bank. Prior~~Merger, Legacy CBTX’s Compensation Committee also approved payment to ~~joining~~Mr. Franklin of an additional $425,333, which when added to the ~~Bank, Mrs. Merriwether served as~~$1,089,246 paid under the ~~Corporate Director, Human Resources and Talent Development~~SERP following the Merger, fully funded his expected future benefit under the SERP (i.e., $200,000 per year beginning at ~~Apergy, which she joined in 2016. A certified Senior Human Resources Professional with more than 20 years of comprehensive human resources experience, Mrs. Merriwether spent many years in~~age 70) assuming a 4% discount rate. The SERP terminated effective at the ~~oil and gas and banking industries prior to joining the organization. Mrs. Merriwether is a graduate with a bachelor’s degree in international business and economics from Purdue University.~~

~~James L. Sturgeon.~~ ~~Mr. Sturgeon has served as Senior Executive Vice President and Chief Risk Officer~~effective time of the ~~Bank since 2013. Prior~~Merger. For the period beginning

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January 1, 2022, and ending September 30, 2022, CommunityBank accrued a liability of $164,468 in respect of its obligations under the SERP.

Retirement Benefits

We maintain additional compensatory arrangements as part of our executive compensation program that are intended to ~~that he served as~~provide payments to certain of our employees, including the Vice Chairman from 2011 through 2013 at VB Texas Inc., and Vista Bank. He oversees the Bank’s risk division with enterprise risk management, compliance, audit, loan review, information security, financial crimes risk and strategic planning activities. Additionally, he chairs the Bank’s risk committee and sits on various Bank level risk and governance committees. Mr. Sturgeon has over 40 years of experience in banking and graduated with a B.B.A in Finance degree from University of Houston in 1973, and an M.B.A. from Southern Methodist University in 1977.

~~Tawn G. Vandenberg.~~ Ms. Vandenberg has served at Senior Executive Vice President and Chief Administration Officer of the Bank since November 2019. Ms. Vandenberg has responsibility for the Bank’s retail division and deposit operationsNEOs, upon their resignation or retirement. These include our 401(k) Plan as well as ~~oversight~~a similar plan for Legacy Allegiance employees. The purpose of these plans is to provide competitive retirement benefits that enable us to attract and retain talented leaders who will exert considerable influence on our direction and success.

We make a matching contribution of up to 6% of eligible compensation for participants in the 401(k) Plan.

Prohibition on Hedging and Restrictions on Pledging

Our executive officers, directors and certain other employees are required to receive pre-clearance approval under our Insider Trading Policy, prior to entering into any transactions in our securities, subject to certain limited exceptions, and may only trade during open trading windows. Employees who are subject to trading restrictions may enter into a trading plan under Rule 10b5-1 under the Exchange Act in compliance with applicable law and the terms of our Insider Trading Policy. Executive officers are prohibited from, among other things, entering into hedging, short sale, option and other derivative transactions involving our securities and any pledge of our securities as collateral for a loan may only be made if the value of the Bank’s electronic banking services and call center. Prior to November 2019, Ms. Vandenberg was Executive Vice President and Senior Administration Officer overseeing administration project management, facilities and procurement and operational technology deployments. From 2011, Ms. Vandenberg handledassets, including the Bank’s operational conversions when banks were acquired and served as Vendor Management Officer from 2015 through 2018, obtaining her Certified Banking Vendor Manager certification in 2017. Ms. Vandenberg graduated from Houston Community College with an Associates of Arts in Business.

~~Joe F. West.~~ ~~Mr. West has served as Senior Executive Vice President and Chief Credit Officer~~securities, securing the loan is at least 250% of the ~~Bank since 2013. Mr. West joined~~outstanding loan balance at all times. Any pledge of securities must be pre-approved by the ~~Bank~~under the terms of the Insider Trading Policy.

Risk Management Considerations

The Compensation Committee reviews the risks and rewards associated with our compensation program. The Compensation Committee designs our compensation program with features that mitigate risk without diminishing the incentive nature of the compensation. The Committee believes that our compensation program encourages and rewards prudent business judgment and appropriate risk-taking over the long term. We believe our incentive compensation plans and policies include terms designed to mitigate any potential material risks created by the performance-based metrics used in ~~2013 via~~ the ~~merger~~incentive compensation plans.

Together, the features of ~~CBTX~~our executive compensation program are intended to:

•

Ensure that our compensation opportunities do not encourage excessive risk taking; and ~~Vista Bank Texas where he was Executive Vice President~~

•

Focus our executive officers on managing Stellar towards creating long-term, sustainable value for our stockholders.

Compensation Committee Report

The Compensation Committee has reviewed and ~~Senior Credit Officer since 2006. Prior~~discussed the Compensation Discussion and Analysis contained in this proxy statement with the management of the Company. Based on this review and discussion, the Compensation Committee recommended to ~~Vista Bank Texas, Mr. West served as Senior Credit Officer at Horizon Capital Bank~~the Board of Directors that the Compensation Discussion and Analysis be included in Houston. In his capacity as Chief Credit Officer he is responsible for loan asset quality, loan policy and the Bank’s loan approval process. Mr. West has over 40 years’ experience in banking and graduated with a B.B.A. in Accounting from Baylor University in 1978 and is a licensed Certified Public Accountant.this proxy statement.

Compensation Committee:

Michael A. Havard (Chairperson)
Jon-Al Duplantier
Fred S. Robertson
John El Williams, Jr.

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EXECUTIVE COMPENSATION PAYMENTS AND ~~OTHER MATTERS~~AWARDS

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These include, but are not limited to, reduced disclosure obligations regarding executive compensation in our proxy statements, including the requirement to include a specific form of Compensation Discussion and Analysis, as well as exemptions from the requirement to hold a non-binding advisory vote on executive compensation and the requirement to obtain shareholder approval of any golden parachute payments not previously approved. We have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.

~~Our “named executive officers,” which consist of our principal executive officer and the two other most highly compensated executive officers, are:~~

•

~~Robert R. Franklin, Jr. —~~ ~~Chairman, President and Chief Executive Officer~~

•

~~J. Pat Parsons —~~ ~~Vice Chairman~~

•

~~Robert T. Pigott, Jr. — Chief Financial Officer and Senior Executive Vice President~~

Summary Compensation Table

The following table ~~below shows~~sets forth information regarding the compensation paid to each of our ~~named executive officers~~Named Executive Officers for ~~services rendered in all capacities during~~ the fiscal years indicated. The title shown for each Named Executive Officer reflects his or her position as of the last day of 2022. Except as set forth in the notes to the table, all cash compensation for each of our ~~named executive officers~~Named Executive Officers was paid by the ~~Bank, where Mr. Franklin, Mr. Parsons and Mr. Pigott each serve in the same capacity. Narrative disclosure regarding the compensation elements set forth below follows this table.~~Bank.

Name and Principal Position Year
Salary
($)

Bonus(1)
($)

Stock
Awards(2)
($)

Nonqualified
Deferred
Compensation
Earnings(3)
($)

All Other
Compensation
($)

Total
($)

Robert R. Franklin, Jr.
Chairman of the Board,
President and Chief
Executive Officer
2020 550,000 600,000 59,948 9,338 248,750(4) 1,468,036
2019 500,000 1,250,000 96,363 12,607 262,660(5) 2,121,630
J. Pat Parsons
Vice Chairman
2020 300,000 330,000 32,982 6,179 169,679(6) 838,840
2019 300,000 550,000 52,983 8,860 177,584(7) 1,089,427
Robert T. Pigott, Jr.
Chief Financial Officer and Senior Executive Vice President
2020 327,059 150,000 14,987 — 24,251(8) 516,297
2019 317,533 250,000 24,083 — 23,951(9) 615,567

Name and Position	Year		Salary(3)			Bonus(4)			Stock Awards(5)			Non-equity Incentive Plan Compensation(6)			Change in Pension Value and Nonqualified Deferred Compensation Plan Earnings			All Other Compensation(8)			Total
Robert R. Franklin, Jr. Chief Executive Officer		2022		$	573,750		$	900,000		$	1,391,086			—		$	5,023(7)		$	620,747(a)		$	3,492,506
		2021		$	550,000		$	800,000		$	78,843			—			—		$	319,099		$	1,747,942
		2020		$	550,000		$	600,000		$	59,948			—			—		$	264,144		$	1,474,092
Paul Egge(1) Senior Executive Vice President and Chief Financial Officer		2022		$	117,500		$	35,000		$	611,875		$	188,688			—		$	11,521(b)		$	964,584
Robert T. Pigott, Jr. Former Senior Executive Vice President and Chief Financial Officer		2022		$	327,059			—		$	14,990			—			—		$	1,047,808(c)		$	1,389,856
		2021		$	327,059		$	150,000		$	14,774			—			—		$	27,717		$	519,550
		2020		$	327,059		$	150,000		$	14,987			—			—		$	26,240		$	518,286
Steven F. Retzloff(1) Executive Chairman		2022		$	137,500		$	75,000		$	1,117,979		$	164,485			—		$	10,458(d)		$	1,567,297
Ramon A. Vitulli, III(1) President		2022		$	135,000		$	50,000		$	729,409		$	231,221			—		$	19,987(e)		$	1,165,617
Travis Jaggers��(2) President of Stellar Bank		2022		$	348,631		$	500,000		$	34,996			—		$	3,941(7)		$	28,201(f)		$	917,113

(1)

Messrs. Egge, Retzloff and Vitulli joined the Company from Allegiance at the effective time of the Merger.

(2)

Mr. Jaggers was not a Named Executive Officer for 2021 or 2020.

(3)

The amounts shown in this column represent salaries earned during the ~~aggregate~~fiscal year shown. For Messrs. Egge, Retzloff and Vitulli, the amounts shown represent their salaries for the period beginning October 1, 2022, which was the date of the effective time of the Merger.

(4)

For 2022, the amount ~~of annual~~shown was awarded as a discretionary cash bonuses earned by our named executive officers for fiscal years 2020 and 2019 performance, respectively. For Messrs. Franklin and Parsons, 75% of the amount reported in fiscal years 2020 and 2019 wasbonus paid in ~~February 2021~~March 2023 for such officer’s exceptional personal performance in 2022 in connection with integrating CBTX and February 2020, respectively, and the remaining 25% will be paid (plus interest accrued at the rate of 7% per year, 4% per year beginning January 1, 2021 compounded monthly) in February 2023 and February 2022, respectively, subject to their continued employment through each such date.Allegiance.

~~(2)~~
(5)

~~As required~~The amounts shown in the column do not reflect dollar amounts actually received by ~~SEC rules,~~the Named Executive Officers. Instead, these amounts ~~in this column~~ represent the aggregate grant date fair value of ~~stock-based compensation expense as required by FASB~~the Restricted Stock Awards (“RSAs”) and Performance Share Awards (“PSAs”) granted in the year indicated computed in accordance with ASC Topic ~~718 Stock Based Compensation~~718. The grant date fair value (which is sometimes referred to herein as the “accounting value”) is used to recognize the accounting expense for long-term equity awards. For 2022, the amounts shown include the grant date fair value of the PSAs awarded in November 2022 to Messrs. Franklin and ~~were calculated using~~Retzloff. The grant date fair value of the PSAs was determined by an outside professional valuation consultant to be $22.00 per share, and represents the estimate of the most probable aggregate compensation cost to be recognized over the requisite service period determined as of the grant date under ASC Topic 718. For a discussion of the assumptions ~~for restricted stock and nonqualified stock option awards that are contained~~made in the ~~notes~~valuations reflected in this column, see Note 15 of the Notes to ~~the Company’s financial statements under Note 18, “Stock-Based Compensation,” included~~ Consolidated Financial Statements

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in our ~~annual report~~Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020. These~~2022. The amounts shown in this column for Messrs. Franklin, Pigott and Jaggers represent stock awards granted to them during 2022. The amounts shown in this column for Messrs. Egge, Retzloff and Vitulli represent stock awards granted to them on or after October 1, 2022.

(6)

The amounts shown in this column reflect the amounts paid to the applicable Named Executive Officers under the Allegiance Annual Incentive Plan based on 2022 performance. A prorated bonus was paid under the Allegiance Annual Incentive Plan following closing of the Merger, and the balance was paid in March 2023 based on final full-year results.

(7)

The amount shown for Messrs. Franklin and Jaggers reflects earnings credited at the rate of 4% on their bonus holdback amounts for the period that began January 1, 2022, and ended on June 15, 2022.

(8)

The amounts shown as “All Other Compensation” for 2022 for each Named Executive Officer are ~~not~~comprised of the ~~actual value~~following:

(a)

For Mr. Franklin: (i) $18,300 in matching contributions to the Company’s 401(k) plan, (ii) a payment in the amount of $425,333 on October 1, 2022, to fully fund his expected future benefit under his 2017 Salary Continuation Agreement, (iii) $164,468 in Company accruals under his 2017 Salary Continuation Agreement, (iv) $1,464 in respect of a company car, (v) $8,291 in reimbursement of country club dues, and (vi) $4,791 in split-dollar life insurance premiums.

(b)

For Mr. Egge: (i) $1,500 in matching contributions to the Allegiance 401(k) plan for the period that ~~may be realized by our named executive officers.~~began on October 1, 2022, (ii) $9,458 in profit sharing contributions to the Allegiance 401(k) plan, and (iii) $563 in reimbursement of country club dues.

(c)

For Mr. Pigott: (i) $9,559 in matching contributions to the Company’s 401(k) plan, (ii) $1,046,806 in severance, and (iii) $1,002 in reimbursement of cell phone costs.

(d)

For Mr. Retzloff: (i) $1,000 in matching contributions to the Allegiance 401(k) plan for the period that began on October 1, 2022, and (ii) $9,458 in profit sharing contributions to the Allegiance 401(k) plan.

(e)

For Mr. Vitulli: (i) $413 in matching contributions to the Allegiance 401(k) plan for the period that began on October 1, 2022, (ii) $9,458 in profit sharing contributions to the Allegiance 401(k) plan, and (iii) $10,116 in reimbursement of country club dues.

(f)

For Mr. Jaggers: (i) $18,300 in matching contributions to the Company’s 401(k) plan, (ii) $9,786 in reimbursement of country club dues, and (iii) $1,459 in reimbursement of cell phone costs.

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~~(3)~~
Grants of Plan-Based Awards for 2022

~~Represents above-market earnings credited~~The following two tables set forth information relating to grants of plan-based awards to the Named Executive Officers during 2022 and the RSAs and PSAs held by the Named Executive Officers as of December 31, 2022. All non-equity incentive plan awards were made under the Allegiance Annual Incentive Plan as it was in ~~fiscal years 2020~~effect during 2022, and ~~2019~~all awards of RSAs and PSAs were made under the 2022 Plan (defined below).

				Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)				Estimated Future Payouts Under Equity Incentive Plan Awards(2)				All Other Stock Awards: Number of Shares of Stock(3)		Grant Date Fair Value Of Stock and Option Awards(4)
Name	Award Type	Grant Date		Target		Maximum		Target		Maximum		All Other Stock Awards: Number of Shares of Stock(3)		Grant Date Fair Value Of Stock and Option Awards(4)
Robert R. Franklin, Jr.	Restricted Stock Award		2/1/2022		—		—		—		—		2,269		$	79,995
	Restricted Stock Award		10/21/2022		—		—		—		—		13,265		$	435,623
	Performance Share Award		10/21/2022		—		—		13,265		39,794		13,265		$	875,469
Paul P. Egge	Annual Incentive		—		137,230		205,845		—		—		—			—
Paul P. Egge	Restricted Stock Award		10/21/2022		—		—		—		—		18,632		$	611,875
Robert T. Pigott, Jr.	Restricted Stock Award		2/1/2022		—		—		—		—		502		$	14,990
Steven F. Retzloff	Annual Incentive		—		162,756		244,134		—		—		—			—
	Restricted Stock Award		10/21/2022		—		—		—		—		11,311		$	371,453
	Performance Share Award		10/21/2022		—		—		11,311		33,933		—		$	746,526
Ramon A. Vitulli, III	Annual Incentive		—		162,000(1)		243,000		—		—		—			—
Ramon A. Vitulli, III	Restricted Stock Award		10/21/2022		—		—		—		—		22,211		$	729,409
Travis Jaggers	Restricted Stock Award		2/1/2022		—		—		—		—		1,172		$	34,996

(1)

The Allegiance Annual Incentive Plan provides a cash payout based on performance. The amounts disclosed in these columns reflect the target and maximum annual cash incentive opportunities for Named Executive Officers for 2022. The amount of the annual cash incentive opportunity depends on the base salary of the Named Executive Officer for the year. Threshold performance results in a 0% payout, target performance results in a payout at 100% of target and the maximum payout is 150% of the target. Linear interpolation is used to ~~Mr. Franklin’s~~determine the applicable payout amount between threshold and Mr. Parsons’ respective holdback bonus arrangements. Holdback bonus amounts accrue interest at the rate of 7% per year, compounded monthly (4% per year beginning January 1, 2021). Mr. Franklin’s holdback bonus arrangement was credited with interest in the aggregate amounts of $20,181target and ~~$26,783 for fiscal years 2020~~between target and ~~2019, respectively. Mr. Parsons’ holdback bonus arrangement was credited with interest in the aggregate amounts of $13,216 and $18,837 for fiscal years 2020 and 2019, respectively.~~maximum.

~~(4)~~
(2)

~~All~~Amounts disclosed in these columns reflect the potential target and maximum number of shares covered by the PSAs granted in November 2022 to the applicable Named Executive Officers.

(3)

Amounts disclosed in this column reflect the number of shares covered by RSAs granted to our Named Executive Officers in 2022.

(4)

The amounts shown in the column do not reflect dollar amounts actually received by the Named Executive Officers. Instead, these amounts represent the aggregate grant date fair value of the RSAs and PSAs granted in the year indicated computed in accordance with ASC Topic 718. The grant date fair value (which is sometimes referred to herein as the “accounting value”) is used to recognize the accounting expense for long-term equity awards. For 2022, the amounts shown include the grant date fair value of the PSAs awarded in November 2022 to Messrs. Franklin and Retzloff. The grant date fair value of the PSAs was $22.00 per share, which was determined by an outside professional valuation consultant to be the estimate of the most probable aggregate compensation cost to be recognized over the requisite service period determined as the grant date of the PSAs under ASC Topic 718, calculated using a Monte-Carlo simulation model. For a discussion of the assumptions made in the valuations reflected in this column, see Note 15 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

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Outstanding Equity Awards at Fiscal Year End

The following table provides information regarding outstanding equity awards held by the Named Executive Officers as of December 31, 2022.

	Stock Awards
Name	Number of Shares of Stock That Have Not Vested		Market Value of Shares of Stock That Have Not Vested(1)			Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested		Equity Incentive Plan Awards: Market Value of Unearned Shares That Have Not Vested
Robert R. Franklin, Jr.		13,265(2)		$	390,787		13,265(3)		$	500,195(4)
Paul P. Egge		18,632(2)		$	548,899		—			—
Steven F. Retzloff		11,311(2)		$	333,453		11,311(3)		$	426,524(4)
Ramon A. Vitulli, III		22,211(2)		$	654,336		—			—

(1)

Based on the closing price of $29.46 per share of the Company’s common stock on December 31, 2022.

(2)

Amounts disclosed reflect the number of unvested shares covered by RSAs granted on October 21, 2022. One-third of the shares covered by these RSAs will vest on each of October 1, 2023, October 1, 2024, and October 1, 2025, generally subject to such Named Executive Officer’s continued service with us on each such vesting date.

(3)

Amounts disclosed reflect the target number of shares covered by the PSAs granted on October 21, 2022. Between 0% and 300% of the target number of shares covered by the PSAs will vest on December 31, 2023, generally subject to the applicable Named Executive Officer’s continued service with us on such date. The number of shares earned will be determined after December 31, 2023, based on our performance relative to pre-established TSR, ROATCE, and Relative Efficiency Ratio Performance metrics, provided that the maximum number of shares will be 100% of the target number if our TSR is negative for the period that began November 4, 2021, and ends December 31, 2023.

(4)

Amount reflects estimated PSA achievement based on performance status as of December 31, 2022 (128% of target) based on the closing price of $29.46 per share of the Company’s common stock on December 31, 2022. The actual number of shares that may be earned, if at all, is contingent upon the achievement of pre-established performance metrics over performance period ending December 31, 2023. The number of shares that may be earned is between 0% and 300% of the target number of shares.

Stock Vested

The following table contains information concerning each vesting of restricted stock during the fiscal year ended December 31, 2022 for the Named Executive Officers.

	Restricted Stock Awards
Name	Number of Shares Acquired on Vesting		Value Realized on Vesting(1)
Robert R. Franklin, Jr.		13,994		$	409,325
Paul P. Egge		—			—
Robert T. Pigott, Jr.		3,830		$	112,028
Steven F. Retzloff		—			—
Ramon A. Vitulli, III		—			—
Travis Jaggers		5,884		$	172,107

(1)

Calculated by multiplying the closing price of the common stock on the date of vesting by the number of shares of restricted stock acquired upon vesting. For each Named Executive Officer, the amount reported is the aggregate of shares vesting from multiple grants of restricted stock.

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2022 Omnibus Incentive Plan

In 2022, we adopted the CBTX, Inc. 2022 Omnibus Incentive Plan. The purpose of the 2022 Plan is to provide an additional incentive to selected officers, employees, non-employee directors and consultants of the combined company and its subsidiaries whose contributions are essential to the growth and success of the combined company’s business, and to attract and retain competent and dedicated persons whose efforts will contribute to and promote the long-term growth and profitability of the combined company. The Company’s Board of Directors believes that equity awards are necessary for the combined company to remain competitive and are essential to recruiting and retaining highly qualified employees. The 2022 Plan provides that the Company may grant stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), stock bonuses, other stock-based awards, cash awards, performance awards or any combination of the foregoing. The maximum number of shares of the Company’s common stock that is available for issuance under the 2022 Plan is 2,000,000.

Nonqualified Deferred Compensation

The following table provides information regarding contributions and distributions under nonqualified deferred compensation ~~for Mr. Franklin for 2020 includes $16,839~~plans during 2022.

Name	Balance/ Amount Accrued as of January 1, 2022			Company Contributions/ Accruals During 2022			Aggregate Earnings (Losses) During 2022			Aggregate Withdrawals/ Distributions During 2022			Aggregate Balance as of December 31, 2022
Robert R. Franklin, Jr. 2017 Salary Continuation Agreement Holdback Bonus Arrangement
		$	924,778		$	164,468(1)			—		$	1,089,246		—
		$	272,772			—		$	5,023(2)		$	277,795		—
Travis Jaggers Holdback Bonus Arrangement
Travis Jaggers Holdback Bonus Arrangement		$	214,009			—		$	3,941(2)		$	217,950		—

(1)

The amount shown reflects the amount accrued by CommunityBank in respect of ~~country club dues, $17,100 of matching contributions to~~ Mr. Franklin’s 401(k) account, $750 of contributions to Mr. Franklin’s health savings account, $6,401 of life insurance premiums, $4,659 attributable to the use of a Company car, and a $203,001 increase in the actuarial present value of his accrued benefit under his 2017 Salary Continuation Agreement ~~(discussed below).~~for the period beginning January 1, 2022, and ending September 30, 2022.

~~(5)~~
(2)

~~All other compensation~~The amount shown reflects earnings on holdback bonus amounts credited at the annualized rate of 4% for ~~Mr. Franklin for 2019 includes $16,384~~the period beginning January 1, 2022, and ending September 30, 2022.

Potential Payments upon Termination or Change of country club dues, $16,800 of matching contributions to Mr. Franklin’s 401(k) account, $750 of contributions to Mr. Franklin’s health savings account, $6,401 of life insurance premiums, $4,825 attributable to the useControl

Upon termination of a Named Executive Officer’s employment with the Company, ~~car,~~or upon a change in control, the Company maintains certain arrangements, plans and programs pursuant to which Named Executive Officers are eligible to receive cash severance, equity vesting and other benefits.

Treatment of Equity Awards upon Termination of Employment

Restricted Stock Awards. Unless otherwise provided for by an employment agreement, the RSAs granted to our Named Executive Officers will be forfeited upon termination of employment for any reason; provided, however, that under the RSAs granted on October 21, 2022, the Named Executive Officers will receive prorated vesting upon their termination due to death or disability.

Performance Share Awards. Unless otherwise provided for by an employment agreement, under the terms of the PSA award agreement, upon termination of a ~~$217,500 increase~~Named Executive Officer’s employment as a result of termination by the Company any unvested PSAs are forfeited.

Treatment of Equity Awards upon a Change in Control

Restricted Stock Awards. The RSAs granted to our Named Executive Officers provide for full acceleration of vesting upon a change in control (as defined in the ~~actuarial present value of his accrued benefit under his 2017 Salary Continuation Agreement (discussed below)~~2022 Plan).

~~(6)~~

All other compensation for Mr. Parsons for 2020 includes $17,100 of matching contributions to Mr. Parsons’ 401(k) account, $487 of contributions towards Mr. Parsons’ home security system, $10,382 of life insurance premiums and $11,929 attributable to the use of a Company car. This amount additionally reflects the cash compensation received by Mr. Parsons pursuant to his employment agreement which entitles him to receive $100,000 annually for a period of 10 years upon reaching the age of 65 and the earnings of $29,781 on Mr. Parsons’ deferred compensation arrangement in fiscal year 2020.

~~(7)~~

All other compensation for Mr. Parsons for 2019 includes $16,800 of matching contributions to Mr. Parsons’ 401(k) account, $941 of contributions towards Mr. Parsons’ home security system, $10,382 of life insurance premiums and $9,578 attributable to the use of a Company car. This amount additionally reflects the cash compensation received by Mr. Parsons pursuant to his employment agreement which entitles him to receive $100,000 annually for a period of 10 years upon reaching the age of 65 and the earnings of $39,883 on Mr. Parsons’ deferred compensation arrangement in fiscal year 2019.

~~(8)~~

All other compensation for Mr. Pigott for 2020 includes $17,100 of matching contributions to Mr. Pigott’s 401(k) account, $750 of contributions to Mr. Pigott’s health savings account and $6,401 of life insurance premiums.

~~(9)~~

All other compensation for Mr. Pigott for 2019 includes $16,800 of matching contributions to Mr. Pigott’s 401(k) account, $750 of contributions to Mr. Pigott’s health savings account and $6,401 of life insurance premiums.

~~Narrative Discussion of Summary Compensation Table~~

~~General.~~ The primary elements of our executive compensation are base salary, discretionary cash bonuses, long-term incentive compensation in the form of equity awards, and other benefits including perquisites. We originally established our executive compensation philosophy and practices to fit our status as a privately held corporation and adapted our philosophy and practices following our initial public offering. We believe the current mix and value of these compensation elements provide our named executive officers with total annual compensation that is both reasonable and competitive within our markets, appropriately reflects our performance and the executive’s particular contributions to that performance and takes into account applicable regulatory guidelines and requirements.

~~Base Salary.~~ Each named executive officer’s base salary is a fixed component of compensation for each year for performing specific job duties and functions. We review these base salaries at the end of each year, with any adjustments implemented at the beginning of the next year. In considering whether to make adjustments to the base salary rates of our named executive officers, our board of directors considers many factors, including but not limited to (a) changes to the scope of the executive’s responsibilities, (b) the executive’s job performance, and (c) the competitive market for executive talent, as estimated based on competitive market data developed by Longnecker, our independent compensation consultant, publicly

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~~available information and~~Performance Share Awards. Under the ~~experience of members~~terms of the PSAs, in the event that the Company experiences a change of control (as defined in the 2022 Plan), then the Compensation Committee will determine and approve the Company’s performance with respect to the performance vesting conditions no later than three (3) business days before the date on which such change of control occurs. Provided that the recipient remains a service provider (as defined in the 2022 Plan) from the grant date to the date of the change of control, he or she will be deemed to have earned and vested, effective as of immediately prior to the change of control, the number of PSAs determined based on the Company’s performance (as determined by the Compensation Committee in its sole discretion). All unearned PSAs will be automatically forfeited to and reacquired by the Company without consideration immediately upon the change of control.

Stellar Bancorp, Inc. Change in Control Severance Plan.

As described above in the Compensation, Discussion and Analysis, in connection with the Merger, the board approved the Stellar Bancorp, Inc. Change in Control Severance Plan which is applicable to the Named Executive Officers. If an involuntary termination of ~~directors~~a Named Executive Officer’s employment (other than for death, disability or “cause” (as defined in the Plan)) or a resignation by the eligible employee for “good reason” (as defined in the Change in Control Severance Plan) occurs during the period, commencing three months prior to the consummation of a change in control and ~~management. Effective January 1, 2020, Mr. Franklin’s~~ending 18 months following such change in control (each a “Qualifying Termination”), the Named Executive Officer will be entitled to (a) a payment equal to two times the sum of (i) the Named Executive Officer’s annual base salary ~~was increased~~and (ii) the Named Executive Officer’s target bonus, (b) a payment equal to ~~$550,000 (from $500,000) and Mr. Pigott’s~~the Named Executive Officer’s pro-rata annual base salary was increased to $327,059 (from $317,533). These salary increases were enacted in recognition of their past and expected future contributions to us and to improve the competitive positioning of their total compensation.

~~In 2021, based on the recommendation of Mr. Franklin, our board of directors determined not to increase base salary~~bonus for ~~Messrs. Franklin and Pigott in light of the challenging environment resulting from the global pandemic.~~

~~Discretionary Bonus.~~ Historically, our annual cash bonus awards for named executive officers have been discretionary awards awarded by the board of directors after the end of each fiscal year. The determination of the amount of these discretionary cash bonus awards, if any, has been made based on an overall assessment of our performance for the fiscal year in light of overall market conditions and the individual performance of the named executive officers. The annual bonuses earned by Messrs. Franklin and Parsons have historically been paid in two installments, with 75% of the approved bonus amount paid in the first quarter of the calendar year following the year in which the ~~bonus was earned~~termination occurs, and (c) a payment equal to 18 times the Company’s monthly contribution to the cost of medical, dental and vision coverage for the Named Executive Officer and his or her dependents. The Named Executive Officer will also be entitled to outplacement services not to exceed $25,000.

Any severance benefits payable under the Change in Control Severance Plan will be reduced by any severance benefits to which the Named Executive Officer would otherwise be entitled under any general severance policy or severance plan maintained by the Company or its subsidiaries. The Change in Control Severance Plan also contains a 12-month non-solicitation covenant applicable to any Named Executive Officer who receives benefits under the Plan.

If the payments or benefits to be paid to a Named Executive Officer under the Change in Control Severance Plan or any other arrangement would trigger the excise tax imposed on “excess parachute payments,” the Named Executive Officer’s payments and benefits will be reduced to the maximum amount that does not trigger the excise tax unless the Named Executive Officer would be better off (on an after-tax basis) if he or she received all payments and benefits and paid all excise and income taxes. With the exception of Mr. Jaggers, all of our Named Executive Officers participate in the Change in Control Severance Plan.

The table below sets forth for each of the Named Executive Officers the amount of the severance payments and benefits and the ~~remaining 25% paid (with interest accrued at the rate~~accelerated vesting of 7% per year, 4% per year beginning January 1, 2021) in February of the third calendar year following the year in which the bonus was earned, subject to the named executive officer’s continuing employment with us through such date. In evaluating and determining a discretionary bonus to a named executive officer for 2020, based on the recommendation of Mr. Franklin and considering the challenging environment resulting from the global pandemic and the impact to our operations, the compensation committee decided to limit bonuses for named executed officers to approximately 40% of the bonuses paid to the named executive officers for 2019. In addition, the compensation committee decided to reduce the interest crediting rate on deferred bonus amounts from 7% per year (compounded monthly) to 4% per year (compounded monthly), effective beginning January 1, 2021. The decision to reduce the interest crediting rate on deferred bonuses was made after considering the interest rate market environment and the competitive market data.

~~Long-Term Incentive Compensation. We believe that equity-based incentives are an effective means for aligning the interests of our executives with the interests of our stockholders and~~equity awards that the long-term compensation of our executive officers should be linked to the value provided to our stockholders. In addition, we use stock-based compensation as a retention tool. Because the stock awards generally vest over a multi-year period, they provide our executives with an ongoing incentive to continue their employment with us and to maximize shareholder value. Long-term stock-based incentives granted to our executives for the last several yearsNamed Executive Officer would have been ~~structured~~entitled to upon various change in ~~the form~~control and termination of restricted stock awards. Restricted stock awards are designed to link executives’ interests with those of our stockholders because the value of the awards is based on the value of our common stock. In addition, they provide a long-term retention incentive throughout the vesting period because the restricted stock generally has value regardless of stock price volatility. On February 1, 2020, our Compensation Committee granted the following awards of restricted stock to our named executive officers: Mr. Franklin — 3,261 shares of restricted stock; Mr. Parsons — 1,793 shares of restricted stock; and Mr. Pigott — 815 shares of restricted stock. Each of these awards vest in three approximately equal annual installments beginning on February 1, 2021, subject to the named executive officer’s continued statusemployment events as ~~an employee on each applicable vesting date. These restricted stock awards will become immediately and fully vested upon~~described above, assuming that a change in control and/or termination of ~~control. In addition,~~employment occurred on February 1, 2021, our Compensation Committee granted the following awards of restricted stock to our named executive officers: Mr. Franklin — 2,252 shares of restricted stock; Mr. Parsons — 1,239 shares of restricted stock; and Mr. Pigott — 563 shares of restricted stock. Each of these awards vest in three approximately equal annual installments beginning on February 1, 2022, subject to the named executive officer’s continued status as an employee on each applicable vesting date. These restricted stock awards will become immediately and fully vested upon a change of control.

~~Employee Retirement Benefit Plan.~~ Our named executive officers are also each eligible to participate in our 401(k) plan, which is designed to provide retirement benefits to all eligible employees. Our 401(k) plan provides employees with the opportunity to save for retirement on a tax-deferred basis and permits employees to defer between 1% and 100% of eligible compensation, subject to statutory limits. Under the 401(k) plan, we may make discretionary matching contributions or any additional contributions.December 31, 2022.

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Name	Compensation Component	Change in Control			Qualifying Termination In Connection With A Change in Control			Death or Disability			Involuntary Termination Not in Connection With A Change in Control
Robert R. Franklin, Jr.	Cash Severance			—		$	3,579,750(1)		$	2,300,000(2)		$	2,300,000(2)
	Long Term Incentives		$	890,982(3)		$	890,982(4)		$	890,982(5)		$	890,982(5)
	Non-Equity Incentive Plan Compensation			—		$	548,250(6)		$	548,250(7)		$	548,250(7)
	Benefits and Perquisites:			—		$	61,865(8)		$	36,865(9)		$	36,865(9)
	Total:		$	890,982		$	5,080,847		$	3,776,097		$	3,776,097
Paul P. Egge	Cash Severance			—		$	1,339,970(1)			—		$	940,000(10)
	Long Term Incentives		$	548,899(3)		$	548,899(4)		$	45,604(11)		$	182,966(12)
	Non-Equity Incentive Plan Compensation			—		$	199,985(6)			—		$	199,985(8)
	Benefits and Perquisites:			—		$	75,465(8)			—		$	50,465(9)
	Total:		$	548,899		$	2,164,319		$	45,604		$	1,373,416
Steven F. Retzloff	Cash Severance			—		$	1,595,000(1)			—		$	1,100,000(10)
	Long Term Incentives		$	759,977(3)		$	759,977(4)		$	27,692(11)		$	111,074(12)
	Non-Equity Incentive Plan Compensation			—		$	247,500(6)			—		$	247,500(8)
	Benefits and Perquisites:			—		$	56,236(8)			—		$	31,236(9)
	Total:		$	759,977		$	2,658,713		$	27,692		$	1,489,810
Ramon A. Vitulli, III	Cash Severance			—		$	1,620,000(1)			—		$	940,000(10)
	Long Term Incentives		$	654,336(3)		$	654,336(4)		$	45,604(11)		$	218,112(12)
	Non-Equity Incentive Plan Compensation			—		$	270,000(6)			—		$	270,000(8)
	Benefits and Perquisites:			—		$	75,465(8)			—		$	50,465(9)
	Total:		$	654,336		$	2,619,801		$	45,604		$	1,478,577
Travis Jaggers	Cash Severance			—		$	375,000(13)			—		$	375,000(13)
	Long Term Incentives			—			—			—			—
	Non-Equity Incentive Plan			—			—			—			—
	Compensation			—			—			—			—
	Benefits and Perquisites:			—			—			—			—
	Total:			—		$	375,000			—		$	375,000

~~Deferred Compensation Arrangements under Annual Bonus Plan.~~ ~~The Bank had~~

(1)

Under the Company’s Change in Control Severance Plan, amount is equal to two times (three times in the ~~past established unfunded deferred compensation arrangements with executive officers at~~case of Mr. Franklin) the ~~Bank, including Mr. Parsons, and certain other highly compensated employees who contributed to the continued growth, development and future business success~~sum of the Bank. Pursuant to these arrangements we contributed between 25% and 33% of each eligible participant’s incentive bonus amount into a deferred compensation account. These arrangements were frozen to new contributionsbase salary in 2014. Despite the restriction on further contributions, we had a continuing liability under these arrangements of $2.0 million at December 31, 2020. Mr. Parsons’ deferred compensation account continues to hold the amounts deferredeffect immediately prior to the ~~freeze date, which accrues interest~~termination plus the target annual incentive bonus.

(2)

Under his employment agreement, if Mr. Franklin is involuntarily terminated without “cause,” he resigns for “good reason”, or his employment terminates due to his death or disability, he is entitled to receive (a) cash severance equal to the greater of two times his then base salary or $1,500,000, (b) a prorated bonus for the year of termination based on performance at ~~an annual rate of 7% (4% beginning January 1, 2021) compounded monthly. Mr. Parsons became fully vested on in~~“target”, and (c) a payment equal to 18 times the premium for continuation coverage under COBRA under the Company’s health benefit plans. He will also be deemed to have satisfied all service vesting conditions with respect to his deferred compensation arrangement on March 1, 2018. The vested balance of Mr. Parsons’ account under his deferred compensation arrangement was $311,813 at December 31, 2020. In January 2021, the compensation committee decided to reduce the interest crediting rate on deferred compensation amounts from 7% per year (compounded monthly) to 4% per year (compounded monthly), effective beginning January 1, 2021. The decision to reduce the interest crediting rate on deferred compensation amounts was made after considering the interest rate market environment and the competitive market data.then-outstanding equity awards.

~~2017 Salary Continuation Agreement.~~ ~~In October 2017, we entered into a salary continuation agreement (the “SERP”).~~

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(3)

Under the ~~SERP, Mr. Franklin will receive an annual payment for ten years commencing at age 70 (the “Normal Retirement Benefit”). The amount~~terms of the ~~annual payment (the “Annual SERP Payment”) is determined by using reasonable actuarial assumptions to convert~~RSA agreements, upon the SERP accrual balance (which is annually approved by the Compensation Committee and may be increased, but not decreased) into the Normal Retirement Benefit. The SERP accrual balance was $640,000 at December 31, 2020, which yields a Normal Retirement Benefit with an Annual SERP Paymentoccurrence of approximately $200,000. If Mr. Franklin’s employment terminates before age 70, instead of the Normal Retirement Benefit he would receive a reduced annual payment that is based on the amount of the SERP accrual balance when employment termination occurs. The reduced installment payments would not commence until the seventh month after his termination of employment, or if earlier, the month after he attains age 70. The SERP also provides for a lump-sum cash benefit (in lieu of any other SERP benefit) payable immediately after a change in control, ~~regardless~~100% of ~~whether Mr. Franklin’s employment also terminates. The lump-sum benefit is the amount of the SERP accrual balance~~all RSAs will vest as of the date of the change in control. IfIn addition, under the terms of the PSA agreements, the PSAs granted to Messrs. Franklin and Retzloff in 2022 will vest as of the date of the change in control in the amount earned based on actual performance as of the date of the change in control. The amount shown is the market value of all unvested RSAs based on the price of a share of our common stock as of December 31, 2022, plus the market value of the PSAs (based on performance status as of December 31, 2022 at 128% of target) based on the price of a share of our common stock as of December 31, 2022.

(4)

The vesting of equity compensation described in footnote (3) to this table also applies if the Named Executive Officer’s employment is terminated in a Qualifying Termination in connection with a change in ~~control occurred while~~control.

(5)

Under his employment agreement, if Mr. Franklin is ~~receiving installment payments under~~involuntarily terminated without “cause,” he resigns for “good reason”, or his employment terminates due to his death or disability, he will deemed to have satisfied all service vesting conditions with respect to then-outstanding equity awards. The amount shown is the ~~SERP, he would instead receive an immediate lump-sum payment consisting~~market value of all unvested RSAs based on the price of a share of our common stock as of December 31, 2022, plus the market value of the ~~aggregate~~PSAs (based on performance status as of December 31, 2022 at 128% of target) based on the price of a share of our common stock as of December 31, 2022.

(6)

Under the Company’s Change in Control Severance Plan, amount is equal to a pro-rata portion of ~~all remaining installment payments.~~

~~Employment Agreements with~~each Named Executive ~~Officers~~Officer’s target annual incentive bonus.

~~We have entered into~~

(7)

Under Mr. Franklin’s employment agreement, amount is equal to a pro-rata portion of 2022 of his annual incentive bonus based on “target” performance.

(8)

Amount is the Company’s contribution to the cost of medical, dental, and vision coverage for each Named Executive Officer for an 18-month period and $25,000 for outplacement services.

(9)

Amount is the cost of medical, dental, and vision coverage for each Named Executive Officer for an 18-month period.

(10)

Under their respective employment agreements, ~~with each~~upon a involuntary termination without “cause” or resignation for “good reason”, Messrs. Egge, Retzloff and Vitulli are entitled to receive (a) cash severance equal two times their then base salary, (b) a prorated bonus for the year of ~~our named executive officers. The following is~~termination based on performance at “target”, and (c) a ~~summary~~payment equal to the COBRA premium cost of medical, dental, and vision coverage for an 18-month period.

(11)

Under the terms of the ~~material terms~~RSA agreements for the RSAs granted on October 21, 2022, Named Executive Officer receives prorated vesting of ~~each such agreement.~~his unvested RSA award upon his termination due to death or disability (as defined in the 2022 Plan).

~~Employment Agreement with Robert R. Franklin, Jr.~~

~~We entered into an amended~~(12)

Under their respective employment agreements, upon a involuntary termination without “cause” or resignation for “good reason”, Messrs. Egge, Retzloff and ~~restated~~Vitulli are entitled to receive vesting of the next scheduled vesting tranche of the RSAs that were granted on October 21, 2022.

(13)

Under Mr. Jagger’s employment agreement, ~~with Mr. Franklin on October 28, 2017, pursuant~~he is entitled to ~~which he serves as our President and Chief Executive Officer and as Chief Executive Officer of~~cash severance in the Bank for an initial term of five years that extends for successive one-year renewal terms unless either party gives 60-days’ advance notice of non-renewal. As consideration for these services, the amended and restated employment agreement provides Mr. Franklin with the following compensation and benefits:

•

~~A minimum annual~~amount equal to one times his base salary ~~of $450,000, subject to annual review by our Compensation Committee.~~

•

~~An annual cash performance bonus opportunity in the minimum amount of 25% of~~upon his ~~base salary.~~

•

~~An award of 30,000 shares of restricted stock (subject to adjustment~~involuntary termination without “cause” or resignation for any stock splits, etc.), which was granted in 2017 under our 2017 Omnibus Incentive Plan. These shares vest in five equal annual installments beginning on the first anniversary of the grant date of the award, subject to Mr. Franklin’s continuous employment through each vesting date.

•

~~Participation in the SERP, described above.~~“good reason.”

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•
PAY VERSUS PERFORMANCE TABLE

~~Certain severance benefits in~~In accordance with Section 953(a) of the ~~event~~Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of ~~a qualifying termination~~Regulation S-K (the “Pay Versus Performance Rule”), we are providing the following information about the relationships between the compensation actually paid to our named executive officers and company performance.

The following table sets forth information concerning the compensation of ~~employment (including in connection with a change in control). See “— Potential Payments upon a Termination~~our Chief Executive Officer and our other named executive officers for each of ~~Employment or a Change in Control.”~~the 2022, 2021 and 2020 fiscal years:

	Summary Compensation Table Total for CEO(1)			Compensation Actually Paid to CEO(1)(3)			Average Summary Compensation Table for Non-CEO Named Executive Officers(2)			Average Compensation Actually Paid to Non-CEO Named Executive Officers(2)(3)			Value of Initial Fixed $100 Investment Based On:						Net Income ($ Millions)			Company Selected Measure: Earnings Per Share ($)
Year	Summary Compensation Table Total for CEO(1)			Compensation Actually Paid to CEO(1)(3)									Total Shareholder Return(4)			Peer Group Total Shareholder Return(5)			Net Income ($ Millions)			Company Selected Measure: Earnings Per Share ($)
2022		$	3,492,506		$	3,124,239		$	1,165,405		$	1,074,976		$	100.17		$	90.81		$	51.4		$	1.48
2021		$	1,747,942		$	1,793,633		$	655,068		$	683,648		$	96.87		$	128.27		$	81.6		$	2.85
2020		$	1,474,092		$	1,424,283		$	679,635		$	653,633		$	83.66		$	107.54		$	26.4		$	1.57

(1)

Amounts reported are for Robert R. Franklin, Jr., who served as our Chief Executive Officer during each of the applicable fiscal years.

•
(2)

~~Certain other employee benefits~~Our non-CEO named executive officers (our “Non-CEO Named Executive Officers”) were (a) Paul P Egge, Robert T. Pigott, Jr., Steven F. Retzloff, Ramon A. Vitulli, III, and ~~perquisites, including a company-provided car~~Travis Jaggers for 2022; and ~~reimbursement of country club dues.~~(b) Robert T. Pigott and J. Pat Parsons for 2021 and 2020.

~~Pursuant to~~(3)

Amounts in these columns show the amended and restated employment agreement, Mr. Franklin will be subject to a confidentiality covenant, a two-year post-termination non-competition covenant and a two-year post-termination non-solicitation covenant.

~~Employment Agreement with J. Pat Parsons~~

~~We entered into an employment agreement with Mr. Parsons on May 21, 2008 (which was amended on December 30, 2008 and March 6, 2013), pursuant to which he serves~~“Compensation Actually Paid,” as the Vice Chairman of our board of directors and as Vice Chairman of the board of directors of the Bank. The employment agreement provides for an initial term of five years and automatically renews each year. Pursuant to the employment agreement, Mr. Parsons is entitled to an annual base salary of $300,000, subject to annual review by our board of directors, and is eligible to receive a discretionary bonus payment for each fiscal year. Mr. Parsons is also eligible to receive employee benefits, fringe benefits, and perquisitescalculated in accordance with the ~~employment agreement. In addition, Mr. Parsons’ employment agreement~~methodology prescribed by the Pay Versus Performance Rule. The table below provides the adjustments to the Summary Compensation Table total compensation to arrive at the Compensation Actually Paid to our CEO and the average Compensation Actually Paid to our Non-CEO Named Executive Officers for ~~certain severance benefits~~each of the covered fiscal years.

	2022						2021						2020
	CEO			Non-CEO NEOs (Average)			CEO			Non-CEO NEOs (Average)			CEO			Non-CEO NEOs (Average)
Summary Compensation Total		$	3,492,506		$	1,165,405		$	1,747,942		$	655,068		$	1,474,092		$	679,635
Adjustments
Deduction for Amounts Reported under the “Stock Awards” and “Option Awards” Columns in the Summary Compensation Table for Applicable FY		$	(1,391,086)		$	(501,850)		$	(78,843)		$	(22,176)		$	(59,948)		$	(23,985)
Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Remain Unvested as of Applicable FY End, determined as of Applicable FY End		$	941,138		$	401,150		$	65,308		$	26,129		$	83,188		$	33,265
Increase based on ASC 718 Fair Value of Awards Granted during Applicable FY that Vested during Applicable FY, determined as of Vesting Date		$	78,361		$	9,793		$	—		$	—		$	78,361		$	—

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	2022						2021						2020
	CEO			Non-CEO NEOs (Average)			CEO			Non-CEO NEOs (Average)			CEO			Non-CEO NEOs (Average)
Increase/deduction for Awards Granted during Prior FY that were Outstanding and Unvested as of Applicable FY End, determined based on change in ASC 718 Fair Value from Prior FY End to Applicable FY End		$	—		$	—		$	35,424		$	12,985		$	(77,295)		$	(27,113)
Increase/deduction for Awards Granted during Prior FY that Vested During Applicable FY, determined based on change in ASC 718 Fair Value from Prior FY End to Vesting Date		$	3,320		$	478		$	23,802		$	11,643		$	(74,116)		$	(8,169)
Total Adjustments		$	(368,267)		$	(90,429)		$	45,691		$	28,581		$	(49,809)		$	(26,002)
Total Compensation Actually Paid		$	3,124,239		$	1,074,976		$	1,793,633		$	683,648		$	1,424,283		$	653,633

For purposes of the foregoing adjustments, the value of equity awards was determined as follows: (i) for RSAs, the closing price of our common stock on the applicable fiscal year-end date, or, in the ~~event~~case of ~~a qualifying termination~~vesting RSAs, the closing price of ~~employment~~our common stock on the applicable vesting date; and ~~certain payments in connection with a “change in control”~~(ii) for the PSAs that were unvested as of December 31, 2022, the estimate of the ~~Company. See “— Potential Payments upon~~most probable aggregate compensation cost to be recognized over the requisite service period determined as of December 31, 2022, under ASC Topic 718, calculated by an outside professional valuation consultant using a ~~Termination of Employment or a Change in Control.” Pursuant to the employment agreement, Mr. Parsons~~Monte-Carlo simulation model.

(4)

Our total shareholder return is eligible to receive an additional annual payment of $100,000 for a period of 10 years upon reaching the age of 65, subject to certain restrictions. These annual payments began in 2014 and are scheduled to end in 2023.

~~Employment Agreement with Robert T. Pigott, Jr.~~

We entered into an employment agreement with Mr. Pigott on March 6, 2013, pursuant to which he serves as our Chief Financial Officer and the Chief Financial Officer of the Bank. The employment agreement provides for an initial term of five years and automatic renewals thereafter for successive one-year terms, unless either party provides notice of non-renewal at least 60 days prior to the renewal date. Pursuant to the employment agreement, Mr. Pigott is entitled to an annual base salary of $225,000, subject to annual review by our board of directors, and is eligible to receive a discretionary bonus paymentcalculated, for each fiscal ~~year. Mr. Pigott is also eligible to receive employee benefits, fringe benefits, and perquisites in accordance with~~year, as the ~~employment agreement. In addition, Mr. Pigott’s employment agreement provides for certain severance benefits~~cumulative total shareholder return on our common stock from January 1, 2020, through the last day of the applicable fiscal year, assuming that $100 was invested beginning January 1, 2020. Amounts shown include reinvestment of dividends on the Company’s common stock.

(5)

Peer TSR reflects the TSR of the Nasdaq Bank Index, the industry peer group reported in the ~~event of a qualifying termination of employment. See “— Potential Payments upon a Termination of Employment or a Change in Control.”~~

~~Potential Payments upon a Termination of Employment or a Change in Control~~

Below we have described the severance and other change in control benefits to which our named executive officers would be entitled upon a termination of employment and in connection with a change in control.

~~Termination of Employment without Cause or Resignation with Good Reason~~

The employment agreements with each of our named executive officers provide for severance benefits if we terminate the executive without “cause” or the executive resigns with “good reason” (as each of those terms is definedCompany’s Stock Performance Group in the applicable employment agreement), which circumstances we refer to as a “qualifying termination of employment.” Upon a qualifying termination of employment, the executive will be entitled to the following payments and benefits under his employment agreement:

•

~~an amount equal to the accrued but unpaid base salary and unused vacation pay, which we refer to as the “accrued obligations”;~~

•

~~a lump sum cash payment consisting of $1,500,000 for Mr. Franklin (unless termination occurs during the 27-month period that begins three months prior to a change in control); 100% of one year’s~~2022 Annual Report on Form 10-K.

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~~annual base salary for Mr. Parsons (unless termination occurs due to change in control);~~Relationships Between Compensation Actually Paid and ~~$550,000 for Mr. Pigott;~~

•

~~pro-rata portion of the executive’s annual bonus, except for Mr. Parsons, which we refer to as the “unpaid incentive payment”;~~

•

medical benefits coverage for Mr. Franklin and Mr. Pigott and their dependents for 18 months and 24 months, respectively, following the date of termination of employment, and medical benefits coverage for Mr. Parsons and his dependents for the lesser of the period of time that the employment agreement would have been in effect, or 12 months, which we refer to as the “health and welfare benefits”; and

•

~~Mr. Franklin will fully vest in all outstanding unvested equity awards that would have vested based solely on Mr. Franklin’s continued employment (i.e., all time-based equity awards).~~

~~Change in Control~~

~~Mr. Franklin~~

Pursuant to his amended and restated employment agreement, if Mr. Franklin is terminated by us or the Bank other than for “cause” or he resigns for “good reason” (as each of those terms is defined in Mr. Franklin’s amended and restated employment agreement) during the 27-month period that begins three months prior to a “change in control” (as such term is defined in Mr. Franklin’s amended and restated employment agreement) and ends 24 months following such change in control, then, in lieu of the $1,500,000 cash severance payment otherwise payable to him, Mr. Franklin will be entitled to receive a cash severance payment equal to the greater of (a) $1,500,000 and (b) the amount equal to three times the sum of his then-current base salary and target annual bonus for the calendar year in which the termination occurs.

In addition, under the terms of his SERP, upon a change in control Mr. Franklin is entitled to receive a lump-sum cash payment (in lieu of any other SERP benefit) in the amount of the Bank’s liability accrual balance in respect of the SERP ($640,000 as of December 31, 2020). This amount is payable immediately after the change in control, regardless of whether Mr. Franklin’s employment also terminates.

~~Mr. Parsons~~

Under his employment agreement, Mr. Parsons is entitled to a lump sum cash payment in an amount equal to 100% of one year’s base salary upon termination without “cause” (as such term is defined in Mr. Parsons’ employment agreement) or if he resigns with “good reason” (as such term is defined in the employment agreement) unless the termination occurs during the 180-day period immediately following a “change in control” of the Company (as that term is defined in the employment agreement), in which case Mr. Parsons will be entitled to receive a lump sum cash payment in an amount equal to 150% of one year’s base salary.

~~Outstanding Equity Awards at Fiscal Year End~~Financial Performance Measures

The ~~outstanding equity awards held by each of~~chart below show the relationship between the compensation actually paid to our named executive officers ~~at December 31, 2020 are shown in~~and the ~~table below. Narrative disclosure regarding~~cumulative TSR of Stellar and the ~~Company’s equity compensation plans are set forth following this table.~~

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~~Option Awards~~

~~Stock Awards~~

~~Number of Securities~~
~~Underlying~~
~~Unexercised~~
~~Options~~

~~Equity~~
~~Incentive~~
~~Plan~~
~~Awards:~~
~~Number of~~
~~Securities~~
~~Underlying~~
~~Unexercised~~
~~Unearned~~
~~Options~~
~~Price~~

~~Option~~
~~Exercise~~

~~Option~~
~~Expiration~~
~~Date~~

~~Number~~
~~of Shares~~
~~or Units~~
~~of Stock~~
~~That Have~~
~~Not~~
~~Vested~~
~~(#)~~

~~Market~~
~~Value of~~
~~Shares or~~
~~Units of~~
~~Stock That~~
~~Have Not~~
~~Vested(1)~~
~~($)~~

~~Equity~~
~~Incentive~~
~~Plan Awards:~~
~~Number of~~
~~Unearned~~
~~Shares, Units~~
~~or Other~~
~~Rights That~~
~~Have Not~~
~~Vested~~
~~(#)~~

~~Equity~~
~~Incentive~~
~~Plan~~
~~Awards:~~
~~Market or~~
~~Payout~~
~~Value of~~
~~Unearned~~
~~Shares,~~
~~Units or~~
~~Other~~
~~Rights that~~
~~have not~~
~~Vested~~
~~($)~~

~~Name~~

~~Exercisable~~

~~Unexercisable~~

~~Robert R. Franklin, Jr.~~

—

~~12,000(2)~~

~~306,120~~

—

~~1,778(3)~~

~~45,357~~

—

~~3,261(4)~~

~~83,188~~

~~J. Pat Parsons~~

—

~~4,000~~3)

~~102,040~~

—

~~1,222(3)~~

~~31,173~~

—

~~1,793(4)~~

~~45,739~~

—

~~Robert T. Pigott Jr.~~

—

~~4,000(2)~~

~~102,040~~

—

~~444(3)~~

~~11,326~~

—

~~815(4)~~

~~20,791~~

—

~~(1)~~

Market value of shares of restricted stock that have not vested is calculated by multiplying the number of shares of stock that have not vested by the closing market price of our common stock on December 31, 2020, which was $25.51.

~~(2)~~

~~Shares of restricted stock awarded under the 2017 Plan on November 11, 2017, which vest in equal increments on an annual basis over a five-year period.~~

~~(3)~~

~~Shares of restricted stock awarded under the 2017 Plan on February 1, 2019, which vest in approximately equal increments on an annual basis over a three-year period.~~

~~(4)~~

~~Shares of restricted stock awarded under the 2017 Plan on February 1, 2020, which vest in approximately equal increments on an annual basis over a three-year period.~~

~~VB Texas, Inc. 2006 Stock Option Plan~~

In connection with our merger with VB Texas, Inc., we assumed the VB Texas, Inc. 2006 Stock Option Plan (the “2006 Plan”), and each outstanding option thereunder at the effective time of the merger to acquire shares of VB Texas, Inc. common stock was converted into an option to purchase our common stock equal to the number of shares of VB Texas, Inc. common stock into which such options were exercisable immediately before the effective time multiplied by an exchange ratio. All of these options under the 2006 Plan became fully vested and immediately exercisable at the time of the merger with VB Texas, Inc. As of December 31, 2020, there were options outstanding to acquire 45,720 shares of our common stock under the 2006 Plan. The 2006 Plan expired on October 25, 2016, and no additional options may be granted under its terms.

~~CBFH, Inc. 2014 Stock Option Plan~~

In May 2014 our board of directors adopted the Company’s 2014 Stock Option Plan (the “2014 Plan”), which was approved by our shareholders in May 2014. The 2014 Plan was adopted to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives to selected employees and to promote the success of the Company’s business by offering these individuals an opportunity to acquire a proprietary interest in the success of the Company, or to increase this interest, by permitting them to receive options to purchase shares of common stock of the Company. The 2014 Plan providesNasdaq Bank Index for the issuance of up to 1,127,200 shares of our common stock pursuant to options granted under the plan. At December 31, 2020, there were options outstanding to acquire 156,000 shares of our common stock under the 2014 Plan. Although the Company has not issued any options under the 2014 Plan since 2017, 963,200 shares were available for future grant at December 31, 2020.

three years shown.

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~~CBTX, Inc. 2017 Omnibus Incentive Plan~~

In September 2017 our shareholders approved the 2017 Plan, which was previously approved by our board of directors. The purposes of the 2017 Plan are to provide additional incentives to selected officers, employees, non-employee directors and consultants, to strengthen their commitment, motivate them to faithfully and diligently perform their responsibilities and to attract and retain competent and dedicated persons who are essential to the growth and success of our business and whose efforts will impact our long-term growth and profitability. The 2017 Plan provides for the issuance of stock options, stock appreciation rights, or SARs, restricted stock, restricted stock units, or RSUs, stock bonuses, other stock-based awards and cash awards. The 2017 Plan reserved 600,000 shares of our common stock for issuance and at December 31, 2020, 308,857 shares of our common stock were available for further issuance under this reservation. At December 31, 2020, 131,917 shares of restricted stock were outstanding under the 2017 Plan.

~~Director Compensation~~

We pay our directors based on the director’s participation in board meetings held throughout the year, and the Bank pays its directors based on the director’s participation in its board of directors and committee meetings. During fiscal year 2020, directors received $2,500 per board meeting attended. Additionally, the chairman of each committee received a fee of $5,000 per meeting attended, and the other members of each committee will receive a fee of $2,500 per meeting attended. [MISSING IMAGE: bc_tsr-4clr.jpg]

The following table sets forth compensation paid, earned or awarded during 2020 to each of our directors other than Robert R. Franklin, Jr. and J. Pat Parsons, whose compensation is described above in “Summary Compensation Table.” The table also includes compensation earned by each director that is attributable to his service as a director ofcharts below show the ~~Bank.~~

Name
Fee Earned or
Paid in Cash ($)

Stock Awards
($)

All Other
Compensation
($)

Total
Compensation
($)

Michael A. Havard 57,989 42,070 — 100,059
Tommy W. Lott 47,989 42,070 — 90,059
Glen W. Morgan 25,489 42.070 — 67,559
Joe E. Penland, Sr. 35,489 42,070 — 77,559
Reagan A. Reaud 15,217 28,056 — 43,273
Wayne A. Reaud(1)
10,000 — — 10,000
Joseph B. Swinbank 50,489 42,070 — 92,559
Sheila G. Umphrey 22,989 42,070 — 65,059
John E. Williams, Jr. 32,989 42,070 — 75,059
William E. Wilson, Jr. 55,489 42,070 — 97,559

~~(1)~~

~~Mr. Wayne A. Reaud retired from the board of directors on May 20, 2020.~~

Directors are also entitled to the protection provided by the indemnification provisions in our amended and restated certificate of formation and amended and restated bylaws, and, to the extent they are directors of the Bank, the articles of association and bylaws of the Bank.

~~In January 2021,~~relationship between the compensation ~~committee of the board of directors, comprised solely of independent directors, recommended changes~~actually paid to the compensation program for non-employee directors after consideration of market data and based on the recommendation of Longnecker, its independent compensation consultant. The board of directors of directors approved these changes on January 20, 2021. As a result, effective beginning January 1, 2021, non-employee directors will be compensated as follows:

•

Each non-employee director will receive an annual base retainer of $20,000, with 50% payable in March and 50% payable in December, subject in each case to the director attending at least 75% of the board meetings during the applicable period (or portion of such period during which the individual is a non-employee director). In addition, each director will receive a fee of $750 for each board meeting the director attends (whether in-person or by telephone or other electronic means).

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•

The chair of the audit committee will receive an annual retainer of $10,000 and the other members of the audit committee will receive annual retainers of $7,500, in each case subject to the director attending at least 75% of the audit committee meetings during the applicable period (or portion of such period during which the director is the chair or member of the audit committee, as applicable). In addition, each member of the audit committee will receive a fee of $500 for each audit committee meeting the director attends (whether in-person or by telephone or other electronic means).

•

The chair of the compensation committee will receive an annual retainer of $7,500 and the other members of the audit committee will receive annual retainers of $2,500, in each case subject to the director attending at least 75% of the compensation committee meetings during the applicable period (or portion of such period during which the director is the chair or member of the compensation committee, as applicable). In addition, each member of the compensation committee will receive a fee of $450 for each compensation committee meeting the director attends (whether in-person or by telephone or other electronic means).

•

The chair of the corporate governance and nominating committee will receive an annual retainer of $5,000 and the other members of the corporate governance and nominating committee will receive annual retainers of $2,500, in each case subject to the director attending at least 75% of the corporate governance and nominating committee meetings during the applicable period (or portion of such period during which the director is the chair or member of the corporate governance and nominating committee, as applicable). In addition, each member of the corporate governance and nominating committee will receive a fee of $350 for each corporate governance and nominating committee meeting the director attends (whether in-person or by telephone or other electronic means).

•

Each director will receive an annual award of restricted stock having a target value of $47,500 (prorated for new directors based on the date of appointment). The restricted stock award will be subject to one-year cliff vesting.

~~Compensation Policies and Practices and Risk Management~~

~~We do not believe any risks arise from~~ our ~~compensation policies and practices for our~~named executive officers and ~~other employees that are reasonably likely to have a material adverse effect on~~ our ~~operations, results of operations or financial condition.~~

~~Compensation Committee Interlocks~~net income and ~~Insider Participation~~

None of our executive officers served as (a) a member of a compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board) of another entity, one of whose executive officers served on the Company’s Compensation Committee, (b) a director of another entity, one of whose executive officers served on the Company’s Compensation Committee or (c) a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board) of another entity, one of whose executive officers served as a director of the Company.

During the year ended December 31, 2020, the members of our Compensation Committee were Messrs. Michael A. Havard (Chairman), Tommy W. Lott, Joe E. Penland, Sr., Joseph B. Swinbank and Wayne A. Reaud, who ceased to serve as a member of the Compensation Committee effective as of May 20, 2020. None of the members of the Compensation Committee (a) was an officer or employee of the Company or its subsidiary in 2020, (b) was formerly an officer or employee of the Company or its subsidiary or (c) had any relationship that required disclosure under the section titled “Certain Relationships and Related Person Transactions” other than Mr. Wayne A. Reaud. We routinely purchase advertising space in local newspapers in the areas in which the Company operates. The Examiner is the primary local newspaperearnings per share for the Beaumont, Texas area and is a publication of The Examiner Corporation. Mr. Wayne A. Reaud is the sole shareholder of The Examiner Corporation. We paid The Examiner Corporation $52,000 for fiscal year 2020. Mr. Wayne A. Reaud is the father of Mr. Reagan A. Reaud.three years shown.

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~~Equity Compensation Plan Information~~ [MISSING IMAGE: bc_gaapearning-4clr.jpg]

Other Relevant Financial Performance Measures

For 2022, the following other financial performance measures represented the most important financial performance measures used by us to link compensation actually paid to our named executive officers to our financial performance:

	Other Financial Performance Measures
	Earnings Per Share
	Relative Return on Average Assets (“ROAA”)
	Relative Return on Average Common Equity (“ROACE”)
	Relative Return on Average Tangible Common Equity (“ROATCE”)

For a discussion of how these other financial performance measures impacted the compensation actually paid to our named executive officers during 2022, please see the “Compensation Discussion and Analysis” beginning on page 27.

CEO PAY RATIO

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO. The ~~following table summarizes our equity~~CEO to median employee pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Given the different methodologies that various public companies will use to determine an estimate of their pay ratio, the estimated ratio reported below should not be used as a basis for comparison between companies.

Below is the 2022 annual total compensation ~~plan information as~~ of ~~December 31, 2020.~~the Company’s CEO, the annual total compensation of the Company’s median employee, the ratio of the annual total compensation of the Company’s CEO to that of the Company’s median employee and the methodology we used to calculate the Company’s CEO pay ratio.

Plan Category
Number of Shares to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights

Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights

Number of Shares Remaining
available for Future Issuance
Under Equity Compensation
Plans (excluding column (a))

(a) (b) (c)
Equity compensation plans approved by shareholders (1)
156,000 $ 18.95 1,272,057
Equity compensation plans not approved by shareholders — — —
Total 156,000 $ 18.95 1,272,057

	CEO Annual Total Compensation			$3,492,506
	Median Employee Annual Total Compensation			$55,207
	CEO to Median Employee Pay Ratio			63 to 1

~~(1)~~

The number of shares available for future issuance includes 308,857 shares available under the 2017 Plan (which allows for the issuance of options, as well as various other stock-based awards) and 963,200 shares available under the 2014 Plan.

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Methodology

To identify the median of the annual total compensation of all of the Company’s employees, as well as to determine the annual total compensation of the Company’s median employee and the Chief Executive Officer, the Company took the following steps:

•

We determined that, as of December 31, 2022, the Company’s eligible employee population, including full-time, part-time and seasonal or temporary workers, consisted of 1180 individuals, (including the Chief Executive Officer) and all of these individuals were located in the United States.

•

To identify the “median employee” (other than the Chief Executive Officer), we compared the compensation amounts from the Company’s payroll records as reported to the Internal Revenue Service on Form W-2 for 2022. In making this determination, we did not annualize the compensation of full or part-time employees who were hired in 2022, but did not work for the Company for the entire fiscal year. Further, in accordance with SEC rules we did not make full-time equivalent adjustments to the Company’s 13 part-time employees.

•

Because we had an even number of employees after eliminating the Chief Executive Officer, we could not identify a mathematical median employee. Therefore, we have identified the median employee as the employee who had the lesser of W-2 earnings from the two employees who would be averaged in a mathematical median calculation.

•

Once we identified the median employee, we combined all of the elements of such employee’s compensation for 2022 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K resulting in annual total compensation of our median employee of $55,207.

•

To determine the annual total compensation of the Chief Executive Officer, we used the amount reported in the “Total” column of the Summary Compensation Table appearing on page 46, which was calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.

The Company’s continued investment in its employees is tantamount to the continued performance of the organization, and the Company focuses on offering competitive compensation arrangements that balance risk and reward while encouraging employees to grow and develop professionally.

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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

~~Certain~~Some of our officers, directors and principal shareholders ~~as well as~~and their ~~immediate family members and~~ affiliates are customers of ~~or have or~~the Bank. Such officers, directors and principal shareholders and their affiliates have had transactions ~~with, the Bank or us in the ordinary course of business. These transactions include deposits, loans, and other financial services related transactions. Related person transactions are made~~ in the ordinary course of business with the Bank, including borrowings, all of which were effected on substantially the same terms and conditions, including interest ~~rates~~rate and collateral, ~~(where applicable),~~ as those prevailing ~~at the~~from time to time for comparable transactions with unaffiliated persons ~~not related to us,~~ and dodid not involve more than the normal risk of collectability or ~~present~~ other ~~features~~ unfavorable ~~to us. Our loans and deposits with these parties have been made and accepted in compliance with applicable regulations and our written policies.~~features. We expect to continue to have such transactions on similar terms and conditions with such officers, directors and shareholders and their affiliates in the future.

Lindsay, Lindsay & Parsons, Attorneys at Law has represented us in various legal matters. Mr. Parsons is a member of our board of directors and his son is a partner at Lindsay, Lindsay & Parsons, Attorneys at Law. We paid legal fees of $42,934 for fiscal year 2020.

We routinely purchase advertising space in local newspapers in the areas in which the Company operates. The Examiner is the primary local newspaper for the Beaumont, Texas area and is a publication of The Examiner Corporation. Mr. Wayne A. Reaud is the sole shareholder of The Examiner Corporation. We paid The Examiner Corporation $52,000 for fiscal year 2020. Mr. Wayne A. Reaud is the father of Mr. Reagan A. Reaud.

Transactions by us with related persons are subject to regulatory requirements and restrictions. These requirements and restrictions include Sections 23A and 23B of the Federal Reserve Act (which govern certain transactions by the Bank with its affiliates) and the Federal Reserve’s Regulation O (which governs certain loans by the Bank to its executive officers, directors, and principal shareholders). See our Annual Report on Form 10-K Item 1. Business — Regulation and Supervision ~~and Regulation~~ — ~~Restrictions~~Limits on Transactions with Affiliates and Insiders.

~~We have~~ Additionally, the Company has adopted policies to comply with these regulatory requirements and restrictions, such as a written Related Person Transactions Policy which provides that any related person transaction is generally prohibited unless the Audit Committee determines that such transaction is fair to the Company and, if necessary, the Company has developed an appropriate plan to manage any conflicts of interest.

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BENEFICIAL OWNERSHIP OF THE COMPANY’S COMMON STOCK BY MANAGEMENT AND
PRINCIPAL SHAREHOLDERS OF THE COMPANY

The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock as of March ~~30, 2021,~~31, 2023, by (1) ~~each~~directors, director ~~director nominee~~nominees and named executive ~~officer~~officers of the Company, (2) each person who is known by the Company to own beneficially 5% or more of the Company’s common stock and (3) all directors, director nominees and executive officers as a group. Unless otherwise indicated, based on information furnished by such shareholders, management of the Company believes that each person has sole voting and dispositive power over the shares indicated as owned by such ~~person, subject to applicable community property laws.~~person.

Beneficial ownership is determined in accordance with rules of the SEC and generally includes any shares over which a person exercises sole or shared voting and/or investment power. Shares of common stock subject to options currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage ownership of the person holding the options but are not deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated, we believe the beneficial owners of common stock listed below, based on information furnished by them, have sole voting and investment power with respect to the number of shares listed opposite their names. ~~Unless otherwise noted, the address for each director and named executive officer listed in the table below is c/o CBTX, Inc., 9 Greenway Plaza, Suite 110, Houston, Texas 77046.~~

Name of Beneficial Owner(1)

Number of
Shares Beneficially
Owned

~~Number of Shares~~
Percentage
Beneficially
Owned

~~Percentage~~
~~Beneficially Owned~~ ~~(1)~~(2)

Directors, Director Nominees and Named Executive Officers:

Okan I. Akin

85,947(3)

John Beckworth

193,325(4)

Jon-Al Duplantier

3,052(5)

Paul P. Egge

58,978(6)

Robert R. Franklin, Jr.

~~276,516(2)~~376,164(7)

~~1.12~~%

~~J. Pat Parsons~~

~~126,803(3)~~

Michael A. Havard

~~46,823(4)~~59,657(8)

~~Tommy W. Lott~~Travis Jaggers

~~223,943(5)~~12,845

~~Glen W. Morgan~~Frances H. Jeter

~~1,222,743(6)~~23,860(9)

~~4.97~~%*

Justin M. Long

49,566(10)

George Martinez

300,145(11)

William S. Nichols, III

75,755(12)

Joe E. Penland, Sr.

~~1,421,233(7)~~1,433,670(13)

~~5.78~~2.7%

Reagan A. Reaud

~~3,370(8)~~5,807(14)

Steven F. Retzloff

537,719(15)

1.0%

Fred S. Robertson

93,007(16)

Joseph B. Swinbank

~~262,303(9)~~325,854(17)

~~1.07~~%*

~~Sheila G. Umphrey~~Ramon A. Vitulli, III

~~1,222,823(10)~~109,394(18)

~~4.97~~%*

Joe F. West

87,369(19)

John E. Williams, Jr.

~~1,230,423(11)~~1,233,360(20)

~~5.00~~2.3%

William E. Wilson, Jr.

~~80,031(12)~~82,468(21)

~~Robert T. Pigott, Jr.~~Directors, Nominees and Executive Officers as a group
(20 persons)

~~65,345(13)~~5,147,942(22)

*9.7%

~~Directors and Executive Officers as a group (19 persons)~~

~~6,421,932(14)~~

~~26.04~~%

Principal ~~Shareholders – 5% Security Holders:~~Shareholders:

BlackRock, Inc.

~~1,312,557(15)~~7,248,466(23)

~~5.34~~13.7%

~~FJ Capital Management~~The Vanguard Group

~~1,246,363(16)~~2,979,390(24)

~~5.07~~5.6%

~~Represents beneficial~~Indicates ownership ~~of less than 1%~~which does not exceed 1.0%.

(1)

The address of each of the Company’s directors and officers is c/o Stellar Bancorp, Inc., 9 Greenway Plaza, Suite 110, Houston, Texas 77046.

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(2)

Percentages are based on ~~24,594,299~~52,954,985 shares of common stock issued and outstanding at March ~~30, 2021.~~31, 2023. For purposes of computing the percentage of outstanding shares of common stock held by any individual ~~listed in~~list on this table, any shares of common stock that such person has the right to acquire pursuant to the exercise of a stock option that are exercisable or will vest within 60 days of March ~~30, 2021~~31, 2023 are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

~~(2)~~
(3)

Includes (i) ~~259,201~~36,216 shares held by Mr. Akin individually, (ii) 6,564 units of Performance Stock Awards and (iii) 43,167 shares outstanding pursuant to restricted stock awards.

(4)

Includes (i) 16,466 shares held by Mr. Beckworth individually, (ii) 81,051 shares held by John Beckworth & Laura H. Beckworth Ten Com, (iii) 94,560 shares held by Laura Hobby Beckworth 1999 WPH Trust of which his spouse is trustee and (iv) 1,248 shares outstanding pursuant to restricted stock awards.

(5)

Includes (i) 1,804 shares held by Mr. Duplantier individually and (ii) 1,248 shares outstanding pursuant to restricted stock awards.

(6)

Includes (i) 26,792 shares held by Mr. Egge individually, (ii) 10,595 units of Performance Stock Awards and (iii) 21,591 shares outstanding pursuant to restricted stock awards.

(7)

Includes (i) 271,732 shares held by Mr. Franklin individually and (ii) ~~17,315~~78,324 units of Performance Stock Awards and (iii) 26,108 shares outstanding pursuant to restricted stock awards. Mr. Franklin has pledged 101,600 shares as collateral to secure outstanding debt obligations.

~~(3)~~
(8)

Includes (i) ~~38,371~~58,409 shares held by Mr. ~~Parsons~~Havard individually and (ii) ~~81,387 shares held jointly by Mr. Parsons and his spouse and (iii) 7,045~~1,248 shares outstanding pursuant to restricted stock awards.

~~(4)~~
(9)

Includes (i) ~~44,960~~22,612 shares held by ~~Mr. Havard individually, (ii) 80 shares that Mr. Havard has shared voting and~~

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~~investment power over pursuant to a power of attorney and disclaims beneficial ownership of and (iii) 1,783 shares outstanding pursuant to restricted stock awards.~~

~~(5)~~

~~Includes (i) 222,160 shares held by Mr. Lott~~Ms. Jeter individually and (ii) ~~1,783~~1,248 shares outstanding pursuant to restricted stock awards.

~~(6)~~
(10)

Includes (i) ~~579,934~~16,314 shares held by Mr. ~~Morgan~~Long individually, (ii) ~~641,026~~2,800 shares held by ~~the Grace Trust~~Mr. Long’s individual retirement account, (iii) 8,883 units of ~~which Mr. Morgan serves as the trustee~~Performance Stock Awards and ~~(iii) 1,783~~(iv) 21,569 shares outstanding pursuant to restricted stock awards.

~~(7)~~
(11)

Includes (i) ~~479,144~~6,971 shares held by Mr. Martinez individually, (ii) 291,576 shares held by Martinez 2007 Family Partnership Ltd of which Mr. Martinez is a limited partner and (ii) 1,598 shares outstanding pursuant to restricted stock awards.

(12)

Includes (i) 7,009 shares held by Mr. Nichols individually, (ii) 51,896 shares held by Nichols Realty Investments I, Ltd of which Mr. Nichols is the President of the managing partner, Nichols GP Investments, Inc., (iii) 15,602 shares held by Nichols Rising Star Partners II, Ltd of which Mr. Nichols is the President of the managing partner, Nichols GP Investments, Inc. and (iv) 1,248 shares outstanding pursuant to restricted stock awards.

(13)

Includes (i) 484,616 shares held by Mr. Penland individually, (ii) ~~215,670~~223,170 shares held by the Penland Foundation of which Mr. Penland serves as the trustee, (iii) 724,636 shares held by Tram Road Partners LP of which Mr. Penland is the trustee and (iv) ~~1,783~~1,248 shares outstanding pursuant to restricted stock awards. Tram Road Partners LP has pledged 724,636 shares as collateral to secure outstanding debt obligations.

~~(8)~~
(14)

Includes (i) ~~1,087~~4,059 shares held by Mr. Reaud individually, (ii) 500 shares held by Reaud Holdings LLC and (iii) ~~1,783~~1,248 shares outstanding pursuant to restricted stock awards.

~~(9)~~
(15)

Includes (i) ~~158,920~~55,083 shares held by Mr. Retzloff individually, (ii) 53,412 units of Performance Stock Awards, (iii) 378,240 shares held by Retzloff Holdings, Ltd of which Mr. Retzloff is a limited partner, (iv) 25,531 shares held by Retzloff Industries, Inc. of which Mr. Retzloff is the President, (v) 12,598 shares held by SF Retzloff Family Limited Partnership, Ltd of which Mr. Retzloff is a limited partner and (vi) 12,855 shares outstanding pursuant to restricted stock awards.

(16)

Includes (i) 15,248 shares held by Mr. Robertson’s individual retirement account, (ii) 76,511 shares held by The Robertson Family Trust of which Mr. Robertson is a trustee and (iii) 1,248 shares outstanding pursuant to restricted stock awards.

(17)

Includes (i) 223,006 shares held by Mr. Swinbank individually, (ii) 101,600 shares held by the JBS/STS Grandchildren’s Trust of which Mr. Swinbank has voting power and (iii) ~~1,783~~1,248 shares outstanding pursuant to restricted stock awards.

~~(10)~~

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(18)

Includes (i) ~~1,216,000~~46,973 shares held by ~~the Umphrey II Family Limited Partnership of which Ms. Umphrey is a limited partner and has shared voting and investment power,~~Mr. Vitulli individually, (ii) ~~80 shares held jointly by Mrs. Umphrey and her spouse, (iii) 4,960~~9,205 shares held by ~~Mrs. Umphrey individually~~Mr. Vitulli’s individual retirement account, (iii) 14,159 units of Performance Stock Awards and (iv) ~~1,783~~39,057 shares outstanding pursuant to restricted stock awards. Mr. Vitulli has pledged 20,371 shares as collateral to secure outstanding debt obligations.

(19)

Includes (i) 63,422 shares held by Mr. West individually, (ii) 7,491 units of Performance Stock Awards and (iii) 16,456 shares outstanding pursuant to restricted stock awards.

~~(11)~~
(20)

Includes (i) ~~1,228,640~~1,231,612 shares held by Mr. Williams individually, (ii) 500 shares held by his spouse and ~~(ii) 1,783~~(iii) 1,248 shares outstanding pursuant to restricted stock awards. Mr. Williams has pledged 608,000 shares as collateral to secure outstanding debt obligations.

~~(12)~~
(21)

Includes (i) ~~42,248~~44,031 shares held by Mr. Wilson individually, (ii) ~~24,000~~25,189 shares held by Mr. Wilson’s individual retirement account, (iii) 12,000 shares held by the Caldwell ~~McFadden~~McFaddin Mineral Trust of which Mr. Wilson serves as the trustee and (iv) ~~1,783~~1,248 shares outstanding pursuant to restricted stock awards.

~~(13)~~
(22)

Includes (i) ~~32,646 shares held by Mr. Pigott’s individual retirement account, (ii) 27,371 shares held by Mr. Pigott individually and (iii) 5,328 shares outstanding pursuant to restricted stock awards.~~

~~(14)~~

~~Includes (i) 6,272,031~~4,772,385 shares held by the directors and executive officers, (ii) ~~63,368~~13,728 shares issuable upon the exercise of stock options within 60 days of March ~~30, 2021,~~31, 2023, (iii) 179,428 Performance Stock Awards, and ~~(iii) 86,533~~(iv) 182,401 shares outstanding pursuant to restricted stock awards. Individuals in this group have separately pledged a total of ~~1,434,236~~1,454,607 shares as collateral to secure outstanding ~~debt obligations of such individuals.~~debt.

~~(15)~~
(23)

~~Based~~The information concerning BlackRock, Inc. is based solely on information ~~reported~~contained in its Schedule 13G filed with the SEC on aJanuary 23, 2023. BlackRock, Inc.’s principal business address is 55 East 52nd Street, New York, NY 10055. Includes shares held by each of BlackRock Advisors, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock Fund Advisors; BlackRock Asset Management Ireland Limited; BlackRock Institutional Trust Company, N.A.; BlackRock Financial Management, Inc.; BlackRock Asset Management Schweiz AG; and BlackRock Investment Management, LLC. Based on the information contained in the filing, BlackRock, Inc. has sole voting power with respect to 7,158,830 shares, sole dispositive power with respect to 7,248,466 shares and beneficially owns 7,248,466 shares. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of the common stock.

(24)

The information concerning The Vanguard Group is based solely on information contained in its Schedule 13G filed with the SEC on February ~~2, 2021 by or~~9, 2023. The Vanguard Group’s principal business address is 100 Vanguard Blvd., Malvern, PA 19355. Based on ~~behalf of BlackRock, Inc.~~the information contained in the filing, The ~~address of BlackRock, Inc. is 55 East 52~~nd ~~Street, New York, NY 10055.~~Vanguard Group has sole voting power with respect to 0 shares, shared power to vote 31,544 shares, sole dispositive power with respect to 2,909,664 shares and shared dispositive power with respect to 69,726 shares.

~~(16)~~
Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act, requires our directors and executive officers and persons who own more than 10% of our outstanding shares of common stock to file reports of ownership and changes in ownership of our equity securities, including shares of the Company’s common stock with the SEC. Such persons are required by the SEC’s regulations to furnish us with copies of all reports they file pursuant to Section 16.

Based solely on ~~information reported on~~our review of the copies of such reports we received with respect to fiscal year 2022, we believe that all filing requirements applicable to our directors, executive officers and persons who own more than 10% of a ~~Schedule 13G filed~~registered class of our equity securities have been timely complied with in accordance with Section 16(a) of the ~~SEC on March 29, 2021 by or on behalf of FJ Capital. The address of FJ Capital Management, LLC is 1313 Dolley Madison Blvd #306, McLean VA 22101.~~

Exchange Act.

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AUDIT COMMITTEE REPORT

Notwithstanding anything to the contrary set forth in any of the Company’s previous or future filings under the Securities Act or the Exchange Act that might incorporate this proxy statement or future filings with the SEC, in whole or in part, the following report of the Audit Committee shall not be deemed to be incorporated by reference into any such filing.

~~The~~In accordance with its written charter adopted by our Board, the Company’s Audit Committee ~~oversees~~assists the ~~Company’s~~Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting ~~process on behalf~~practices of the ~~board. Management~~Company. The Board has the primary responsibility for preparing the Company’s financial statements and the reporting process, including developing, maintaining and evaluating the Company’s internal control over financial reportingdetermined that each Audit Committee member is independent in accordance with ~~generally accepted accounting principles, or GAAP. In fulfilling its oversight responsibilities,~~ the Nasdaq listing standards and in Section 10A of the Exchange Act and that each of William (Bill) E. Wilson, Jr. and Michael A. Havard has the requisite attributes of an “audit committee financial expert” as defined by the rules and regulations of the SEC.

The Audit Committee reviewed and discussed ~~with management~~ the Company’s audited consolidated financial statements with management, which has primary responsibility for the ~~fiscal year~~financial statements, and with the Company’s independent registered public accounting firm, Crowe LLP, which is responsible for expressing an opinion on whether such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021 and the results of the Company’s operations and the Company’s cash flows for each of the years in the three-year period ended December 31, ~~2020, including a discussion of the quality, not just the acceptability, of the~~2022, in conformity with accounting principles ~~the reasonableness of significant judgments, and the clarity of disclosures~~generally accepted in the ~~financial statements.~~United States of America.

The Audit Committee ~~discussed~~met regularly with ~~Grant Thornton~~Crowe LLP ~~their audit of the Company’s 2020 financial statements, including~~and the Company’s internal ~~control over financial reporting. During 2020, the Audit Committee met with Grant Thornton LLP,~~audit staff, with and without management present, to discuss the results of their ~~examinations, their evaluations~~audits, management’s assessment of the Company’s internal control over financial reporting, and the overall quality of the Company’s financial reporting. ~~In addition,~~The Audit Committee also reviewed Crowe LLP’s Report of Independent Registered Public Accounting Firm included in the Company’s Annual Report on Form 10-K related to its respective audit of the Company’s consolidated financial statements.

The Audit Committee discussed with ~~Grant Thornton~~Crowe LLP the matters that are required to be discussed by PCAOB Auditing Standard No. 1301 (Communications with Audit Committees), as adopted by the Public Company Accounting Oversight Board. The Audit Committee also discussed with internal audit and management any significant matters as a result of the internal audit work.

The Audit Committee has received the written disclosures and the letter from Crowe LLP required by applicable requirements of the Public Company Accounting Oversight Board ~~(“PCAOB”), and the SEC and such other matters as are required to be discussed~~regarding Crowe LLP’s communications with the Audit Committee ~~under generally accepted auditing standards.~~concerning independence, and has discussed with Crowe LLP its independence. The Audit Committee ~~also discussed with Grant Thornton~~has concluded that Crowe LLP ~~the auditors’ independence from management and~~has not provided any prohibited non-audit services to the Company ~~including the matters in the written disclosures~~ and ~~the letter from Grant Thornton LLP required by the PCAOB, considered the compatibility of non-audit services~~its affiliates, which is compatible with ~~the auditors’ independence and concluded that the auditor’s independence had been maintained.~~maintaining Crowe LLP’s independence.

Based on ~~its~~the above-mentioned review and discussions ~~noted above,~~with management and Crowe LLP, the Audit Committee recommended to the ~~Company’s board~~Board that the Company’s audited financial statements be included in ~~the annual report to shareholders~~its Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2022, for filing with the SEC. The Audit Committee also recommended the reappointment, subject to shareholder ratification, of Crowe LLP and our Board concurred in such recommendation.

The Audit Committee of the Board of Directors

William (Bill) E. Wilson, Jr. (~~Chairman~~)
(Chairperson)
Jon-Al Duplantier
Michael A. Havard
~~Tommy W. Lott~~
~~Joseph B. Swinbank~~
William (Nick) S. Nichols, III

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PROPOSAL 2. ADVISORY VOTE ON THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS (“SAY-ON-PAY”)

In connection with the termination of the Company’s status as an emerging growth company on December 31, 2022, and in accordance with the requirements of Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act) and the related rules of the SEC, the Company is providing shareholders the opportunity to vote on a non-binding, advisory resolution to approve the compensation of its named executive officers.

We urge shareholders to read the section titled “Executive Compensation and Other Matters — Compensation Discussion and Analysis” beginning on page 27 of this proxy statement, which describes in more detail how the Company’s executive compensation policies and procedures operate and are designed to achieve its compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, appearing on pages 46 through 58, which provide detailed information on the compensation of the Company’s named executive officers. The Compensation Committee and the Board of Directors believe that the policies and procedures articulated are effective in achieving its goals and that the compensation of its named executive officers reported in this proxy statement has contributed to the Company’s recent and long-term success.

The Company is asking for shareholder approval of the compensation of its named executive officers as disclosed in this proxy statement in accordance with SEC rules, which disclosures include the information contained in the Compensation Discussion and Analysis, the compensation tables and the narrative discussion following the compensation tables. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s named executive officers and the policies and practices described in this proxy statement.

Accordingly, the Company is asking its shareholders to vote on the following resolution at the annual meeting:

“RESOLVED, that the Company’s shareholders approve, on a non-binding, advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2023 annual meeting of shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2022 Summary Compensation Table and the other related tables and disclosures.”

This advisory vote, commonly referred to as a “Say-On-Pay” vote, is non-binding on the Board of Directors. Although non-binding, the Board of Directors and the Compensation Committee will review and consider the voting results when making future decisions regarding the Company’s executive compensation program.

THE BOARD RECOMMENDS A VOTE “FOR” THE SAY-ON-PAY RESOLUTION

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PROPOSAL 3. ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (“SAY-ON-FREQUENCY”)

As required by federal securities laws, the Board of Directors is providing our shareholders with an opportunity to vote on the frequency of future advisory votes on the compensation of our named executive officers. Shareholders may choose to approve holding an advisory vote on the compensation of our named executive officers annually, biennially or triennially. Accordingly, we are asking shareholders whether the advisory vote should occur every year, every two years or every three years.

The Company has not historically provided an opportunity to shareholders to vote on compensation of our named executive officers. In 2023, with the expiration of the Company’s Emerging Growth Company status, the Board has implemented a ‘say on pay’ vote related to the compensation of our named executive’s during 2022 and believes an annual advisory vote moving forward will allow the Board to obtain information on shareholders’ views of the compensation of our named executive officers on a more consistent and timely basis. In addition, the Board believes an annual advisory vote on the compensation of our named executive officers will provide the Board of Directors and the Compensation Committee with frequent input from shareholders on our compensation programs for our named executive officers. Finally, the Board believes an annual advisory vote on the compensation of the Company’s executive officers aligns more closely with the Company’s objective to engage in regular dialogue with its shareholders on corporate governance matters, including the Company’s executive compensation philosophy, policies and programs.

Although this advisory vote on the frequency of the ‘Say-on-Pay’ vote is non-binding, the Board and our Compensation Committee will review and consider the outcome of this advisory vote when determining how often to present future advisory votes on compensation of our named executive officers to shareholders.

THE BOARD RECOMMENDS A VOTE FOR “1 YEAR” AS THE FREQUENCY FOR ANNUAL ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVES.

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PROPOSAL 4. RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Pursuant to the recommendation of the Audit Committee, the Board has appointed Crowe LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2023. The Board is seeking ratification of the appointment of Crowe LLP for the 2023 fiscal year. Shareholder ratification of the selection of Crowe LLP as our independent registered public accounting firm for the 2023 fiscal year is not required by our bylaws, state law or otherwise. However, the Board is submitting the selection of Crowe LLP to our shareholders for ratification as a matter of good corporate governance. If the shareholders fail to ratify the selection, the Audit Committee will consider this information when determining whether to retain Crowe LLP for future services.

At the annual meeting, shareholders will be asked to consider and act upon a proposal to ratify the appointment of Crowe LLP. Assuming a quorum is present, the ratification of such appointment will require the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled to vote and present in person or represented by proxy at the annual meeting. Representatives of Crowe LLP are expected to be in attendance at the annual meeting and will be afforded the opportunity to make a statement. The representatives will also be available to respond to questions.

THE BOARD RECOMMENDS A VOTE “FOR” THE PROPOSAL
TO RATIFY THE APPOINTMENT OF CROWE LLP AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2023.

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DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS FOR ~~THE 2022~~2024 ANNUAL MEETING

If a shareholder desires to submit a shareholder proposal pursuant to Rule 14a-8 under the Exchange Act for inclusion in the proxy statement for the ~~2022~~2024 annual meeting of shareholders, such proposal and supporting statements, if any, must be ~~received by~~sent to us at the Company’s principal executive office no later than December ~~15, 2021~~29, 2023. Any such proposal must comply with the requirements of Rule 14a-8.

In addition, our bylaws establish an advance notice procedure for shareholder proposals to be brought before an annual meeting. For business, other than nomination of directors, to be properly brought before a meeting, notice must be received by the Secretary of the Company at the address below not less than 90 nor more than 120 calendar days prior to the first anniversary of the preceding year’s annual meeting. The Secretary of the Company, therefore, must receive notice of any business to be considered at our ~~2022~~2024 annual meeting of shareholders, no earlier than January ~~19, 2022~~26, 2024 and no later than February ~~18, 2022.~~25, 2024. Additionally, for nominations of persons for election to the board to be properly made at a meeting by a shareholder, notice must be received by the Secretary of the Company at the address below, not less than 120 nor more than 150 calendar days prior to the first anniversary of the preceding year’s annual meeting. The Secretary of the Company, therefore, must receive notice of shareholder nomination for candidates no earlier than December ~~20, 2021~~27, 2023 and no later than January ~~19, 2022.~~26, 2024.

However, in the case of shareholder proposals and shareholder nominations, if the date of the annual meeting is advanced more than 30 calendar days prior to such anniversary date or delayed more than 60 calendar days after such anniversary date then the notice must be received no later than the later of 70 calendar days prior to the date of the annual meeting or the close of business on the 7th calendar day following the earlier of the date on which notice of the annual meeting is first mailed by or on behalf of the Company or the day on which public announcement is first made of the date of the annual meeting. All notices to us must also provide certain information set forth in the Company’s bylaws. A copy of the Company’s bylaws may be obtained upon written request to the Secretary of the Company.

Shareholder proposals and nominations should be submitted to the ~~Corporate~~ Secretary of the Company ~~and the Chairman of the Corporate Governance and Nominating Committee of CBTX,~~at Stellar Bancorp, Inc., ~~Attn: Corporate Secretary,~~ 9 Greenway Plaza, Suite 110, Houston, Texas 77046.

ANNUAL REPORT ON FORM 10-K

We will furnish, without charge, a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC, to any shareholder upon written request to Stellar Bancorp, Inc., 9 Greenway Plaza, Suite 110, Houston, Texas 77046.

Our Annual Report on Form 10-K, including consolidated financial statements and related notes, for the fiscal year ended December 31, 2022, as filed with the SEC, accompanies but does not constitute part of this proxy statement.

OTHER MATTERS

The ~~board~~Board does not intend to bring any other matter before the annual meeting and does not know of any other matters that are to be presented for action at the annual meeting. However, if any other matter does properly come before the annual meeting or any adjournment or postponement thereof, the proxies will be voted in accordance with the discretion of the person or persons voting the proxies.

You are cordially invited to attend the annual meeting. Regardless of whether you plan to attend the annual meeting, you are urged to complete, date, sign and return the enclosed proxy in the accompanying envelope at your earliest convenience.

~~By Order of the Board of Directors,~~

~~Robert R. Franklin, Jr.~~
~~Chairman, President and Chief Executive Officer~~

~~Houston, Texas~~
~~April 14, 2021~~

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3. To approve, on an advisory, non-binding basis, thefrequency of future advisory votes on thecompensation of our named executive officers.2 1 Year Years 3 Years AbstainProposals — The Board of Directors recommend a vote FOR all the nominees listed, FOR Proposals X – X and for every X YEARS on Proposal X.01 - John Beckworth04 - William E. Wilson, Jr.02 - Fred S. Robertson 03 - Joseph B. SwinbankFor Withhold For Withhold For Withhold1 U P XUsing a black ink pen, mark your votes with an X as shown in this example.Please do not write outside the designated areas.03TECC++ A a vote FOR all the nominees listed and FOR Proposal 2 4, and 1-Year for Proposal 3.2. To approve, on an advisory, non-binding basis, the compensationpaid to our named executive officers as disclosed in theaccompanying proxy statement (“Say-On-Pay”).1. To elect four (4) of Class I directors to serve on the board of directors of the Company until the Company’s 2026 annual meeting of shareholders, and until their respectivesuccessors are duly elected and qualified or until their earlier resignation or removal.For Against AbstainPlease sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please givefull title.Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below.4. To ratify the appointment of Crowe LLP as the independentregistered public accounting firm of the Company for the yearending December 31, 2023.5. To transaction such other business as may properly comebefore the meeting or any adjournment thereof.q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q2023 Annual Meeting Proxy Card000004MR A SAMPLEDESIGNATION (IF ANY)ADD 1ADD 2ADD 3ADD 4ADD 5ADD 6ENDORSEMENT_LINE______________ SACKPACK_____________1234 5678 9012 345MMMMMMMMMMMMMMMMMMMMMMMM5 7 6 6 8 0MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE ANDMR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE ANDC 1234567890 J N TC123456789MMMMMMMMMMMMMMMMMMM000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 ext000000000.000000 extIf no electronic voting,delete QR code and control #Δ ≈You may vote online or by phone instead of mailing this card.OnlineGo to www.envisionreports.com/STELor scan the QR code — login details arelocated in the shaded bar below.Save paper, time and money!Sign up for electronic delivery atwww.envisionreports.com/STELPhoneCall toll free 1-800-652-VOTE (8683) withinthe USA, US territories and CanadaVotes submitted electronically must bereceived by 1:00 a.m., Central Time,on May 25, 2023.Your vote matters – here’s how to vote!

Small steps make an impact.Help the environment by consenting to receive electronicdelivery, sign up at www.envisionreports.com/STELNotice of 2023 Annual Meeting of Shareholders to be held on May 25, 2023Proxy Solicited on behalf of the Stellar Bancorp, Inc. Board of DirectorsThe undersigned hereby constitutes and appoints Robert R. Franklin, Jr. and Steven R. Retzloff, jointly and severally with the full power of substitution andrevocation, as proxies to represent and to vote for and on behalf of the undersigned, with all the powers that the undersigned would possess if personallypresent, all of the shares of common stock, par value $0.01 per share, of Stellar Bancorp, Inc. (the “Company”), that the undersigned would be entitled tovote if then personally present at the Annual Meeting of Shareholders of the Company (the “Annual Meeting”) to be held at The Houstonian Hotel,111 North Post Oak Lane, Houston, Texas 77024 on Thursday, May 25, 2023, at 10:00 a.m. Central Time, and at any adjournments or postponements thereof,on the matters and proposals set forth in the Notice of the Annual Meeting of Shareholders dated April 24, 2023, and which may properly come before theAnnual Meeting in accordance with directions contained in this Proxy Card. The undersigned hereby revokes all appointments of proxy previously given tovote at the Annual Meeting.This proxy, when properly executed, will be voted in the manner directed herein by the undersigned Shareholder. If no direction is made, this proxy will bevoted “FOR” the election of all of the Class I director nominees named in Proposal 1, “FOR” approval of Proposal 2, for “1-Year” for Proposal 3, and “FOR”approval of Proposal 4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.(Items to be voted appear on reverse side)Stellar Bancorp, Inc.q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qChange of Address — Please print new address below. Comments — Please print your comments below.C Non-Voting Items++Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders.The materials are available at: www.envisionreports.com/STEL2023 Annual Meeting of Stellar Bancorp, Inc. ShareholdersMay 25, 2023 at 10:00 a.m. CTThe Houstonian Hotel111 North Post Oak LaneHouston, Texas 77024

~~TABLE OF CONTENTS~~

0001473844 4 2022-01-01 2022-12-31

	ABOUT THE ANNUAL MEETING					2
	~~When and where will the annual meeting be held?~~PROPOSAL 1. ELECTION OF DIRECTORS					27
	~~What is the purpose~~Classification of the ~~annual meeting?~~Company’s Directors					27
	~~Who are the nominees for Class III directors?~~Election Procedures; Term of Office					27
	~~Who is entitled to vote at the annual meeting?~~Nominees for Election					27
	~~How do I vote?~~CONTINUING DIRECTORS AND EXECUTIVE OFFICERS					29
	~~What is the difference between a shareholder of record and a “street name” holder?~~Board Diversity Disclosure					314
	~~What constitutes a quorum for the annual meeting?~~Board Diversity Matrix					314
	BOARD AND COMMITTEE MATTERS					14
	~~What is a broker non-vote?~~Board Meetings					314
	~~What should I do if I receive more than one set of voting materials?~~Director Attendance at Annual Meeting					315
	~~What are the board’s recommendations on how I should vote my shares?~~Board Leadership Structure					415
	~~How will my shares be voted if I return a signed and dated proxy card, but don’t specify how my shares will be voted?~~Executive Sessions					415
	~~What are my choices when voting?~~Board Composition and Special Period Governance					415
	~~May I change my vote after I have submitted my proxy card?~~Director Independence					416
	~~What percentage of the vote is required to approve each proposal?~~Risk Management and Oversight					516
	~~How are broker non-votes and abstentions treated?~~Director Nominations					517
	~~What are the solicitation expenses and who pays the cost of this proxy solicitation?~~Criteria for Director Nominees					517
	~~Are there any other matters to be acted upon at the annual meeting?~~Process for Identifying and Evaluating Director Nominees					517
	~~Where can I find voting results?~~Procedures to be Followed by Shareholders For Director Nominations					518
	~~How can I communicate with~~Committees of the ~~board?~~Board					519
	~~PROPOSAL 1. ELECTION OF DIRECTORS~~Director Compensation					621
	~~Number of Directors; Term of Office~~CERTAIN CORPORATE GOVERNANCE MATTERS					625
	~~Nominees for Election~~Code of Business Conduct and Ethics					625
	~~Election Procedures~~Corporate Governance Guidelines					725
	~~Class I Directors with a Term Expiring in 2022~~Compensation Committee Interlocks and Insider Participation					725
	~~Class II Directors with a Term Expiring in 2023~~Independent Auditors					925
	~~PROPOSAL 2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED~~ ~~PUBLIC ACCOUNTING FIRM~~Fees Paid to Independent Registered Public Accounting Firm					1125
	~~BOARD AND COMMITTEE MATTERS~~Audit Committee Pre-Approval					1226
	~~Board Meetings~~Additional Information Regarding Change of Independent Registered Public Accounting Firm					1226
	~~Director Attendance at Annual Meeting~~EXECUTIVE COMPENSATION AND OTHER MATTERS					1227
	~~Board Composition~~Compensation Discussion and Analysis					1227
	~~Director Independence~~Executive Compensation Highlights					1227
	Named Executive Officers					28
	Compensation Program, Philosophy and Objectives					29
	Shareholders Engagement and Say on Pay					29
	Compensation Overview					30
	Compensation Practices					30
	Review of Peer Group Data					32
	2022 Compensation Decisions					33
	Long-Term Equity Incentive Compensation					35
	Employment Agreements					38

	~~Fees Paid to Independent Registered Public Accounting Firm~~					18
	~~Audit Committee Pre-Approval~~					18
	~~CURRENT EXECUTIVE OFFICERS~~					19
	~~EXECUTIVE COMPENSATION AND OTHER MATTERS~~					21
	~~Summary Compensation Table~~					21
	~~Narrative Discussion of Summary Compensation Table~~					22
	~~Employment Agreements with Named Executive Officers~~					24
	~~Potential Payments upon a Termination of Employment or a Change in Control~~					25
	~~Outstanding Equity Awards at Fiscal Year End~~					26
	~~VB Texas, Inc. 2006 Stock Option Plan~~					27
	~~CBFH, Inc. 2014 Stock Option Plan~~					27
	~~CBTX, Inc. 2017 Omnibus Incentive Plan~~					28
	~~Director Compensation~~					28
	~~Compensation Policies and Practices and Risk Management~~					29
	~~Compensation Committee Interlocks and Insider Participation~~					29
	~~Equity Compensation Plan Information~~					30
	~~CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS~~					31
	BENEFICIAL OWNERSHIP OF THE COMPANY’S COMMON STOCK BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS OF THE COMPANY					3260
	~~AUDIT COMMITTEE REPORT~~Delinquent Section 16(a) Reports					3462
	~~DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS FOR THE 2022 ANNUAL MEETING~~AUDIT COMMITTEE REPORT					3563
	~~OTHER MATTERS~~PROPOSAL 2. ADVISORY VOTE ON THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS (“SAY-ON-PAY”)					3564
	PROPOSAL 3. ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (“SAY-ON-FREQUENCY”)					65
	PROPOSAL 4. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM					66
	DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS FOR 2024 ANNUAL MEETING					67
	ANNUAL REPORT ON FORM 10-K					67
	OTHER MATTERS					67

Name of Nominee	Age	Position	Director Since
Sheila G. Umphrey	81	Director	2017
John E. Williams, Jr.	66	Director	2007
William E. Wilson, Jr.	65	Director	2017

	2020			2019
Audit fees(1)		$	589,677		$	637,628
Audit-related fees			—			—
Tax fees			—			—
All other fees			—			—
Total fees		$	589,677		$	637,628

Name and Principal Position	Year		Salary ($)		Bonus(1) ($)		Stock Awards(2) ($)		Nonqualified Deferred Compensation Earnings(3) ($)		All Other Compensation ($)		Total ($)
Robert R. Franklin, Jr. Chairman of the Board, President and Chief Executive Officer		2020		550,000		600,000		59,948		9,338		248,750(4)		1,468,036
		2019		500,000		1,250,000		96,363		12,607		262,660(5)		2,121,630
J. Pat Parsons Vice Chairman		2020		300,000		330,000		32,982		6,179		169,679(6)		838,840
J. Pat Parsons Vice Chairman		2019		300,000		550,000		52,983		8,860		177,584(7)		1,089,427
Robert T. Pigott, Jr. Chief Financial Officer and Senior Executive Vice President		2020		327,059		150,000		14,987		—		24,251(8)		516,297
		2019		317,533		250,000		24,083		—		23,951(9)		615,567

Name	Fee Earned or Paid in Cash ($)		Stock Awards ($)		All Other Compensation ($)		Total Compensation ($)
Michael A. Havard		57,989		42,070		—		100,059
Tommy W. Lott		47,989		42,070		—		90,059
Glen W. Morgan		25,489		42.070		—		67,559
Joe E. Penland, Sr.		35,489		42,070		—		77,559
Reagan A. Reaud		15,217		28,056		—		43,273
Wayne A. Reaud(1)		10,000		—		—		10,000
Joseph B. Swinbank		50,489		42,070		—		92,559
Sheila G. Umphrey		22,989		42,070		—		65,059
John E. Williams, Jr.		32,989		42,070		—		75,059
William E. Wilson, Jr.		55,489		42,070		—		97,559

Plan Category	Number of Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights			Number of Shares Remaining available for Future Issuance Under Equity Compensation Plans (excluding column (a))
	(a)		(b)			(c)
Equity compensation plans approved by shareholders (1)		156,000		$	18.95		1,272,057
Equity compensation plans not approved by shareholders		—			—		—
Total		156,000		$	18.95		1,272,057