Why This Fund Dumped a $103 Million Regional Bank Position Amid a 37% Rally

On May 15, 2026, North Reef Capital Management disclosed in a Securities and Exchange Commission filing that it sold out of Stellar Bancorp (NYSE:STEL), liquidating 2,875,245 shares in an estimated $103.10 million transaction based on quarterly average pricing.

What happened

According to a filing with the Securities and Exchange Commission dated May 15, 2026, North Reef Capital Management sold its entire holding of 2,875,245 shares in Stellar Bancorp. The estimated transaction value was approximately $103.10 million based on the average closing price for the quarter. The fund’s quarter-end position value in the stock dropped by $88.96 million, reflecting both the divestment and share price changes.

What else to know

• Top five holdings after the filing:
  • NYSE: FHN: $328.96 million (11.3% of AUM)
  • NASDAQ: MKTX: $309.34 million (10.6% of AUM)
  • NYSE: ABCB: $266.98 million (9.2% of AUM)
  • NYSE: KEY: $253.63 million (8.7% of AUM)
  • NASDAQ: SBCF: $176.44 million (6.1% of AUM)
• As of May 14, 2026, shares of Stellar Bancorp were priced at $36.58, up 37% over the past year and outperforming the S&P 500 by about 10 percentage points.

Company overview

Company snapshot

• Stellar Bancorp offers a comprehensive suite of commercial banking products, including deposit accounts, commercial and industrial loans, real estate loans, and consumer lending, with additional services such as cash management, mobile banking, and safe deposit facilities.
• The firm generates revenue primarily through net interest income from lending activities and fee-based services, leveraging a regional branch network and digital channels to serve clients efficiently.
• It serves small and medium-sized businesses, professionals, and individual customers, with a geographic focus on the Southeast region, particularly the Houston metropolitan area and surrounding markets.

Stellar Bancorp is a regional financial services provider with a strong presence in the Texas market, operating over 1,000 employees and a diversified portfolio of banking solutions. The company's strategic focus on commercial and real estate lending, combined with a robust deposit base, is reflected in its service offerings and loan portfolio.

What this transaction means for investors

This sale ultimately looks less like a panic move and more like a fund locking in gains after a strong run and an upcoming merger that could cap further upside. Stellar shares have climbed 37% over the past year, and with the Prosperity Bancshares deal expected to close around July 1, North Reef may simply see better risk-reward opportunities elsewhere in the banking sector.

Operationally, Stellar’s latest quarter was solid. First-quarter net income rose to $27 million, while diluted EPS climbed to $0.53 from $0.51 in the prior quarter. Loan growth was especially notable, with loans held for investment increasing 3.9% sequentially, or 16% annualized. Net interest margin also improved to 4.24%, helped by stronger securities yields and loan growth momentum. At the same time, investors should keep an eye on credit quality. Nonperforming assets rose to $70.1 million from $60 million last quarter.

Going forward, the bigger story may be how Stellar executes on the merger rather than standalone growth. Once a bank enters acquisition mode, upside increasingly depends on integration success and cost synergies instead of pure organic expansion.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Ameris Bancorp. The Motley Fool has a disclosure policy.