Core Insights - Banner Capital Management has successfully closed a portfolio recapitalization into Banner Capital Fund I and launched Banner Capital Fund II [1][4] Fund I - Fund I is a multi-asset continuation fund with over $400 million in capital commitments, aimed at acquiring interests in eight pre-fund portfolio companies [2] - Hamilton Lane acted as the lead investor, with many pre-fund investors retaining significant interests in the portfolio companies through this new vehicle [2] - The transaction provides additional time and capital for portfolio companies while offering partial liquidity to pre-fund investors [2][3] Fund II - Fund II is a lower middle market buyout fund with a target size of $200 million, following the close of Fund I [4] - A preliminary closing for Fund II was held to facilitate the Western Pavement Services transaction, with participation from the Larry H. & Gail Miller Family Foundation and other legacy LPs [4][5] - A traditional first closing for Fund II is anticipated in Q4 2025 [4] Company Overview - Banner Capital Management focuses on providing partnership capital to family-owned and founder-led businesses across the Western United States, investing in sectors such as industrial, services, consumer, and healthcare [6] - As of the closing of Fund I, Banner has $653 million in assets under management [6][7]

Financial Performance - Net income for the three months ended March 31, 2025, was $45.14 million, an increase of 20.2% compared to $37.56 million for the same period in 2024[14]. - Earnings per common share for Q1 2025 were $1.31, compared to $1.09 for the same period in 2024, representing an increase of 20.2%[14]. - Net income for the three months ended March 31, 2025, was $45,135,000, an increase of 20% compared to $37,559,000 for the same period in 2024[16]. - Other comprehensive income for the same period was $29,348,000, compared to a loss of $10,347,000 in 2024[16]. - Total comprehensive income for Q1 2025 reached $74,483,000, significantly higher than $27,212,000 in Q1 2024[16]. Asset and Deposit Changes - Total assets decreased slightly to $16.17 billion as of March 31, 2025, from $16.20 billion at the end of 2024, representing a decline of 0.18%[12]. - Total deposits increased to $13.59 billion as of March 31, 2025, up from $13.51 billion at the end of 2024, marking a growth of 0.6%[12]. - The company reported an increase in deposits, netting $78,867,000, compared to $129,274,000 in the prior year[23]. - Total deposits increased to $13.593 billion as of March 31, 2025, compared to $13.514 billion at December 31, 2024, reflecting a growth of 0.58%[75]. Interest Income and Expenses - Total interest income rose to $193.87 million for Q1 2025, up 4.3% from $184.69 million in Q1 2024[14]. - Net interest income after provision for credit losses increased to $137.94 million, compared to $132.44 million in the prior year, reflecting a growth of 4.2%[14]. - Net interest income increased to $141.08 million for the three months ended March 31, 2025, up from $132.96 million in the same period of 2024, reflecting a growth of 6.4%[14]. - Total non-interest expense increased to $101.26 million in Q1 2025, compared to $97.64 million in Q1 2024, reflecting a rise of 3.4%[14]. Credit Loss Provisions - The provision for credit losses was $3.14 million for Q1 2025, significantly higher than $0.52 million in Q1 2024, indicating increased caution in lending practices[14]. - The allowance for credit losses on loans was $157.32 million as of March 31, 2025, compared to $155.52 million at the end of 2024[12]. - The provision for credit losses increased to $3,139,000 in Q1 2025, a significant increase from $520,000 in Q1 2024[21]. - The allowance for credit losses increased to $157,323 as of March 31, 2025, from $155,521 at the beginning of the period[70]. Loan Portfolio and Performance - Total loans receivable reached $11.439 billion as of March 31, 2025, an increase from $11.355 billion as of December 31, 2024[38]. - The net loans, after accounting for unearned loan fees and discounts, totaled $11.281 billion as of March 31, 2025[38]. - The company modified loans totaling $5.090 million for borrowers experiencing financial difficulty during the three months ended March 31, 2025[41]. - The commercial business loans that were 90 days or more past due totaled $1.183 million as of March 31, 2025[43]. Securities and Fair Value - As of March 31, 2025, the total amortized cost of available-for-sale securities was $2,426,395 thousand, with a fair value of $2,108,945 thousand, reflecting a gross unrealized loss of $319,418 thousand[32]. - The gross unrealized losses for available-for-sale securities were $319,418 thousand, with 199 securities in an unrealized loss position as of March 31, 2025, compared to 201 at December 31, 2024[33]. - The fair value of loans receivable, net, was estimated at $11.04 billion as of March 31, 2025, down from $11.20 billion at December 31, 2024[76]. - The fair value of mortgage servicing rights at March 31, 2025, was $36.03 million, compared to $37.93 million at December 31, 2024[76]. Tax and Regulatory Matters - The Company had a net deferred tax asset of $139.4 million as of March 31, 2025, and recognized $2.0 million of unrecognized tax benefits related to uncertain tax positions[96]. - Tax credits and other tax benefits recognized amounted to $4.245 million for Q1 2025, up from $2.994 million in Q1 2024, representing a growth of approximately 42%[99]. - The Company recorded an income tax expense of $10.7 million for Q1 2025, with an effective tax rate of 19.1%, slightly higher than the 19.0% rate in Q1 2024[97]. Miscellaneous - The company reported a net loss on the sale of securities of $0 for Q1 2025, a significant improvement compared to a loss of $4.90 million in Q1 2024[14]. - The company does not currently provide profits interest awards, making the new FASB guidance on stock compensation not applicable to its consolidated financial statements[30]. - The total shareholders' equity as of March 31, 2025, was $1,833,453,000, an increase from $1,664,508,000 as of March 31, 2024[19].

Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $45.1 million or $1.30 per diluted share for Q1 2025, compared to $1.09 per share for Q1 2024 and $1.34 per share for Q4 2024 [9] - Core earnings for Q1 2025 were $59 million, up from $53 million in Q1 2024, with revenue from core operations increasing to $160 million from $150 million year-over-year [11] - Return on average assets was 1.15% for Q1 2025, reflecting continued execution on the super community bank strategy [12] Business Line Data and Key Metrics Changes - Total loans increased by $84 million in Q1 2025, with a 5% year-over-year growth, while core deposits increased by 3% [13][21] - Delinquent loans rose to 0.63% of total loans, up from 0.49% at year-end and 0.36% in March 2024, indicating a manageable increase despite the higher interest rate environment [16] - Nonperforming assets increased to 0.26% of total assets, consisting of $39 million in nonperforming loans [19] Market Data and Key Metrics Changes - The agricultural sector remains a concern due to tariff implications, with the ag portfolio representing 3% of total loans [51][26] - The construction portfolio, including residential, commercial, and multifamily construction, remains acceptable at 15% of total loans [24] Company Strategy and Development Direction - The company aims to maintain a moderate risk profile while focusing on core deposit growth and client relationships [12][13] - Banner has been recognized as one of America's 100 best banks and continues to receive accolades for its business model and value proposition [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment, anticipating a slowdown due to tariffs and market volatility, but remains optimistic about capturing market share [118][119] - The company plans to continue robust portfolio reviews and maintain close contact with borrowers to understand long-term implications of economic changes [27] Other Important Information - The company announced a core dividend of 48 cents per common share, reflecting strong capital ratios and tangible common equity growth of 13% year-over-year [13] - The company has a strong balance sheet and capital base, exceeding regulatory requirements [32] Q&A Session Summary Question: Margin expectations and components - Management noted that funding costs were flat throughout the quarter, with expectations for NIM expansion in Q2 if the Fed cuts rates [44] Question: Agricultural sector concerns - Management indicated ongoing caution regarding the agricultural sector due to tariff implications, expecting continued strain in the coming months [49] Question: Competitive dynamics and client demand - Management reported that pipelines continue to grow despite uncertainty, with clients eager to proceed once clarity is achieved [61] Question: Capital plans and stock buyback - Management emphasized maintaining the core dividend as a priority, with potential for stock buybacks under consideration [85] Question: Economic outlook and defense spending - Management expressed a pessimistic view on economic growth but noted opportunities for market share due to disruptions in the banking sector [118] Question: Changes in oversight on retail CRE book - Management confirmed no changes in oversight but maintains a thorough quarterly review process [136]

Financial Performance - Net income was $45.1 million, compared to $46.4 million for the prior quarter[6] - HFI Loan growth of $570 million year-over-year, representing a 5% increase[6] - Net interest margin (tax equivalent) increased by 10 basis points to 3.92%[6] - Return on average assets was 1.15%, and return on average equity was 10.17%, compared to 1.15% and 10.35% respectively, for the prior quarter[6] Balance Sheet and Loan Portfolio - Total assets of Banner Corporation are $16.2 billion, with deposits of $13.6 billion and loans of $11.5 billion[8] - Total loan originations (excluding HFS) were $536 million[6] - Allowance for credit losses – loans was 1.38% of total loans, with a $3.1 million provision for credit losses[6] - Non-performing assets remained low at 0.26% of total assets, up 2 basis points from last quarter[6] Revenue and Efficiency - Core revenue was $160 million for the quarter and $624 million for the last 12 months[23] - Noninterest income was $18.8 million for the quarter and $74.4 million for the last 12 months[23] - Efficiency ratio (GAAP) increased 126 basis points to 63.21%; adjusted, non-GAAP efficiency ratio increased 144 basis points to 62.18%[6] Strategic Focus - The company aims to build value for stakeholders by focusing on core banking competency, sustainable growth, and scalable acquisitions[7] - The company emphasizes growing revenue by taking advantage of its geography and value proposition[9]

Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $45.1 million or $1.3 per diluted share for Q1 2025, compared to $1.09 per share for Q1 2024 and $1.34 per share for Q4 2024 [8][20] - Core earnings for Q1 2025 were $59 million, up from $53 million in Q1 2024, with revenue from core operations increasing to $160 million from $150 million year-over-year [9][10] - The return on average assets was 1.15% for Q1 2025, reflecting strong core deposit base and expense control [9] Business Line Data and Key Metrics Changes - Total loans increased by $84 million in the quarter, with a year-over-year growth of 5%, driven primarily by construction and development loans [16][22] - Core deposits represented 89% of total deposits, with a 3% increase year-over-year [10][22] - Delinquent loans increased to 0.63% of total loans, up from 0.36% a year ago, indicating a higher interest rate environment's impact [13] Market Data and Key Metrics Changes - The agricultural loan portfolio remains a concern due to tariff implications, with agriculture representing 3% of the loan book [19][37] - The consumer mortgage portfolio saw a modest increase of $9 million, while home equity lines of credit declined by $4 million [18] - The commercial and small business loan totals declined by $16 million quarter-over-quarter, primarily due to paydowns on larger commercial lines of credit [16] Company Strategy and Development Direction - The company continues to focus on a super community bank strategy, emphasizing client relationships and core funding [10] - Banner Corporation aims to maintain a moderate risk profile while navigating current market volatility [8] - The company has received multiple accolades, including being named one of America's Best Banks and one of the most trustworthy companies [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment, anticipating a slowdown due to tariffs and other uncertainties [19][91] - The company plans to continue robust portfolio reviews and maintain close contact with borrowers to understand long-term implications [19] - Management remains optimistic about market share opportunities despite economic challenges [91] Other Important Information - The company announced a core dividend of $0.48 per common share, reflecting a 13% increase in tangible common equity per share year-over-year [10] - The reserve for credit losses provides coverage of 1.38% of total loans, indicating a strong capital position [15] Q&A Session Summary Question: Margin expectations and components - Management indicated that funding costs were flat throughout the quarter, with expectations for net interest margin expansion if the Fed maintains rates [32] Question: Agricultural sector concerns - Management acknowledged ongoing caution regarding the agricultural sector due to tariff implications and rising input costs [34][35] Question: Pipeline and client demand - Management noted that pipelines continue to grow despite uncertainty, with clients eager to proceed once clarity is achieved [48] Question: Competitive dynamics and growth opportunities - Management highlighted that growth in California is driven by new talent and successful client acquisition [107] Question: Capital plans and stock buyback - Management confirmed a focus on maintaining the core dividend and is considering options for capital deployment, including potential stock buybacks [66][68]

Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $45.1 million or $1.30 per diluted share for Q1 2025, compared to $1.09 per share for Q1 2024 and $1.34 per share for Q4 2024 [9] - Core earnings for Q1 2025 were $59 million, up from $53 million in Q1 2024, with revenue from core operations increasing to $160 million from $150 million year-over-year [11] - Return on average assets was 1.15% for Q1 2025, reflecting continued execution on the company's super community bank strategy [12] Business Line Data and Key Metrics Changes - Total loans increased by $84 million in Q1 2025, with a 5% year-over-year growth, while core deposits increased by 3% [13][21] - Delinquent loans rose to 0.63% of total loans, up from 0.49% at year-end and 0.36% in March 2024, indicating a higher interest rate environment's impact [16] - Nonperforming assets increased to 0.26% of total assets, consisting of $39 million in nonperforming loans [19] Market Data and Key Metrics Changes - The agricultural sector remains a concern due to tariff implications, with the ag portfolio representing 3% of total loans [51][26] - The construction portfolio, including residential, commercial, and multifamily construction, remains acceptable at 15% of total loans [24] Company Strategy and Development Direction - The company aims to maintain a moderate risk profile while focusing on organic growth and client relationships [12][13] - Banner continues to receive recognition for its business model, being named one of America's 100 best banks and one of the best regional banks [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment, anticipating a slowdown due to tariffs and market volatility [118] - The company plans to maintain robust portfolio reviews and close contact with borrowers to understand long-term implications [27] Other Important Information - The company announced a core dividend of 48 cents per common share, reflecting a 13% increase in tangible common equity per share year-over-year [13] - The company maintains a strong balance sheet with capital ratios exceeding regulatory requirements [32] Q&A Session Summary Question: Margin expectations and components - Management indicated that funding costs were flat, with expectations for net interest margin expansion in Q2 if the Fed maintains rates [44] Question: Agricultural sector concerns - Management acknowledged ongoing caution regarding the agricultural sector due to tariff implications, expecting continued strain [49] Question: Competitive dynamics and client demand - Management noted that pipelines continue to grow despite uncertainty, with clients eager to proceed once clarity is achieved [61] Question: Capital plans and stock buyback - Management emphasized maintaining the core dividend as a priority, with potential for stock buybacks under consideration [85] Question: Economic outlook and defense spending - Management expressed a pessimistic view on economic growth but noted opportunities to gain market share due to disruptions in the banking sector [118] Question: Changes in oversight on retail CRE book - Management confirmed no changes in oversight but emphasized ongoing thorough portfolio reviews [136]

Core Insights - Banner (BANR) reported revenue of $160.19 million for Q1 2025, a year-over-year increase of 10.8% and a surprise of +2.56% over the Zacks Consensus Estimate of $156.19 million [1] - Earnings per share (EPS) for the same period was $1.29, compared to $1.22 a year ago, with an EPS surprise of +4.88% over the consensus estimate of $1.23 [1] Financial Performance Metrics - Efficiency Ratio was reported at 63.2%, better than the three-analyst average estimate of 63.9% [4] - Net charge-offs to average loans receivable was 0%, outperforming the three-analyst average estimate of 0.1% [4] - Net interest margin (tax equivalent) stood at 3.9%, slightly above the 3.8% average estimate from three analysts [4] - Total non-performing loans were $38.96 million, lower than the two-analyst average estimate of $41.82 million [4] - Total non-performing assets were $42.73 million, compared to the $45.15 million average estimate based on two analysts [4] - Average balance of total interest-earning assets was $14.94 billion, slightly below the $15.09 billion estimated by two analysts [4] - Net interest income was $141.08 million, exceeding the three-analyst average estimate of $138.53 million [4] - Total non-interest income reached $19.11 million, surpassing the three-analyst average estimate of $17.66 million [4] - Net interest income/rate spread (tax equivalent) was $144.36 million, compared to the two-analyst average estimate of $141.89 million [4] - Mortgage banking operations generated $3.10 million, exceeding the $2.77 million estimated by two analysts [4] Stock Performance - Shares of Banner have returned -7.8% over the past month, compared to the Zacks S&P 500 composite's -4.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1: Earnings Performance - Banner reported quarterly earnings of $1.29 per share, exceeding the Zacks Consensus Estimate of $1.23 per share, and up from $1.22 per share a year ago, representing an earnings surprise of 4.88% [1] - The company posted revenues of $160.19 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.56%, compared to year-ago revenues of $144.55 million [2] - Over the last four quarters, Banner has consistently surpassed consensus EPS estimates and revenue estimates [2] Group 2: Stock Performance and Outlook - Banner shares have declined approximately 10.4% since the beginning of the year, while the S&P 500 has decreased by 8.3% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.25 on revenues of $159.9 million, and for the current fiscal year, it is $5.23 on revenues of $645.54 million [7] Group 3: Industry Context - The Financial - Savings and Loan industry, to which Banner belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Financial Performance - Banner Corporation reported net income of $45.1 million, or $1.30 per diluted share, for Q1 2025, compared to $46.4 million, or $1.34 per diluted share, in the previous quarter and $37.6 million, or $1.09 per diluted share, in Q1 2024[2]. - Net interest income for Q1 2025 was $141.1 million, an increase from $140.5 million in the previous quarter and $133.0 million in Q1 2024, reflecting higher yields on interest-earning assets and lower funding costs[7]. - Non-interest income was $19.1 million in Q1 2025, down from $20.0 million in the previous quarter but up from $11.6 million in Q1 2024[12]. - Total revenue for Q1 2025 was $160,191,000, compared to $160,571,000 in Q4 2024 and $144,550,000 in Q1 2024[39]. - Net income for Q1 2025 was $45,135,000, compared to $46,391,000 in Q4 2024 and $37,559,000 in Q1 2024[39]. - Return on average assets was 1.15% for Q1 2025, consistent with the previous quarter and up from 0.97% in Q1 2024[11]. - Return on average equity for Q1 2025 was 10.17%, down from 10.35% in Q4 2024 but up from 9.14% in Q1 2024[39]. Deposits and Loans - Total deposits increased to $13.59 billion at March 31, 2025, up 3% from $13.16 billion at March 31, 2024[11]. - Core deposits represented 89% of total deposits at March 31, 2025, indicating a strong core funding position[4]. - Total deposits increased to $13.593 billion in Q1 2025, up 1% from $13.514 billion in Q4 2024 and 3% from $13.158 billion in Q1 2024[28]. - Total loans receivable increased to $11,438,796 thousand, a 1% increase from the prior quarter and a 5% increase year-over-year[30]. - Loans held for sale decreased to $24.5 million at March 31, 2025, from $32.0 million at December 31, 2024, and increased from $9.4 million a year ago[17]. - Commercial business loans decreased by 3% from the prior quarter, totaling $1,283,754 thousand, but increased by 2% year-over-year[30]. Credit Quality - The provision for credit losses was $3.1 million in Q1 2025, compared to $3.0 million in the previous quarter and $520,000 in Q1 2024, reflecting loan growth in the construction portfolio[10]. - The allowance for credit losses on loans was $157.3 million, or 1.38% of total loans receivable, as of March 31, 2025[11]. - Non-performing loans increased to $39.0 million at March 31, 2025, from $37.0 million at December 31, 2024, and $29.5 million a year ago[22]. - Total non-performing assets rose to $42,727 thousand, with a non-performing assets to total assets ratio of 0.26%[34]. - The total delinquent loans as a percentage of total loans receivable increased to 0.63% from 0.49% in the prior quarter[30]. Capital and Ratios - Total common shareholders' equity increased to $1.83 billion, or 11.34% of total assets, at March 31, 2025, compared to $1.77 billion, or 10.95% of total assets, at December 31, 2024[20]. - Banner's estimated common equity Tier 1 capital ratio was 12.60% at March 31, 2025, indicating strong capital levels[21]. - The consolidated Tier 1 leverage capital ratio improved to 11.22% in Q1 2025 from 11.05% in Q4 2024, indicating a stronger capital position[28]. - Total capital to risk-weighted assets ratio for Banner Corporation was 15.23%, significantly above the minimum requirement for "Well Capitalized" status[36]. - Common equity tier 1 capital to risk-weighted assets ratio for Banner Corporation was 12.60%, well above the 4.50% minimum requirement[36]. Operational Highlights - The company plans to host a conference call on April 17, 2025, to discuss its first quarter results[23]. - Banner Corporation operates a commercial bank with total assets of $16.17 billion, providing a full range of financial services[24]. - Forward-looking statements indicate potential risks including economic conditions, interest rate changes, and regulatory impacts[25]. - The efficiency ratio (GAAP) improved to 63.21% in Q1 2025 from 67.55% in Q1 2024[40]. - Tangible common shareholders' equity increased to $1,457,730 thousand in Q1 2025 from $1,398,147 thousand in Q4 2024 and $1,286,426 thousand in Q1 2024[41].

Group 1 - Banner (BANR) is expected to report quarterly earnings of $1.23 per share, an increase of 0.8% year-over-year, with revenues forecasted at $156.19 million, reflecting an 8.1% increase [1] - The consensus EPS estimate has remained unchanged over the past 30 days, indicating analysts' reassessment of their projections [1][2] - The consensus estimate for the 'Efficiency Ratio' is 63.9%, down from 67.6% a year ago [4] Group 2 - Analysts expect 'Net interest margin (tax equivalent)' to be 3.8%, compared to 3.7% the previous year [4] - The estimate for 'Total non-performing loans' is projected at $41.82 million, up from $29.49 million year-over-year [4] - 'Total non-performing assets' are expected to reach $45.15 million, an increase from $29.94 million a year ago [5] Group 3 - The average prediction for 'Average Balance - Total interest-earning assets' is $15.09 billion, compared to $14.64 billion last year [5] - 'Net interest income' is projected to be $138.53 million, up from $132.96 million year-over-year [5] - 'Total non-interest income' is expected to reach $17.66 million, compared to $11.59 million in the same quarter last year [6] Group 4 - Over the past month, Banner shares have declined by 8.7%, while the Zacks S&P 500 composite has decreased by 6.1% [6] - Based on its Zacks Rank 3 (Hold), Banner is likely to perform in line with the overall market in the upcoming period [6]