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]

Core Viewpoint - Banner (BANR) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [3][5]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Recent Performance of Banner - For the fiscal year ending December 2025, Banner is expected to earn $5.23 per share, reflecting a 4.4% increase from the previous year [7]. - Over the past three months, the Zacks Consensus Estimate for Banner has risen by 7.1%, indicating a positive trend in earnings estimates [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, highlighting their superior earnings estimate revision characteristics [8][9].

Core Viewpoint - The Zacks Savings and Loan industry is facing challenges due to weak asset quality and subdued economic growth, impacting net interest income (NII) improvement. However, digitization efforts by companies like Banner Corp., Berkshire Hills Bancorp, and Heritage Financial Corp. are expected to provide some growth opportunities [1][2]. Industry Overview - The Zacks Savings and Loan industry consists of specialized U.S. banks focused on residential mortgage finance, offering various loans including residential, commercial, and vehicle loans [3]. - These institutions fund mortgages with savings insured by the FDIC and have historically been required to invest a significant portion of their assets in mortgages, a restriction lifted in 2019 [4]. Current Trends - **Worsening Asset Quality**: Economic uncertainty and inflation are affecting consumers' loan repayment abilities, leading to increased reserves and deteriorating asset quality metrics [5]. - **Fed Rate Cuts & Loan Demand**: The Federal Reserve's interest rate cuts in 2024 have not significantly improved loan demand, with expectations of modest lending growth in 2025 [6][7]. - **Digital Transformation**: Companies are transitioning to technology-driven operations to enhance competitiveness and profitability, despite initial cost increases [8][9]. Industry Performance - The Zacks Savings and Loan industry has outperformed the Zacks Finance Sector and the S&P 500, with a collective gain of 20% over the past year compared to 10.1% for the S&P 500 [14]. - The industry's current trailing 12-month price-to-tangible book ratio (P/TBV) is 1.78X, below the five-year median of 1.95X, indicating a discount compared to the broader market [16][17]. Company Highlights - **Banner Corp**: A $16.2 billion bank holding company with a diversified loan portfolio and a conservative $3.43 billion investment portfolio. Non-performing assets were $39.6 million (0.24% of total assets) as of Dec 31, 2024, with earnings estimates indicating growth of 4.4% and 8.5% for 2025 and 2026, respectively [18][21][22]. - **Berkshire Hills Bancorp**: A community bank with a market capitalization of $1.2 billion, showing organic growth with a revenue CAGR of 2.7% and loan CAGR of 3.8% from 2020 to 2024. Non-performing assets were $26.7 million in 2024, with earnings estimates indicating increases of 13.5% and 50.1% for 2025 and 2026, respectively [23][24]. - **Heritage Financial**: A full-service commercial bank with a market capitalization of $804.6 million, showing a NII CAGR of 45.2% from 2019 to 2024. Non-performing assets were $5.2 million in 2024, with earnings estimates indicating growth of 9.7% and 12.5% for 2025 and 2026, respectively [25][26][27].

Financial Performance - Revenues for the year ended December 31, 2024, were $608.6 million, a decrease of 1.3% from $620.4 million in the prior year[253]. - Net income for the year ended December 31, 2024, was $168.9 million, or $4.88 per diluted share, down from $183.6 million, or $5.33 per diluted share in the prior year[253]. - Adjusted revenue for 2024 was $614.776 million, a decrease of 4.5% from $643.874 million in 2023[261]. - Net income for 2024 was $168.898 million, down 8.0% from $183.624 million in 2023[261]. - The company's net income for the year was $168.9 million, with cash dividends paid or accrued amounting to $67.0 million[276]. Interest Income and Expenses - Net interest income decreased to $541.7 million for the year ended December 31, 2024, compared to $576.0 million in the prior year, reflecting a net interest margin of 3.75% versus 4.01%[253]. - Interest expense rose to $224.4 million for the year ended December 31, 2024, an increase of $98.8 million, or 79%, driven by a 72 basis-point increase in the average cost of funding liabilities[324]. - The average yield on interest-earning assets increased by 39 basis points to 5.26%, with interest income for the year ended December 31, 2024, reaching $766.1 million, up from $701.6 million in the prior year[321]. - The net interest margin on a tax-equivalent basis was 3.75% for the year ended December 31, 2024, a decrease of 26 basis points from the prior year[320]. - The net change in net interest income (tax equivalent) for 2024 was a decrease of $33.253 million compared to 2023[333]. Loan and Deposit Growth - Total deposits rose to $13.51 billion at December 31, 2024, up from $13.03 billion a year ago, with core deposits representing 89% of total deposits[253]. - Total loans receivable increased by $544.2 million, or 5%, to $11.35 billion at December 31, 2024, compared to $10.81 billion at December 31, 2023[272]. - Total deposits increased by $484.9 million, or 4%, reaching $13.51 billion at December 31, 2024, compared to $13.03 billion at December 31, 2023[301]. - Total loans increased to $11.123 billion in 2024, up from $10.483 billion in 2023, reflecting a growth of approximately 6.1%[329]. - Total loans increased to $11.355 billion in 2024 from $10.810 billion in 2023, indicating a growth of approximately 5%[335]. Asset Quality - Non-performing assets increased to $39.6 million, or 0.24% of total assets, at December 31, 2024, compared to $30.1 million, or 0.19% of total assets a year ago[253]. - The provision for credit losses was $7.6 million for the year ended December 31, 2024, down from $10.8 million in 2023, reflecting risk rating downgrades and growth in loan balances[316]. - Total non-performing loans increased to $36.96 million for the year ended December 31, 2024, compared to $29.60 million in 2023[311]. - The allowance for credit losses on loans was $155.5 million, or 1.37% of total loans receivable, at December 31, 2024, compared to 1.38% a year ago[253]. - The provision for credit losses decreased to $8.6 million in 2024 from $11.1 million in 2023, indicating improved credit quality[333]. Equity and Capital Ratios - Common shareholders' equity per share increased to $51.49 at December 31, 2024, from $48.12 a year ago[253]. - Total shareholders' equity increased by $121.6 million to $1.77 billion at December 31, 2024, compared to $1.65 billion at December 31, 2023[276]. - Tangible common shareholders' equity rose to $1.40 billion, or 8.84% of tangible assets, at December 31, 2024, up from $1.27 billion, or 8.33%, at December 31, 2023[276]. - Banner Corporation's tier 1 common equity to risk-weighted assets ratio is 12.44%[381]. - Both Banner Corporation and Banner Bank exceeded all current regulatory capital requirements to be classified as "well capitalized" as of December 31, 2024[379]. Non-Interest Income and Expenses - Total non-interest income increased to $66.9 million for the year ended December 31, 2024, compared to $44.4 million in 2023, mainly due to a decrease in the net loss on the sale of securities[317]. - Non-interest income for 2024 was $66.888 million, a significant increase of 51% compared to $44.409 million in 2023[339]. - Non-interest expense for the year ended December 31, 2024, increased by $9 million, or 2%, compared to 2023, totaling $391.538 million[346]. - Salary and employee benefits rose by $5.992 million, or 2%, to $250.555 million in 2024, driven by annual salary increases and higher loan production commissions[346][347]. - Miscellaneous income surged by 60% to $8.289 million in 2024, primarily due to gains from the sale of SBA loans and a non-performing loan[342]. Interest Rate Risk Management - The company actively manages interest rate risk through adjustments in the mix of interest-earning assets and funding sources[356]. - The Bank actively uses interest rate swaps to manage interest rate risk and reduce volatility in net interest income[366]. - A positive interest rate sensitivity gap indicates that during rising rates, net interest income is likely to increase, while a negative gap would adversely affect it[361]. - The company anticipates a decrease in net interest income of $8.730 million, or 1.5%, over the next 12 months if interest rates drop by 100 basis points[360]. - As of December 31, 2024, total interest-earning assets maturing or repricing within one year exceeded total interest-bearing liabilities by $2.17 billion, representing a one-year cumulative gap to total assets ratio of 13.37%[363].

Core Viewpoint - Banner (BANR) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Rising earnings estimates for Banner suggest an improvement in the company's underlying business, likely leading to increased stock prices [5][8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The system maintains a balanced distribution of 'buy' and 'sell' ratings, ensuring that only the top 5% of stocks receive a 'Strong Buy' rating [9][10]. Recent Performance of Banner - Analysts have raised their earnings estimates for Banner, with the Zacks Consensus Estimate for the fiscal year ending December 2025 projected at $5.17 per share, reflecting a year-over-year increase of 3.2% [8]. - Over the past three months, the consensus estimate for Banner has increased by 6.7% [8].