Banner(US:BANR)2022-10-20 19:50Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $49.1 million, or $1.43 per diluted share for Q3 2022, compared to $1.44 per share in Q3 2021 and $1.39 per share in Q2 2022 [9] - Pretax pre-provision earnings, excluding certain expenses, were $66.9 million for Q3 2022, up from $57.8 million in Q2 2022 [10] - Core revenue from operations increased by 9% to $161.5 million compared to $148.2 million in Q2 2022 [10] - Return on average assets was 1.18% for Q3 2022 [10] Business Line Data and Key Metrics Changes - Core deposits increased by 1.5% compared to September 30, 2021, representing 95% of total deposits [11] - Loans outside of PPP loans increased by 10% year-over-year [11] - Delinquent loans as of September 30 were 0.22% of total loans, up from 0.20% a year ago [13] - Core portfolio loan growth, excluding PPP loans, was $388 million or 4.1% for the quarter, with an annualized growth rate of 16.3% [14] Market Data and Key Metrics Changes - Commercial loans, excluding PPP, grew by nearly 5% or $53 million in the quarter, with an annualized rate of 18% [14] - The agricultural loans reflected an 8% year-over-year increase, excluding PPP loans [17] - The consumer mortgage portfolio saw significant growth due to holding completed construction mortgage loans on the balance sheet [17] Company Strategy and Development Direction - The company is focused on the "Banner Forward" initiative, which aims to accelerate growth in commercial banking, deepen retail client relationships, and streamline back-office operations [7] - The company continues to emphasize its core values and commitment to clients, communities, and shareholders [8] - The company is positioned to navigate economic cycles effectively, with a strong credit culture and solid reserve for loan losses [17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding loan growth, anticipating mid to upper single-digit growth in Q4 and into 2023, barring significant economic downturns [31] - The economic environment is described as uncertain, with management prepared for potential recession impacts [17] - Management noted that credit quality metrics remain strong, with a focus on maintaining a moderate risk profile [9][13] Other Important Information - The company announced a quarterly dividend of $0.44 per share [11] - Banner Corporation received recognition for client satisfaction, ranking as the number one bank in the Northwest by JD Power [12] Q&A Session Summary Question: Expense guidance and efficiency initiatives - Management does not anticipate material additional restructuring costs from the Banner Forward initiative, expecting a low 90s core run rate going into 2023 [26][27] Question: Core deposit management - Management expects modest runoff of price-sensitive deposits but continues to acquire new clients, particularly in small business and commercial sectors [29] Question: Loan growth expectations - Management anticipates maintaining mid to upper single-digit loan growth in Q4 and into 2023, despite potential economic challenges [31] Question: Margin guidance - New loans are being added in the mid to upper fives range, with expectations for deposit betas to catch up as rates rise [33][35] Question: Provision for loan losses - Provisioning was driven by loan growth and qualitative factors related to economic sentiment [36] Question: Balance sheet growth and bond portfolio - The bond portfolio is expected to gradually amortize, with cash flows around $75 million to $80 million per quarter [39] Question: Total capital ratio and share repurchases - Management is cautious about share repurchases due to economic uncertainty, with expectations for the total capital ratio to improve over time [41] Question: Fee income outlook - Management expects a rebound in fee income in Q4, following a significant mark on the multifamily loans held for sale in Q3 [43] Question: Noninterest-bearing deposits - Seasonal increases in noninterest-bearing deposits are typical in Q3, with expectations for plateauing in Q4 [48]