Banner(US:BANR)2024-10-17 18:25Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $45.2 million or $1.30 per diluted share for Q3 2024, an increase from $1.15 per share in Q2 2024 [7] - Core earnings for Q3 2024 were $57 million, up from $52 million in the prior quarter, with revenue from core operations at approximately $154 million, an increase of $3 million compared to Q2 2024 [8] - Return on average assets was 1.13% for Q3 2024, with tangible common equity per share increasing by 24% year-over-year [9] Business Line Data and Key Metrics Changes - Total loans increased by $146 million during the quarter, with portfolio loans increasing by $81 million and held-for-sale loans increasing by $65 million [19] - Core deposits represented 89% of total deposits, with a $462 million increase in core deposits during the quarter [20] - Loan growth was muted, with a 1% increase in portfolio loan balances from the linked quarter and a 6% year-over-year growth [15] Market Data and Key Metrics Changes - Delinquent loans ended the quarter at 0.40%, up from 0.29% in the previous quarter and 0.27% year-over-year [13] - Nonperforming assets increased by $12 million, representing 0.28% of total assets, with $43 million in nonperforming loans [13] - The agricultural sector saw an increase in nonaccrual loans, attributed to a specific relationship in Northern California [17] Company Strategy and Development Direction - The company continues to focus on its super community bank strategy, emphasizing client relationships, core funding, and client loyalty [9] - Banner Corporation has been recognized as one of America's 100 Best Banks and received various accolades for its business model and value proposition [11] - The company is committed to environmental, social, and governance (ESG) initiatives, reflecting its dedication to positive community impact [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging operating environment for commercial banks but expressed confidence in the company's ability to navigate it [9] - The company anticipates continued low to mid-single digit loan growth for 2024, with potential for mid-single digit growth in 2025 [48] - Management noted that demand for credit is expected to increase post-election, as economic clarity improves [70] Other Important Information - The company reported a net provision for credit losses of $1.7 million, with a reserve for credit losses totaling $154.6 million, providing 1.38% coverage of the loan portfolio [14] - The average rate on new loan production for the quarter was 8.23%, down from 8.47% in the prior quarter [23] - The company is evaluating its capital structure, including potential actions regarding redeemable subordinated debt and share repurchase authorization [66][67] Q&A Session Summary Question: Can you provide insight into the fluctuation in compensation expense and the overall expense outlook into Q4? - Management indicated that the drop in compensation was due to unexpected items and expects normalization in expenses moving forward [28] Question: How do you think about your ability to continue to drive core deposits? - Management noted that while loan growth is expected to outpace deposit growth long-term, they have seen success in bringing core deposits back to the bank [45] Question: Is there pent-up demand for credit from your customer base? - Management confirmed that there is demand for credit and expects it to increase as economic clarity improves post-election [70] Question: What are your thoughts on the M&A environment? - Management continues to engage in dialogue with potential partners and remains focused on organic growth while being prepared for opportunistic acquisitions [57] Question: How do you view the trajectory of net interest margin moving forward? - Management anticipates some compression in net interest margin due to deposit cost lag but believes a return to a normal yield curve will support margin expansion in the long term [51]