• Net Profit: $45.1 million or $1.30 per diluted share for Q1 2025.
• Core Earnings: $59 million for Q1 2025, up from $53 million in Q1 2024.
• Revenue from Core Operations: $160 million for Q1 2025, compared to $150 million in Q1 2024.
• Return on Average Assets: 1.15% for Q1 2025.
• Core Deposits: Represent 89% of total deposits.
• Loan Growth: Loans increased 5% year-over-year.
• Core Deposit Growth: Core deposits increased 3% year-over-year.
• Tangible Common Equity Per Share: Increased by 13% year-over-year.
• Dividend: Core dividend of $0.48 per common share announced.
• Delinquent Loans: 0.63% of total loans, up from 0.49% at year-end 2024.
• Adversely Classified Loans: 1.73% of total loans, up from 1.69% in the previous quarter.
• Nonperforming Assets: 0.26% of total assets.
• Loan Losses: $3.7 million for the quarter.
• Net Provision for Credit Losses: $3.1 million for the quarter.
• Loan Originations: Down 33% compared to the previous quarter.
• Loan Outstanding Growth: $84 million increase in the quarter.
• Net Interest Margin: Increased 10 basis points to 3.92%.
• Non-Interest Income: Decreased by $900,000 from the prior quarter.
• Non-Interest Expense: Increased by $1.8 million from the prior quarter.

• Warning! GuruFocus has detected 4 Warning Sign with HBAN.

Release Date: April 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Banner Corp (NASDAQ:BANR) reported a net profit of $45.1 million or $1.30 per diluted share for Q1 2025, an increase from $1.09 per share in Q1 2024.
• Core earnings for Q1 2025 were $59 million, up from $53 million in Q1 2024, demonstrating strong earnings power.
• The company maintained a strong core deposit base, representing 89% of total deposits, and achieved a 3% increase in core deposits year-over-year.
• Banner Corp (NASDAQ:BANR) was recognized by Forbes as one of America's 100 Best Banks and one of the best banks in the world, highlighting its strong market reputation.
• The company announced a core dividend of $0.48 per common share, reflecting confidence in its financial stability and shareholder returns.

Negative Points

• Delinquent loans increased to 0.63% of total loans, up from 0.49% at year-end and 0.36% in March 2024, indicating rising credit risk.
• Adversely classified loans rose modestly to 1.73% of total loans, reflecting economic pressures and higher operating costs.
• Nonperforming assets increased by $3 million, representing 0.26% of total assets, which could impact future profitability.
• Loan originations were down 33% compared to the previous quarter, particularly in the commercial and commercial real estate portfolios.
• The impact of trade tariffs and economic uncertainty poses risks to small businesses and consumers, potentially affecting future loan performance.

Q & A Highlights

Q: The margin seems better than expected. Can you discuss the components of the margin and any expectations for the future? A: Robert Butterfield, Executive Vice President, Chief Financial Officer, explained that funding costs were flat for the quarter, while yield improved. Moody's forecasts suggest rate cuts in 2025, which could lead to some net interest margin (NIM) expansion in Q2. If funding costs remain flat and loan yields continue to rise, there could be a 5 basis point increase in loan yields while the Fed is on pause.

Q: How is the agricultural sector performing, and what are the expectations given the current economic conditions? A: Jill Rice, Executive Vice President, Chief Credit Officer, noted that the agricultural sector is an area of concern due to tariff implications. While most crops are sold domestically, increased tariffs could lead to higher domestic supply and impact pricing. The agricultural sector represents 3% of the loan book, with an average loan size of $1.2 million, indicating manageable risk.

Q: Can you provide an update on loan growth expectations for 2025? A: Jill Rice stated that they are targeting mid-single-digit loan growth for 2025, with expectations for more growth in the second half of the year. Despite uncertainty, commercial pipelines are rebuilding, and the company hit its Q1 expectations, maintaining confidence in the 2025 plan.

Q: What is the outlook for the margin in 2025, and is there potential to reach a 4% margin? A: Robert Butterfield indicated that as long as the Fed is on pause or gradually decreasing rates, the margin should progress higher. While not providing a specific timeline, he noted that historically, the company has been above a 4% margin and could reach that level again under favorable market conditions.

Q: How is Banner Corp managing potential impacts from tariffs and trade wars? A: Jill Rice explained that the company is closely monitoring clients and the impact on their bottom lines. Sectors like technology, agriculture, and manufacturing could be affected. However, the company's diverse and granular loan portfolio, with strong sponsors and guarantees, helps mitigate risks.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.