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Banner (BANR) Q2 Earnings call transcript Jul 18, 2024

AInvestFriday, Jul 19, 2024 11:50 am ET
2min read

In Banner Corporation's second quarter 2024 earnings call, the company reported a net profit available to common shareholders of $39.8 million, or $1.15 per diluted share, demonstrating a resilient performance despite the challenging economic environment. The company highlighted its commitment to maintaining a moderate risk profile and strategic investments aimed at improving operational performance.

Strategic Performance and Investments

Banner Corporation reported a strong core earnings performance, with pre-tax pre-provision earnings excluding gains and losses on the sale of securities and changes in fair value of financial instruments standing at $52.4 million. The company's core return on average assets reached 1.02%, reflecting its strong organic growth strategy and continued execution on its super community bank strategy. This strategy, which focuses on growing new client relationships, maintaining core funding positions, promoting client loyalty, and demonstrating safety and soundness, has been instrumental in the company's success.

Loan Portfolio and Credit Quality

Jill Rice, the Chief Credit Officer, provided updates on the loan portfolio and credit quality, reporting negligible changes in the composition and performance of the portfolio. Delinquent loans decreased to 0.29% from 0.36% in the previous quarter, while adversely classified loans increased slightly to 1.09%. The $2.1 million increase in REO is attributed to a single undeveloped residential real estate parcel obtained via foreclosure. The net provision for credit losses for the quarter was $2.4 million, with loan losses a modest $991,000. The reserve for credit losses loans totaled $152.8 million, providing 1.37% coverage of the portfolio and 498% coverage of non-performing loans.

Operating Performance and Financial Metrics

Rob Butterfield, the Chief Financial Officer, discussed the operating performance and financial metrics, noting that total loans increased by $279 million, with growth in several categories, including multifamily construction, owner-occupied CRE, C&I, and small business. Total securities decreased by $63 million due to normal portfolio cash flows. Deposits decreased by $80 million during the quarter, primarily due to client tax payments, but core deposits remained strong at 88% of total deposits. Total borrowings increased by $329 million to support loan growth and the seasonal decline in deposit balances.

Looking Forward

Looking ahead, Banner Corporation remains optimistic about its future prospects, with plans to continue investing in technology and efficiency to support its growth strategies. The company's commitment to maintaining a strong balance sheet and capital position, coupled with its strategic focus on customer service and community engagement, positions it well for the challenges and opportunities ahead.

Investor and Analyst Questions

During the question-and-answer session, key shareholders and investors asked about deposit trends, loan growth, and margin dynamics. Banner Corporation's management provided insights into these topics, highlighting the importance of seasonality, loan repricing dynamics, and the company's strategic focus on maintaining a moderate risk profile and investing in technology to improve operational efficiency.

Conclusion

Banner Corporation's second quarter 2024 earnings call underscored the company's solid financial performance, strategic focus, and commitment to maintaining a strong balance sheet and capital position. Despite the challenges posed by the current economic environment, Banner Corporation remains optimistic about its future prospects, with a clear focus on growth, innovation, and customer service. The company's strong operational performance and strategic investments are expected to drive its continued success in the years ahead.

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