BANNER CORP Q4 FY2024 earnings call

• Mark Grescovich provided an overview of Q4 and full year 2024 performance, highlighting core earnings, core deposits, and marketplace recognitions like being named one of America's 100 Best Banks, etc.
• Jill Rice discussed the loan portfolio, noting delinquent loans at 0.49%, adversely classified loans at 1.69% of total loans, nonperforming assets at 0.24% of total assets, and details on various loan categories including commercial, residential, agricultural, etc.
• Rob Butterfield talked about net interest income increasing $4.9 million due to net interest margin increasing to 3.82%, noninterest income increasing $2 million, noninterest expense increasing $3.2 million, and the company's strong liquidity and capital position with all capital ratios exceeding regulatory well-capitalized levels.

For the quarter ended December 31, 2024, Banner Corporation reported a net profit available to common shareholders of $46.4 million or $1.34 per diluted share. The full year ended December 31, 2024, saw net income available to common shareholders of $168.9 million. Pretax pre-provision earnings, excluding gains/losses on securities sales and fair value changes, for full year 2024 were $223.2 million. Fourth quarter 2024 core operations revenue was $160 million, with full year 2024 core operations revenue at $615 million. Core deposits represent 89% of total deposits. Loans increased 5% and core deposits increased 4% year-over-year.

• Targeting mid-single-digit loan growth rates for 2025.
• Expect NIM to be relatively flat in Q1 2025 as loan yields will be down a few basis points due to floating rate repricing down, partially offset by adjustable rate loans repricing up, and funding costs seeing a smaller reduction compared to deposit costs. If no rate cut, expect margin to be up a few basis points each quarter.

• Economic uncertainty impacting certain borrowers, leading to increases in adversely classified loans.
• Potential impact of interest rate environment, immigration reform, and tariffs on loan growth.
• Lower commodity prices affecting agricultural borrowers, putting strain on smaller borrowers in the ag portfolio.

Q: Jeff Rulis asked about the margin, specifically if there were any unusual recoveries and about the mortgage business and loan growth outlook.

A: Robert Butterfield responded on margin components like funding cost decline and balance sheet hedge benefit; Mark Grescovich talked about mortgage banking as a strength with opportunity in market disruption; Jill Rice stated targeting mid-single-digit loan growth for 2025 with caveats on interest rates, immigration, tariffs.

Q: Andrew Terrell inquired about expenses and margin dynamics in Q1.

A: Robert Butterfield discussed expense growth expectations and investment in a new loan and deposit origination system; explained Q1 margin dynamics with floating asset repricing and deposit cost uncertainties.

Q: David Feaster asked about client pulse, deposit costs, and credit.

A: Jill Rice talked about client optimism tempered by wait-and-see on administration changes; Robert Butterfield mentioned positive client reception to deposit cost reductions; Jill Rice discussed credit concerns in ag due to lower commodity prices and idiosyncratic credit deterioration in other sectors.

Q: Andrew Liesch asked about M&A conversations.

A: Mark Grescovich characterized conversations as positive but competitive, emphasizing need for scale and technology investment for reinvestment in the franchise.

Q: Kelly Motta asked about market scale and loan growth outlook.

A: Mark Grescovich talked about opportunities in existing markets and hiring fit Banner culture; Jill Rice explained mid-single-digit loan growth target considering positives and negatives like interest rates, immigration, tariffs