On Thursday, Banner (NASDAQ:BANR) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Access the full call at https://events.q4inc.com/attendee/947594631
Summary
Banner reported a net profit of $54.7 million, or $1.60 per diluted share, for Q1 2026, compared to $1.30 per share in Q1 2025.
The company’s core earnings for Q1 2026 were $66.3 million, up from $58.6 million in Q1 2025, reflecting a 6% increase in revenue from core operations.
Banner’s loan portfolio showed modest year-over-year growth of 2.4%, with significant commercial real estate payoffs impacting overall balances.
The company increased its quarterly dividend by 4% to $0.52 per share, reflecting strong capital and liquidity positions.
Management highlighted continued execution of its super community bank strategy and resilience in its core deposit base, which represents 89% of total deposits.
Operational highlights included recognition as one of America’s 100 Best Banks and one of the best banks in the world by Forbes.
The outlook anticipates mid-single-digit loan growth for 2026, with some margin expansion expected in the second half of the year.
Full Transcript
Tiffany (Conference Operator)
Hello and thank you for standing by. My name is Tiffany and I will be your conference operator today. At this time I would like to welcome everyone to The Banner Corporation First Quarter 2026 Conference Call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press Star then the number one on your telephone keypad. I would now like to turn the call over to Mark Grescovich, President and Chief Executive Officer of Banner Corporation. Mark, please go ahead.
Mark Grescovich (President and Chief Executive Officer)
Thank you, Tiffany and good morning everyone. I would also like to welcome you to the first quarter 2026 earnings call for Banner Corporation. Joining me on the call today is Rob Butterfield, Banner Corporation’s Chief Financial Officer, Jill Rice, our Chief Credit Officer and Rich Arnold, our Head of Investor Relations. Rich, would you please read our forward looking Safe harbor statement?
Rich Arnold (Head of Investor Relations)
Sure. Mark. Good morning. Our presentation today discusses Banner’s business outlook and will include forward looking statements. These statements include descriptions of management’s plans, objectives or goals for future operations, products or services, forecast of financial or other performance measures and statements about Banner’s general outlook for economic and other conditions. We also may make other forward looking statements in the question and answer period following management’s discussion. These forward looking statements are subject to a number of risks and uncertainties and actual results may differ materially from those discussed today. Information on the risk factors that could cause actual results to differ are available in the earnings press release that was released yesterday and a recently filed Form 10-K for the year ended December 31, 2025. Forward looking statements are effective only as of the date they are made and Banner assumes no obligation to update information concerning its expectations.
Mark Grescovich (President and Chief Executive Officer)
Mark. Thank you, Rich. As is customary today we will cover four primary items with you. First, I will provide you with high-level comments on Banner’s first quarter 2026 performance. Second, the actions Banner continues to take to support all of our stakeholders, including our Banner team, our clients, our communities and our shareholders. Third, Jill Rice will provide comments on the current status of our loan portfolio. And finally, Rob Butterfield will provide more detail on our operating performance for the quarter as well as comments on our balance sheet. Before I get started, I wanted to thank all of my 2,000 colleagues in our company who are working extremely hard to assist our clients and our communities. Banner has lived our core values summed up as doing the right thing for the past 135 years. Our overarching goal continues to be to do the right thing for our clients, our communities, our colleagues, our company and our shareholders and to provide a consistent and reliable source of commerce and capital through all economic cycles and change events. I am pleased to report again to you that is exactly what we continue to do. I am very proud of the entire Banner team that is living our core values. Now let me turn to an overview of our performance. As announced, Banner Corporation reported a net profit available to common shareholders of $54.7 million, or $1.60 per diluted share for the quarter ended March 31, 2026. This compares to a net profit to common shareholders of $1.30 per share for the first quarter of 2025 and $1.49 per share for the fourth quarter of 2025. Our strategy to maintain a moderate risk profile and the investments we have made and continue to make in order to improve operating performance have positioned the company well for the future. Rob will discuss these items in more detail shortly. The strength of our balance sheet coupled with the strong reputation we maintain in our markets will allow us to manage through the current market uncertainty. To illustrate the core earnings power of Banner, I would direct your attention to pre tax, pre provision earnings excluding gains and losses on the sale of securities, changes in fair value of financial instruments, and building and lease exit costs. Our first quarter 2026 core earnings were $66.3 million compared to $58.6 million for the first quarter of 2025. Banner’s first quarter 2026 revenue from core operations was $169 million compared to $160 million for the first quarter of 2025, an increase of nearly 6%. We continue to benefit from a strong core deposit base that has proved to be resilient and loyal to Banner, a very good net interest margin and core expense control. Overall, this resulted in a return on average assets of 1.37% for the first quarter of 2026. Once again, our core performance reflects continued execution on our super Community bank strategy that is Growing new client relationships, maintaining our core funding position, promoting client loyalty and advocacy through our responsive service model, and demonstrating our safety and soundness through all economic cycles and change events. To that point, our core deposits continue to represent 89% of total deposits. Reflective of this performance, coupled with our strong regulatory capital ratios and the fact that we increased our tangible common equity per share by 11% from the same period last year, we announced a core dividend increase of 4% to $0.52 per common share. Finally, I’m pleased to say that we continue to receive marketplace recognition and validation of our business model and our value proposition Banner was again named one of America’s 100 Best Banks as well as one of the best banks in the world by Forbes and Newsweek, named Banner bank one of the most trustworthy companies both in America and the world again this year, and just recently again named Banner one of the best regional banks in the country. Additionally, J.D. power and Associates named Banner bank the best bank in the Northwest for retail client satisfaction. For 2025. Our company was certified by Great Place to Work S and P Global Market Intelligence ranked Banner’s financial performance among the top 50 public banks with more than $10 billion in assets. And as we’ve noted previously, Banner bank again received an outstanding CRA rating. Let me now turn the call over to Jill to discuss trends in our loan portfolio and her comments on Banner’s credit quality.
Jill Rice (Chief Credit Officer)
Jill thank you Mark and good morning everyone. As detailed in our press release, we again had a strong quarter of loan originations in line with that reported in the fourth quarter and 61% higher than that reported in the first quarter of 2025. Still, significant commercial real estate payoffs coupled with expected paydowns within the AG portfolio offset production such that portfolio loans decreased 14 million when compared to December 31, 2025. Year over year loan growth was modest at 2.4%. Production within the commercial real estate portfolio continued to be meaningful with owner occupied CRE up 3% in the quarter and 15% year over year and investor real estate up 1% in the quarter and nearly 8% year over year. Those increases, however, were almost entirely offset by the significant commercial real estate paydowns within the multifamily portfolio, down 6% in the quarter and 9% year over year as stabilized properties moved into the secondary market within the construction portfolios. The 12% increase quarter over quarter in commercial construction reflects the continued funding of previously approved projects. In addition to the multifamily payoffs noted previously. We had two large land development projects payoff which resulted in a 7.5% decrease in balances this quarter. We are continuing to see an elongation of the days on market within the for sale one to four family construction portfolio given the elevated interest rate environment and general economic uncertainty. Still, the level of completed and unsold inventory remains within historical norms and the builders continue to have strong balance sheets and profit margins to work with. In total, the One4Family Construction portfolio continues to represent a modest 5% of the loan portfolio and the total construction portfolio including land and land development continues to be acceptable at 14% of the loan book. After declining 3% last quarter, CNI line utilization moved closer to normal, increasing 2% this quarter. In total, commercial loans were up a modest 1% both in the quarter and year over year. Agricultural balances, as expected, were down 6% in the quarter as crop proceeds reduced line balances and the decline reported year over year reflects the collection and payoff of multiple classified ag balances. Shifting to credit quality Our credit metrics remain Strong. Delinquent loans increased 2 basis points and now represent 0.56% of total loans, which compares to 0.63% reported as of March 31, 2025. Adversely classified loans increased by 42 million in the quarter, representing 2% of total loans and total non performing assets at 51.7 million represent a modest 0.32% of total assets. The increase in adversely classified assets is centered in three relationships operating in manufacturing, residential construction and wholesale agricultural supplies. As of March 31, the allowance for credit losses totals 160.4 million, providing 1.37% coverage of total loans. Consistent with prior quarters, loan losses in the quarter totaled 1.5 million and were offset in part by recoveries totaling 253,000. The risk rating migration discussed previously, coupled with the net charge off resulted in a provision of 1.3 million to the Reserve for credit losses loans. This was offset by a release from the Reserve for unfunded commitments of 2.1 million for a net provision recapture of 796,000. The first quarter of 2026 continued to be impacted by economic uncertainty given persistent inflation, the higher for longer interest rate environment and increasing geopolitical issues. Through this we have maintained consistent underwriting standards which include a focus on strong sponsors, properly margined collateral, seasoned repayment sources, and in the vast majority of cases, personal guarantees. And we continue our practice of robust quarterly portfolio reviews in order to identify any emerging issues early. We remain well positioned to weather the uncertain economic environment ahead. With that, I will hand the microphone over to Rob for his comments.
Rob Butterfield (Chief Financial Officer)
Rob thank you Jill. We reported $1.60 per diluted share for the fourth quarter compared to $1.49 per diluted share for the prior quarter. The increase in earnings per share compared to the prior quarter was primarily due to the current quarter having lower expenses, a recapture of provision for credit losses. In addition, the prior quarter included a decrease in the valuation of financial instruments carried at fair value and any loss on the disposal of assets. Core pre tax pre …
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