Summary of Banner Corporation Q1 2026 Earnings Call

1Key Financial Results and Metrics

Net Profit: $54.7 million, or $1.60 per diluted share, compared to $1.30 in Q1 2025 and $1.49 in Q4 2025.

Core Earnings: $66.3 million, up from $58.6 million year-over-year.

Revenue from Core Operations: $169 million, a 6% increase from $160 million in Q1 2025.

Return on Average Assets (ROAA): 1.37%.

Core Deposits: Represented 89% of total deposits, with a 5.5% annualized increase in core deposits.

Tangible Common Equity per Share: Increased by 11% year-over-year.

Dividend: Core dividend increased by 4% to $0.52 per share.

2Strategic Updates and Business Highlights

Continued focus on a moderate risk profile and investments to improve operating performance.

Recognition as one of America's 100 Best Banks and a top regional bank by various publications.

Strong performance in client satisfaction, with awards from J.D. Power for retail client satisfaction in the Northwest.

Ongoing commitment to community and stakeholder engagement.

3Forward Guidance and Outlook

Loan Growth: Expected mid-single-digit growth for 2026, despite headwinds from commercial real estate payoffs.

Net Interest Margin (NIM): Anticipated to remain flat in Q2 2026, with potential expansion in the second half of the year as funding costs decrease and loan yields increase.

Capital Management: Consideration of continued share repurchases and M&A opportunities, dependent on market conditions.

4Bad News, Challenges, or Points of Concern

Loan Portfolio: Portfolio loans decreased by $14 million compared to Q4 2025, with a year-over-year growth of only 2.4%. Significant payoffs in commercial real estate and agricultural loans were noted.

Credit Quality: Adversely classified loans increased by $42 million, representing 2% of total loans, with total nonperforming assets at $51.7 million (0.32% of total assets). Concerns about the impact of economic uncertainty on credit quality were expressed.

Economic Environment: Ongoing inflation, higher interest rates, and geopolitical issues are creating uncertainty that may affect future performance.

5Notable Q&A Insights

Margin Outlook: Management expects NIM to remain flat in Q2 due to seasonal deposit outflows but anticipates expansion in Q3 as funding costs decrease.

Loan Demand: While demand remains strong, economic uncertainty is causing some hesitation in closing deals. Payoffs are primarily due to delayed expectations rather than competitive losses.

Capital Priorities: The company is balancing share repurchases with dividend increases and remains selective regarding M&A opportunities, focusing on organic growth.

Technology Investments: Banner is exploring AI and fintech solutions, with a focus on enhancing data integrity and improving client service. Overall, Banner Corporation reported a solid start to 2026, with strong earnings and a focus on strategic growth, despite facing challenges in loan growth and credit quality amidst a complex economic landscape.