Q2 2025 Banner Corp Earnings Call
Hello everyone and welcome to the banner Corporation. Second quarter 2025 conference call and webcast. My name is Nadia and I I'll be coordinating the call today.
If you would like to ask a question at the end of the presentation, please press star followed by 1 on your telephone keypad,
I will now hand over to your host. Mark Greco, president and CEO to begin Mark. Please go ahead.
Thank you, nausea and good morning everyone. I would also like to welcome you to the second quarter earnings call for Banner Corporation.
Rob Butterfield: Joining me on the call today is Rob Butterfield Banner corporation's Chief Financial Officer.
Jill rice. Our chief credit officer.
Speaker Change: And Rich Arnold our head of investor relations.
Speaker Change: Rich. Would you please read our forward-looking Safe Harbor statement?
Sure, Mark. Good morning our presentation today, discusses banners business Outlook and will include forward looking statements. These statements include descriptions of Management's, plans, objectives or goals for future operations, products are Services forecast of financial or other performance measures and statements about banners. General outlook for economic and other conditions.
Speaker Change: We also going to make other forward-looking statements and the question and answer period following Management's discussion.
Speaker Change: Is forward-looking statements are subject to a number of risks and, and uncertainties and actual results May differ materially from those discussed today, information on risk factors that could cause actual results to differ are available from the earnings, press release. That was released yesterday and a recently filed form 10 Q for the quarter ended, March, 31st 2025,
For looking statements are effective only as of the date, they are made and Banners are sent to no obligation to update information concerning its expectations, mark.
Speaker Change: Thank you, rich.
Speaker Change: As is customary today, we will cover 4 primary items with you.
First, I will provide you high level comments on Banner second quarter performance.
Speaker Change: 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 Joe Rice will provide comments on the current status of our loan portfolio.
Speaker Change: Sheet.
Speaker Change: Before I get started, I want to thank all of my 2,000 colleagues in our company who are working, extremely hard to assist our clients and communities.
Banner has lived our core values summed up as doing the right thing for the past 135 years.
Speaker Change: 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.
Speaker Change: I am pleased to report again to you. That is exactly what we continue to do.
Speaker Change: I am very proud of the entire Banner team that are living our core values.
Speaker Change: Now, let me turn to an overview of our performance.
Speaker Change: As announced Banner Corporation reported a net profit available to Common shareholders of 45.5 million, or 1 dollar and 31 cents per diluted share for the quarter ended. June 30th 2025.
Speaker Change: This compares to a net profit to Common shareholders of 1.15, cents per share for the second quarter of 2024 and 1.30 cents per share for the first quarter of 2025.
Speaker Change: Our strategy in maintaining 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.
Speaker Change: The strength of our balance sheet coupled with a strong reputation. We maintain in our markets will allow us to manage through the current market uncertainty.
Speaker Change: Rabble discussed in a number of these items in more detail shortly.
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.
Speaker Change: Building and Lease exit costs and changes in fair, value of financial instruments.
Our second quarter of 2025 core earnings were 62 million compared to 52 million for the second quarter of 2024.
Speaker Change: Banner's second quarter of 2025 revenue, from core operations was 163 million compared to a 150 million dollars for the second quarter of 2024.
Speaker Change: We continue to benefit from a strong core deposit base that has proved to be resilient and loyal to manner.
Speaker Change: A very good, net, interest margin and core expense control.
Speaker Change: Overall, this resulted in a return on average assets of 1.13% for the second quarter of 2025.
Once again, our core performance reflects continued execution on our super Community Bank strategy.
Speaker Change: That is growing new client relationships. Maintaining our core funding position.
Promoting client loyalty and advocacy through our responsive service model.
Speaker Change: And demonstrating our safety and soundness through all economic cycles and change events.
Speaker Change: To that point, our core deposits continue to represent 89% of total deposits.
Further, we continued our solid organic growth with loans, increasing 5% and core deposits, increasing 4% over the same period last year.
Speaker Change: Reflective of this performance coupled, with our strong regulatory Capital ratios, and the fact that we increased, our tangible common Equity per share by 13% from the same period last year.
Speaker Change: We announced a core dividend of 48 cents per common share.
Speaker Change: 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 1 of America's 100, best banks and 1 of the best banks in the world by Forbes.
Speaker Change: Newsweek named Banner 1 of the most trustworthy companies in America and the world again this year and just recently named Banner 1 of the best Regional banks in the country.
Speaker Change: JD Power and Associates named Banner Bank. The best bank in the Northwest for retail client satisfaction.
Our company was recently certified by great places to work and S&P Global Market intelligence, ranked banners, um, financial performance among the top 50 Public banks with more than 10 billion dollars in assets.
Additionally, the crow Bond rating agency affirmed, all of banners investment grade debt and deposit ratings.
Speaker Change: Noted previously Banner Bank received an outstanding CRA rating.
Speaker Change: 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.
Jill Rice: Thank you, Mark and good morning everyone. As reflected in our earnings release loan originations were strong, we reported solid loan growth across multiple product lines, and Banners, credit metrics, remained stable.
Jill Rice: Loan originations increased 80% when compared to the links quarter with commercial real estate up. 484% cni originations up 96% and construction and Land Development, increasing 43% respectively. All while, all while commercial and Commercial Real Estate pipelines continue to build
This level of activity, reflects a certain amount of business confidence in spite of the continuing, higher rate environment, and yet to be finalized trade, negotiations.
Loan outstanding, grew by 252 million in the quarter or 9%, on an annualized basis and are up 5% year-over-year in line with our year to date expectations.
The primary drivers of the growth were owner occupied commercial real estate up 104 million.
Jill Rice: cni, loans up, 65 million, and the construction and development book, with 1 to 4 families,
Jill Rice: The growth in owner occupied commercial real estate is a mix of new Middle Market. Clients expansion of existing relationships and continued solid performance in new small business regeneration.
Jill Rice: The cni story is similar with growth coming from the expansion of existing relationships increased line utilization and meaningful. Small business. Originations
Jill Rice: The residential construction portfolio at 5% of total loans continued to be Diversified across markets and product mix and the level of complete and unsold. Inventory remains below, historical Norms as Builders have become more cautious with replacement starts in this extended High rate environment.
Jill Rice: The increase in land and Land Development, reflects the Builder's need to replenish finished. Lot inventory with Land Development, financing reserved for the strongest vertically. Integrated clients within the portfolio.
Jill Rice: Aggregating. All business lines in
Jill Rice: In the construction portfolio. The total remains balanced at 15% of total loans.
Jill Rice: Agricultural loans, increased 3% in the quarter as both the size of operating lines and line utilization increased to cover higher operating costs and normal seasonal activities.
Jill Rice: And the growth in consumer, 1 to 4 families, secured loans, reflects a, strong home, equity promotion, that occurred in the second quarter.
Jill Rice: Circling back to Banner's credit metrics delinquent, loans declined, to 0.41% of total loans, as compared to 0.63% last quarter, and 0.29% as of June 30th 2024.
Adversely classified. Loans also declined in the quarter over quarter down, 8.3 million, and represent 1.62% of total loans and 11 basis, point decrease, when compared to March 31st.
Jill Rice: In spite of the 7 million increase in the quarter non-performing assets, remain modest at 0.30% of total assets.
Jill Rice: Non-performing loans filled a 43 million. The majority of which are consumer related, primarily Residential Mortgage Loans which involve prolonged resolution timelines. Given consumer, protection regulations,
Jill Rice: Ario, balances total 6.8 million at 3.3 million in the quarter as we completed the foreclosure on an industrial property and 2, small single family properties during the quarter.
Jill Rice: Loan losses in the quarter totaled. 1.7 million and were offset in part by recoveries totaling 600,000.
Jill Rice: The net provision for credit losses. For the quarter was 4.8 million, including a 4.2 million provision for loan losses and a 588,000 provision related to unfunded loan. Commitments.
Jill Rice: The provision was largely driven by the strong loan. Growth with the reserved for credit losses, providing coverage of 1.37% of total loans which compares to 1.38% as of the late quarter and 1.37% as of June 30th 2024.
Last quarter, I noted that the level of economic uncertainty coupled with the Myriad of policy changes that were being implemented created a potential headwind that could negatively impact our clients and communities.
Jill Rice: With the majority of the burden borne by the small business sector. And further stressing the consumer,
Jill Rice: Still in these uncertain times and are super Community delivery model coupled with a consistent approach to underwriting. Credit has enabled us to expand existing and grow new relationships. While maintaining our moderate risk profile, our strong balance sheet robust, Capital base, and solid reserved for loan losses, continue to service. Well with that, I will hand the microphone over to Rob for his comments. Rob, great. Thank you. Jill. We report 1.31 cents per diluted share for the second quarter compared to 1.3 per dilute share for the prior quarter.
Rob Butterfield: The 1% increase in earnings per share was primarily due to an increase in net interest income. Partially offset by the current quarter including costs associated with consolidating back office space as well as a higher provision for credit losses. Due to growth in the loan balances.
We experienced strong positive operating leverage during the quarter compared to both the prior quarter and the quarter ended June 30th 2024. As core pre tax pre-provision income, increased 6.6% for 3.9 million, compared to the prior quarter and increased 19%, or 10 million compared to the year ago quarter.
Total loans increased 265 million during the quarter with portfolio loans increasing 252 million or nearly 9% on an annualized basis.
Rob Butterfield: And held for sale loans, increased 13 million, the loans to deposit ratio into the quarter at 87%.
Rob Butterfield: Total Security is decreased. 55 million primarily due to normal portfolio, cash flows.
Deposits decreased by 66 million during the quarter due to court, deposits. Decreasing 40 million as a result of normal seasonal activity.
Rob Butterfield: Time deposits decreased 26 million due to a 25 million. Decrease in broker deposits core deposits into the quarter at 89% of total, deposits. Same as the prior quarter.
Total borrowing to increase 309 million during the quarter. As fhlb advances were used to temporarily fund loan growth.
Banners liquidity and capital profile. Continue to remain strong with robust core funding based a lower Reliance on wholesale borrowing and significant off-balance sheet, borrowing capacity.
Rob Butterfield: as a reflection of our robust capital and strong liquidity positions, Banner called, and repaid, 100 million of subordinated, notes, at the end of the quarter,
Rob Butterfield: Net interest income increased 3.3 million from the prior quarter due to average interest earning assets, increasing 188 million and 1 more interest earning day in the current quarter.
Rob Butterfield: The increase in average earning assets was due to average loan. Balances increasing 223 million
Rob Butterfield: Partially offset by total average interest bearing cash and investment balances. Decreasing 36 million
Rob Butterfield: The earning NASA yield continues to benefit from a remixing out of security and into loans.
Rob Butterfield: Tax code on net, interest margin was 3.92%. Same as the last quarter.
Earning asset yields increase by basis points, due to a 5 basis. Point increase in loan yields as a just for loans. Continue to reprice higher and Lou loans are being originated at rate higher than the average yield on the loan portfolio.
Rob Butterfield: The average rate on new Loan Production for the quarter was 7.27% compared to 8.01% for the prior quarter. The reduction was due to a higher percentage of production coming from owner occupied CRA and cni in the current quarter.
Rob Butterfield: Funding cost increased life basis points as a result of using fhlb advances to temporarily fund loan growth and seasonal tax deposit declines.
Rob Butterfield: Deposit costs for 1.47% for the current quarter, which was consistent with the prior quarter, non-interest bearing, deposits into the quarter at 33% of total deposits.
Rob Butterfield: Total non-interest income decreased 1.4 million from the prior quarter, primarily due to a loss of 99,000 on the disposal of assets related to back off to space consolidation and a 227,000 net difference. In the fair value, adjustments on financial instruments carried at fair value.
Rob Butterfield: Total non-interest expense was similar to the prior quarter with increases in salary and benefits Information, Technology, marketing and Aro expenses, which were offset by higher capitalized, loan origination expense.
Rob Butterfield: The current quarter included, 834,000 of lease, termination and costs associated with back office, space consolidation.
Mark: This concludes my prepared comments. Now I'll turn it back to mark.
Mark: Thank you, Jill and Rob for your comments.
Mark: That concludes our prepared, remarks and nausea will now open the call, and we welcome your questions.
Speaker Change: Great. Thank you. If you would like to ask a question please press star. Followed by 1 on your telephone keypad. If you would like to remove your question, please press star followed by 2.
Speaker Change: When preparing to ask your question, please listen to your phone as a featured locally.
Speaker Change: Our first question goes to David fista of Raymond James, David, please, go ahead.
Speaker Change: Hey, good morning everybody.
Speaker Change: Good morning, David. Um,
Speaker Change: I I just wanted to follow up, maybe on on Jill, you touched on it a bit about the, the Improvement in origination is really an impressive increase and I was just hoping you could elaborate maybe a bit more you know, on on
From your standpoint did anything change or uh, do you feel like your customers are more comfortable with the broader economy? Uh, or or was there any kind of a timing issue? Just curious, whether there's anything to read into that and and just kind of how the pipelines are holding up just giving that increase in originations.
Speaker Change: So the increase um, in the origination certainly pulled some of the pipeline out and so they're rebuilding now. Um, and if you look back, historically I think what you would see David is that q1 is q1 and Q3 are generally slower than Q2 and Q4. So the Tariff noise that happened at the end of q1. Certainly slowed things down there and the policy changes. They that opened back up a little bit, pulled some of that through. Um, so you know what was muted longer growth in? Q1 came in in Q2.
And I guess at the end of the day, what I would say to you is that I'm still expecting us to hit that mid single digit growth rate for the year. I expect we'll see a little bit of a pullback in Q3, but, you know, we had a 5% annualized year-over-year in q1. We had a 5% annualized year-over-year in Q2 and that's roughly what we're projecting for the year.
Speaker Change: Of 2025, okay.
Speaker Change: Okay, that's helpful and and then maybe just touching on on the funding side a bit, you know. Anecdotally is just we're hearing a lot more competition on on the deposit side. As growth has increased across the industry, could you just maybe touch on on? Obviously there's some seasonality too but just kind of curious what you're seeing on on the core deposit. Front, some initiatives that you got in place to maybe drive core deposits. Um, and and maybe you know, just how you think about funding that additional loan growth over the back half of the year.
Speaker Change: Year.
Rob Butterfield: Yeah David. So just from a this is Rob. So just from a
Overall uh pressure on deposits. We're not necessarily seeing competition heat up on deposits. At this point we're we're not seeing kind of competitive pure Banks. Uh increasing rate specials right now. Everything seems to be a bit more static. I mean deposits are always highly competitive. So let's just keep that in mind. But the ultra competitive department or environment that we experienced, you know, really, you know, a year ago is not quite what we're seeing right now. I mean, really, I mean our, our whole philosophy all along has been relationship Banking. And so our expectation is, is that as we are uh, bringing in new clients, we expect it to come with the total relationship. Not only the loans, but also the deposits. And we've also talked about that. Um, we're heavily focused on on small business and small business tend to be deposit rich in their relationships. So that tends to
Rob Butterfield: Help as well.
Rob Butterfield: Okay.
Rob Butterfield: And then to the extent that that loan growth continues to to outpace, deposits. I mean, would you expect to kind of bridge that Gap I guess first? Could you remind us the cash flows from the Securities book um and then would you expect to kind of bridge the gap with or you know plug it with a you know fhlb advances? Or is there any shift in appetite to maybe you know look at repositioning Securities or selling anything to free up some liquidity to to fund the growth that you guys are seeing?
Rob Butterfield: Yeah, so so David on the security portfolio, first of all um it's about 60 million, a quarter of the the cash flows that are coming off right now. Um we we're not currently planning any kind of repositioning but we would you know we're remain some flexibility there. Just depending on if market conditions change
Um, I what was the first part of the question. I'm sorry. I'm trying to
Speaker Change: Bug or just, you know, kind of curious how you think about funding your growth going forward.
Speaker Change: Yeah I'm not. It was a plug for this quarter certainly and I think that's why we saw that increase in funding costs during the quarter was deposit costs were flat but funding costs was up because of the combination of 2. Both the really strong loan growth that we had for the quarter, but then also just normal seasonal deposit, outflows that we experienced during the first 2 months of the quarter. Uh, and so, that's why you saw fhlb advances, increase. If normal seasonality returns, we would expect that. We would see deposit growth happen in the third quarter and deposit. Growth could very well, outpace loan growth in the third quarter, if historical um kind of Trends come in line. And so I mean usually during the third quarter, that's when we see our egg clients their crops come in, cash comes in from that. So historically, we've always seen an increase in deposits during the third quarter.
Speaker Change: Okay, that's helpful. Thanks everybody.
David Fista: Thanks David.
Speaker Change: The next question. Go to Andrew Terrell of Stevens. Andrew please go ahead.
Andrew Terrell: Hey, good morning.
Good morning. Um if I could just finish up kind of on the the margin of funding there, that the subject that was redeemed or paid off this quarter, do you have the the rate on that or the cost of it?
Andrew Terrell: Just trying to get a sense for, you know, the rate of what's remaining.
Andrew Terrell: Yeah, it the the cost on that at the time, so it was 5%, but then there was also amortization of some of the, you know, original debt issuance costs there. So it was it was about 550, was the all-in cost on that subject. And so we would expect some some pickup, uh, reduction in in funding costs because now, you know, effectively, if you move that from the 5502,
Andrew Terrell: Fhlb advances at least temporarily. I mean they're in the 450 range. So maybe we pick up a 100 basis points on that.
Yep, got it. Okay. Um, I appreciate it and then
Speaker Change: You know, maybe stick with your op on, um, just the expense base. You definitely had maybe a little bit of a benefit this quarter from the, um, deferred origination costs. Um, it sounds like maybe loan growth, a little bit slower and the, the 3Q just hoping to get a sense of kind of the puts and takes of the expense space.
Speaker Change: Into the back half of the year. And if you have kind of an expected, uh, quarterly run rate,
Yeah. So Andrew on, on the expense side of the equation.
Andrew Terrell: Uh, you know, we continue to go live with some of the different modules on the new deposit and loan origination system. So in the second half of the year, we would expect it expenses to to increase.
Andrew Terrell: And what we're looking at is, we're, we're looking at kind of over the longer term. Offsetting a portion of that, with, uh, consolidation of some additional back office space. I think you saw some of those non-recurring expenses come through during the current quarter, but we would probably expect that we continue to see some non-recurring expenses come through, probably over the next 3 or 4 quarters related to that specific initiative.
um, and if you think about a run rate uh you know what we talked about is the first quarter was probably a decent run rate that we would expect and then if you kind of layer in just normal inflationary changes as you go forward from there,
Andrew Terrell: As you mentioned the second quarter was was down and that was partially driven really by the higher capitalized loan cost, higher origination, you know just due to the higher originations but if you think about q1 was really low originations historically as well. So we expect capitalized loan costs. Probably to be somewhere in between those 2.
Mark: Got it. Um, okay, thank you. Um, and I just wanted to ask. Um, I mean maybe for Mark um,
Speaker Change: You know, the the m&a environment seems like it's maybe a little more amicable today and we've seen quite a few deals. Now, it's just curious. If anything has changed, um, in terms of your view on on m&a,
How palatable you, you see it being today. Um, and then just any update on on, kind of status of discussions or how how m&a kind of fits into the the banner strategy over the the kind of near to medium term.
Numbers that we put up quarter over quarter and year over year. The organic business model and our execution were were very focused on it and it's very successful.
Speaker Change: So opportunistic m&a is something we will continue to look at, but I don't feel compelled that we have to do anything. It is something it is simply something that you know I think the the entire industry is going to continue to look to some consolidation to get additional efficiencies. But we remain very focused on our organic business model.
Speaker Change: Uh great uh thank you for taking the questions.
Jeff Rules: The next question, goes to Jeff rules of Da Davidson Jeff. Please, go ahead.
Jeff: Morning. Uh,
Jill, I had a question about that.
Good morning Mark, uh the the loan growth comment you made about a pullback in the third quarter. Was that a a pullback from the 9% Pace from 2 Q or a net.
Jeff: Run up. I guess. Is it still positive? Correct.
Jeff: Yeah, it's a pullback from the 9% growth rate and if you look at our disclosures right, if you just quarter over quarter, third quarter is generally a little slower than second quarter.
Speaker Change: Got it. Uh thanks for clarifying and and Rob on the
Speaker Change: Back to the margin, you know, you got that uh, the pickup or the reduction from from the subject um, move as well as.
Speaker Change: okay, I guess if bone growth
Speaker Change: Uh, levels off or slows down a little bit and and fhlb needs our our somewhat reduced and you get that maybe the seasonal pickup in in deposits.
Speaker Change: Frames up a pretty good uh margin Outlook. I I guess if you
Speaker Change: Think about the second half absent, any any fed moves? Um, expectations there. That that sounds like, that's
Speaker Change: More, uh, I guess Tailwinds and headwinds on, on the margin.
Speaker Change: Yeah, I think that's right. Jeff. Um the as long as the FED is on pause, which you know, we use Moody's. I think last forecast I saw from them. They were going to assuming uh, when no rate cut until September. That's a long time from now. So we'll see what really happens. And and then an additional 1 in December, and under that scenario, we would expect loan yields to continue to increase. 4 to 5 basis, points the quarter. So the third quarter, we'd see that, you know, kind of the same
Clip that we experienced during the the second quarter, as far as loan yield expansion and the funding sites, where, you know, there's probably a little less predictability, but if we do assume that, um, deposit costs would remain flat.
But where we could see the Improvement in the funding costs would be that normal seasonal activity. If if that third quarter, seasonal, increase comes into deposits, then we'd have lower Reliance on fhlb advances, which would reduce the funding costs.
Speaker Change: Uh, got it. Thank you. Uh, last 1 for me was maybe on the credit side the
Speaker Change: Where the risk rating downgrades were Edition.
Speaker Change: Jill, you you cautious on the small business and consumers, are those the areas that added to
Speaker Change: Those balances.
Speaker Change: So you kind of faded out on me Jeff but the um the decrease in substandard, this quarter was really a mix. Um we had several upgrades a couple of payoffs and then a handful of downgrades into substandard for that net um change of 8.3 million.
Speaker Change: The agricultural sector has experienced more downgrades due to the pressure on commodities prices and input costs. So we are seeing uh, some continued
pain in the egg sector. So I'll remind you, it's 3% of the loan portfolio, 50% operating lines and 50% real estate secured. Um, I continued to watch the small business sector looking forward. We haven't seen, you know, real pain in it, yet, the delinquencies are pretty static in that as well. So it's just where I think the pain of the tariffs will ultimately land before they get pushed to the final consumer.
Speaker Change: Hopefully that answered your question as you were fading out on me. Jeff if I didn't hit it all, I'm sorry.
Speaker Change: Yeah okay so the um sorry I think it was a headset thing. Um the uh
Speaker Change: The little bump in non-performing, was was mostly egg. Um,
Charge of the bump and non-performing is almost exclusively 1 to 4, family Residential Properties due to that extended time period. And what, you know, the way we have to work with them with consumer protection laws, it's
Speaker Change: they take a long time to work their way through.
Sure.
Okay, that's good detail. Thank you.
Speaker Change: Thanks Jeff.
Speaker Change: Thank you as a reminder, if you would like to ask a question please press star. Followed by 1 on your telephone keypad.
Speaker Change: And then the next question, go to Kelly motor of KBW Kelly, please go ahead.
Speaker Change: Hey, good morning, thanks for the question. Um,
Speaker Change: Oh maybe I would start off by circling back on um the margin. I there's been a lot of moving parts and I appreciate all the colors thus far but um wondering you know particularly in light of the really strong loan growth. Um, I know 1 of the drivers of the margin ahead has been just the backbone for repricing. Um, of the loan book, so wondering how spreads are holding up new, where new pricing is coming in and if there's
Speaker Change: Um, there's a lot of color on the deposit competition, but wondering, um, how how things are holding up on the loan side in terms of pricing and spreads? Thank you.
Speaker Change: So, Kelly on the loan side, pricing on the term pieces are, you know, they're pretty, they are holding up their, you know, there hasn't been a lot of change in that, um, you know, where we're going to see, the chains will be in the variable rate portfolio when the rates reset. Um, if you look at the origination and see, you know, the dip in the yields quarter over quarter, it was really the different mix between the product type, you know, less construction and more cni and owner occupied CRA, but in general, they um, the yields are holding up.
Speaker Change: Got it. And I I think Rob the commentary on on prior calls have been like, roughly a 5 basis. Point increase in loan yields apps. And, um,
Uh, fed cuts, which would cut into that, um, wondering if that kind of rough rule of thumb still holds in terms of modeling for the Nim perspective.
Speaker Change: Yeah, I think, I think that's right. I'd say 4 to 5 basis points. Um, what is what I would expect. And I think the modeling is showing that that would continue as long as the FED is on pause for the, for the next, you know, handful of quarters. But over time that backlog of adjustable rate loans that haven't repriced through the cycle, um, kind of continues to dwindle.
Speaker Change: Time. We'd expect.
Speaker Change: To.
Speaker Change: You know.
Speaker Change: Trend down over time. But in the near term, we would expected in that 4 to 5 basis, point range.
Got it. That's that's helpful. Um maybe last question for me on on loan growth, um obviously it was it was a really good quarter. Um wondering Jill are, are you seeing any particular markets where there's been better opportunities or um,
Speaker Change: The activity is holding up a bit better. Just wondering if there's any sort of regional differences that um or color on that front that you could provide.
Jill Rice: Yeah. Kelly I would say this past quarter largely when you think of the more Middle Market space it was more specific Northwest generated than California. I think when you look at the small business origination both C and I and the owner occupied the area that broad-based across the footprint,
Jill Rice: Um and then I guess I would add that I would expect to see um some solid growth out of coming out of California as we've added several seasons. Um, relationship managers recently to that market, so I expect more growth coming in the California Market in the near term.
Speaker Change: Got it. That's helpful, I'll set back. Thank you so much.
Speaker Change: Thank you, Kelly.
It appears we have no further questions. I'll hand back to mark for any closing comments.
Mark: Thank you, Nadia. As I stated, we're very proud of the banner team and our second quarter 2025 performance.
Thank you for your interest in banner and joining our call today. We look forward to reporting our results again to you in the future. Have a great day, everyone.
Mark: Thank you. Just now, can you please call? Thank you for joining. You may now. Disconnect your lines.