Banner Bank has been treading water for the past six months, holding steady at $68.99. The stock also fell short of the S&P 500’s 8.8% gain during that period.
Is now the time to buy Banner Bank, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Is Banner Bank Not Exciting?
We're cautious about Banner Bank. Here are three reasons there are better opportunities than BANR and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income.
Over the last five years, Banner Bank grew its revenue at a tepid 2.5% compounded annual growth rate. This fell short of our benchmarks.
2. Net Interest Income Points to Soft Demand
While bank generate revenue from multiple sources, investors view net interest income as a cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of one-time fees.
Banner Bank’s net interest income has grown at a 3.6% annualized rate over the last five years, worse than the broader banking industry.
3. EPS Took a Dip Over the Last Two Years
While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.
Sadly for Banner Bank, its EPS declined by 7.9% annually over the last two years while its revenue was flat. This tells us the company struggled to adjust to choppy demand.
Final Judgment
Banner Bank’s business quality ultimately falls short of our standards. With its shares underperforming the market lately, the stock trades at 1.2× forward P/B (or $68.99 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now. We’d suggest looking at the Amazon and PayPal of Latin America.
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