Over the last six months, Banner Bank’s shares have sunk to $61.03, producing a disappointing 6.9% loss - a stark contrast to the S&P 500’s 1.7% gain. This may have investors wondering how to approach the situation.

Is now the time to buy Banner Bank, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Is Banner Bank Not Exciting?

Despite the more favorable entry price, we're swiping left on Banner Bank for now. Here are three reasons why you should be careful with BANR and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees.

Regrettably, Banner Bank’s revenue grew at a tepid 2.4% compounded annual growth rate over the last five years. This was below our standards.

2. Net Interest Income Points to Soft Demand

Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.

Banner Bank’s net interest income has grown at a 3.5% annualized rate over the last four years, worse than the broader bank industry. Its growth was driven by both an increase in its outstanding loans and net interest margin, which represents how much a bank earns in relation to its outstanding loan book.

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 more than its revenue over the last two years, dropping 9%. This tells us the company struggled to adjust to shrinking demand.

Final Judgment

Banner Bank isn’t a terrible business, but it doesn’t pass our bar. Following the recent decline, the stock trades at 1.1× forward P/B (or $61.03 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We're pretty confident there are more exciting stocks to buy at the moment. We’d recommend looking at a top digital advertising platform riding the creator economy.

Stocks We Would Buy Instead of Banner Bank

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