Banner Corporation Up to Strong Buy on Acquisition Deals - Analyst Blog

On Nov 29, Zacks Investment Research upgraded Banner Corporation (BANR) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The rank upgrade of this Washington-based financial institution was driven by strong estimate revisions, given the expectations that the recent acquisition deals will aid the company's growth prospects.

On Nov 7, Banner Corporation, the bank holding company for Banner Bank and Islanders Bank, announced that it has received regulatory approval for the proposed acquisition of Oregon-based Siuslaw Financial Group, Inc. (SFGP). The stock plus cash deal, which was announced in Aug 2014, is expected to close by end of 2014. Following closure, the deal is expected to be immediately accretive to earnings per share, excluding one-time transaction expenses.

In terms of assets, the merged entity is set to become one of the biggest commercial banks headquartered in the Pacific Northwest, with around $5.1 billion in assets.

Further, another merger deal was announced on Nov 5. Banner Corporation has inked a deal to merge with AmericanWest Bank.  The merged company will have assets worth more than $9.7 billion , loans of $6.8 billion and deposits of $7.9 billion. Also, it will operate around 190 branches across five western states.

Per the deal, shareholders of AmericanWest will receive 13.23 million shares of Banner common stock and $130.0 million in cash. The deal is expected to close in second-quarter 2015. Following closure, the deal is expected to be accretive to earnings per share in 2015, excluding one-time transaction expenses. Also, it is expected to be 13% accretive to earnings per share in 2016.

Considering the closing price of Banner common stock as of Nov 4, 2014, the total value of the deal is around $702 million.

Analysts' bullish stance on the stock was reflected in the estimate revisions over the past 30 days. For 2014, the Zacks Consensus Estimate increased slightly to $2.82 per share. Also, it moved north 4.1% to $2.77 per share for 2015.

Other Stocks to Consider

Other stocks in this space worth considering include Great Southern Bancorp Inc. (GSBC), and Beneficial Mutual Bancorp Inc. (BNCL). Both the stocks hold the same Zacks Rank as Banner Corporation.