BANR

Banner Bank's third quarter saw revenue growth driven by the integration of Pacific Financial and strong organic loan origination, with commercial real estate and construction lending as notable contributors. Management highlighted the resilience of Banner's core deposit base, which supports funding stability. CEO Mark Grescovich pointed to disciplined expense management and a focus on maintaining a moderate risk profile as key operational priorities, while credit metrics remained stable despite increased interest rates and competitive lending conditions. Is now the time to buy BANR? Find out in our full research report (it's free). - Revenue: $177.3 million vs analyst estimates of $185 million (3% year-on-year growth, 4.2% miss) - Adjusted EPS: $1.51 vs analyst expectations of $1.57 (3.6% miss) - Market Capitalization: $2.55 billion While we enjoy listening to the management's commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. - Ryan Payne (D.A. Davidson): Asked about the outlook for net interest margin; CFO Robert Butterfield said, "I would expect some expansion in NIM in the fourth quarter," but long-term trends depend on Fed policy and deposit competition. - Matthew Clark (Piper Sandler): Questioned deposit growth seasonality and sustainability; Butterfield explained third quarter is typically strong due to agricultural inflows, with some balances expected to normalize in Q4. - Meghan Lynch (KBW): Inquired about expense run rates post-acquisition; Butterfield detailed the phased realization of synergies, expecting 40% cost reductions by mid-2027 as integration progresses. - Andrew Terrell (Stephens): Probed capital deployment priorities; Butterfield noted the company will focus on dividends, selective share repurchases, and maintaining flexibility for potential future M&A. - David Feaster (Raymond James): Sought clarity on loan growth drivers and credit risk; Chief Credit Officer Jill Rice cited strong pipelines, competitive pricing, and robust credit standards, with ongoing monitoring of commercial real estate and consumer segments. In the coming quarters, the StockStory team will monitor (1) the pace and success of Pacific Financial integration, particularly cost synergy realization, (2) net interest margin trends as loan repricing and deposit costs respond to rate shifts, and (3) sustained organic loan growth, especially in commercial real estate and construction. Execution on deposit retention and operational efficiency will also be key. Banner Bank currently trades at $70.11, up from $67.39 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it's free for active Edge members). WHILE YOU'RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn't over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

This article first appeared on GuruFocus. - Net Profit to Common Shareholders: $47.7 million, or $1.36 per diluted share, for Q3 2026, versus $1.54 per diluted share in Q3 2025. - Core Earnings (Pre-Tax-Provision): $68.6 million in Q3 2026, compared to $67.8 million in Q3 2025. - Revenue from Core Operations: $179 million in Q3 2026, up 6% from $169 million in Q3 2025. - Return on Average Assets: 1.11% for Q3 2026. - Net Interest Income: Increased $8.2 million from the prior quarter. - Net Interest Margin (Tax Equivalent): 4.14%, up from 4.13% in the prior quarter. - Total Loans: Increased $1 billion in the quarter, including $766 million acquired from Pacific Financial and $235 million of organic growth (approximately 8% annualized for legacy Banner). - Loan Originations: Up 2% from the linked quarter and up 61% versus Q3 2025. - Total Deposits: Increased $1.6 billion, including $1 billion acquired; organic deposit growth was $463 million (13% annualized). - Core Deposits: Increased $1.46 billion and represent 90% of total deposits. - Non-Interest-Bearing Deposits: 32% of total deposits. - Total Deposit Cost: Increased 5 basis points to 1.38%. - Loan-to-Deposit Ratio: 84% at quarter end. - Non-Interest Income: Decreased $2.8 million from the prior quarter, driven partly by a $2.1 million loss on the sale of acquired securities. - Non-Interest Expense: Increased $7.7 million from the prior quarter, including a $4.9 million increase in M&A expenses and a $1.1 million increase in foreclosed real estate write-downs. - Provision for Credit Losses: $2.8 million, consisting of $1.8 million for loan losses and $1 million for unfunded loan commitments. - Net Charge-Offs: Loan losses of $1.2 million, partially offset by $528,000 in recoveries. - Delinquent Loans: 0.56% of total loans, up 5 basis points from the linked quarter and versus 0.39% at September 30, 2025. - Adversely Classified Assets: Declined $9 million in the quarter; 1.61% of total loans. - Nonperforming Assets: Increased $2.4 million, comprising $59 million of nonperforming loans and $4 million of REO balances. - Allowance for Credit Losses: 1.32% of total loans, up $8.6 million to establish initial reserve on acquired loans; versus 1.35% in the linked quarter and 1.36% at September 30, 2025. - Tangible Equity to Asset Ratio: 9.48%. - Total Shareholder Equity: Increased $135 million to $2.13 billion. - Core Dividend: $0.52 per share declared. - Warning! GuruFocus has detected 4 Warning Signs with BANR. - Is BANR fairly valued? Test your thesis with our free DCF calculator. Release Date: October 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Banner Corp (NASDAQ:BANR) reported core earnings of $68.6 million, up from $67.8 million year-over-year, with revenue from core operations increasing 6% to $179 million. - Organic loan growth was strong at $235 million, or 8% annualized, driven by commercial real estate and construction, with loan originations up 61% year-over-year. - Core deposits represent 90% of total deposits, and organic deposit growth was $463 million, or 13% annualized, demonstrating a strong deposit franchise. - Credit metrics remain stable with nonperforming assets at a low level, net charge-offs modest at $1.2 million, and a robust allowance for credit losses at 1.32% of total loans. - The Pacific Financial acquisition adds $766 million in loans and $1 billion in deposits, with expected cost synergies of 40%, supporting future growth and efficiency. - Earnings per diluted share decreased to $1.36 from $1.54 in the prior-year quarter, impacted by merger-related expenses and a loss on the sale of securities. - Non-interest income decreased by $2.8 million from the prior quarter, driven by a $2.1 million loss on securities sales and lower mortgage banking and SBA gain-on-sale activity. - Non-interest expense increased by $7.7 million from the prior quarter, primarily due to $4.9 million in merger and acquisition expenses and a $1.1 million write-down of foreclosed real estate. - Net interest margin expansion may be limited by rising deposit costs, with the cost of deposits increasing 5 basis points to 1.38% and further pressure expected from competitive pricing. - Loan growth may face headwinds from rising interest rates, as some clients are pausing expansion plans and builders remain cautious, potentially slowing demand in 2027. Q: With the FHLB advance runoff and securities sale, where do you see the NIM trajectory from here?A: CFO Robert Butterfield expects some NIM expansion in Q4, driven by loan repricing (about 25% of the portfolio reprices up with the September Fed hike), a couple of basis points from the Pacific Financial deal, and higher securities yields, partly offset by rising deposit costs. For 2027, the trajectory depends on Fed actionsexpansion if rates rise or hold, but flat to moderate compression if the Fed cuts. Q: Given strong organic loan growth, what are you hearing from customers amid rising rates, and what is the loan growth outlook into 2027?A: Chief Credit Officer Jill Rice said it is too early to fully gauge rate-driven demand effects, though a handful of clients have paused expansion plans. She views rising rates as an initial headwind but noted healthy commercial and CRE pipelines and meaningful unfunded construction projects, expecting mid-single-digit loan growth to close 2026 and the same pace in 2027. Q: How should we think about the fee income run rate, stripping out the securities loss?A: CFO Robert Butterfield said Q3 non-interest income was below the typical run rate due to slower mortgage banking and SBA gain-on-sale activity. For Q4, add two more months of Bank of the Pacific (~$400,000/month, or ~$800,000) plus roughly $0.5 million of normalization, which gets close to a run rate assuming the mortgage and SBA slowdown persists. Q: What is the spot cost of deposits at the end of September, and what interest-bearing deposit beta do you expect on the way up?A: CFO Robert Butterfield said September spot deposit cost was 1.40% versus 1.38% for the quarter. On interest-bearing deposit beta, Banner saw 28% on the way down but is modeling 40% on the way up, expecting an outcome between 28% and 40%, with increases typically lagged and some front-running already observed. Q: Organic deposit growth was very stronghow much is seasonal, where is it coming from, and is it sustainable?A: CFO Robert Butterfield attributed much of the $463 million to Q3 seasonality, mainly Ag clients bringing in crop harvest cash. He expects roughly $100 million could flow back out in early Q4 as operating lines are paid down, but year-end balance sheet positioning by other clients typically offsets this, so deposits usually still rise in Q4. Q: Now that the Pacific Financial deal has closed, is there any incremental balance sheet repositioning or opportunity you are taking advantage of?A: CFO Robert Butterfield said Banner repositioned Pacific's securities portfolio in September and intentionally kept the duration short, so cash flows can be organically redeployed into the loan portfolio over time. No further balance sheet repositioning is planned on the securities or loan side. Q: How should we think about Pacific Financial's expense contribution and a clearer run rate?A: CFO Robert Butterfield said to start with Q3 total expenses, back out ~$5 million of M&A expense and ~$1 million of REO write-downs, then add two months of Pacific operations (~$10 million quarterly). About 10% of the targeted 40% cost synergies are achieved now, another 20% should be realized around January 1, 2027, and the final 10% by mid-2027; a 2027 run rate also needs normal inflation plus continued investment. Q: What are your views on fixed asset repricing and its contribution to the margin going forward?A: CFO Robert Butterfield expects a modest pickup from both fixed asset repricing and higher yields on new loans, noting Q3 new loan yields rose only slightly because commitments were made before rates increased. He estimates fixed asset repricing contributes a couple of basis points per quarter, with a clearer impact once the rate trajectory is better understood. Q: With capital leveraged by strong growth and the deal, do you prefer buybacks, holding capital, or building capital for future M&A?A: CFO Robert Butterfield said the core dividend remains the first priority. Banner repurchased 200,000 shares in September after the Pacific deal closed, views buybacks as very attractive at current prices, and will evaluate more in Q4while still keeping capital roughly at current levels, preserving room for the right M&A opportunity. Q: What gives you confidence in maintaining mid-single-digit loan growth next year, and what are you seeing on competition and underwriting?A: Chief Credit Officer Jill Rice said competition remains fierce, especially on pricing, with nonbank lenders offering looser underwriting that Banner will not match. Confidence comes from strong calling efforts, new and existing bankers winning clients, market disruption from other bank combinations, and a healthy construction pipelineall showing up in originations that fund onto the books over time. Q: As you stress the book for higher rates, which segments are you watching, and how healthy is the CRE book across your footprint?A: Chief Credit Officer Jill Rice said Banner is watching consumer, SBA, and CRE segments, and continuously stress-tests the office portfolio as if loans had already repriced. Very few loans appear unable to work at a current rate reset, which she credits to disciplined debt service coverage requirements, significant borrower equity, recourse on 99% of the book, and global cash flows; issues of size have been idiosyncratic rather than rate-driven. Q: Given the tailwindsmargin expansion, strong deposits, credit, loan growth, and excess capitalwhat are you excited about, and where are you investing for the next several years?A: CEO Mark Grescovich highlighted organic growth opportunities from market disruption caused by other institutions' combinations, a strong footprint, and balance sheet strength with a moderate risk profile and flexible capital. He also pointed to operational improvements and efficiency investments creating scalable efficiencies and positive operating leverage in 2027, supporting continued improvement in returns. Q: Have M&A conversations picked up, and what is your appetite for another deal while integrating Pacific Financial?A: CEO Mark Grescovich said Banner's philosophy is unchanged and it continues dialogue with potential partners it views as For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Oct. 22, 2026 - President and CEO - Mark J. Grescovich - Chief Financial Officer - Robert G. Butterfield - Chief Credit Officer - Jill Rice - Head of Investor Relations - Rich Arnold Operator: Press star 1 to raise your hand. I will now hand the call over to Mark J. Grescovich, President and CEO of Banner. Mark? Please go ahead. Mark J. Grescovich: Thank you, Trevor, and good morning, everyone. Would also like to welcome you to the third quarter 2026 earnings call for Banner Corporation. Joining me on the call today is Robert G. Butterfield, Banner Corporation's Chief financial officer. Jill Rice, our Chief Credit Officer; and Rich Arnold, our Head of investor relations. Rich, would you please read our forward-looking Safe Harbor statement? Rich Arnold: Sure, Mark. Good morning. Our presentation today discusses Banner's business outlook and will include forward-looking statements. These statements include descriptions of management's plans objectives or goals for future operations, products or services, forecast of financial or other performance measures, and statements about Banner's general outlook for economic and other conditions. We also may make other forward-looking statements in the question and answer period following management's discussion. These forward-looking statements are subject to a number of risks and uncertainties, and the actual results may differ materially from those discussed today. Information on the risk factors that could cause actual results to differ are available from the earnings press release that was released yesterday and most recently filed Form 10 Q for the quarter ended 06/30/2026. Forward-looking statements are effective only as of the day they are made, and Banner assumes no obligation to update information concerning its expectation. Mark? Mark J. Grescovich: Thank you, Rich. As is customary, today, I will cover 4 primary items with you. First, I will provide you with high-level comments on Banner's third quarter 2026 performance. 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, Jill Rice will provide comments on the current status of our loan portfolio and finally, Robert G. Butterfield will provide more detail on our operating performance for the quarter as well as comments on our balance sheet. Before I get started, I want to welcome our new colleagues from the Bank of the Pacific team to Banner. And thank all of my 2,000 colleagues in our company who are working extremely hard to assist our clients and Banner has lived by our core values, summed up as doing the right thing, for the past 1 hundred and 35 years. 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. I am pleased to report again to you that is exactly what we continue to do. I am very proud of the entire Banner team that is living our core values. Now let me turn to an overview of our performance. As announced, Banner Corporation reported a net profit available to common shareholders of $47.7 million or $1.36 per diluted share for the quarter ended 09/30/2026. This compares to a net profit to common shareholders of $1.54 per share for the third quarter of 2025. The third quarter 2026 performance was impacted by the closure of the previously announced Pacific Financial acquisition. Robert will discuss this in more detail shortly. Also, our strategy to maintain a moderate risk profile and the investments we have made and continue to make to improve our operating performance have positioned the company well for the future. 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. To illustrate the core earnings power of Banner, I would direct your attention to pretax, pre provision earnings excluding gains and losses on the sale of securities, changes in fair value of financial instruments, merger and acquisition related expenses, and building and lease exit costs. Our third quarter 2026 core earnings were $68.6 million compared to $67.8 million for the third quarter of 2025. Banner's third quarter 2026 revenue from core operations was $179 million compared to a $169 million for the third quarter of 2025 an increase of 6%. We continue to benefit from a strong core deposit base that has proved to be resilient and loyal to Banner. A very good net interest margin, and core expense control. Overall, this resulted in a return on average assets of 1.11% for the third quarter of 2026. Once again, our core performance reflects continued execution on our super community bank strategy. That is growing new client relationships, maintaining our core funding position, promoting client loyalty and advocacy through our responsive service model, and demonstrating our safety and soundness through all economic cycles, and change events. To that point, our core deposits represent 90% of total deposits. Reflective of this performance, coupled with our strong regulatory capital ratios and our strong tangible common equity per share we announced a core dividend of $0.52 per share. In the quarter, we also released our 2025 corporate responsibility report. Banner has always been committed to doing the right thing in support of our clients the many communities that we serve, and our colleagues. The accomplishments highlighted in this report are meant to reflect the deep connection we have with all of our stakeholders and our commitment to creating positive change in the communities we serve. Finally, I am 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 as well as 1 of the best banks in the world by Forbes. And Newsweek named Banner, 1 of the most trustworthy companies both in America and the world again this year, and just recently again named Banner 1 of the best regional banks in the country. Additionally, our company was certified by Great Place to Work, S&P Global Market Intelligence ranked Banner's financial performance among the top 50 public banks with $10 billion in assets, the Kroll Bond Rating Agency affirmed all of Banner's investment grade debt and deposit ratings. And as we have noted previously, Banner Bank again received an outstanding CRA rating. 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 noted, we completed the acquisition of Pacific Financial this month adding to our portfolio growth while maintaining strong credit metrics. A testament to the credit culture at both organizations. Loan originations exceeded expectations, increasing 2% from the linked quarter in contrast to the typical seasonal slowdown and increasing 61% when compared to the third quarter of 2025. Importantly, Banner's credit metrics remain stable. Loan outstandings grew by $1 billion in the quarter or 8% from the linked quarter. Of that amount, $766 million was attributable to the acquisition while the additional $235 million resulted from organic loan growth. On a stand alone basis, $235 million equates to an annualized growth rate of approximately 8% for the legacy Banner portfolio. Commercial real estate was the primary driver of loan growth during the quarter. Owner occupied real estate grew by $100 million including $74 million of acquisition related growth and $26 million of organic growth. Investor CRE grew by $61 million, reflecting acquired balances of $77 million that were partially offset by payoffs within the legacy portfolio. Growth within the small balance real estate portfolio was entirely acquisition related. Multifamily real estate grew by $57 million including $37 million of acquisition related growth with the remainder driven by transfers from construction and new originations partially offset by continued refinancing activity into the secondary market. The construction portfolio increased $108 million including $29 million of acquisition related growth and $79 million of organic growth. The majority of this increase occurred within the land and land development and commercial construction segment. The construction portfolio remains well balanced with 1- to 4-family construction continuing to represent 5% of total loans and the overall construction portfolio representing 14% of total loans. As discussed in prior calls, we continue to closely monitor the completed and unsold inventory levels within the 1- to 4-family for sale construction portfolio. Current levels remain well within historical norms, and builders remain cautious regarding new starts. C&I loan balances increased by $72 million approximately 45% of which was acquisition related while the small business portfolio grew by $79 million entirely through organic growth. Looking at the ag portfolio, the $52 million increase primarily reflects acquired balances. The 1- to 4-family portfolio increased by $64 million including $46 million of acquisition related growth with the balance reflecting custom construction conversions upon completion net of payoffs. Finally, consumer balances increased by $103 million including $63 million of acquisition related growth and $40 million in new originations primarily in home equity lines of credit. Turning to our credit metrics. Delinquent loans at 0.56% of total loans increased 5 basis points from the linked quarter compared to 0.39% as of 09/30/2025. Adversely classified assets declined by $9 million in the quarter and now represent 1.61% of total loans. Nonperforming assets increased by $2.4 million in the quarter and are comprised of nonperforming loans of $59 million and REO balances of $4 million. Net charge offs were modest during the quarter. Loan losses totaled $1.2 million and were partially offset by recoveries totaling $528 thousand. The provision for credit losses in the quarter was $2.8 million, consisting of a $1.8 million provision for loan losses and a $1 million provision for unfunded loan commitments. Additionally, the allowance for credit losses increased by $8.6 million to establish the initial reserve associated with the acquired loan portfolio. At 1.32% of total loans, the reserve remains strong and compares to 1.35% as of the linked quarter and 1.36% as of 09/30/2025. I will close by noting that our credit metrics remain strong and reflective of our moderate risk profile. The addition of the Pacific Financial portfolio aligns well with Banner's underwriting standards and the credit culture is highly consistent with our own further reinforcing our risk profile. We remain well positioned to navigate this economic cycle with a granular and diverse loan portfolio that is supported by a strong balance sheet. A robust reserve for credit losses, and capital levels well in excess of regulatory requirements. With that, I will hand the microphone over to Robert for his comments. Robert? Robert G. Butterfield: Great. Thank you, Jill. We reported $1.36 per diluted share for the third quarter. Compared to $1.43 per diluted share in the prior quarter. The decrease in earnings per share compared to the prior quarter primarily due to M&A-related expenses and a loss on the sale of securities acquired in the Pacific Financial merger. Partially offset by stronger net interest income and a lower provision for credit losses. Core pretax pre provision income increased $4.2 million or 7% compared to the prior quarter. Jill Rice: As Jill previously mentioned, total loans increased $1 billion during the quarter. Robert G. Butterfield: which included $766 million of loans acquired from Pacific Financial Corporation and $235 million of organic loan growth. The loan to deposit ratio ended the quarter at 84%. Total security balances increased $158 million during the quarter primarily reflecting securities acquired in the Pacific Financial transaction after repositioning the acquired portfolio. Partially offset by an increase in unrealized loss in the security portfolio due to an increase in interest rates. Deposits increased $1.6 billion during the quarter as part of the Pacific Financial acquisition. We acquired $1 billion in deposits. Excluding acquisition related organic deposit growth, organic deposit growth was $463 million during the quarter or 13% on an annualized basis. Demonstrating the strength of our balance sheet and our deposit franchise and our client relationships. Core deposits increased $1.46 billion and represent 90% of total deposits at the end of the quarter. Certificates of deposits increased $142 million during the quarter. Due to the CDs acquired from Pacific Financial. Total borrowings declined during the quarter as we repaid all outstanding FHLB advances. Reflecting the strength of our deposit funding base. The tangible equity-to-asset ratio was 9.48%, and total shareholder equity increased $135 million during the quarter to $2.13 billion Net interest income increased $8.2 million from the prior quarter due to a combination of net interest margin expansion and growth in average earning assets. Including the impact of the Pacific Financial acquisition and organic loan growth. The tax equivalent net interest margin was 4.14% compared to 4.13% in the prior quarter. The increase in net interest margin was driven by higher yields on earning assets, as average loan yields increased 3 basis points and the yield on investment securities increased by 7 basis points. The average rate on new loan production for the current quarter was 6.55% compared to 6.53% from the prior quarter. The increase in asset yields was partially offset by higher funding cost. Primarily reflecting an increase in the cost of deposits. Due to a combination of an increase in market interest rates and the majority of the growth in deposits being in interest bearing accounts. Total deposit cost increased 5 basis points to 1.38%. Non interest bearing deposits ended the quarter at 32% of total deposits. Total non interest income decreased $2.8 million from the prior quarter. The decrease was primarily driven by a $2.1 million loss on the sale of securities acquired from Pacific Financial. As market interest rates increased during September prior to the sale being completed. Higher debit card transaction expenses lower gains on the sale of mortgage and SBA loans, and lower income from swap related activities, also contributed to the decrease. These decreases were partially offset by favorable changes in the valuation of financial instruments carried at fair value. Total noninterest expense increased $7.7 million the prior quarter. The primary driver was a $4.9 million increase in M&A expenses associated with the closing of the Pacific Financial transaction. And a $1.1 million increase in write-downs of foreclosed real estate holdings. The current quarter also included 1 month of expense associated with the operations acquired from Pacific Financial. Our capital liquidity and credit quality metrics continue to position us well to support our clients, communities, and future growth opportunities while maintaining a disciplined risk profile. This concludes my prepared comments. Now I will turn it back to Mark. Mark J. Grescovich: Thank you, Jill and Robert, for your comments. That concludes our prepared remarks. And Trevor, we will now open the call to and welcome questions. Operator: Thank you, Mark. We will now begin the question and answer session. Please if you would like to ask a question, press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. You are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeff Rulis with D.A. Davidson. Jeff, your line is open. Ryan Payne: Morning. This is Ryan Payne on for Jeff Rulis. Starting off bigger picture, or starting off bigger picture on the margin. Some moving pieces with the FHLB advances runoff and security sale. So where do you see the NIM trajectory from here? Robert G. Butterfield: Sure, Ryan. This is this is Robert. So if we think about the fourth quarter and the asset side of it, I would expect some expansion in loan yields as about 25% of our loan portfolio would have repriced up with the increase in Fed funds rate in September. And then in addition, the closing of Pacific Financial deal would also add a couple basis points to the loan yield as well. And then I would expect the portfolio also to see an increase in yield in that 6 to 7 basis point range. On the funding side, I would expect some increase in the cost of deposits as we have seen competitors increase deposit pricing after the Fed increased the Fed funds rate. So on a net basis, I would expect some expansion in NIM in the fourth quarter. If we are looking out further, 2027 would really be dependent on Fed actions. I have seen the market pricing in anywhere from 1 to 2 increases in 2027 in addition to the increase that they are pricing in December. I will say, Moody's forecast is showing something different, and we usually follow Moody's. They are actually showing 2 rate decreases in 2027. So I would say there is a bit of lack of clarity out there around the interest rate trajectory right now. The market's right, and we see some increase in the fourth quarter and then also a few increases in 2027, then I would expect some expansion of our net interest margin as we are slightly asset sensitive. If the Fed was on pause for some reason, I think we would also see some moderate expansion during 2027 really just depending on the level of deposit rate competition. And a gradual decline or if the FED decides to decrease some interest rates in 2027, then I think it is either flat to a moderate compression. Ryan Payne: Understood. Very helpful. On the loan side of things, strong organic loan growth this quarter. If you could talk to what you are hearing from customers amidst a rising rate environment, I know, Jill, you mentioned that builders might be cautious. But if that could impact demand, and any expectations as we head into 2027 on the loan growth side? Jill Rice: Sure, Ryan. it is a bit early to really peg what is going to happen in terms of loan demand with the rate environment. We have had a I will call it a handful of clients who hit the pause button and are stepping back and looking at some of their expansion plans. But you know, it. Again, it is too soon to really know. The strong loan growth was fantastic this quarter. I do think the increasing rate environment that we are moving into is gonna be an initial headwind. But that said, we have meaningful unfunded construction projects in process. Outside of, you know, the residential portfolio that Yes, they are being cautious with new starts. Commercial and commercial real estate pipelines remain healthy. We are still anticipating a mid-single-digit loan growth as we close out 2026 and I would position that to be the same loan growth rate we will expect into 2027. Ryan Payne: Okay. Thank you. And just last for me, trying to gauge the run rate on fee income. In stripping out that loss on securities, is that kind of where we can think of where the run rate is, or where would you set expectations on fees? Robert G. Butterfield: Sure, Ryan. it is Robert. So noninterest income in the third quarter, I think, was lower than our typical run rate. We have seen lower mortgage banking activity and also SBA gain on loan sale as higher interest rates have slowed activity in these areas. If I think about the fourth quarter, and you wanted to get to a run rate, you would you would need to add the full a full quarter of Bank of Pacific activity. You know, we saw 1 month of that in the in the third quarter, so you need to add 2 more months in there. They are running about $400 thousand a month, so that would be an additional $800 thousand on top of what we saw in the third quarter. And I think there is just a number of areas where we just know, you always see fees move up and down quarter over quarter. So I think there is probably some normalization of above that after you add in Bank of the Pacific of maybe a $500 thousand or something in that range. And I think that gets you probably close to a run rate as long as we see that slowdown in mortgage banking and SBA. Ryan Payne: I got it. Very helpful. Thanks, guys. Mark J. Grescovich: Thanks, Ryan. Operator: Our next question comes from the line of Matthew Clark with Piper Sandler. Matthew? Your line is open. Matthew Clark: Thanks. Good morning. Thanks for the questions. Just a couple more on the margin. If you had the spot rate on deposits at the end of September and then your expectations around the interest bearing deposit beta, I think it was 28%, on the way down. Just curious what you think you might achieve on the way up? Robert G. Butterfield: Sure, Matthew. So spot cost of deposits the month of September was 1.40%. Compared to 1.38% for the quarter, so we were seeing some additional pressure in the month of September there. And then as far as the deposit beta on the interest bearing deposits, as you said, 28 basis points is what we are seeing on the upside Modeling wise, we are modeling something higher. We are modeling 40%. So I would say it would end up somewhere between 28 and 40, but that tends to be very lagged is what we have experienced in the past. Oftentimes, you know, I think we have seen some front running of that. If you think about that deposit cost increase 5 basis points, during the third quarter, and, typically, we would have expected that to be relatively flat without the kind of pressure on market index rates that we saw during the third quarter. So we are hoping some of that, it was front-end loaded, but, you know, I would I would expect some carryover from the Fed actions. in the fourth quarter. Got it. Matthew Clark: And then just on deposits on the organic side, really strong. I think some of that was seasonal, but maybe speak to the portion that you know, you would not attribute to being seasonality and where it is coming from and whether or not there is anything you know, whether or not those balances are sustainable? Robert G. Butterfield: Yeah. So we mean, the third quarter is always the best quarter for us from a deposit growth standpoint. There is some seasonality to that. But the majority have been sticking around. Typically, what we see in it, it is mostly on the ag side. Is we see you know, cash coming in from crop harvest and other things, and it builds as you get into the go through the third quarter. And, typically, what happens at the beginning of the fourth quarter we would normally expect that those clients would use that cash flow to pay down operating lines of credit and do other things with that cash. So, you know, if you think about 463 million there could be a $100 million of that would come back out in early fourth quarter. But then, typically, what happens as you move into the end of the year, we see other clients that start to position their balance sheet for the end of the year, and oftentimes, they will put additional cash on their balance sheet as we end the fourth quarter. So that usually ends up balancing out, and, typically, we would we would see some increase in deposits in the fourth quarter when you balance those 2 out. Got it. Matthew Clark: And then last 1, for me, for Mark on M&A. I know you were in the midst of integrating the latest deal, but any comments around you know, whether or not conversations have picked up at all in your appetite to consider another deal? Mark J. Grescovich: Yeah. Thank you, Matthew, for the question. You know, our philosophy has not changed. We continue to have dialogue with folks we think would be great partners with Banner. And we are very excited about the Bank of the Pacific combination and Pacific Financial closure, and we do have an integration that is gonna occur mid month. So, we are focused on that. But to the extent that opportunities arise, we are. We are prepared to move forward. But, like I said, we are focused on the current disruption, our organic growth and making sure that the Pacific Financial integration goes extremely well. Understood. Matthew Clark: Thank you. Operator: Our next question comes from the line of Kelly Motta with KBW. Kelly, your line is open. Meghan Lynch: Hi. This is Meghan Lynch on for Kelly Motta. Thanks for taking my question. So just sort of on Pacific a bit more, I know they enhanced balance sheet flexibility given their low loan to deposit and their great funding. So I was just sort of wondering now that you are closed, is there any incremental repositioning of the balance sheet or any sort of opportunities that you guys are seeing or taking advantage of? Robert G. Butterfield: Yeah. Thanks. Thanks, Meghan. This is this is Robert again. So what we did there is we did reposition their security portfolio in the month of September, and left the balances there, but we intentionally left the duration short on that security portfolio on where we repositioned it to. But the thought process being that as the cash flows come off of that acquired security portfolio, we are able to redeploy those back into the loan portfolio. But that is gonna happen organically. We are not looking at doing any type of balance sheet repositioning or anything like that from the security side or from a loan portfolio perspective. We just intentionally left the duration short so we can redeploy those cash flows over time into the loan book. Meghan Lynch: Okay. Thank you. That was very helpful and then. So you sort of gave. You touched on the how much Pacific is adding to fees and sort of that run rate, but how should we think about like, their expense contribution and sort of a clearer run rate on that Pacific contributes to expenses? Robert G. Butterfield: Sure. So to get to a run rate from an expense standpoint, if you if you start with the total expenses for the third quarter, you would need to back out the M&A expense of $5 million and then also back out that write down on REO properties that we took of around $1 million. And then from there, you would need to add in 2 months of expense for Bank of the Pacific operations. You know, their quarterly expenses have been running around $10 million at this point. We have probably achieved about 10% synergies. So 10% off the 10 million gets you to kind of a monthly run rate right now. What we expected was to get a total of 40% cost synergies there. I think the other. Another 20% of the 40% would be realized starting at the beginning of the year. So call that 01/01/2027. And then the last 10% of cost synergies would be realized by mid next year, call it July 1, to get to that total of 40% cost synergies that we expected. Then, you know, if you are trying to get to a 2027 run rate, you would need to add normal inflationary increase in expenses plus you know, a little bit on top of that for continued investments into their organization. Meghan Lynch: Okay. Perfect. Thank you. Very helpful. that is it for me. Mark J. Grescovich: Thank you, Meghan. Operator: Our next question comes from the line of Andrew Terrell with Stephens. Andrew, your line is open. Andrew Terrell: Hey, good morning. Mark J. Grescovich: Morning, Andrew. Andrew Terrell: Hey. Robert G. Butterfield: Robert, I wanted to ask about just the fixed asset repricing dynamics on the margin. I think if I recall, I think it was last quarter, it sounded like, you know, it is maybe fizzling out a little bit. We have had pretty tremendous backup in the curve here. Just your views on fixed rate and the contribution of the margin going forward? Andrew Terrell: Sure, Andrew. Robert G. Butterfield: Thanks for the question. Yeah. I mean, we certainly think there will be a little bit of pickup there. I think it is gonna come from a couple different pieces. it is not only the fixed asset repricing, but it is also the yields on new loans coming on. If you look at the yields in the third quarter, it was up slightly from the second quarter, but not much. And that is just because you know, even though rates had increased, we had commitments out there prior to the rates increase. So you had some that did not really realize the full increase in the market interest rate. So we think there is some benefit just as new loans are coming on and existing loans are paying off. You know, we are still trying to get our full handle around what the benefit is of the fixed asset repricing. You know, we have. We are we are running a couple basis points. It almost came down to zero. So I think as we start through the process here, it will probably be a couple basis points a quarter. And you know, as we get a clearer trajectory on where rates are gonna stay going forward here, then we will probably get a better sense on what the full impact would be. Yep. Got it. Okay. I appreciate it. Andrew Terrell: And then looking at capital, you guys leverage capital just a little bit with the strong growth and the deal sequentially. Just interest in buyback continuing from here versus you know, maybe holding capital or building capital anticipation of future M&A? Robert G. Butterfield: I guess, you have a preference You know, the way we are thinking about that right now, Andrew, of course, core dividend is the first thing that we are focused If we are looking at something beyond that, I mean, we did repurchase 200 thousand shares in September after the Pacific Financial deal closed. We think share repurchases are very attractive. We are currently trading at. And so we will evaluate further share repurchase in the fourth quarter. And, you know, think even with the share repurchases, we are probably keeping capital at about the current level or maybe it goes down a little bit. So I think that still provides with opportunity to consider, you know, the right M&A opportunity that would. That could come along. Andrew Terrell: Got it and is this. I think it is like 12.6% CET1. Is 12.5% CET1 kind of how you think about capital targets if you think long term or is it a different level than that? Robert G. Butterfield: Think it is. It would be something below that. You know, we are also been focused on the TCE ratio. If you think about the TCE ratio, we were at 10% at the end of the second quarter. We are at 9.48% right now. Bank of the Pacific reduced it about 20 basis points. The increase in the unrealized loss in security portfolio was the other call it 30 basis points of that. Our target range. The upper end of our target range is 9.5%. So we are sitting at the upper end of our target range right now. And we are above the peer median if you look at our proxy peers, we were, you know, we were about 30 basis points above where they were at. Previously. So think there is additional room to bring down the TCE ratios. Okay. Andrew Terrell: Great. Thanks for taking my questions. Mark J. Grescovich: Thank you, Andrew. Operator: Our next question comes from the line of Feaster with Raymond James. David? Your line is open. David Feaster: Good morning, everybody. Mark J. Grescovich: Morning, David. Robert G. Butterfield: Morning, David. David Feaster: I wanted to follow up on maybe, Jill, your commentary about, you maintaining a mid single digit pace of growth next year. You know, I am just curious, what gives you confidence in that? what is driving growth? Sounds like there is some construction tailwinds. But are there any markets you are seeing more strength or segments? And just, you know, maybe as you touch on the competitive side, obviously, it is been tough pricing front, but curious if you are seeing that abate at all or whether competition is maybe more towards looser underwriting as well? Just kinda curious on the growth front and the competitive landscape on the loan side. Jill Rice: Sure, David. So competition continues to be fierce. With the clientele that we bank on a day in and day out basis. And pricing, you know, it continues to be 1 of the levers that are pulled. You know, there is not a ton within the banking industry that is pushing out in terms of underwriting standards. Certainly secondary market, you know, insurance companies, and that sort of, you know, competition gives underwriting that we do not generally match. So we have some of that we are competing with. But the confidence really comes from the you know, good work that our team has been doing over the past year in terms of who they are calling on, growing existing client relationships, bringing in new clients as well. New team members, have been really successful. Existing bankers have, you know, been successful as well in terms of, you know, expansion. We benefit from the market disruption as well. So, you know, some of the you know, combinations that have occurred or shifts in, you know, where decisions are made caused people to rethink where they want to do banking. So all of that together just you are seeing it I am seeing it, I should say, in, you know, the originations. And so those originations are front runners to dollars that are advancing on the books, whether it is closings that, you know, and funding up of those closings over time. And, again, the construction portfolio is there. there is a lot there as well to pull through. Okay. that is helpful. David Feaster: And then, Jill, maybe just staying with you, touching on the credit side. Obviously, you guys have done. You guys are phenomenal on the credit front, and very conservative. I am curious as you think about higher rates and you stress the book, are there any segments that you are watching more closely? I mean, we got small business, you know, SBA or a consumer? Yeah. And then just high level, how do you think about the health of the CRE book and the markets across your footprint? Just kinda curious what you are seeing and what you are hearing from borrowers. Jill Rice: Probably. So what are we watching? You know, you hit on all of them? Rich? I mean, we are looking at the consumer. We are looking at FDA. We are watching what a higher rate environment is doing to them in terms of segments within CRE we continue to stress the office portfolio and, you know, continually look at that as it will, you know, as if it had re priced instead of, you know, when is it gonna re price just to kind of watch what is gonna be happening or potentially happening based on their, you know, most current operating statements. To date, we do not have very many that would, you know, look like they will not work at a current rate reset. You know? I think that speaks to the underwriting we are doing as we are going in terms of the debt service coverages that we expect for various different, you know, types of properties. Coupled with the significant equity that borrowers have in their properties going in recourse that is on, you know, 99% of the loan book as well. And, you know, global cash flows that can backstop issues with any particular property. So we are monitoring you know, I would say most of the book on a very regular basis in terms of, you know, what can happen in this rising rate environment. But right now, any issues of size have been idiosyncratic and not really related to the interest rate environment. David Feaster: Okay. that is helpful. And then, Mark, maybe just a high level 1 for you. I mean, we talked about, there is a lot of tailwinds for your business. Rich? You got the back book of pricing story, margin expansion, a strong core deposit base. Strong credit, loan growth, excess capital. There. there is a lot to like here. Just given your competitive positioning and kind of the tailwinds for the bank in this market, what are you excited about right now? And where are you investing today that can help maybe take the bank to the next level over the next several years? Mark J. Grescovich: Thank you for the question, David. I think you hit a number of the things I am excited about. We have an opportunity on some growth avenues organically, there is quite a bit of market disruption that is occurring with a combination of other financial institutions, which creates uncertainty in clients' minds in our footprint. We are in a great footprint for business. So I am very excited about our opportunity to grow organically. And at the same time, the company is extremely well positioned as you already said, from a balance sheet strength standpoint, a moderate risk profile, Our capital posture that Robert talked about is extremely strong. So it presents quite a bit of flexibility for our company going forward. I would also say that, given the improvements that we have made in our operations, than the investments we have made to improve our efficiency will also create, some scalable efficiencies and generate positive operating leverage as we go into 2027. So I am very excited about the how the organization is positioned and what we can do going forward and continue to improve returns. David Feaster: that is terrific. Thanks, everybody. Mark J. Grescovich: Thank you, David. Operator: There are no further questions at this time. I will now turn the call back to Mark for closing remarks. Please go ahead. Mark J. Grescovich: Great. Thank you, Trevor. As I have stated, we are very proud of the Banner team and our solid third quarter 2026 performance. Thank you all for your interest in Banner and for joining our call today. We look forward to reporting our results to you again in the future. Have a great day, everyone. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Banner, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Banner wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,363,905!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 22, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Banner (BANR) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

- Interested in Banner Corporation? Here are five stocks we like better. - Q3 earnings declined year over year: Net income available to common shareholders was $47.7 million, or $1.36 per diluted share, versus $1.54 a year earlier, partly reflecting Pacific Financial acquisition costs. Core pre-tax, pre-provision earnings rose to $68.6 million, while core operating revenue increased 6% to $179 million. - The Pacific Financial acquisition drove significant balance-sheet growth: Loans increased $1 billion and deposits rose $1.6 billion, including $766 million and $1 billion, respectively, from the acquisition. Banner expects mid-single-digit loan growth through the end of 2026 and into 2027. - Integration and margin trends are central to the outlook: Banner expects modest net interest margin expansion in Q4 and has achieved about 10% of its targeted cost synergies, with the full 40% expected by mid-2027. Credit quality remained broadly stable, though tangible equity declined to 9.48% following the acquisition and securities-market losses. Banner (NASDAQ:BANR) reported third-quarter 2026 net profit available to common shareholders of $47.7 million, or $1.36 per diluted share, as the company closed its previously announced Pacific Financial acquisition and recorded related expenses. The result compared with $1.54 per share in the third quarter of 2025 and $1.43 per share in the prior quarter. President and Chief Executive Officer Mark Grescovich said the acquisition affected the quarter's reported performance, while the company's core operations continued to benefit from its deposit base, net interest margin and expense controls. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over Banner reported core pre-tax, pre-provision earnings of $68.6 million, excluding securities-sale gains and losses, fair-value changes, merger-and-acquisition expenses, and building and lease exit costs. That compared with $67.8 million a year earlier. Core operating revenue rose 6% year over year to $179 million. The company reported a 1.11% return on average assets and said core deposits represented 90% of total deposits. Banner also announced a quarterly dividend of $0.52 per share. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? Chief Credit Officer Jill Rice said total loans rose $1 billion during the quarter, or 8% from the prior quarter. Of the increase, $766 million came from the Pacific Financial acquisition and $235 million reflected organic growth. On a legacy Banner basis, the organic increase equated to an annualized growth rate of about 8%. Commercial real estate was the principal contributor to loan growth. Construction loans rose $108 million, including $79 million in organic growth, while owner-occupied real estate loans increased $100 million. Commercial and industrial balances rose $72 million, and small-business balances increased $79 million through organic growth. → IonQ's Bold Expansion Could Leave Shareholders Paying the Price Rice said Banner's construction portfolio remained balanced, with one-to-four-family construction representing 5% of total loans and total construction representing 14%. The company continues to monitor completed and unsold inventory in its one-to-four-family construction portfolio, though Rice said current levels remained within historical norms and builders were cautious about new starts. Banner expects mid-single-digit loan growth through the end of 2026 and into 2027, Rice said. She noted that some clients have paused expansion plans amid the rising-rate environment, but commercial and commercial real estate pipelines remain healthy, while unfunded construction projects outside the residential portfolio could support future growth. Total deposits increased $1.6 billion, including $1 billion acquired in the Pacific Financial transaction. Excluding acquired deposits, organic deposit growth was $463 million, or 13% on an annualized basis. Chief Financial Officer Rob Butterfield said a portion of the organic growth was seasonal, particularly related to agricultural cash flows, and that roughly $100 million could leave early in the fourth quarter as customers pay down operating lines. He added that year-end client balance-sheet positioning has historically helped offset some of that outflow. Banner repaid all outstanding Federal Home Loan Bank advances during the quarter. Its loan-to-deposit ratio ended the period at 84%, while total shareholder equity increased $135 million to $2.13 billion. Net interest income increased $8.2 million from the prior quarter, supported by higher average earning assets and a modest expansion in the tax-equivalent net interest margin to 4.14% from 4.13%. Average loan yields rose 3 basis points, investment-security yields increased 7 basis points, and the average rate on new loan production was 6.55%. Funding costs also increased, with total deposit costs rising 5 basis points to 1.38%. Noninterest-bearing deposits were 32% of total deposits at quarter-end. Butterfield said Banner expects some net interest margin expansion in the fourth quarter. About 25% of the loan portfolio was expected to reprice following the September increase in the federal funds rate, while the Pacific Financial transaction was expected to add "a couple of basis points" to loan yields. Higher deposit costs are also expected as competitors raise deposit pricing. Beyond the fourth quarter, Butterfield said the margin outlook will depend largely on Federal Reserve policy and deposit-rate competition. Banner considers itself slightly asset-sensitive, meaning additional rate increases could support margin expansion, while rate cuts could result in a flat-to-moderately compressed margin. Noninterest income declined $2.8 million from the prior quarter, primarily due to a $2.1 million loss on the sale of securities acquired from Pacific Financial. Higher debit-card transaction expenses, lower mortgage and SBA loan-sale gains, and lower swap-related income also weighed on results. Noninterest expense increased $7.7 million, led by $4.9 million in merger-and-acquisition expenses, a $1.1 million increase in write-downs of foreclosed real estate holdings, and one month of operating expenses from the acquired business. Butterfield said Bank of the Pacific's quarterly expenses had been about $10 million and that Banner had achieved roughly 10% of anticipated cost synergies. The company expects to realize another 20% of planned synergies at the beginning of 2027 and the final 10% by mid-2027, reaching its targeted 40% total cost savings. Banner's credit metrics remained stable, according to Rice. Delinquent loans were 0.56% of total loans, up 5 basis points from the prior quarter and from 0.39% a year earlier. Adversely classified assets declined $9 million to 1.61% of total loans. Nonperforming assets increased $2.4 million and included $59 million of nonperforming loans and $4 million of real estate owned. Net charge-offs were modest, with loan losses of $1.2 million partly offset by $528,000 in recoveries. The provision for credit losses was $2.8 million, including $1.8 million for loan losses and $1 million for unfunded commitments. Banner also added $8.6 million to establish the initial reserve for the acquired loan portfolio. Its allowance for credit losses was 1.32% of total loans. Rice said the company is closely monitoring consumer, SBA and commercial real estate exposures, including the office portfolio. She said that issues of size have been idiosyncratic rather than broadly tied to interest rates. Banner's tangible equity-to-assets ratio was 9.48%, down from 10% at the end of the second quarter. Butterfield said the acquisition reduced the ratio by about 20 basis points, while increased unrealized losses in the securities portfolio accounted for another roughly 30 basis points. He said the company remains at the upper end of its targeted range and could consider additional share repurchases while preserving flexibility for future acquisition opportunities. Banner Corporation (NASDAQ: BANR) is a bank holding company headquartered in Walla Walla, Washington. Through its principal subsidiary, Banner Bank, the company provides banking and financial services to individuals, families, businesses and communities in the Pacific Northwest. Banner Bank offers deposit products, residential and commercial real estate lending, construction and land development loans, commercial and industrial financing, agricultural loans, consumer loans and home equity products. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What Banner (BANR) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

- Banner Corporation reported Q3 2026 results with net interest income of US$161.89 million and net income of US$47.71 million, while both revenue and earnings per share came in below analyst expectations. - Lower net charge offs of US$704,000 for the quarter, compared with US$2.2 million a year earlier, sit alongside higher operating costs and merger related expenses, giving a mixed picture of Banner's underlying profitability. - We will now look at how Banner's investment narrative holds up, given earnings missing forecasts while credit costs remained relatively low. Scan how Banner fits alongside other regional lenders by lining it up against 31 resilient stocks with low risk scores that aim to pair resilient balance sheets with steadier credit costs. To own Banner stock, you need to be comfortable with a regional bank that is leaning on core deposits, measured loan growth and tech and merger execution to keep earnings moving. The latest quarter delivered higher net interest income year on year, but EPS missed expectations, which keeps attention on whether efficiency gains can offset elevated costs. The key short term catalyst is Banner converting its Pacific Financial merger and new origination platform into a cleaner efficiency ratio. The biggest risk is that higher operating and integration expenses linger or recur, which would limit any margin improvement. Based on current information, the earnings miss looks manageable rather than thesis breaking. The most relevant fresh data point here is Banner's Q3 2026 earnings update. Net income for the quarter came in at US$47.71 million with basic EPS from continuing operations of US$1.37 and diluted EPS of US$1.36, both lower than the prior year, while revenue still grew year on year. That mix matters for the current catalysts. Investors focused on capital return and the dividend story will be weighing those slightly weaker quarterly earnings against the earlier narrative of efficiency gains and Pacific Financial synergies. With net charge offs at US$704,000 for the quarter, credit costs look contained, so execution risk sits more in expenses than in loan quality right now. Analysts currently frame Banner's medium term story around measured growth rather than big swings. The consensus view builds in revenue expanding at 10.4% a year over the next three years, paired with profit margins easing slightly from 31.0% today to 30.7% in that same window. On earnings, the group of forecasts points to profit of US$278.0 million and earnings per share of US$7.35 by 2029, up from current earnings of US$208.4 million. That implies an increase in earnings of roughly US$69.6 million over the period, even as the margin line is expected to soften a touch. Banner's narrative projects US$904.2 million revenue and US$278.0 million earnings by 2029. This builds in 10.4% yearly revenue growth and an earnings increase of about US$69.6 million from current earnings of US$208.4 million. Those estimates sit alongside an assumption that the share count edges lower, with analysts modeling a 0.3% annual decline in outstanding stock over the next three years. A slightly smaller base of shares means any given profit pool spreads across fewer units, which can help earnings per share, even if net income trends are steady rather than explosive. Valuation work in the stock reports then connects these profit targets to a P/E multiple. The analyst group uses a P/E of 11.3x on the 2029 earnings estimate, compared with about 10.8x today and just below the 11.4x marker quoted for the wider US banks sector. That gap is small, so much of the debate for you as an investor turns on whether Banner can actually hit those US$904.2 million of revenue and US$278.0 million of earnings using its Pacific Northwest footprint and recent merger and tech projects without stretching its risk profile. Uncover why Banner's fair value indicates an 11% potential upside to its current price before the market closes the gap. Don't just follow the ticker; dig into the data and build a conviction that's truly your own. - A great starting point for your Banner research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision. - See our latest analysis for Banner. The report includes a comprehensive fundamental analysis summarized in a single visual, the Snowflake, making it easy to evaluate Banner's overall financial health at a glance. Once you have a view on Banner, it can help to cross check that thesis against a wider watchlist so you see how other opportunities stack up on quality, value and income potential. - If you want to focus on value and quality together, scan a curated 33 high quality undervalued stocks that pairs stronger fundamentals with pricing that some investors may view as appealing. - For income focused investing, compare Banner's payout profile with a hand picked set of 7 dividend fortresses that aim to balance yield with resilience. - To widen your research beyond the usual tickers, look across a 21 high quality undiscovered gems that may not be widely followed but still show solid underlying numbers. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include BANR. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Management attributed third quarter performance to the successful closure of the Pacific Financial acquisition, which significantly expanded the balance sheet and client base. - Core earnings growth was driven by a resilient and loyal core deposit base, which now represents 90% of total deposits, providing a stable funding foundation. - The company maintains a moderate risk profile strategy, prioritizing safety and soundness through economic cycles while investing in operational efficiencies to drive future leverage. - Performance was bolstered by strong net interest margin expansion and disciplined core expense control despite the complexities of integrating a new acquisition. - Marketplace recognition from Forbes and Newsweek was cited as validation of Banner's 'super community bank' strategy and its value proposition to stakeholders. - The acquisition of Pacific Financial is expected to align well with Banner's existing credit culture and underwriting standards, reinforcing the company's overall risk profile. - Management anticipates moderate net interest margin expansion in the fourth quarter, supported by the repricing of 25% of the loan portfolio and the full impact of the Pacific Financial deal. - Loan growth is projected to remain in the mid-single-digit range through the end of 2026 and into 2027, despite potential headwinds from a rising interest rate environment. - Expense synergies from the Pacific Financial acquisition are expected to reach 40% in total, with 20% realized by early 2027 and the final 10% by mid-2027. - Future margin trajectory remains dependent on Fed actions; management noted a lack of market clarity for 2027, with scenarios ranging from further expansion to moderate compression. - Capital allocation priorities remain focused on the core dividend, with opportunistic share repurchases and potential M&A considered as secondary uses of excess capital. - Third quarter earnings were impacted by $4.9 million in M&A-related expenses and a $2.1 million loss on the sale of securities acquired in the merger. - The allowance for credit losses increased by $8.6 million to establish the initial reserve associated with the acquired Pacific Financial loan portfolio, while the total provision for credit losses in the quarter was $2.8 million. - Management noted a $1.1 million increase in write-downs of foreclosed real estate holdings during the quarter. - Unrealized losses in the security portfolio increased due to rising interest rates, impacting the tangible equity-to-asset ratio by approximately 30 basis points. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management expects NIM expansion in Q4 2026 due to asset repricing and the Pacific Financial integration. - For 2027, the outlook is uncertain; if the Fed pauses or raises rates, expansion continues, but rate decreases would lead to flat or compressed margins. - Growth is being driven by commercial and construction pipelines, though some clients have 'hit the pause button' due to higher rates. - Competition remains 'fierce' on pricing, but management is seeing opportunities arising from market disruptions and competitor consolidations. - The current interest-bearing deposit beta is 28%, but management is modeling a more conservative 40% for future planning. - Spot deposit costs in September were 1.40%, slightly higher than the quarterly average, reflecting increased competitive pressure. - Management repurchased 200,000 shares in September and will evaluate further buybacks in Q4 as the stock is viewed as 'very attractive'. - The target Tangible Common Equity (TCE) ratio has an upper end of 9.5%, and management sees room to bring this down while remaining above peer medians.

Banner (BANR) came out with quarterly earnings of $1.51 per share, missing the Zacks Consensus Estimate of $1.54 per share. This compares to earnings of $1.52 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -1.95%. A quarter ago, it was expected that this regional bank would post earnings of $1.47 per share when it actually produced earnings of $1.44, delivering a surprise of -2.04%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Banner, which belongs to the Zacks Financial - Savings and Loan industry, posted revenues of $177.28 million for the quarter ended September 2026, missing the Zacks Consensus Estimate by 3.06%. This compares to year-ago revenues of $170.72 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Banner shares have added about 8.8% since the beginning of the year versus the S&P 500's gain of 12.7%. While Banner has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Banner was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.57 on $193.21 million in revenues for the coming quarter and $6.15 on $717.31 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Savings and Loan is currently in the bottom 29% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Kearny (KRNY), is yet to report results for the quarter ended September 2026. The results are expected to be released on October 22. This bank holding company is expected to post quarterly earnings of $0.17 per share in its upcoming report, which represents a year-over-year change of +13.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Kearny's revenues are expected to be $46.59 million, up 7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Banner Corporation (BANR) : Free Stock Analysis Report Kearny Financial (KRNY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

For the quarter ended September 2026, Banner (BANR) reported revenue of $177.28 million, up 3.8% over the same period last year. EPS came in at $1.51, compared to $1.52 in the year-ago quarter. The reported revenue represents a surprise of -3.06% over the Zacks Consensus Estimate of $182.87 million. With the consensus EPS estimate being $1.54, the EPS surprise was -1.95%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how Banner performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: - Efficiency Ratio: 65.3% versus the five-analyst average estimate of 59.7%. - Net charge-offs / Average loans receivable: -0% compared to the 0.1% average estimate based on five analysts. - Net interest margin (tax equivalent): 4.1% versus 4.2% estimated by five analysts on average. - Average Balance - Total interest-earning assets: $15.86 billion compared to the $16.11 billion average estimate based on three analysts. - Total non-performing assets: $62.96 million versus the three-analyst average estimate of $63 million. - Total non-performing loans: $59.1 million versus $57.19 million estimated by three analysts on average. - Total Capital Ratio: 14.4% versus 14.2% estimated by two analysts on average. - Leverage Ratio: 11.6% compared to the 11.9% average estimate based on two analysts. - Tier 1 Capital Ratio: 12.6% compared to the 13.1% average estimate based on two analysts. - Net interest income: $161.89 million versus the five-analyst average estimate of $163.39 million. - Total non-interest income: $15.39 million compared to the $19.21 million average estimate based on five analysts. - Mortgage banking operations: $2.58 million versus the four-analyst average estimate of $2.97 million. View all Key Company Metrics for Banner here>>> Shares of Banner have returned -1% over the past month versus the Zacks S&P 500 composite's +1% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Banner Corporation (BANR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Regional banking company Banner Corporation (NASDAQ:BANR) fell short of the market's revenue expectations in Q3 2026 as sales rose 3% year on year to $177.3 million. Its non-GAAP profit of $1.51 per share was 3.6% below analysts' consensus estimates. Is now the time to buy Banner Bank? Find out in our full research report. - Net Interest Income: $161.9 million vs analyst estimates of $165.9 million (7.9% year-on-year growth, 2.4% miss) - Net Interest Margin: 4.1% vs analyst estimates of 4.2% (in line) - Revenue: $177.3 million vs analyst estimates of $185 million (3% year-on-year growth, 4.2% miss) - Efficiency Ratio: 65.3% vs analyst estimates of 59.7% (556.4 basis point miss) - Adjusted EPS: $1.51 vs analyst expectations of $1.57 (3.6% miss) - Tangible Book Value per Share: $45.84 vs analyst estimates of $47.14 (2.3% year-on-year growth, 2.8% miss) - Market Capitalization: $2.32 billion "Banner's results for the third quarter reflect the continued strength of our super community bank model, which prioritizes deepening client relationships, maintaining a strong funding base, and delivering exceptional service while upholding a moderate risk profile," Grescovich continued. "Our earnings for the third quarter of 2026 benefited from loan growth and the completion of the merger with Pacific Financial. These benefits were partially offset by higher non-interest expense, which primarily reflects merger related expenses. Banner continues to build on a foundation of solid credit quality, backed by a well-funded credit loss reserve and a robust capital position that offers both resilience and flexibility for future growth. At the same time, the strategic investments we have made across the organization are delivering tangible results, further positioning Banner for long-term success. We also continue to capitalize on a strong core deposit base, with core deposits representing 90% of total deposits at quarter-end. For more than 136 years, Banner has upheld its core values by consistently doing the right thing for our clients, communities, colleagues, company and shareholders. Our long-standing commitment has enabled us to earn trust, navigate change with confidence and continue building a strong foundation for the future." Founded in 1890 in Walla Walla, Washington, and evolving through more than a century of economic cycles, Banner Corporation (NASDAQ:BANR) operates Banner Bank, providing commercial banking services, loans, and financial products to individuals and businesses across Washington, Oregon, California, Idaho, and Utah. From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Regrettably, Banner Bank's revenue grew at a sluggish 3.2% compounded annual growth rate over the last five years. This was below our standard for the banking sector and is a poor baseline for our analysis. We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Banner Bank's annualized revenue growth of 5.8% over the last two years is above its five-year trend, which is encouraging. This quarter, Banner Bank's revenue grew by 3% year on year to $177.3 million, falling short of Wall Street's estimates. Net interest income made up 87.1% of the company's total revenue during the last five years, meaning Banner Bank barely relies on non-interest income to drive its overall growth. Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics. WHILE YOU'RE HERE: The Next Palantir? One satellite company captures images of every point on Earth. Every single day. The Pentagon wants it. Hedge funds are using it to beat earnings. You've probably never heard of it. This is what the early days of Palantir looked like before it became a giant. Same playbook. Different technology. If you missed Palantir, you need to see this. Claim The Stock Ticker for Free HERE. Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions. This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation. Banner Bank's TBVPS grew at a mediocre 4.2% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 5.6% annually over the last two years from $41.12 to $45.84 per share. Over the next 12 months, Consensus estimates call for Banner Bank's TBVPS to grow by 20.3% to $55.15, top-notch growth rate. We struggled to find many positives in these results. Its revenue missed and its net interest income fell short of Wall Street's estimates. Overall, this was a weaker quarter. The stock remained flat at $68.02 immediately after reporting. Is Banner Bank an attractive investment opportunity right now? If you're making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it's free.