WALLA WALLA, Wash.--(BUSINESS WIRE)-- Banner Corporation (NASDAQ: BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $53.5 million, or $1.54 per diluted share, for the third quarter of 2025, compared to $45.5 million, or $1.31 per diluted share, for the preceding quarter and $45.2 million, or $1.30 per diluted share, for the third quarter of 2024. Net interest income was $150.0 million for the third quarter of 2025, compared to $144.4 million in the preceding quarter and $135.7 million for the third quarter a year ago. The increase in net interest income compared to the preceding quarter and the prior year quarter reflects an increase in both the yield and average balance of interest-earning assets. The increase in net interest income compared to the prior year quarter also reflects a decrease in overall funding costs. Third quarter 2025 results included a $2.7 million provision for credit losses, compared to $4.8 million in the preceding quarter and $1.7 million in the third quarter of 2024. Net income was $144.1 million, or $4.15 per diluted share, for the nine months ended September 30, 2025, compared to net income of $122.5 million, or $3.54 per diluted share, for the nine months ended September 30, 2024. Banner’s results for the nine months ended September 30, 2025 include a $10.6 million provision for credit losses, a $374,000 net gain on the sale of securities and a $626,000 net increase in the fair value adjustments on financial instruments carried at fair value, compared to a $4.6 million provision for credit losses, a $5.5 million net loss on the sale of securities and a $1.1 million net decrease in the fair value adjustments on financial instruments carried at fair value during the same period in 2024.

Banner announced that its Board of Directors increased its regular quarterly cash dividend by 4% to $0.50 per share payable November 14, 2025, to common shareholders of record on November 4, 2025.

“Banner’s third quarter performance reflects the continued strength of our super community bank strategy, which focuses on building client relationships, preserving a strong funding base, and delivering exceptional service while sustaining a moderate risk profile,” said Mark Grescovich, President and CEO. “Our earnings for the third quarter of 2025 benefited from solid year over year loan growth as well as higher yields on interest-earning assets. The strategic investments we have made across the organization are generating meaningful returns and are further strengthening Banner for long-term success. Additionally, Banner continues to demonstrate strong credit quality, supported by stable credit metrics, a well-funded reserve for loan losses, and a robust capital position that provides resilience and flexibility for future growth. We also continue to benefit from a strong core deposit base, with core deposits representing 89% of total deposits at quarter-end. For 135 years, Banner has stayed true to 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 navigate change with confidence and continue building a strong foundation for the future.”

At September 30, 2025, Banner, on a consolidated basis, had $16.56 billion in assets, $11.54 billion in net loans and $14.02 billion in deposits. Banner operates 135 full-service branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.

Third Quarter 2025 Highlights

• Net interest margin, on a tax equivalent basis, was 3.98% for the current quarter, compared to 3.92% in the preceding quarter and 3.72% in the third quarter a year ago.
• Revenue increased 5% to $170.7 million for the third quarter of 2025, compared to $162.2 million in the preceding quarter and increased 11% from $153.7 million in the third quarter a year ago.
• Adjusted revenue* (the total of net interest income and total non-interest income adjusted for the net gain or loss on the sale of securities, the net change in valuation of financial instruments, and gains or losses incurred on building and lease exits) was $168.7 million in the third quarter of 2025, compared to $163.0 million in the preceding quarter and $153.7 million in the third quarter a year ago.
• Net interest income was $150.0 million in the third quarter of 2025, compared to $144.4 million in the preceding quarter and increased 11% from $135.7 million in the third quarter a year ago.
• Mortgage banking operations revenue was $3.3 million for the third quarter of 2025, compared to $3.2 million in both the preceding quarter and the third quarter a year ago.
• Return on average assets was 1.30% for the third quarter of 2025, compared to 1.13% in both the preceding quarter and third quarter a year ago.
• Net loans receivable were $11.54 billion at September 30, 2025, compared to $11.53 billion at June 30, 2025, and increased 4% compared to $11.07 billion at September 30, 2024.
• Total deposits increased 4% to $14.02 billion at September 30, 2025, compared to $13.53 billion at June 30, 2025 and $13.54 billion at September 30, 2024.
• Core deposits represented 89% of total deposits at September 30, 2025.
• Non-performing assets were $45.3 million, or 0.27% of total assets, at September 30, 2025, compared to $49.8 million, or 0.30% of total assets, at June 30, 2025 and $45.2 million, or 0.28% of total assets, at September 30, 2024.
• The allowance for credit losses - loans was $159.7 million, or 1.36% of total loans receivable, as of September 30, 2025, compared to $160.5 million, or 1.37% of total loans receivable, as of June 30, 2025 and $154.6 million, or 1.38% of total loans receivable, as of September 30, 2024.
• Dividends paid to shareholders were $0.48 per share in the quarter ended September 30, 2025.
• Common shareholders’ equity per share increased 3% to $55.71 at September 30, 2025, compared to $53.95 at the preceding quarter end, and increased 7% from $52.06 at September 30, 2024.
• Tangible common shareholders’ equity per share* increased 4% to $44.79 at September 30, 2025, compared to $43.09 at June 30, 2025, and increased 9% from $41.12 at September 30, 2024.
• Repurchased 250,000 shares of Banner common stock during the third quarter of 2025 at an average price of $63.11 per share.

*Non-GAAP (Generally Accepted Accounting Principles) financial measure; See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

Income Statement Review

Net interest income was $150.0 million in the third quarter of 2025, compared to $144.4 million in the preceding quarter and $135.7 million in the third quarter a year ago. Net interest margin, on a tax equivalent basis, increased six basis points to 3.98% for the third quarter of 2025, compared to 3.92% for the preceding quarter, and increased 26 basis points compared to 3.72% in the third quarter a year ago. The net interest margin for the current quarter benefited from higher yields on interest-earning assets and lower funding costs.

Interest income was $205.8 million in the third quarter of 2025, compared to $200.3 million in the preceding quarter and $195.8 million in the third quarter a year ago. Average yields on interest-earning assets increased three basis points to 5.43% for the third quarter of 2025, compared to 5.40% for the preceding quarter, and increased 10 basis points compared to 5.33% in the third quarter a year ago, primarily due to increases in average loan yields. Average loan yields increased five basis points to 6.17%, compared to 6.12% in the preceding quarter, and increased 13 basis points compared to 6.04% in the third quarter a year ago. The increase in average loan yields during the current quarter primarily reflects new loans being originated at higher interest rates and adjustable-rate loans repricing higher.

Interest expense was $55.9 million in both the third quarter of 2025 and the preceding quarter, compared to $60.2 million in the third quarter a year ago. Total deposit costs increased three basis points to 1.50% in the third quarter of 2025, compared to 1.47% the preceding quarter and decreased 11 basis points compared to 1.61% in the third quarter a year ago. The decrease in deposit costs in the current quarter compared to the same quarter a year ago was primarily due to interest rate declines in the second half of 2024. The average rate paid on borrowings decreased 29 basis points to 4.18% in the third quarter of 2025, compared to 4.47% in the preceding quarter, and decreased compared to 5.08% in the third quarter a year ago, primarily due to declines in both market interest rates and the average balance of borrowings. The total cost of funding liabilities decreased three basis points to 1.57% in the third quarter of 2025, compared to 1.60% in the preceding quarter, primarily due to a decrease in the average balance of FHLB advances, as the increase in deposits was used to pay down borrowings. The total cost of funding liabilities also decreased 16 basis points from 1.73% in the third quarter a year ago, primarily due to deposit interest rate declines and decreases in both the average balance and cost of borrowings, partially offset by an increase in the average balance of interest-bearing deposits.

A $2.7 million provision for credit losses was recorded in the current quarter (comprised of a $1.4 million provision for credit losses - loans and a $1.3 million provision for credit losses - unfunded loan commitments). This compares to a $4.8 million provision for credit losses in the prior quarter (comprised of a $4.2 million provision for credit losses - loans and a $588,000 provision for credit losses - unfunded loan commitments) and a $1.7 million provision for credit losses in the third quarter a year ago (comprised of a $2.0 million provision for credit losses - loans and a $262,000 recapture of provision for credit losses - unfunded loan commitments). The provision for credit losses in the quarter was driven by changes in both portfolio mix and individually evaluated loans.

Total non-interest income was $20.7 million in the third quarter of 2025, compared to $17.8 million in the preceding quarter and $18.1 million in the third quarter a year ago. The increase from the preceding quarter was primarily due to a $2.0 million increase in miscellaneous income, which reflected gains recognized on the sale of assets during the current quarter, compared to losses incurred on building and lease exits during the prior quarter associated with Banner’s reduction of excess office space. The increase compared to the prior year quarter was also primarily due to the increase in miscellaneous income resulting from the disposition of assets. Total non-interest income was $57.6 million for the nine months ended September 30, 2025, compared to $46.9 million for the same period a year earlier.

Mortgage banking operations revenue was $3.3 million in the third quarter of 2025, compared to $3.2 million in both the preceding quarter and the third quarter a year ago. The volume of one- to four-family loans sold during the current quarter increased compared to both the preceding quarter and the prior year quarter. Home purchase activity accounted for 88% of one- to four-family mortgage loan originations in the third quarter of 2025, compared to 85% in the preceding quarter and 88% in the third quarter of 2024.

Total non-interest expense was $102.0 million in the third quarter of 2025, compared to $101.3 million in the preceding quarter and $96.3 million in the third quarter of 2024. The increase from the previous quarter reflected a $450,000 increase in miscellaneous expense due to an increase in talent acquisition and other employee related expenses and a $308,000 increase in advertising and marketing expenses due to increases in direct mail marketing and community development expenses, partially offset by a $551,000 decrease in salary and employee benefits resulting from decreased medical premiums expense and payroll taxes. In addition, the current quarter included losses of $1.0 million in building and lease exit costs, compared to $834,000 of such costs in the previous quarter. The increase compared to the same quarter a year ago primarily reflects increases in salary and employee benefits, information and computer data services and professional and legal expenses. For the nine months ended September 30, 2025, total non-interest expense was $304.6 million, compared to $292.1 million for the nine months ended September 30, 2024.

Banner’s efficiency ratio was 59.76% for the third quarter of 2025, compared to 62.50% in the preceding quarter and 62.63% in the same quarter a year ago. Banner’s adjusted efficiency ratio, a non-GAAP financial measure, was 58.54% for the third quarter of 2025, compared to 60.28% in the preceding quarter and 61.27% in the year-ago quarter. The improvement in Banner’s efficiency ratio compared to both the preceding and prior year quarters primarily reflected stronger net interest margins, combined with controlled growth in operating expenses. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.

Balance Sheet Review

Total assets were $16.56 billion at September 30, 2025, up from $16.44 billion at June 30, 2025 and $16.19 billion at September 30, 2024. The increase compared to the prior quarter was primarily due to an increase in interest-bearing deposits held at other banks, partially offset by decreases in securities. Securities and interest-bearing deposits held at other banks totaled $3.47 billion at September 30, 2025, compared to $3.29 billion at June 30, 2025 and $3.50 billion at September 30, 2024. The average effective duration of the securities portfolio was approximately 6.4 years at September 30, 2025, compared to 6.3 years at September 30, 2024.

Total loans receivable were $11.70 billion at September 30, 2025, up from $11.69 billion at June 30, 2025 and up 4% compared to $11.22 billion at September 30, 2024. Commercial real estate loans increased to $4.00 billion at September 30, 2025, compared to $3.97 billion at June 30, 2025, and increased 5% compared to $3.79 billion at September 30, 2024. The increase in commercial real estate loans from both June 30, 2025 and September 30, 2024 was a combination of both new loan production and the conversion of commercial construction loans to the commercial real estate portfolio upon the completion of the construction phase. Construction, land and land development loans increased 2% to $1.74 billion at September 30, 2025, compared to $1.70 billion at June 30, 2025, and increased 14% compared to $1.53 billion at September 30, 2024. The increase from both June 30, 2025 and September 30, 2024 was primarily due to new production and advances, partially offset by payoffs and transfers to the portfolio upon the completion of the construction phase. Commercial business loans decreased 2% to $2.43 billion at September 30, 2025, compared to $2.47 billion at June 30, 2025, primarily due to payoffs and paydowns outpacing new loan production, and increased 3% compared to $2.37 billion at September 30, 2024, primarily as a result of new loan production.

Loans held for sale were $20.3 million at September 30, 2025, compared to $37.7 million at June 30, 2025 and $78.8 million at September 30, 2024. One- to four- family residential mortgage held for sale loans sold in the current quarter totaled $136.9 million, compared to $104.6 million in the preceding quarter and $95.0 million in the third quarter a year ago. The decrease in loans held for sale compared to the preceding and prior year quarters was primarily the result of increased sales of one- to four- family residential mortgage loans held for sale, with loan sales outpacing originations during the quarter.

Total deposits were $14.02 billion at September 30, 2025, compared to $13.53 billion at June 30, 2025 and $13.54 billion a year ago. Core deposits increased 4% to $12.48 billion at September 30, 2025, compared to $12.05 billion at June 30, 2025, and increased 4% compared to $12.02 billion at September 30, 2024. The increase compared to the preceding and prior year quarters primarily reflects increases in interest-bearing transaction and savings accounts. Core deposits remain stable at 89% of total deposits at September 30, 2025, June 30, 2025 and September 30, 2024. Certificates of deposit increased 4% to $1.54 billion at September 30, 2025, compared to $1.48 billion at June 30, 2025, and increased from $1.52 billion a year earlier.

FHLB advances decreased 82% to $100.0 million at September 30, 2025, compared to $565.0 million at June 30, 2025 and decreased 57% compared to $230.0 million a year ago as deposits were used as the primary source of funds during the current quarter. At September 30, 2025, off-balance sheet liquidity included additional borrowing capacity of $3.25 billion at the FHLB and $1.63 billion at the Federal Reserve, as well as federal funds line of credit agreements with other financial institutions of $125.0 million.

At September 30, 2025, total common shareholders’ equity was $1.91 billion or 11.55% of total assets, compared to $1.87 billion or 11.35% of total assets at June 30, 2025, and $1.79 billion or 11.08% of total assets at September 30, 2024. The increase at September 30, 2025 compared to June 30, 2025 was due to a $36.7 million increase in retained earnings resulting from $53.5 million in net income, partially offset by the accrual of $16.8 million of cash dividends during the third quarter of 2025. In addition, Banner repurchased 250,000 shares of its common stock in the third quarter of 2025 at an average price of $63.11 per share. At September 30, 2025, tangible common shareholders’ equity, a non-GAAP financial measure, was $1.54 billion, or 9.50% of tangible assets, compared to $1.49 billion, or 9.28% of tangible assets, at June 30, 2025, and $1.42 billion, or 8.96% of tangible assets, a year ago. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized.” At September 30, 2025, Banner’s estimated common equity Tier 1 capital ratio was 12.78%, its estimated Tier 1 leverage capital to average assets ratio was 11.33%, and its estimated total capital to risk-weighted assets ratio was 14.66%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.

Credit Quality

The allowance for credit losses - loans was $159.7 million, or 1.36% of total loans receivable and 399% of non-performing loans, at September 30, 2025, compared to $160.5 million, or 1.37% of total loans receivable and 373% of non-performing loans, at June 30, 2025, and $154.6 million, or 1.38% of total loans receivable and 359% of non-performing loans, at September 30, 2024. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $14.0 million at September 30, 2025, compared to $12.8 million at June 30, 2025, and $13.8 million at September 30, 2024. Net loan charge-offs totaled $2.2 million in the third quarter of 2025, compared to net loan charge-offs of $1.0 million and $230,000 in the preceding quarter and third quarter a year ago, respectively. Non-performing loans were $40.0 million at September 30, 2025, compared to $43.0 million at June 30, 2025, and $43.0 million a year ago. Substandard loans were $174.0 million as of September 30, 2025, compared to $189.5 million as of June 30, 2025 and $150.1 million a year ago. Total non-performing assets were $45.3 million, or 0.27% of total assets, at September 30, 2025, compared to $49.8 million, or 0.30% of total assets, at June 30, 2025, and $45.2 million, or 0.28% of total assets, a year ago.

Conference Call

Banner will host a conference call on Thursday, October 16, 2025, at 8:00 a.m. PDT, to discuss its third quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (833) 470-1428 using access code 613608 to participate in the call. A replay of the call will be available at www.bannerbank.com.

About the Company

Banner Corporation is a $16.56 billion bank holding company operating a commercial bank in four Western states through a network of branches offering a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.

Forward-Looking Statements

When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “may,” “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” “potential,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made and based only on information then actually known to Banner. Banner does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Forward-looking statements may relate to, among other things, future financial performance, strategic plans or objectives, revenues or earnings projections, and other financial or operational information. These statements are inherently subject to numerous risks and uncertainties, including ongoing market volatility and evolving global conditions, which may cause actual results to differ materially from those expressed or implied. These factors include, but are not limited to: (1) adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of labor shortages, elevated inflation, recessionary pressures, or slowing economic growth; (2) changes in interest rate levels and the duration of such changes, including actions by the Federal Reserve, which could materially affect our net interest margin, funding costs, asset values, access to capital and liquidity; (3) the impact of inflation and monetary and fiscal policy responses thereto, and their impact on consumer and business behavior; (4) geopolitical developments and international conflicts, including but not limited to tensions or instability in Eastern Europe, the Middle East, and Asia, or the imposition of new or increased tariffs and trade restrictions, which may disrupt financial markets, global supply chains, energy prices, or economic activity in specific industry sectors, including, but not limited to, agriculture-based lending; (5) the effects of federal government shutdowns, debt ceiling standoff, or other fiscal policy uncertainty; (6) the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; (7) expectations regarding key growth initiatives and strategic priorities; (8) credit risks from lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (9) results of examinations by regulatory authorities, which could result in the imposition of penalties, required changes to our business practices, or additional reserves; (10) competitive pressures among depository and non-depository institutions affecting pricing, market share or product offerings; (11) fluctuations in real estate values; (12) the ability to adapt to rapid technological changes, including advancements in artificial intelligence, digital banking, and cybersecurity; (13) vulnerabilities in information systems or third-party service providers, including disruptions, breaches, or attacks; (14) market volatility or deterioration in capital markets affecting liquidity, valuations, or investor confidence; (15) the costs, effects and outcomes of litigation or other legal proceedings involving the Company; (16) legislation or regulatory changes, including but not limited to shifts in capital requirements, banking regulation, tax laws, or consumer protection laws; (17) climate-related risks and natural disasters, which may affect loan collateral, operations, or compliance obligations; (18) changes in accounting principles, policies or guidelines; (19) the impact of future acquisitions or business combinations, including related goodwill impairment risks and integration challenges; (20) effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; (21) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (22) other risks detailed from time to time in Banner’s other reports filed with and furnished to the Securities and Exchange Commission including Banner’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.