Banner Corporation Reports Strong Third Quarter 2025 Results, Boosts Dividend
Banner Corporation (NASDAQ: BANR), the parent company of Banner Bank, announced robust financial results for the third quarter of 2025, reporting net income of $53.5 million, or $1.54 per diluted share. This represents a notable increase from $45.5 million, or $1.31 per diluted share, recorded in the previous quarter and $45.2 million, or $1.30 per diluted share, in the third quarter of 2024.
Net interest income for the quarter reached $150.0 million, up from $144.4 million in the preceding quarter and $135.7 million in the same quarter last year. The growth in net interest income reflects both higher yields and an increase in the average balance of interest-earning assets. Additionally, improved funding efficiency contributed to the year-over-year increase. Banner recorded a provision for credit losses of $2.7 million for the third quarter, compared to $4.8 million in the prior quarter and $1.7 million in the third quarter of 2024.
For the nine months ended September 30, 2025, Banner reported net income of $144.1 million, or $4.15 per diluted share, compared to $122.5 million, or $3.54 per diluted share, for the same period in 2024. These results included 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 of financial instruments carried at fair value. By contrast, the nine-month period in 2024 reflected a $4.6 million provision for credit losses, a $5.5 million net loss on securities sales, and a $1.1 million net decrease in fair value adjustments.
In conjunction with these results, Banner’s Board of Directors announced a 4% increase in its regular quarterly cash dividend to $0.50 per share, payable November 14, 2025, to shareholders of record on November 4, 2025.
CEO Commentary
Mark Grescovich, President and CEO of Banner, highlighted the bank’s strong performance, stating, “Banner’s third quarter results underscore the strength of our super community bank strategy, which emphasizes building long-term client relationships, maintaining a solid funding base, and delivering exceptional service while keeping risk at moderate levels. Our earnings benefited from consistent year-over-year loan growth and higher yields on interest-earning assets. Strategic investments across the organization are producing meaningful returns and enhancing Banner’s long-term prospects.”
Grescovich added, “Our credit quality remains strong, supported by stable metrics, a well-funded reserve for loan losses, and a robust capital position that provides flexibility for future growth. Core deposits, which account for 89% of total deposits, continue to provide a reliable funding base. For 135 years, Banner has stayed true to its values, consistently prioritizing our clients, communities, colleagues, and shareholders. This enduring commitment positions us to navigate changes confidently while building a strong foundation for the future.”
Balance Sheet and Operations Overview
As of September 30, 2025, Banner reported total assets of $16.56 billion, net loans of $11.54 billion, and total deposits of $14.02 billion. The bank operates 135 full-service branches across eight of the top 20 largest western Metropolitan Statistical Areas by population.
Third Quarter 2025 Key Highlights:
- Net Interest Margin: On a tax-equivalent basis, the margin increased to 3.98%, compared to 3.92% in the previous quarter and 3.72% in Q3 2024.
- Revenue: Total revenue rose 5% quarter-over-quarter to $170.7 million and was up 11% year-over-year from $153.7 million. Adjusted revenue, which accounts for gains/losses on securities and other adjustments, totaled $168.7 million.
- Mortgage Banking Revenue: Mortgage operations generated $3.3 million in revenue, consistent with the prior quarter and slightly higher than the same period last year. Home purchase activity accounted for 88% of one- to four-family mortgage originations.
- Return on Average Assets: Increased to 1.30% from 1.13% in both the preceding quarter and Q3 2024.
- Loan and Deposit Growth: Net loans grew slightly to $11.54 billion from $11.53 billion in the previous quarter and rose 4% from $11.07 billion a year ago. Total deposits increased 4% to $14.02 billion, with core deposits maintaining a strong 89% of total deposits.
- Non-Performing Assets: Reduced to $45.3 million, or 0.27% of total assets, compared to $49.8 million, or 0.30%, in the prior quarter.
- Shareholder Equity: Common shareholders’ equity per share increased 3% to $55.71, while tangible common equity per share rose 4% to $44.79. Banner repurchased 250,000 shares during the quarter at an average price of $63.11.
Income Statement Highlights:
Net interest income rose to $150.0 million, with yields on interest-earning assets increasing three basis points to 5.43%. Loan yields grew to 6.17%, driven by new loan originations and higher repricing on adjustable-rate loans. Interest expense remained stable at $55.9 million, while total funding costs decreased to 1.57%, reflecting lower borrowing costs and effective use of deposits to reduce reliance on FHLB advances.
Provision for credit losses totaled $2.7 million, reflecting portfolio mix changes and individually evaluated loans. Non-interest income increased to $20.7 million, driven primarily by gains on asset dispositions. Non-interest expenses were $102.0 million, slightly higher than the prior quarter due to increased marketing and employee-related costs, partially offset by lower salary and benefit expenses. Banner’s efficiency ratio improved to 59.76%, with the adjusted efficiency ratio at 58.54%, reflecting controlled operating expenses and stronger net interest margins.
Balance Sheet Review:
Total assets grew to $16.56 billion, with securities and interest-bearing deposits held at other banks totaling $3.47 billion. Total loans reached $11.70 billion, with commercial real estate loans increasing 5% year-over-year to $4.0 billion and construction loans rising 14% to $1.74 billion. Commercial business loans were slightly lower quarter-over-quarter but up 3% year-over-year. Loans held for sale declined as loan sales outpaced originations.
Deposits rose 4% to $14.02 billion, with core deposits increasing to $12.48 billion. Certificates of deposit increased modestly to $1.54 billion. FHLB advances decreased 82% to $100 million as deposits were used to fund operations. Off-balance-sheet liquidity included $3.25 billion in FHLB borrowing capacity, $1.63 billion at the Federal Reserve, and $125 million in federal funds lines.
Common shareholders’ equity totaled $1.91 billion, or 11.55% of assets, with tangible common equity at $1.54 billion, or 9.50% of tangible assets. Banner maintains capital well above regulatory requirements, with an estimated common equity Tier 1 ratio of 12.78%, Tier 1 leverage of 11.33%, and total capital to risk-weighted assets of 14.66%.
Credit Quality:
Banner’s allowance for credit losses on loans stood at $159.7 million, or 1.36% of total loans, covering 399% of non-performing loans. Net loan charge-offs totaled $2.2 million for the quarter. Non-performing loans were $40.0 million, while substandard loans decreased to $174.0 million. Total non-performing assets were 0.27% of total assets, demonstrating continued strong credit quality.
Conference Call Information:
Banner will host a conference call to discuss third-quarter results on Thursday, October 16, 2025, at 8:00 a.m. PDT. Interested investors can access the live webcast at Investment professionals may dial (833) 470-1428, access code 613608. A replay will also be available on the company’s website.
