Banner Corporation

What they do

Banner is a bank holding company incorporated in Washington that wholly owns Banner Bank, a Washington-chartered commercial bank headquartered in Walla Walla. As of June 30, 2026, it operated 135 branch offices and 15 loan production offices in Washington, Oregon, California, Idaho, Utah and Nevada. Its primary business is traditional banking: taking deposits and originating loans to individuals, businesses and public sector entities. It also runs mortgage banking operations through origination and sale of one- to four-family residential loans, and lends in commercial business, commercial real estate, agriculture, construction, multifamily, SBA and consumer categories. Banner is regulated by the Federal Reserve, the Washington DFI and the FDIC, and its stock trades on NASDAQ under "BANR."

Revenue drivers

• Net interest income — The dominant revenue source, at $587.9 million in 2025 versus $541.7 million in 2024, earned on loans and investment securities funded by client deposits, FHLB advances, other borrowings and junior subordinated debentures.
• Deposit fees and other service charges — Fee income of $43.2 million in 2025, essentially flat versus $43.4 million in 2024, generated from client deposit accounts and banking services.
• Mortgage banking operations — Revenue of $13.2 million in 2025 versus $12.2 million in 2024, from originating and selling one- to four-family residential loans into the secondary market; $2.8 million in Q2 2026 versus $3.2 million in the preceding quarter.
• All other non-interest income — Includes net gains or losses on securities sales and fair-value changes, plus $17.3 million of other non-interest income in 2025; total non-interest income was $72.8 million in 2025 versus $66.9 million in 2024.

Recent performance

For the second quarter of 2026, Banner reported net income of $48.9 million, or $1.43 per diluted share, compared with $54.7 million, or $1.60 per diluted share, in the preceding quarter, and $45.5 million, or $1.31 per diluted share, in the second quarter of 2025. Net interest income was $153.7 million, up from $150.2 million in the preceding quarter and $144.4 million a year earlier, and revenue was $172.0 million. The quarter included a $3.8 million provision for credit losses versus a $796,000 recapture in the preceding quarter, and non-performing assets rose to $60.5 million, or 0.36% of total assets, from $51.7 million, or 0.32%. Net loans receivable grew to $11.83 billion at June 30, 2026 from $11.55 billion at March 31, 2026, while total deposits slipped to $13.79 billion from $13.84 billion. For the first half of 2026, net income was $103.6 million, or $3.03 per diluted share, compared with $90.6 million, or $2.61 per diluted share, a year earlier.

Strategy

Management describes its operating model as a "super community bank," seeking to pair regional-bank product breadth with community-bank service for middle market and small businesses, business owners and their families and employees. Stated longer-term priorities are originating high-quality assets and acquiring clients while maintaining a moderate risk profile, along with efficiency, talent retention and technology improvements. The company is investing in its delivery platform, digital service and account origination capabilities, and marketing to raise brand awareness, while noting that mobile and digital banking adoption has accelerated and branch transaction volume has declined. It is also expanding through acquisition: on April 30, 2026, it agreed to acquire Pacific Financial Corporation, parent of Bank of the Pacific, in an all-stock deal at 0.2633 Banner shares per Pacific Financial share, expected to close in the third quarter of 2026.

Risks

• Pacific Financial acquisition may not close — The all-stock acquisition of Pacific Financial Corporation, parent of Bank of the Pacific, remains subject to Pacific Financial shareholder and regulatory approvals and other closing conditions, and Banner states there is no assurance it will be completed on the anticipated timetable or at all.
• Rising non-performing assets — Non-performing assets increased to $60.5 million, or 0.36% of total assets, at June 30, 2026, from $51.7 million, or 0.32%, at March 31, 2026, and from $51.2 million, or 0.31%, at December 31, 2025.
• Credit loss exposure and provisioning — The allowance for credit losses on loans was $161.8 million, or 1.35% of total loans receivable, at June 30, 2026, and the quarter included a $3.8 million provision for credit losses after a recapture in the preceding quarter.
• Funding cost and borrowing dependence — Net interest income is sensitive to deposit costs and borrowings; the company attributed part of the increase in net interest income versus the prior quarter to margin expansion offset by higher interest expense associated with increased FHLB borrowings, and borrowings stood at $336.9 million at December 31, 2025.

Outlook

Management ties its outlook to continued execution of the super community bank model, citing second quarter 2026 robust loan growth, a well-funded credit loss reserve and a robust capital position. It expects recent investments, including new software intended to enhance efficiency, to support long-term growth. The company also expects the Pacific Financial acquisition to close in the third quarter of 2026, adding density in Western Washington and Western Oregon markets, subject to shareholder and regulatory approvals.