Banner Q4 2025 Banner Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Banner Corp Earnings Call
See, and I'll be coordinating your call today.
during the presentation, you can register a question by pressing star, followed by 1 on your telephone keypad,
If you change your mind, please press star followed by 2.
It is now my pleasure to hand over to president and CEO Mark greskovich to begin. Please go ahead.
Thank you, Lucy and
and full year 2025 earnings call for Banner Corporation.
Joining me on the call today is Rob Butterfield Banner corporation's Chief Financial Officer.
Joe Wright. Our chief credit officer.
And Rich Arnold are head of investor relations.
Rich. Would you please read our forward-looking Safe Harbor statement?
Sure, Mark. Good morning our presentation today, discusses banners 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, forecasts of financial or other performance measures.
Statements about banners General. I'll look for economic and other conditions. We also may make other forward-looking statements in the question and answer period following Management's discussion.
Before looking statements are subject to a number of risks and uncertainties and actual results May differ materially from those discussed today information on the risk factors. That could cause actual results to differ are available in the earnings press. Press release that was released yesterday and the recently filed form 10q for the quarter ended. September 30th. 2025 we're looking statements are effective only as of the day they are made and banner assumes. No obligation to update information concerning its expectations, mark.
Thank you, rich.
As is customary today, we will cover 4 primary items with you.
First, I will provide you high level comments on banners fourth quarter and full year 2025 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, you'll rights will provide comments on the current status of our loan portfolio.
And finally Rock 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 wanted to thank all of my 2,000 colleagues in our company who are working, extremely hard to assist our clients and communities.
Banner has lived our core values summed up as doing the right thing for the past 135 years.
Our overarching goal continues to be to do the right thing for our clients. Our communities
Speaker #1: First, I will provide you high-level comments on BANNER'S fourth quarter and full year 2025 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.
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.
Speaker #1: Third, Jill Rice will provide comments on the current status of our loan portfolio, and finally, Rob Butterfield will provide more detail on our operating performance for the quarter, as well as comments on our balance sheet.
I am very proud of the entire Banner team that are living our core values.
Now, let me turn to an overview of our performance.
Speaker #1: Before I get started, I wanted to thank all of my 2,000 colleagues in our company who are working extremely hard to assist our clients and communities.
As announced Banner Corporation reported in that profit available to Common shareholders of 51.2 million or $1.49 per diluted, share for the quarter ended December 31st 2025.
Speaker #1: BANNER has lived our core values, summed up as doing the right thing, for the past 135 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.
This compares to a net profit to Common shareholders of 1.54 cents per share for the third quarter of 2025.
And 1.34 cents per share for the fourth quarter of 2024.
For the full year, ended December, 31st 2025.
Speaker #1: I am pleased to report again to you that, as exactly what we continue to do. I am very proud of the entire BANNER team that are living our core values.
Banner reported net income available to Common shareholders of 195.4 million or 5.64 cents per diluted share compared to 168.9 million for $4.88 per share for the year. Ended December 31st 2024.
Speaker #1: Now, let me turn to an overview of our performance. As announced, Banner Corporation reported a net profit available to common shareholders of $51.2 million, or $1.49 per diluted share, for the quarter ended December 31, 2025.
Our strategy to maintain a moderate risk profile and the Investments we have made and continue to make in order to improve our operating performance, have positioned the company. Well for the future.
Rob will discuss these in more detail shortly.
Speaker #1: This compares to a net profit to common shareholders of $1.54 per share for the third quarter of 2025 and $1.34 per share for the fourth quarter of 2024.
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.
Speaker #1: For the full year ended December 31st, 2025, BANNER reported net income available to common shareholders of $195.4 million or $5.64 per diluted share compared to $168.9 million or $4.88 per share for the year ended December 31st, 2024.
I would direct your attention to pre-tax pre-provision earnings, excluding gains and losses on the sale of securities.
Changes in fair, value of financial instruments.
And building and Lease exit costs.
For the full year 2025.
Core earnings were 255 million compared to 223.2 million for the full year of 2024.
Speaker #1: Our strategy to profile, and the investments we have made, maintain a moderate risk and continue to make in order to improve our operating performance have positioned the company well for the future.
Speaker #1: Rob will discuss these in more detail shortly. The strength of our balance sheet, coupled with the strong reputation we maintain in our markets, will allow us to manage through the current market uncertainty.
Banners fourth quarter, 2025 revenue. From core operations, was 170 million compared to 169 million for the prior quarter and 160 million for the fourth quarter of 2024.
Speaker #1: To illustrate the core earnings power of BANNER, I would direct your attention to pre-tax pre-provision earnings excluding gains and losses on the sale of securities, changes in fair value of financial instruments, and building and lease exit costs.
the full year, 2025 core Revenue was 661 million compared to 615 million dollars for the full year of 2024, an increase of 8%
We continue to benefit from a strong core deposit phase that has proved to be resilient and loyal to Banner.
A very good, net, interest margin and core expense control.
Speaker #1: For the full year 2025, core earnings were $255 million compared to $223.2 million for the full year of 2024. BANNER's fourth quarter 2025 revenue from core operations was $170 million, compared to $169 million for the prior quarter and $160 million for the fourth quarter of 2024.
Mark J. Grescovich: First, I will provide you high-level comments on Banner's fourth quarter and full year 2025 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, Rob 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 wanted to thank all of my 2,000 colleagues in our company who are working extremely hard to assist our clients and communities. Banner has lived our core values, summed up as "doing the right thing," for the past 135 years.
Mark J. Grescovich: First, I will provide you high-level comments on Banner's fourth quarter and full year 2025 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, Rob 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 wanted to thank all of my 2,000 colleagues in our company who are working extremely hard to assist our clients and communities. Banner has lived our core values, summed up as "doing the right thing," for the past 135 years.
overall, this resulted in a return on average assets of 1.24% for the fourth quarter of 2025
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.
Speaker #1: The full year 2025 core revenue was $661 million, compared to $615 million for the full year of 2024, an increase of 8%. 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.
To that point, our core deposits continue to represent 89% of total deposits.
Reflective of this performance.
With our strong regulatory Capital ratios, in the fact that we increase, our tangible common Equity per share by 14% from the same period last year.
Mark J. Grescovich: 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 are 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 $51.2 million, or $1.49 per diluted share, for the quarter ended 31 December 2025. This compares to a net profit to common shareholders of $1.54 per share for the third quarter of 2025 and $1.34 per share for the fourth quarter of 2024.
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 are 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 $51.2 million, or $1.49 per diluted share, for the quarter ended 31 December 2025. This compares to a net profit to common shareholders of $1.54 per share for the third quarter of 2025 and $1.34 per share for the fourth quarter of 2024.
We announced a core dividend of 50 cents per common share.
Speaker #1: Overall, this resulted in a return on average assets of 1.24% for the fourth quarter of 2025. Once again, our core performance reflects continued execution on our super community bank strategy.
Finally, I'm 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 and 1 of the best banks in the world by Forbes.
Speaker #1: 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.
Newsweek named Banner 1 of the most trustworthy companies in America.
In the world again this year and just recently, again named Banner 1 of the best Regional banks in the country.
JD Power and Associates named Banner Bank. The best bank in the Northwest for retail client satisfaction.
Speaker #1: To that point, our core deposits continue to represent 89% of total deposits. Reflective of this performance, coupled with our strong regulatory capital ratios and the fact that we increased our tangible common equity per share by 14% from the same period last year, we announced a core dividend of $0.50 per common share.
Our company was also recently certified by great place to work.
And S&P Global Market intelligence, ranked banners financial performance. Among the top 50 Public banks with more than 10 billion dollars in assets.
Additionally, as we've noted previously Banner Bank received an outstanding CRA rating.
Speaker #1: Finally, I'm pleased to say that we continue to receive marketplace recognition and validation of our business model and our value proposition. BANNER was again named one of America's 100 best banks and one of the best banks in the world by Forbes.
Mark J. Grescovich: For the full year ended 31 December 2025, Banner reported net income available to common shareholders of $195.4 million, or $5.64 per diluted share, compared to $168.9 million, or $4.88 per share for the year ended 31 December 2024. Our strategy to maintain a moderate risk profile and the investments we have made and continue to make in order to improve our operating performance have positioned the company well for the future. Rob will discuss these in more detail shortly. 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 pre-tax, pre-provision earnings, excluding gains and losses on the sale of securities, changes in fair value of financial instruments, and building and lease exit costs.
For the full year ended 31 December 2025, Banner reported net income available to common shareholders of $195.4 million, or $5.64 per diluted share, compared to $168.9 million, or $4.88 per share for the year ended 31 December 2024. Our strategy to maintain a moderate risk profile and the investments we have made and continue to make in order to improve our operating performance have positioned the company well for the future. Rob will discuss these in more detail shortly. 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 pre-tax, pre-provision earnings, excluding gains and losses on the sale of securities, changes in fair value of financial instruments, and building and lease exit costs.
Let me count now, turn the call over to Jill to discuss Trends in our loan portfolio and her comments on Banner's credit quality. Jill.
Thank you, Mark and good morning everyone.
Speaker #1: Newsweek named Banner one of the most trustworthy companies in America and the world again this year, and just recently again named Banner one of the best regional banks in the country.
In spite of the followed level of loan. Originations up 9% compared to the linked. Carter and 8% when compared to the quarter ending 1231202024, we experienced negligible loan growth, during the quarter,
Speaker #1: J.D. Power and Associates named BANNER Bank the best bank in the Northwest for retail client satisfaction. Our company was also recently certified by Great Place to Work.
Loan Production was offset by higher than expected. Affordable. Housing credit tax housing tax. Credit pay Downs. A small number of both CRA and shared National Credit, payoffs and significantly lower cni line. Utilization down, 3% in a quarter and 4% year-over-year.
Speaker #1: And S&P Global Market Intelligence ranked BANNER's financial performance among the top 50 public banks with more than $10 billion in assets. Additionally, as we've noted previously, BANNER Bank received an outstanding CRA rating.
Is increased 3.2%.
Within the commercial real estate portfolio. We reported solid growth year-over-year with investor CRA, increasing 5% and owner, occupied CRA increasing 11%.
Speaker #1: Let me now turn the call over to Jill to discuss trends in our loan portfolio and her comments on BANNER's credit quality.
This growth was Diversified both in product type and geography and was granular in nature with our small business teams. Providing nearly 40% of the owner occupied originations by dollar.
Speaker #1: Jill? Thank you,
Speaker #2: Mark, and good morning, everyone. In spite of the solid level of loan originations, up 9% compared to the linked quarter and 8% when compared to the quarter ending 12/31/2024, we experienced negligible loan growth during the quarter.
as mentioned earlier, the fourth quarter results were impacted by prepayments,
Mark J. Grescovich: For the full year 2025, core earnings were $255 million, compared to $223.2 million for the full year of 2024. Banner's fourth quarter 2025 revenue from core operations was $170 million, compared to $169 million for the prior quarter and $160 million for the fourth quarter of 2024. The full year 2025 core revenue was $661 million, compared to $615 million for the full year of 2024, an increase of 8%. 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 1.24% for the fourth quarter of 2025.
For the full year 2025, core earnings were $255 million, compared to $223.2 million for the full year of 2024. Banner's fourth quarter 2025 revenue from core operations was $170 million, compared to $169 million for the prior quarter and $160 million for the fourth quarter of 2024. The full year 2025 core revenue was $661 million, compared to $615 million for the full year of 2024, an increase of 8%. 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 1.24% for the fourth quarter of 2025.
Speaker #2: Loan production was offset by higher-than-expected affordable housing tax credit paydowns, a small number of both CRE and shared national credit payoffs, and significantly lower CNI line utilization.
A source of strength in aggregate, it remains well balanced at 15% of total loans.
Speaker #2: Down 3% in the quarter and 4% year over year. Year over year, portfolio loan balances increased 3.2%. Within the commercial real estate portfolio, we reported solid growth year over year, with investor CRE increasing 5% and owner-occupied CRE increasing 11%.
The growth in commercial construction, 1 to 4 family construction and land and Land Development reported in the quarter reflects the continued funding of previously approved projects.
The decline reflected in the multi-family construction was primarily driven by the affordable housing tax credit pay down to mentioned earlier.
Speaker #2: This growth was diversified both in product type and geography, and was granular in nature, with our small business teams providing nearly 40% of the owner-occupied originations by dollar.
In spite of the housing, affordability crisis, our residential construction portfolio at 5% of the total continues to perform. Well, it remains geographically dispersed and is Diversified by product, mix and price points with levels of completed inventory, continuing to be manageable.
Speaker #2: As mentioned earlier, the fourth quarter results were impacted by prepayments. The decline year over year in the multifamily portfolio is primarily the result of stabilized properties moving to the secondary market.
Sales activity within the General market as well as by submarkets continues to be monitored closely.
Speaker #2: Looking at the construction portfolio, construction lending has long been a core competency at Banner, and it continues to be a source of strength. In aggregate, it remains well-balanced at 15% of total loans.
Mark J. Grescovich: 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 continue to represent 89% of total deposits. Reflective of this performance, coupled with our strong regulatory capital ratios and the fact that we increased our tangible common equity per share by 14% from the same period last year, we announced a core dividend of $0.50 per common share. Finally, I'm pleased to say that we continue to receive marketplace recognition and validation of our business model and our value proposition. Banner was again named one of America's 100 best banks and one of the best banks in the world by Forbes.
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 continue to represent 89% of total deposits. Reflective of this performance, coupled with our strong regulatory capital ratios and the fact that we increased our tangible common equity per share by 14% from the same period last year, we announced a core dividend of $0.50 per common share. Finally, I'm pleased to say that we continue to receive marketplace recognition and validation of our business model and our value proposition. Banner was again named one of America's 100 best banks and one of the best banks in the world by Forbes.
Speaker #2: The growth in commercial construction, one-to-four family construction, and land and land development reported in the quarter reflects the continued funding of previously approved projects.
The decline reflected in cni, is driven largely by a continued reduction in line utilization down 3% in the quarter and 4% when compared to last December. Additionally, the year-over-year decline includes the exiting of several classified relationships. The refinancing off-balance sheet of multiple shared National credits, as well as the payoff of certain relationships that we chose not to retain based on underwriting terms offered by others.
Speaker #2: The decline reflected in multifamily construction was primarily driven by the affordable housing tax credit paydowns mentioned earlier. In spite of the housing affordability crisis, our residential construction portfolio, at 5% of the total, continues to perform well.
The decline was offset in part by continued growth in the small business. Segments up 8% year-over-year, which continues to be a focus of our community banking division.
The modest increase in agricultural, balances year-over-year is the result of expanding a select number of existing relationships.
Speaker #2: It remains geographically dispersed and is diversified by product mix and price point with levels of completed inventory continuing to be manageable. Sales activity within the general market, as well as by submarkets, continues to be monitored closely.
The decline reflected in the 1 to 4 family. Portfolio year-over-year is the result of slightly lower mortgage rates as we closed out, 2025 resulting in home. Refinances
And the growth in home equity lines of credit, both on the current quarter and year-over-year, represent new originations versus an increase in line utilization.
Speaker #2: The decline reflected in CNI is driven largely by a continued reduction in line utilization, down 3% in the quarter and 4% when compared to last December.
As reported. Our overall credit metrics remain strong.
Speaker #2: Additionally, the year-over-year decline includes the exiting of several classified relationships, the refinancing off-balance sheet of multiple shared national credits, as well as the payoff of certain relationships that we chose not to retain based on underwriting terms offered by others.
Mark J. Grescovich: Newsweek named Banner one of the most trustworthy companies in America and the world again this year, and just recently again named Banner one of the best regional banks in the country. J.D. Power and Associates named Banner Bank the best bank in the Northwest for retail client satisfaction. Our company was also recently certified by Great Place to Work, and S&P Global Market Intelligence ranked Banner's financial performance among the top 50 public banks with more than $10 billion in assets. Additionally, as we've noted previously, Banner Bank 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.
Newsweek named Banner one of the most trustworthy companies in America and the world again this year, and just recently again named Banner one of the best regional banks in the country. J.D. Power and Associates named Banner Bank the best bank in the Northwest for retail client satisfaction. Our company was also recently certified by Great Place to Work, and S&P Global Market Intelligence ranked Banner's financial performance among the top 50 public banks with more than $10 billion in assets. Additionally, as we've noted previously, Banner Bank 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?
The delinquent loans increased modestly due primarily to, to a spike in the 1 to 4 family portfolio and now represent 0.54% of total loans up 15 basis points from the linked quarter.
This compares to 0.49% reported as of December, 31st 2024.
Speaker #2: The decline was offset in part by continued growth in the small business segment, up 8% year over year, which continues to be a focus of our Community Banking division.
Speaker #2: The modest increase in agricultural balances year over year is the result of expanding a select number of existing relationships. The decline reflected in the one-to-four family portfolio year over year is the result of slightly lower mortgage rates as we closed out 2025, resulting in home refinances.
Adversely classified loans increased by 19 million in the quarter. And now represent 1.65% of total loans, and total non-performing assets at 51.3 million continue to represent a modest 0.31% of total assets.
The net provision for credit losses. For the quarter was 2.4 million, including a 1.5 million provision for loan losses, and a 945,000 provision related to unfunded loan commitments.
Speaker #2: And the growth in home equity lines of credit, both in the current quarter and year-over-year, represents new originations versus an increase in line utilization.
Speaker #2: As reported, our overall credit metrics remain strong. Delinquent loans increased modestly due primarily to a spike in the one-to-four family portfolio and now represent 0.54% of total loans, up 15 basis points from the linked quarter.
Loan losses in the quarter totaled. 1.2 million and were offset in part by recovery is totaling 310,000 with net charge. Us for the year, representing a nominal fixed basis coins of average total loans.
Jill Rice: Thank you, Mark, and good morning, everyone. In spite of the solid level of loan originations, up 9% compared to the linked quarter and 8% when compared to the quarter ending 31 December 2024, we experienced negligible loan growth during the quarter. Loan production was offset by higher-than-expected affordable housing tax credit paydowns, a small number of both CRE and Shared National Credit payoffs, and significantly lower C&I line utilization, down 3% in the quarter and 4% year over year. Year over year, portfolio loan balances increased 3.2%. Within the Commercial Real Estate portfolio, we reported solid growth year over year, with investor CRE increasing 5% and owner-occupied CRE increasing 11%. This growth was diversified both in product type and geography and was granular in nature, with our small business teams providing nearly 40% of the owner-occupied originations by dollar.
Jill Rice: Thank you, Mark, and good morning, everyone. In spite of the solid level of loan originations, up 9% compared to the linked quarter and 8% when compared to the quarter ending 31 December 2024, we experienced negligible loan growth during the quarter. Loan production was offset by higher-than-expected affordable housing tax credit paydowns, a small number of both CRE and Shared National Credit payoffs, and significantly lower C&I line utilization, down 3% in the quarter and 4% year over year. Year over year, portfolio loan balances increased 3.2%. Within the Commercial Real Estate portfolio, we reported solid growth year over year, with investor CRE increasing 5% and owner-occupied CRE increasing 11%. This growth was diversified both in product type and geography and was granular in nature, with our small business teams providing nearly 40% of the owner-occupied originations by dollar.
After the provision, the allowance for credit losses, totals 160.3 million, providing 1.37% coverage of total loan, loans, consistent with prior quarters.
Speaker #2: This compares to 0.49% reported as of December 31, 2024. Adversely classified loans increased by 19 million in the quarter and now represent 1.65% of total loans.
Speaker #2: And total non-performing assets at $51.3 million continue to represent a modest 0.31% of total assets. The net provision for credit losses for the quarter was $2.4 million, including a $1.5 million provision for loan losses and a $945,000 provision related to unfunded loan commitments.
I will close by again saying Banner's moderate risk profile with stable and strong. Credit metrics a solid reserved for loan losses. And robust Capital levels continues to be a significant source of strength. We are well, positioned to manage through the balance of this economic cycle. And the market uncertainty that comes with it. With that, I will hand the microphone over to Rob for his comments, Rob. Hey, thank you. Jill.
We reported 1 149 cents per diluted share for the fourth quarter compared to 1. 0, 5 4,
Speaker #2: Loan losses in the quarter totaled $1.2 million and were offset in part by recoveries totaling $310,000, with net charge-offs for the year representing a nominal 6 basis points of average total loans.
For the full year. 2025 we reported $5.64 per diluted share compared to $4.88 per diluted share for 2024.
The decrease in earnings per share, compared to the prior quarter was primarily due to a decrease in the valuation of financial instruments carried at fair value.
Speaker #2: After the provision, the allowance for credit losses totals $160.3 million, providing 1.37% coverage of total loans, consistent with prior quarters. I will close by again saying Banner's moderate risk profile, with stable and strong credit metrics, a solid reserve for loan losses, and robust capital levels, continues to be a significant source of strength.
Jill Rice: As mentioned earlier, the fourth quarter results were impacted by prepayments. The decline year over year in the multifamily portfolio is primarily the result of stabilized properties moving to the secondary market. Looking at the construction portfolios, construction lending has long been a core competency at Banner, and it continues to be a source of strength. In aggregate, it remains well-balanced at 15% of total loans. The growth in commercial construction, one-to-four family construction, and land and land development reported in the quarter reflects the continued funding of previously approved projects. The decline reflected in the multifamily construction was primarily driven by the affordable housing tax credit paydowns mentioned earlier. In spite of the housing affordability crisis, our residential construction portfolio, at 5% of the total, continues to perform well.
As mentioned earlier, the fourth quarter results were impacted by prepayments. The decline year over year in the multifamily portfolio is primarily the result of stabilized properties moving to the secondary market. Looking at the construction portfolios, construction lending has long been a core competency at Banner, and it continues to be a source of strength. In aggregate, it remains well-balanced at 15% of total loans. The growth in commercial construction, one-to-four family construction, and land and land development reported in the quarter reflects the continued funding of previously approved projects. The decline reflected in the multifamily construction was primarily driven by the affordable housing tax credit paydowns mentioned earlier. In spite of the housing affordability crisis, our residential construction portfolio, at 5% of the total, continues to perform well.
A loss on the disposal of assets related to software. No longer being used, as well as an increase in medical and it expenses.
Partially offset by an increase in net interest income.
Speaker #2: We are well-positioned to manage through the balance of this economic cycle and the market uncertainty that comes with it. With that, I will hand the microphone over to Rob for his comments.
Compared to 2024 the increase in the full year. 2025 earnings per share was primarily due to an 8.5% increase in net interest income due to higher net, interest margin and growth in earning assets.
Speaker #2: Rob?
Speaker #3: Great, thank you, Jill. We reported $1.49 per diluted share for the fourth quarter, compared to $1.54 per diluted share for the prior quarter. For the full year 2025, we reported $5.64 per diluted share, compared to $4.88 per diluted share for 2024.
For pre-tax, pre-provision income for the current quarter increased 9% or 5.5 million compared to the quarter ended December 2024.
While Court pre-tax, pre-provision income for the current year, increased 14% or 32 million compared to the prior year.
Speaker #3: The decrease in earnings per share compared to the prior quarter was primarily due to a decrease in the valuation of financial instruments carried at fair value, a loss on the disposal of assets related to software no longer being used, as well as an increase in medical and IT expenses.
Jill Rice: It remains geographically dispersed and is diversified by product mix and price point, with levels of completed inventory continuing to be manageable. Sales activity within the general market, as well as by submarkets, continues to be monitored closely. The decline reflected in C&I is driven largely by a continued reduction in line utilization, down 3% in the quarter and 4% when compared to last December. Additionally, the year-over-year decline includes the exiting of several classified relationships, the refinancing off-balance sheet of multiple Shared National Credits, as well as the payoff of certain relationships that we chose not to retain based on underwriting terms offered by others. The decline was offset in part by continued growth in the small business segment, up 8% year over year, which continues to be a focus of our community banking division.
It remains geographically dispersed and is diversified by product mix and price point, with levels of completed inventory continuing to be manageable. Sales activity within the general market, as well as by submarkets, continues to be monitored closely. The decline reflected in C&I is driven largely by a continued reduction in line utilization, down 3% in the quarter and 4% when compared to last December. Additionally, the year-over-year decline includes the exiting of several classified relationships, the refinancing off-balance sheet of multiple Shared National Credits, as well as the payoff of certain relationships that we chose not to retain based on underwriting terms offered by others. The decline was offset in part by continued growth in the small business segment, up 8% year over year, which continues to be a focus of our community banking division.
A full year 2025 of 13.16%.
As Joe previously mentioned loan growth was limited during the quarter. As the increase in production was mostly offset by an increase in payoffs and reduced line utilization.
Speaker #3: Partially offset by an increase in net interest income. Compared to 2024, the increase in full-year 2025 earnings per share was primarily due to an 8.5% increase in net interest income, driven by a higher net interest margin and growth in earning assets.
The loan to deposit ratio into the quarter.
at 86% giving us ample capacity and continue to support existing clients and add new clients,
Total Security is decreased 13 million during the quarter as normal portfolio. Cash flows were partially offset by security purchases.
Speaker #3: Core pre-tax pre-provision income for the current quarter increased 9% or 5.5 million compared to the quarter ended December 2024. While core pre-tax pre-provision income for the current year increased 14% or 32 million compared to the prior year.
Deposits, decrease by 273 million during the quarter of primarily due to normal seasonal activity, as at clients, use deposits to pay down lines of credit and larger deposit. Clients started to deploy excess liquidity.
Jill Rice: The modest increase in agricultural balances year over year is the result of expanding a select number of existing relationships. The decline reflected in the one-to-four family portfolio year over year is the result of slightly lower mortgage rates as we close out 2025, resulting in home refinances. The growth in home equity lines of credit, both on the current quarter and year over year, represents new originations versus an increase in line utilization. As reported, our overall credit metrics remain strong. Delinquent loans increased modestly due primarily to a spike in the one-to-four family portfolio, and now represent 0.54% of total loans, up 15 basis points from the linked quarter. This compares to 0.49% reported as of 31 December 2024. Adversely classified loans increased by $19 million in the quarter and now represent 1.65% of total loans.
The modest increase in agricultural balances year over year is the result of expanding a select number of existing relationships. The decline reflected in the one-to-four family portfolio year over year is the result of slightly lower mortgage rates as we close out 2025, resulting in home refinances. The growth in home equity lines of credit, both on the current quarter and year over year, represents new originations versus an increase in line utilization. As reported, our overall credit metrics remain strong. Delinquent loans increased modestly due primarily to a spike in the one-to-four family portfolio, and now represent 0.54% of total loans, up 15 basis points from the linked quarter. This compares to 0.49% reported as of 31 December 2024. Adversely classified loans increased by $19 million in the quarter and now represent 1.65% of total loans.
Core deposits into the quarter at 89% of total deposits.
Speaker #3: Our performance metrics remain solid as we reported a return on tangible common equity for the current quarter of 13.11% and a return on tangible common equity for the full year 2025 of 13.16%.
Total borrowings increased 40 million during the quarter. As we continue to have a low Reliance on wholesale borrowings the tangible common equity ratio increased from 9.5% to 9.84%
Speaker #3: As Jill previously mentioned, loan growth was limited during the quarter, as the increase in production was mostly offset by an increase in payoffs and reduced line utilization.
As a reflection of our robust capital and strong liquidity positions Banner repurchased, approximately 250,000 shares during the quarter and declared a quarterly dividend of 50 cents per share.
Speaker #3: The loan-to-deposit ratio into the quarter at 86%, giving us ample capacity to continue to support existing clients and add new clients. Total securities decreased 13 million during the quarter as normal portfolio cash flows were partially offset by security purchases.
Net interest income, increased 2.5 million from the prior quarter, due to a 5 basis. Point increase in net interest margin as well as average or assets increasing 60 million during the quarter.
Speaker #3: Deposits decreased by $273 million during the quarter, primarily due to normal seasonal activity as clients used deposits to pay down lines of credit, and larger deposit clients started to deploy excess liquidity.
the increase in average earning assets was due to average loan balances, increase in 115 million, partially offset by total average interest rate, cash and investment balances, decreasing 55 million
Jill Rice: Total non-performing assets at $51.3 million continue to represent a modest 0.31% of total assets. The net provision for credit losses for the quarter was $2.4 million, including a $1.5 million provision for loan losses and a $945,000 provision related to unfunded loan commitments. Loan losses in the quarter totaled $1.2 million and were offset in part by recoveries totaling $310,000, with net charge-offs for the year representing a nominal 6 basis points of average total loans. After the provision, the allowance for credit losses totals $160.3 million, providing 1.37% coverage of total loans consistent with prior quarters. I will close by again saying Banner's moderate risk profile with stable and strong credit metrics, a solid reserve for loan losses, and robust capital levels continues to be a significant source of strength.
Total non-performing assets at $51.3 million continue to represent a modest 0.31% of total assets. The net provision for credit losses for the quarter was $2.4 million, including a $1.5 million provision for loan losses and a $945,000 provision related to unfunded loan commitments. Loan losses in the quarter totaled $1.2 million and were offset in part by recoveries totaling $310,000, with net charge-offs for the year representing a nominal 6 basis points of average total loans. After the provision, the allowance for credit losses totals $160.3 million, providing 1.37% coverage of total loans consistent with prior quarters. I will close by again saying Banner's moderate risk profile with stable and strong credit metrics, a solid reserve for loan losses, and robust capital levels continues to be a significant source of strength. We are well-positioned to manage through the balance of this economic cycle and the market uncertainty that comes with it.
The tax equivalent, net interest margin was 4.03% for the current quarter, compared to 3.98% for the prior quarter.
Speaker #3: Core deposits into the quarter at 89% of total deposits. Total borrowings increased 40 million during the quarter as we continue to have a low reliance on wholesale borrowings.
Earning asset yields decreased for basis points due to a 7 basis. Point decrease, in loan deals. As floating rate loans, repriced down as a result of the 75 basis point reduction in the FED funds rate.
Speaker #3: The tangible common equity ratio increased from 9.5% to 9.84%. As a reflection of our robust capital and strong liquidity positions, BANNER repurchased approximately 250,000 shares during the quarter and declared a quarterly dividend of 50 cents per share.
The average rate on new Loan Production for the current quarter was 6.88% compared to the 7.35% for the prior quarter.
funding cost decreased 10 basis points due to average borrowings decrease in 137 million, and deposit costs, decreasing 7 basis points,
Speaker #3: Net interest income increased $2.5 million from the prior quarter due to a 5 basis point increase in net interest margin, as well as average earning assets increasing $60 million during the quarter.
As deposit pricing was reduced due to the reduction in the FED funds rate.
Non-interest-bearing deposits into the quarter at 33% of total deposits.
Speaker #3: The increase in average earning assets was due to average loan balances increasing by $115 million, partially offset by total average interest-bearing cash and investment balances decreasing by $55 million.
Jill Rice: We are well-positioned to manage through the balance of this economic cycle and the market uncertainty that comes with it. With that, I will hand the microphone over to Rob for his comments. Rob.
Speaker #3: The tax-equivalent net interest margin was 4.03% for the current quarter, compared to 3.98% for the prior quarter. Earning asset yields decreased 4 basis points due to a 7 basis point decrease in loan yields, as floating-rate loans repriced down as a result of the 75 basis point reduction in the Fed funds rate.
With that, I will hand the microphone over to Rob for his comments. Rob.
Robert G. Butterfield: Hey. Thank you, Jill. We reported $1.49 per diluted share for the fourth quarter, compared to $1.54 per diluted share for the prior quarter. For the full year 2025, we reported $5.64 per diluted share, compared to $4.88 per diluted share for 2024. The decrease in earnings per share compared to the prior quarter was primarily due to a decrease in the valuation of financial instruments' fair value, a loss on the disposal of assets related to software no longer being used, as well as an increase in medical and IT expenses, partially offset by an increase in net interest income. Compared to 2024, the increase in the full year 2025 earnings per share was primarily due to an 8.5% increase in net interest income due to a higher net interest margin and growth in earning assets.
Robert G. Butterfield: Hey. Thank you, Jill. We reported $1.49 per diluted share for the fourth quarter, compared to $1.54 per diluted share for the prior quarter. For the full year 2025, we reported $5.64 per diluted share, compared to $4.88 per diluted share for 2024. The decrease in earnings per share compared to the prior quarter was primarily due to a decrease in the valuation of financial instruments' fair value, a loss on the disposal of assets related to software no longer being used, as well as an increase in medical and IT expenses, partially offset by an increase in net interest income. Compared to 2024, the increase in the full year 2025 earnings per share was primarily due to an 8.5% increase in net interest income due to a higher net interest margin and growth in earning assets.
Called non-interest income increased 5.5 million for decreased 5.5 million from the prior quarter. Primarily due to recording a loss of 1.4 million on the disposal of assets, which included the right off of 1 million for software. No longer being used as compared to a 1.4 million dollar gain on the sale of Assets in the prior quarter. In addition, the current quarter had a fair value, decrease of 2 million on financial instruments carried at fair value.
expense was 2.1 million higher than the prior quarter with increase in medical claims software expense
Speaker #3: Average rate on new loan production for the current quarter was 6.88% compared to 7.35% for the prior quarter. Funding costs decreased 10 basis points due to average borrowings decrease in 137 million, and deposit costs decrease in 7 basis points.
And legal expense, as well as lower capitalized loan, origination costs.
Our strong capital and liquidity levels position as well, for 2026, this concludes my prepared comments. Now I'll turn it back to mark.
Speaker #3: As deposit pricing was reduced due to the reduction in the Fed funds rate. Non-interest-bearing deposits into the quarter at 33% of total deposits. Total non-interest income increased 5.5 million or decreased 5.5 million from the prior quarter primarily due to recording a loss of 1.4 million on the disposal of assets, which included the write-off of 1 million for software no longer being used.
Thank you. Uh, Jill and Rob for your, uh, comments on the operating performance of banner that concludes our prepared remarks and Lucy. We will now open the call and welcome questions.
Thank you. Do ask a question. Please press star. Followed by 1 on your telephone keypad now.
If you change your mind, please press star followed by 2. When preparing to ask your question, please. Ensure your device is unmuted locally.
Speaker #3: As compared to a $1.4 million gain on the sale of assets in the prior quarter. In addition, the current quarter had a fair value decrease of $2.0 million on financial instruments carried at fair value.
Robert G. Butterfield: Core pre-tax, pre-provision income for the current quarter increased 9%, or $5.5 million, compared to the quarter ended December 2024, while core pre-tax, pre-provision income for the current year increased 14%, or $32 million, compared to the prior year. Our performance metrics remain solid, as we reported a return on tangible common equity for the current quarter of 13.11% and a return on tangible common equity for the full year 2025 of 13.16%. As Jill previously mentioned, loan growth was limited during the quarter, as the increase in production was mostly offset by an increase in payoffs, and reduced line utilization. The loan-to-deposit ratio ended the quarter at 86%, giving us ample capacity to continue to support existing clients, and add new clients. Total securities decreased $13 million during the quarter, as normal portfolio cash flows were partially offset by security purchases.
Core pre-tax, pre-provision income for the current quarter increased 9%, or $5.5 million, compared to the quarter ended December 2024, while core pre-tax, pre-provision income for the current year increased 14%, or $32 million, compared to the prior year. Our performance metrics remain solid, as we reported a return on tangible common equity for the current quarter of 13.11% and a return on tangible common equity for the full year 2025 of 13.16%. As Jill previously mentioned, loan growth was limited during the quarter, as the increase in production was mostly offset by an increase in payoffs, and reduced line utilization. The loan-to-deposit ratio ended the quarter at 86%, giving us ample capacity to continue to support existing clients, and add new clients. Total securities decreased $13 million during the quarter, as normal portfolio cash flows were partially offset by security purchases.
The first question comes from Jeff rules of Da Davidson your line is now open. Please go ahead.
Speaker #3: Total non-interest expense was 2.1 million higher than the prior quarter with increases in medical claims, software expense, and legal expense, as well as lower capitalized loan origination costs.
Speaker #3: Our strong capital and liquidity levels position us well for 2026. This concludes my prepared comments. Now I'll turn it back to Mark. Mark. Thank you, Jill and Rob, for your comments on the operating performance of Banner.
Thanks. Good morning. Appreciate the detail on the on on the loan front. Sounds like some some you know, payoffs and line utilization impact, uh go, you know thinking about 26 and the and the Outlook um pass tough to tough to gauge. But you're thinking on kind of net, net growth in the in the coming year.
Speaker #3: That concludes our prepared remarks. And Lucy, we will now open the call and welcome
Speaker #3: questions.
Speaker #1: Thank you. We'll ask a
Speaker #1: Question. Please press star, followed by one, on your telephone keypad now. If you change your mind, please press star, followed by two. When preparing to ask your question, please ensure your device is unmuted locally.
Speaker #1: The first question comes from Jeff Ruleth of D.A. Davidson. Your line is now open. Please go ahead.
Robert G. Butterfield: Deposits decreased by 273 million during the quarter, primarily due to normal seasonal activity, as ACC clients used deposits to pay down lines of credit, and larger deposit clients started to deploy excess liquidity. Core deposits ended the quarter at 89% of total deposits. Total borrowings increased 40 million during the quarter, as we continue to have a low reliance on wholesale borrowings. The tangible common equity ratio increased from 9.5% to 9.84%. As a reflection of our robust capital and strong liquidity positions, Banner repurchased approximately 250,000 shares during the quarter and declared a quarterly dividend of $0.50 per share. Net interest income increased 2.5 million from the prior quarter due to a 5 basis point increase in net interest margin, as well as average earning assets increasing 60 million during the quarter.
Deposits decreased by 273 million during the quarter, primarily due to normal seasonal activity, as ACC clients used deposits to pay down lines of credit, and larger deposit clients started to deploy excess liquidity. Core deposits ended the quarter at 89% of total deposits. Total borrowings increased 40 million during the quarter, as we continue to have a low reliance on wholesale borrowings. The tangible common equity ratio increased from 9.5% to 9.84%. As a reflection of our robust capital and strong liquidity positions, Banner repurchased approximately 250,000 shares during the quarter and declared a quarterly dividend of $0.50 per share. Net interest income increased 2.5 million from the prior quarter due to a 5 basis point increase in net interest margin, as well as average earning assets increasing 60 million during the quarter.
And Jill. Just
Speaker #1: ahead. Thanks.
Speaker #4: Good morning. I appreciate the detail on the loan front. Sounds like some payoffs and line utilization impact. Jill, thinking about '26 and the outlook, payoffs are tough to gauge, but your thinking on kind of net growth in the coming...
To kind of the the competitive landscape. It seems like the production side is originations pretty strong. Um, is that much of a a headwind if you will. I mean, that that sounds pretty positive if if just want to kind of check in on the competitive environment.
Speaker #4: year?
Speaker #5: Yeah, Jeff. Certainly,
Speaker #5: Payoffs are tough to gauge. And I would expect that the commercial real estate payoffs are likely to continue to be a headwind this next year.
Speaker #5: Still, our pipelines are, again, building you saw decent growth this last quarter. We've seen positive impact from new bankers hired in the last two years.
Well, it's it's always been competitive in the spaces that we, you know, engage in Jeff. So, I mean, certainly some banks, you know, as I indicated we lost over the course of the Year some credits because we just weren't going to stretch on some of the terms that people are offering to, uh, expand their loan book. But all in, you know, I think we compete. Well, both in the product offering Suite, we have and in pricing,
Speaker #5: So, all in, if the economy holds up, I'm going to say we would expect to grow our loan book in the mid-single digits again over the course of this next year.
Robert G. Butterfield: The increase in average earning assets was due to average loan balances increasing $115 million, partially offset by total average interest-bearing cash and investment balances decreasing $55 million. The tax equivalent net interest margin was 4.03% for the current quarter, compared to 3.98% for the prior quarter. Earning asset yields decreased 4 basis points due to a 7 basis point decrease in loan yields, as floating rate loans repriced down as a result of the 75 basis point reduction in the Fed funds rate. Average rate on new loan production for the current quarter was 6.88%, compared to 7.35% for the prior quarter. Funding costs decreased 10 basis points due to average borrowings decreasing $137 million and deposit costs decreasing 7 basis points, as deposit pricing was reduced due to the reduction in the Fed funds rate. Non-interest-bearing deposits ended the quarter at 33% of total deposits.
The increase in average earning assets was due to average loan balances increasing $115 million, partially offset by total average interest-bearing cash and investment balances decreasing $55 million. The tax equivalent net interest margin was 4.03% for the current quarter, compared to 3.98% for the prior quarter. Earning asset yields decreased 4 basis points due to a 7 basis point decrease in loan yields, as floating rate loans repriced down as a result of the 75 basis point reduction in the Fed funds rate. Average rate on new loan production for the current quarter was 6.88%, compared to 7.35% for the prior quarter. Funding costs decreased 10 basis points due to average borrowings decreasing $137 million and deposit costs decreasing 7 basis points, as deposit pricing was reduced due to the reduction in the Fed funds rate. Non-interest-bearing deposits ended the quarter at 33% of total deposits.
Speaker #4: And Jill, just to kind of the competitive landscape, it seems like the production side is originations pretty strong. Is that much of a headwind, if you will?
Maybe a a similar question for Rob on on the margin and and, and that Outlook as you as you top 4%, um, and I, you know, some some, some deposit fluctuations in the year, but your expectations for margin ahead.
Speaker #4: I mean, that sounds pretty positive if you just want to kind of check in on the competitive.
Yeah thanks. Thanks Jeff. So I mean what I say is ultimately, I think it's going to be largely influenced by the level of actions from the from the Federal Reserve.
Speaker #5: Well, it's always been competitive in the spaces that we engage in, Jeff. So, I mean, certainly some banks, as I indicated, we lost over the course of the year some credits because we just weren't going to stretch on some of the terms that people are offering to expand their loan book.
You know, we've talked about in the past that if there's no fed action in a quarter, then we'd likely expect some new expansion as adjustable rate. Loans continue to rep price up and even at this point, new production is coming on at higher rates and the average rate of the overall portfolio.
Speaker #5: But all in, I think we compete well both in the product offering suite we have and in—
Speaker #5: pricing. I appreciate it.
Speaker #4: Maybe a similar question for Rob on the margin and that outlook, as you've talked about 4%. And some deposit fluctuations at the end of the year, but your expectations for margin?
Speaker #4: Maybe a similar question for Rob on the margin and that outlook, as you've talked about 4%. And some deposit fluctuations at the end of the year, but your expectations for margin ahead?
Robert G. Butterfield: Total non-interest income increased $5.5 million or decreased $5.5 million from the prior quarter, primarily due to recording a loss of $1.4 million on the disposal of assets, which included the write-off of $1 million for software no longer being used, as compared to a $1.4 million gain on the sale of assets in the prior quarter. In addition, the current quarter had a fair value decrease of $2 million on financial instruments carried at fair value. Total non-interest expense was $2.1 million higher than the prior quarter, with increases in medical claims, software expense, and legal expense, as well as lower capitalized loan origination costs. Our strong capital and liquidity levels position us well for 2026. This concludes my prepared comments. Now I'll turn it back to Mark. Mark.
Total non-interest income increased $5.5 million or decreased $5.5 million from the prior quarter, primarily due to recording a loss of $1.4 million on the disposal of assets, which included the write-off of $1 million for software no longer being used, as compared to a $1.4 million gain on the sale of assets in the prior quarter. In addition, the current quarter had a fair value decrease of $2 million on financial instruments carried at fair value. Total non-interest expense was $2.1 million higher than the prior quarter, with increases in medical claims, software expense, and legal expense, as well as lower capitalized loan origination costs. Our strong capital and liquidity levels position us well for 2026. This concludes my prepared comments.
Yep, there is uh, 1 125 basis point cut in a quarter or just at the end of a quarter before a quarter, then we would expect that Nim would be more of a flat scenario as depository pricing would, uh, mostly offset, the impacts of the floating rates and, and we'd also have the benefit of the adjustable rates, if you get multiple rate Cuts in a quarter, then that's where we would expect. That we would see some net interest margin compression.
Speaker #3: Yeah. Thanks, Jeff. So I mean, what I'd say say is ultimately, I think it's going to be largely influenced by the level of actions from the Federal Reserve.
Speaker #3: We've talked about in the past that if there's no Fed action in a quarter, then we'd likely expect some name expansion as adjustable-rate loans continue to reprice up.
You know, we use Moody's for our interest rate forecasting. Uh most recently in January they had 3 rate Cuts really in the first half of the Year March June and July, if that's correct. That would suggest somewhat of a flat first half of the Year potentially, down a bit in the third quarter and expansion in the fourth quarter.
but I, I think the FED actions
Speaker #3: And even at this point, new production is coming on at higher rates than the average rate of the overall portfolio. If there's 125 basis point cut in a quarter or just at the end of a quarter before a quarter, then we would expect that NIM would be more of a flat scenario as deposit repricing would mostly offset the impacts of the floating rates and we'd also have the benefit of the adjustable rates.
Is there's a lot of uncertainty around that right now because the most recent Market stuff, I saw the market was expecting no rate Cuts next year. So somewhere between no rate cuts which would suggest higher net, interest margin expansion and 3 rate cuts which would
Now I'll turn it back to Mark. Mark?
Mark J. Grescovich: Thank you, Jill and Rob, for your comments on the operating performance of Banner. That concludes our prepared remarks. Lucy, we will now open the call and welcome questions.
Mark J. Grescovich: Thank you, Jill and Rob, for your comments on the operating performance of Banner. That concludes our prepared remarks. Lucy, we will now open the call and welcome questions.
suggest more of a flattish type environment. So I'll I'll let I'll let everybody pick their own fed, uh, fed scenario there.
Go ahead. Uh, thanks Rob. Appreciate it. I'll step back.
Thanks Jeff.
Speaker #3: If you get multiple rate cuts in a quarter, then that's where we'd expect that we'd see some net interest margin compression. We use Moody's for our interest rate forecasting.
Operator: Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. The first question comes from Jeff Rulis of D.A. Davidson. Your line is now open. Please go ahead.
Operator: Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. The first question comes from Jeff Rulis of D.A. Davidson. Your line is now open. Please go ahead.
The next question comes from Matthew Clark of Piper. Sandler, your line is now open. Please go ahead.
Speaker #3: Most recently, in January, they had three rate cuts, really in the first half of the year—March, June, and July. If that's correct, that would suggest somewhat of a flat first half of the year, potentially down a bit in the third quarter, and expansion in the fourth quarter.
On deposits at the end of December, and the average margin in the month of December.
[Analyst] (D.A. Davidson): Thanks. Good morning. I appreciate the detail on the loan front. Sounds like some payoffs and line utilization impact. Jill, thinking about 2026 and the outlook, payoffs are tough to gauge, but you're thinking on kind of net growth in the coming year?
Jeff Rulis: Thanks. Good morning. I appreciate the detail on the loan front. Sounds like some payoffs and line utilization impact. Jill, thinking about 2026 and the outlook, payoffs are tough to gauge, but you're thinking on kind of net growth in the coming year?
Matthew could you repeat the question? Good morning, by the way,
Speaker #3: But I think the Fed actions—there's a lot of uncertainty around that right now, because in their most recent market stuff I saw, the market is expecting no rate cuts next year.
glad to have you on the call. I don't know through.
Speaker #3: So, somewhere between no rate cuts—which would suggest higher net interest margin expansion—and three rate cuts, which would suggest more of a flattish-type environment.
Sure, just looking for the spot rate on deposits at the end of the year, either interest bearing or total. And then, if you had the average margin in the month of December,
Jill Rice: Yeah, Jeff, certainly payoffs are tough to gauge, and I would expect that the commercial real estate payoffs are likely to continue to be a headwind this next year. Still, our pipelines are again building. You saw decent growth this last quarter. We've seen positive impact from new bankers hired in the last two years. So all in, if the economy holds up, I'm going to say we would expect to grow our loan book in the mid-single digits again over the course of this next year.
Jill Rice: Yeah, Jeff, certainly payoffs are tough to gauge, and I would expect that the commercial real estate payoffs are likely to continue to be a headwind this next year. Still, our pipelines are again building. You saw decent growth this last quarter. We've seen positive impact from new bankers hired in the last two years. So all in, if the economy holds up, I'm going to say we would expect to grow our loan book in the mid-single digits again over the course of this next year.
Speaker #3: So I'll let everybody pick their own Fed scenario.
Speaker #3: there. Got it.
Yeah, Matthew. It's, it's Rob. So, uh, spot deposit cost for the month of December. We're 1 139 uh, margin was for for December was essentially the same as the quarter right around 403.
Speaker #4: Thanks, Rob. Appreciate it. I'll step back.
Speaker #3: Thanks, Jeff.
Okay, and the 139 is for the month, for the month of December, not your end.
Speaker #1: The next question comes from Matthew Clark of Piper Sandler. Your line is now open. Please go ahead.
That's correct. That's the average for the month. Yes.
Got it. Okay, thank you.
um, and then just on expenses, um,
You know, a couple of unusual items there, this quarter.
Mark J. Grescovich: Jill, just kind of the competitive landscape, it seems like the production side is originations pretty strong. Is that much of a headwind, if you will? I mean, that sounds pretty positive if you just want to kind of check in on the competitive environment.
Jeff Rulis: Jill, just kind of the competitive landscape, it seems like the production side is originations pretty strong. Is that much of a headwind, if you will? I mean, that sounds pretty positive if you just want to kind of check in on the competitive environment.
Speaker #6: On deposits at the end of December and the average margin in the month of
Um, it also seemed like there might have been some transitory expenses.
Speaker #3: Matthew, could you repeat the question? Good morning, by the way. Glad to have you on the call.
How do you think about that? You know, non that kind of core run rate going into going into the first quarter
Speaker #6: Good morning. Sure. Just looking for the spot rate on deposits at the end of the year, either interest-bearing or total, and then if you had the average margin in the month of December.
Jill Rice: Well, it's always been competitive in the spaces that we engage in, Jeff. So I mean, certainly some banks, as I indicated, we lost over the course of the year some credits because we just weren't going to stretch on some of the terms that people are offering to expand their loan book. But all in, I think we compete well, both in the product offering suite we have and in pricing.
Jill Rice: Well, it's always been competitive in the spaces that we engage in, Jeff. So I mean, certainly some banks, as I indicated, we lost over the course of the year some credits because we just weren't going to stretch on some of the terms that people are offering to expand their loan book. But all in, I think we compete well, both in the product offering suite we have and in pricing.
Speaker #3: Yeah, Matthew, it's Rob. So, spot deposit costs for the month of December were 1.39. Margin for December was essentially the same as the quarter.
early in the
Speaker #3: Right around
Speaker #3: 403. Okay.
and then we also saw higher medical claims, which is an unusual for the fourth quarter, but I'll just say that we're even for the first 9 months of the year on medical expenses.
Speaker #6: And the 139s for the month of December, not
Speaker #6: year-end? That's
Speaker #3: Correct. That's the average for the month.
Speaker #3: yes. Got it.
Mark J. Grescovich: Appreciate it. Maybe a similar question for Rob on the margin and that outlook as you top 4%. Some deposit fluctuations into the year, but your expectations for margin ahead?
Jeff Rulis: Appreciate it. Maybe a similar question for Rob on the margin and that outlook as you top 4%. Some deposit fluctuations into the year, but your expectations for margin ahead?
Speaker #6: Okay. Thank you. And then just on expenses, a couple of unusual items there this quarter. It also seemed like there might have been some transitory expenses.
Speaker #6: How do you think about that kind of core run rate going into the first quarter?
They're running lower than typical and then the fourth quarter kind of made up the difference. So probably medical expenses for the full year, were kind of as expected. It was just more back and loaded than than normal. And then we had some higher legal expenses during the current quarter as well. We have 1 legal matter that concluded this quarter and then uh the capitalized loan costs were down a little bit. As I, as I think about that, uh, going into 2025.
Robert G. Butterfield: Yeah. Thanks, Jeff. So I mean, what I'd say is ultimately, I think it's going to be largely influenced by the level of action from the Federal Reserve. We've talked about in the past that if there's no Fed action in a quarter, then we'd likely expect some NIM expansion as adjustable rate loans continue to reprice up. And even at this point, new production is coming on at higher rates than the average rate of the overall portfolio. If there's one 25 basis points cut in a quarter or just at the end of a quarter before a quarter, then we would expect that NIM would be more of a flat scenario as deposit repricing would mostly offset the impacts of the floating rates. And we'd also have the benefit of the adjustable rates.
Robert G. Butterfield: Yeah. Thanks, Jeff. So I mean, what I'd say is ultimately, I think it's going to be largely influenced by the level of action from the Federal Reserve. We've talked about in the past that if there's no Fed action in a quarter, then we'd likely expect some NIM expansion as adjustable rate loans continue to reprice up. And even at this point, new production is coming on at higher rates than the average rate of the overall portfolio. If there's one 25 basis points cut in a quarter or just at the end of a quarter before a quarter, then we would expect that NIM would be more of a flat scenario as deposit repricing would mostly offset the impacts of the floating rates. And we'd also have the benefit of the adjustable rates.
Speaker #3: Yeah, sure. So it's not—I'd just say in general, it's not unusual for expenses to bounce around a little bit quarter to quarter.
Or 2026. I would look at the full year 2025 expenses and then above that for 26, I would just expect normal inflationary, whatever you want to call that, and that 3% range, as far as total expenses in 26 compared to 25.
Speaker #3: And we saw some of those; we saw an increase in IT expenses as the new loan and deposit origination system was fully rolled out early in the fourth quarter.
Okay.
Great. And last 1 for me, um, on special mention in substandard, look like about a 55 basis point increase.
Speaker #3: And then we also saw higher medical claims, which is an unusual for the fourth quarter, but I would just say they were even for the first nine months of the year on medical expenses, they were running lower than typical.
Can you give us some color on on what drove?
Um, those changes this quarter.
Speaker #3: And then the fourth quarter kind of made up the difference, so probably medical expenses for the full year were kind of as expected. It was just more back-end loaded than normal.
Speaker #3: And then we had some higher legal expenses during the current quarter as well. We had one legal matter that concluded this quarter, and then the capitalized loan costs were down a little bit.
Robert G. Butterfield: If you get multiple rate cuts in a quarter, then that's where we would expect that we would see some net interest margin compression. We use Moody's for our interest rate forecasting. Most recently, in January, they had three rate cuts really in the first half of the year, March, June, and July. If that's correct, that would suggest somewhat of a flat first half of the year, potentially down a bit in the third quarter and expansion in the fourth quarter. But I think the Fed actions is there's a lot of uncertainty around that right now because the most recent market stuff I saw, the market is expecting no rate cuts next year. So somewhere between no rate cuts, which would suggest higher net interest margin expansion, and three rate cuts, which would suggest more of a flattish-type environment.
If you get multiple rate cuts in a quarter, then that's where we would expect that we would see some net interest margin compression. We use Moody's for our interest rate forecasting. Most recently, in January, they had three rate cuts really in the first half of the year, March, June, and July. If that's correct, that would suggest somewhat of a flat first half of the year, potentially down a bit in the third quarter and expansion in the fourth quarter. But I think the Fed actions is there's a lot of uncertainty around that right now because the most recent market stuff I saw, the market is expecting no rate cuts next year. So somewhere between no rate cuts, which would suggest higher net interest margin expansion, and three rate cuts, which would suggest more of a flattish-type environment.
Sure, Matthew, uh, when you look at special mention, the largest drivers in the increase were related to downgrading a couple alcoholic, beverage related Enterprises, due to declining cash. Flows within that category. The largest relationships approximately 25 million in the average special mention loan size is modest at 2 million.
Speaker #3: As I think about that going into 2025 or 2026, I would look at the full year 2025 expenses, and then above that for '26, I would just expect normal inflationary, whatever you want to call that, in that 3% range.
Speaker #3: As far as total expenses in '26 compared to '25.
If we shift over to substandard, we saw a modest increase uh, up 19 million within the commercial and construction segments, downgrades continue to be idiosyncratic. And the largest substandard relationship has approximately 19 million outstanding, the average substandard loan, remains well under 1 million, there is nothing screaming about a certain industry or segment that we should be worried about.
Speaker #6: Okay, great. And last one for me. On special mention in substandard, it looked like about a 55 basis point increase. Can you give us some color on what drove those changes this quarter?
Okay, perfect. Thank you.
Thank you. Matthew.
From Andrew.
Terrell from Steven.
Speaker #6: quarter? Sure, Matthew.
Hey, good morning.
Morning morning, Andrew.
Speaker #2: When you look at special mention, the largest drivers in the increase were related to downgrading a couple of alcoholic beverage-related enterprises due to declining cash flows.
Robert G. Butterfield: So I'll let everybody pick their own Fed scenario there.
So I'll let everybody pick their own Fed scenario there.
Um,
Mark J. Grescovich: Got it. Thanks, Rob. Appreciate it. I'll step back.
Jeff Rulis: Got it. Thanks, Rob. Appreciate it. I'll step back.
Speaker #2: Within that category, the largest relationship is approximately $25 million, and the average special mention loan size is modest at $2 million. If we shift over to substandard, we saw a modest increase, up $19 million.
if I could go just uh, quickly to Capital, you know, obviously still in a, a very good Capital position just hoping you could refresh us. I think you still got
Robert G. Butterfield: Thanks, Jeff.
Robert G. Butterfield: Thanks, Jeff.
Operator: The next question comes from Matthew Clark of Piper Sandler. Your line is now open. Please go ahead.
Operator: The next question comes from Matthew Clark of Piper Sandler. Your line is now open. Please go ahead.
Speaker #2: Within the commercial and construction segments, downgrades continue to be idiosyncratic, and the largest substandard relationship has approximately $19 million outstanding. The average substandard loan remains well under $1 million.
A million or so shares or maybe a little more on the on the buyback. Authorization, you've been, you know, somewhat active. Um, just with with evaluations at today, talk about the appetite for, for buyback or potentially increasing the buyback and then
Just any update on um, how you're approaching m&a right now.
Robert G. Butterfield: On deposits at the end of December and the average margin in the month of December?
Matthew Clark: On deposits at the end of December and the average margin in the month of December?
Speaker #2: There is nothing screaming about a certain industry or segment that we should be worried about.
Mark J. Grescovich: Matthew, could you repeat the question? Good morning, by the way. Glad to have you on the call. I don't think we came through.
Mark J. Grescovich: Matthew, could you repeat the question? Good morning, by the way. Glad to have you on the call. I don't think we came through.
Speaker #2: about. Okay.
Speaker #6: Perfect. Thank
Robert G. Butterfield: Sure. Just looking for the spot rate on deposits at the end of the year, either interest-bearing or total, and then if you had the average margin in the month of December.
Matthew Clark: Sure. Just looking for the spot rate on deposits at the end of the year, either interest-bearing or total, and then if you had the average margin in the month of December.
Speaker #3: Thank you, Matthew. you.
Speaker #1: Thank
Speaker #1: You. The next question comes from Andrew Terrell from Stevens. Your line is open. Please go ahead.
Robert G. Butterfield: Yeah. Matthew, it's Rob. So spot deposit costs for the month of December were 139. Margin for December was essentially the same as the quarter, right around 403.
Robert G. Butterfield: Yeah. Matthew, it's Rob. So spot deposit costs for the month of December were 139. Margin for December was essentially the same as the quarter, right around 403.
Sure Andrew I'll start with the capital aspect of it. So I mean I I think as you saw over the last couple quarters we've taken a number of capital actions uh middle of the year repaying, the hundred million dollars of debt and then uh increase in the quarter dividend, last quarter. And then as you as you mentioned we've have repurchased around 250,000, shares of the last 2 quarters in a row and we we still have about 1.2 million shares that are available under the repurchase authorization right now.
Speaker #6: Hey, good morning.
Speaker #3: Good morning, Andrew.
Speaker #6: If I could go just quickly to capital, you're obviously still in a very good capital position. Just hoping you could refresh us—I think you've still got a million or so shares, or maybe a little more, on the buyback authorization.
Uh, we think, you know, if you look at the last 2 quarters, we've purchased the shares right around that 63. Uh, level
Robert G. Butterfield: Okay. The 139 is for the month of December, not year-end?
Matthew Clark: Okay. The 139 is for the month of December, not year-end?
Robert G. Butterfield: That's correct. That's the average for the month, yes.
Robert G. Butterfield: That's correct. That's the average for the month, yes.
Speaker #6: You've been somewhat active just with evaluations today, talking about the appetite for buyback or potentially increasing the buyback. And then, just any update on how you're approaching M&A, right?
Robert G. Butterfield: Got it. Okay. Thank you. And then just on expenses, a couple of unusual items there this quarter. It also seemed like there might have been some transitory expenses. How do you think about that kind of core run rate going into Q1?
Matthew Clark: Got it. Okay. Thank you. And then just on expenses, a couple of unusual items there this quarter. It also seemed like there might have been some transitory expenses. How do you think about that kind of core run rate going into Q1?
Speaker #6: now? Sure, Andrew.
Speaker #3: So, I'll start with the capital aspect of it. So, I mean, I think as you saw over the last couple of quarters, we've taken a number of capital actions. In the middle of the year, repaying the $100 million of sub debt.
And so we think that's an attractive, uh, point to be repurchasing shares. So based on, where we ended the day yesterday, it's a little bit above that. We still think that is attractive. So, ultimately what we'll be doing during the first quarter? Here is really monitoring, uh, Market activity, and market conditions, and then also the price of the stock to see if it makes sense to continue to do that. But I think if you look at our Capital levels right now, uh, we think it's Capital, we target Capital more of an arrangement than a specific number but we're probably still on that upper end of the Capitol right now.
Robert G. Butterfield: Yeah, sure. So, in general, it's not unusual for expenses to bounce around a little bit quarter to quarter. We saw some of those. We saw an increase in IT expenses as the new loan and deposit origination system was fully rolled out early in the Q4. And then we also saw higher medical claims, which isn't unusual for the Q4, but I'd just say, even for the first nine months of the year, on medical expenses, they were running lower than typical. And then the Q4 kind of made up the difference. So probably medical expenses for the full year were kind of as expected. It was just more back-end loaded than normal. And then we had some higher legal expenses during the Q4 as well.
Robert G. Butterfield: Yeah, sure. So, in general, it's not unusual for expenses to bounce around a little bit quarter to quarter. We saw some of those. We saw an increase in IT expenses as the new loan and deposit origination system was fully rolled out early in the Q4. And then we also saw higher medical claims, which isn't unusual for the Q4, but I'd just say, even for the first nine months of the year, on medical expenses, they were running lower than typical. And then the Q4 kind of made up the difference. So probably medical expenses for the full year were kind of as expected. It was just more back-end loaded than normal. And then we had some higher legal expenses during the Q4 as well.
Speaker #3: And then, increasing the core dividend last quarter, and as you mentioned, we have repurchased around 250,000 shares for the last two quarters in a row.
And so, that would suggest that the market conditions are right. We would continue to look at repurchasing shares.
Yes, Andrew and this is Mark uh as it relates to m&a.
Speaker #3: And we still have about 1.2 million shares that are available under the repurchase authorization right now. We think if you look at the last two quarters, we've repurchased the shares right around that $63 level.
You know, our posture has not changed. Um, we continue to
have conversations with parties that we think would be a great combination for Banner.
Speaker #3: And so we think that's an attractive point to be repurchasing shares. So based on where we ended the day yesterday, it's a little bit above that.
Speaker #3: We still think that is attractive. So, ultimately, what we'll be doing during the first quarter here is really monitoring market activity and market conditions, and then also the price of the stock to see if it makes sense to continue to do that.
And given the strong Capital position. We have the strong core earnings power of the company and our Market reputation. We think we would continue to be an excellent partner. So uh as you know, those are a matter of timing.
Robert G. Butterfield: We had one legal matter that concluded this quarter, and then the capitalized loan costs were down a little bit. As I think about that, going into 2025 or 2026, I would look at the full year 2025 expenses, and then above that for 2026, I would just expect normal inflationary, whatever you want to call that, in that 3% range as far as total expenses in 2026 compared to 2025.
We had one legal matter that concluded this quarter, and then the capitalized loan costs were down a little bit. As I think about that, going into 2025 or 2026, I would look at the full year 2025 expenses, and then above that for 2026, I would just expect normal inflationary, whatever you want to call that, in that 3% range as far as total expenses in 2026 compared to 2025.
Speaker #3: But I think if you look at our capital levels right now, we think of capital—we target capital more as a range than a specific number, but we're probably still in that upper end of the range right now.
Yeah. Okay.
Um, I appreciate it and then Rob just on the margin.
Speaker #3: And so that would suggest that the market conditions are right. We would continue to look at repurchasing shares. Yes, Andrew, and this is Mark.
You know, I guess, I guess the question is, what's kind of driving some of the conservatism around.
Speaker #3: As it relates to M&A, our posture has not changed. We continue to have conversations with parties that we think would be a great combination for Banner.
Robert G. Butterfield: Okay. Great. And last one for me. On special mention and substandard, it looked like about a 55 basis point increase. Can you give us some color on what drove those changes this quarter?
Matthew Clark: Okay. Great. And last one for me. On special mention and substandard, it looked like about a 55 basis point increase. Can you give us some color on what drove those changes this quarter?
Any reference getting successive rate cuts um could lead to to margin down. But when I look at, you know, fourth quarter of this year, your your margin was up when we digested most of the cuts and then same 4 q of 24.
we had a lot of cuts in that quarter and
Speaker #3: And given the strong capital position we have, the strong core earnings power of the company, and our market reputation, we think we would continue to be an excellent partner.
your margin was still still up in that quarter. So I guess what's kind of driving the conservatism? Are you are you trying to kind of imply that
Jill Rice: Sure, Matthew. When you look at special mention, the largest drivers in the increase were related to downgrading a couple of alcoholic beverage-related enterprises due to declining cash flows. Within that category, the largest relationship is approximately $25 million, and the average special mention loan size is modest at $2 million. If we shift over to substandard, we saw a modest increase up $19 million. Within the commercial and construction segments, downgrades continue to be idiosyncratic, and the largest substandard relationship has approximately $19 million outstanding. The average substandard loan remains well under $1 million. There is nothing screaming about a certain industry or segment that we should be worried about.
Jill Rice: Sure, Matthew. When you look at special mention, the largest drivers in the increase were related to downgrading a couple of alcoholic beverage-related enterprises due to declining cash flows. Within that category, the largest relationship is approximately $25 million, and the average special mention loan size is modest at $2 million. If we shift over to substandard, we saw a modest increase up $19 million. Within the commercial and construction segments, downgrades continue to be idiosyncratic, and the largest substandard relationship has approximately $19 million outstanding. The average substandard loan remains well under $1 million. There is nothing screaming about a certain industry or segment that we should be worried about.
Speaker #3: So as you know, those are a matter of timing. When things work out appropriately, it's not necessarily something that you can force. So we continue to have very good dialogue with folks that we think would be great partners for
You know, maybe there's some lag to the to the loan uh, loan, repricing on a monthly basis. And we should expect some margin headwinds in the first quarter, just want to unpack that maybe a little bit more.
Speaker #3: BANNER. Yeah.
Speaker #6: Okay, I appreciate it. And then, Rob, just on the margin— I guess the question is, what's kind of driving some of the conservatism around your reference that getting successive rate cuts could lead to margin down?
Speaker #6: But when I look at fourth quarter of this year, your margin was up. When we digested most of the cuts and then same for Q of '24, we had a lot of cuts in that quarter.
Robert G. Butterfield: Okay. Perfect. Thank you.
Matthew Clark: Okay. Perfect. Thank you.
Yeah. So I would I wouldn't I wouldn't expect some headwinds against margin necessarily in the first quarter. If if you think out we did get the Fed rate cut in December, that's not fully Bank baked in necessarily to to the Run rate in in the first quarter. Uh, but but I I think if you, if you think about it the the 1 thing that we're looking at is supposed to adjust for rate loans that have been repricing through the cycle and then also the new loans coming out of it. I'm at a higher yield, the backlog of those adjustable rate loans that have been repricing is coming down at 1 point. I think you look at a year and a half ago, we might have been getting 9 basis points a quarter from that. And at this point, if maybe a benefit of 4 basis points a quarter,
Mark J. Grescovich: Thank you, Matthew.
Mark J. Grescovich: Thank you, Matthew.
Speaker #6: And your margin was still up in that quarter. So I guess, what's kind of driving the conservatism? Are you trying to kind of imply that maybe there's some lag to the loan repricing on a monthly basis, and we should expect some margin headwinds in the first quarter?
Operator: Thank you. The next question comes from Andrew Terrell from Stephens. Your line is open. Please go ahead.
Operator: Thank you. The next question comes from Andrew Terrell from Stephens. Your line is open. Please go ahead.
Robert G. Butterfield: Hey, good morning.
Andrew Terrell: Hey, good morning.
Mark J. Grescovich: Morning, Andrew.
Mark J. Grescovich: Morning, Andrew.
And then also the average loan yield new loan yield compared to the average yield portfolio is also kind of narrowing as well. So so I think the the repricing aspect of the loan portfolio even under a flat rate environment, I think is more, you know, I'm call.
More basis points, of course.
Speaker #6: Just wanted to unpack that maybe a little bit more.
Robert G. Butterfield: If I could go just quickly to capital, you're obviously still in a very good capital position. Just hoping you could refresh us. I think you still got a million or so shares or maybe a little more on the buyback authorization. You've been somewhat active. Just with evaluations out today, talk about the appetite for buyback or potentially increasing the buyback, and then just any update on how you're approaching M&A right now?
Andrew Terrell: If I could go just quickly to capital, you're obviously still in a very good capital position. Just hoping you could refresh us. I think you still got a million or so shares or maybe a little more on the buyback authorization. You've been somewhat active. Just with evaluations out today, talk about the appetite for buyback or potentially increasing the buyback, and then just any update on how you're approaching M&A right now?
Speaker #3: Yeah. So I wouldn't expect some headwinds against margin necessarily in the first quarter. If you think about we did get the Fed rate cut in December, that's not fully baked in necessarily to the run rate in the first quarter.
Point. So if the feds on pause and and were able to maintain funding costs where they're at right now,
And we get that backlog.
I said, you're looking at maybe 4 basis points.
Expansion while the feds on pause.
Speaker #3: But I think, if you think about it, the one thing that we're looking at is those adjustable-rate loans that have been repricing through the cycle, and then also the new loans coming out at a higher yield.
But I've gone through the other scenarios. It's it's just different once the FED starts to cut rates because we still have 30% of the vote, that's floating rate and
Robert G. Butterfield: Sure, Andrew. So I'll start with the capital aspect of it. So I mean, I think as you saw over the last couple of quarters, we've taken a number of capital actions middle of the year, repaying the $100 million sub debt, and then increasing the core dividend last quarter. Then as you mentioned, we have repurchased around 250,000 shares for the last two quarters in a row. And we still have about 1.2 million shares that are available under the repurchase authorization right now. We think if you look at the last two quarters, we've repurchased the shares right around that $63 level. And so we think that's an attractive point to be repurchasing shares. So based on where we ended the day yesterday, it's a little bit above that. We still think that is attractive.
Robert G. Butterfield: Sure, Andrew. So I'll start with the capital aspect of it. So I mean, I think as you saw over the last couple of quarters, we've taken a number of capital actions middle of the year, repaying the $100 million sub debt, and then increasing the core dividend last quarter. Then as you mentioned, we have repurchased around 250,000 shares for the last two quarters in a row. And we still have about 1.2 million shares that are available under the repurchase authorization right now. We think if you look at the last two quarters, we've repurchased the shares right around that $63 level. And so we think that's an attractive point to be repurchasing shares. So based on where we ended the day yesterday, it's a little bit above that. We still think that is attractive.
Speaker #3: The backlog of those adjustable rate loans that have been repricing is coming down. At one point, I think you look at a year and a half ago, we might have been getting 9 basis points a quarter from that.
Of that 30%, 10% are on their floors right now. So 90% of that continues to rise down 25 basis points as the FED Cuts. So,
That's just the way we're looking at it at a high level.
Got it. Okay, thanks for taking the questions.
Speaker #3: And at this point, it's maybe a benefit of 4 basis points a quarter. And then also the average loan yield, new loan yield compared to the average yield of the portfolio is also kind of narrowing as well.
Thank you, Andrew.
The next question is from Kelly M of KBW. Your line is now open. Please go ahead.
Speaker #3: So, I think the repricing aspect of the loan portfolio, even under a flat rate environment—I think it's more, you can call it 4 basis points a quarter at this point.
Hey, good morning. Thanks for the question. I I apologize if um,
Speaker #3: So, if the Fed's on pause and we're able to maintain funding costs where they're at right now, and we get that backlog, then you're looking at maybe 4 basis points a quarter of expansion while the Fed's on pause.
Robert G. Butterfield: So ultimately, what we'll be doing during Q1 here is really monitoring market activity and market conditions, and then also the price of the stock to see if it makes sense to continue to do that. But I think if you look at our capital levels right now, we think the capital, we target capital more of a range than a specific number, but we're probably still on that upper end of capital right now. And so that would suggest that if the market conditions are right, we would continue to look at repurchasing shares.
So ultimately, what we'll be doing during Q1 here is really monitoring market activity and market conditions, and then also the price of the stock to see if it makes sense to continue to do that. But I think if you look at our capital levels right now, we think the capital, we target capital more of a range than a specific number, but we're probably still on that upper end of capital right now. And so that would suggest that if the market conditions are right, we would continue to look at repurchasing shares.
Speaker #3: But I've gone through the other scenarios, that it's just different once the Fed starts to cut rates, because we still have 30% of the book that's floating rate, and of that 30%, 10% are on their floors right now.
This has been asked earlier, I joined a little late but um, just on the tax rate, it looks a bit lower. In the fourth quarter, understanding their, you know, can sometimes be catch UPS or adjustments, um, for the full year. Um, maybe Rob if you could provide, um, what you're You're Expecting here for the tax rate next year as a normalized number.
Speaker #3: So 90% of that continues to reprice down 25 basis points as the Fed cuts. So that's just the way we're looking at it at a high level.
Speaker #6: Got it. Okay. Thanks for taking the
Yeah, thanks. Thanks. Kelly so um, on that 1, you are correct. So the fourth quarter we just had some annual uh year end true up of some of the tax uh, tax items there but the the rate that we're expecting is right around. 19%, I think that's what we were for the first first 9 months of the year. So I think, if you're looking at 2026, it's probably right around 19%.
Speaker #6: questions. Thank you,
Speaker #3: Andrew: The next question is from Kelly.
Mark J. Grescovich: Yes, Andrew, and this is Mark. As it relates to M&A, our posture has not changed. We continue to have conversations with parties that we think would be a great combination for Banner. And given the strong capital position we have, the strong core earnings power of the company, and our market reputation, we think we would continue to be an excellent partner. So as you know, those are a matter of timing. When things work out appropriately, it's not necessarily something that you can force. So we continue to have very good dialogue with folks that we think would be great partners for Banner.
Mark J. Grescovich: Yes, Andrew, and this is Mark. As it relates to M&A, our posture has not changed. We continue to have conversations with parties that we think would be a great combination for Banner. And given the strong capital position we have, the strong core earnings power of the company, and our market reputation, we think we would continue to be an excellent partner. So as you know, those are a matter of timing. When things work out appropriately, it's not necessarily something that you can force. So we continue to have very good dialogue with folks that we think would be great partners for Banner.
Got it. Um, that's that's helpful. Um, and then
Speaker #1: Motta of KBW. Your line is now open. Please go ahead. Hey, good morning. Thanks for the question. I apologize if this has been asked earlier.
Speaker #1: I joined a little late, but just on the tax rate—it looks a bit lower in the fourth quarter. I understand there can sometimes be catch-ups or adjustments.
In, in terms of, uh, it looks like there was some noise to you in in other fees. Um, I know there was, um, you know, some, you know, building lease exit costs that that ran through, um, was it was there anything else of note? Um, and that we should keep in mind as we kind of start to think about a normalized fee, right? Thank you.
Speaker #1: But for the full year, maybe Rob, if you could provide what you're expecting here for the tax rate next year, as a normalized
Speaker #1: But for the full year, maybe Rob, if you could provide what you're expecting here for the tax rate next year, as a normalized number.
Yeah, so the other item in there.
Speaker #3: Yeah. Thanks, Kelly. So on that one, you are correct. So the fourth quarter, we just had some annual year-end throughput of some of the tax items there.
Speaker #3: But the rate that we're expecting is right around 19%. I think that's what we were for the first nine months of the year. So, I think if you're looking at 2026, it's probably right around 19%.
Robert G. Butterfield: Yeah. Okay. I appreciate it. And then, Rob, just on the margin, I guess the question is, what's kind of driving some of the conservatism around your reference? Getting successive rate cuts could lead to margin down. But when I look at fourth quarter of this year, your margin was up when we digested most of the cuts. And then same for Q2, Q4, we had a lot of cuts in that quarter, and your margin was still up in that quarter. So I guess what's kind of driving the conservatism? Are you trying to kind of imply that maybe there's some lag to the loan repricing on a monthly basis, and we should expect some margin headwinds in the first quarter? Just wanted to unpack that maybe a little bit more.
Andrew Terrell: Yeah. Okay. I appreciate it. And then, Rob, just on the margin, I guess the question is, what's kind of driving some of the conservatism around your reference? Getting successive rate cuts could lead to margin down. But when I look at fourth quarter of this year, your margin was up when we digested most of the cuts. And then same for Q2, Q4, we had a lot of cuts in that quarter, and your margin was still up in that quarter. So I guess what's kind of driving the conservatism? Are you trying to kind of imply that maybe there's some lag to the loan repricing on a monthly basis, and we should expect some margin headwinds in the first quarter? Just wanted to unpack that maybe a little bit more.
So we had a total of 1.4 million loss on the disposal of assets and part of that was building related which we adjusted out of our core numbers to get to the 155 earnings per share for the quarter. But it also included a million-dollar write-off of uh software related assets that were no longer using and that's not typically an item that we back out of our core number. So that's a million dollar non-recurring item in there that that I wouldn't expect to see going forward.
Speaker #1: Got it, that's helpful. And then, in terms of— it looks like there was some noise, too, in other fees. I know there were some building lease exit costs that ran through.
Speaker #1: Was there anything else of note that we should keep in mind as we kind of start to think about a normalized fee rate? Thank
Speaker #1: you. Yeah.
What's what's your expectation there? I know. That's been something you've been talking about for a while is this you know a continued um potential headwind here as we look to 26.
Speaker #3: So the other item in there, we had a total of $1.4 million loss on the disposal of assets. And part of that was building-related, which we adjusted out of our core numbers to get to the $1.55 earnings per share for the quarter.
Robert G. Butterfield: Yeah. So I wouldn't expect some headwinds against margin necessarily in Q1. If you think about it, we did get the Fed rate cut in December. That's not fully baked in necessarily to the run rate in Q1. But I think if you think about it, the one thing that we're looking at is those adjustable rate loans that have been repricing through the cycle, and then also the new loans coming out at a higher yield. The backlog of those adjustable rate loans that have been repricing is coming down. At one point, I think you look at a year and a half ago, we might have been getting nine basis points a quarter from that. And at this point, it's maybe a benefit of four basis points a quarter.
Robert G. Butterfield: Yeah. So I wouldn't expect some headwinds against margin necessarily in Q1. If you think about it, we did get the Fed rate cut in December. That's not fully baked in necessarily to the run rate in Q1. But I think if you think about it, the one thing that we're looking at is those adjustable rate loans that have been repricing through the cycle, and then also the new loans coming out at a higher yield. The backlog of those adjustable rate loans that have been repricing is coming down. At one point, I think you look at a year and a half ago, we might have been getting nine basis points a quarter from that. And at this point, it's maybe a benefit of 4 basis points a quarter.
Speaker #3: But it also included a million-dollar write-off of software-related assets that were no longer using. And that's not typically an item that we back out of our core number.
Speaker #3: So that's a million-dollar non-reoccurring item in there that I wouldn't expect to see going forward.
Yeah, Kelly, um, I did note that I, I do expect that, um, commercial real estate payoffs will continue to be a headwind as we move into this next year. So we're we're going to project that we're going to grow our loan book as long as the economy holds up in the mid single digits over 2026 as well. Given the kind of numbers that we're showing in production. The strength of the new relationship managers, we've brought on and the activities, they're bringing to the table as well.
Got it. Appreciate it. I'll step back. Thank you very much.
Speaker #1: Got it. Thanks for the color. Maybe last one, and I apologize again if this was taken, but for Jill, it seems like payoffs in the move of construction to permanent financing weighed on some growth this quarter.
Thanks Kelly.
As a reminder to ask a question. Please press star. Followed by 1 on your telephone keypad now.
Robert G. Butterfield: And then also the average new loan yield compared to the average yield of the portfolio is also kind of narrowing as well. So I think the repricing aspect of the loan portfolio, even under a flat rate environment, I think it's more. You don't call it four basis points a quarter at this point. So if the Fed's on pause and we're able to maintain funding costs where they're at right now, and we get that backlog, then you're looking at maybe four basis points a quarter of expansion while the Fed's on pause. But I've gone through the other scenarios. It's just different once the Fed starts to cut rates because we still have 30% of the vote that's floating rate. And of that 30%, 10% are on their floors right now. So 90% of that continues to reprice down 25 basis points as the Fed cuts.
And then also the average new loan yield compared to the average yield of the portfolio is also kind of narrowing as well. So I think the repricing aspect of the loan portfolio, even under a flat rate environment, I think it's more. You don't call it four basis points a quarter at this point. So if the Fed's on pause and we're able to maintain funding costs where they're at right now, and we get that backlog, then you're looking at maybe four basis points a quarter of expansion while the Fed's on pause. But I've gone through the other scenarios. It's just different once the Fed starts to cut rates because we still have 30% of the vote that's floating rate. And of that 30%, 10% are on their floors right now. So 90% of that continues to reprice down 25 basis points as the Fed cuts.
The next question comes from Liam. Coohill of Raymond James, your line is now open. Please go ahead.
Speaker #1: What's your expectation there? I know that's been something you've been talking about for a while. Is this a continued potential headwind here as we look to
Hi, good morning guys. This is Liam on for David.
Good morning, Liam.
Speaker #1: '26? Yeah,
Speaker #3: Kelly, I did note that I do expect that commercial real estate payoffs will continue to be a headwind as we move into this next year.
Speaker #3: So we're going to project that we're going to grow our loan book, as long as the economy holds up, in the mid-single digits over 2026 as well, given the kind of numbers that we're showing in production and the strength of the new relationship managers we've brought on and the activity they're bringing to the table as
So just to take it at a higher level, you go to the core deposit seasonality and your prepared remarks, but the positives have increased year-on-year across all of your geographies. Um, could you discuss some of the key drivers behind that you're on your growth and who we may be expect some similar core deposit growth in 26, given the new
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Speaker #3: well. Got it.
Speaker #1: Appreciate it. I'll step back. Thank you very much.
Yeah, I think, if you, if you look at it, there's always some seasonality to deposits, um, at our core. We are in relationship bank. So as we're as we're bringing in
Robert G. Butterfield: That's just the way we're looking at it at a high level.
Speaker #3: Thanks,
That's just the way we're looking at it at a high level.
Speaker #3: Kelly, as a reminder, to ask your question, please press *1.
Speaker #1: If you have a question, please press star followed by one on your telephone keypad now. The next question comes from Liam Coohill of Raymond James. Your line is now open.
Robert G. Butterfield: Got it. Okay. Thanks for taking the questions.
Andrew Terrell: Got it. Okay. Thanks for taking the questions.
Mark J. Grescovich: Thank you, Andrew.
Mark J. Grescovich: Thank you, Andrew.
Operator: The next question is from Kelly Motta of KBW. Your line is now open. Please go ahead.
Operator: The next question is from Kelly Motta of KBW. Your line is now open. Please go ahead.
Speaker #1: Please go
Speaker #1: ahead.
Speaker #4: Hi, good
Speaker #4: Morning, guys. This is Liam on for
Speaker #4: David. Good morning, So just to take it at a
[Analyst] (KBW): Hey, good morning. Thanks for the question. I apologize if this has been asked earlier. I joined a little late, but just on the tax rate, it looked a bit lower in the Q4, understanding there can sometimes be catch-ups or adjustments for the full year. Maybe, Rob, if you could provide what you're expecting here for the tax rate next year as a normalized number.
Kelly Motta: Hey, good morning. Thanks for the question. I apologize if this has been asked earlier. I joined a little late, but just on the tax rate, it looked a bit lower in the Q4, understanding there can sometimes be catch-ups or adjustments for the full year. Maybe, Rob, if you could provide what you're expecting here for the tax rate next year as a normalized number.
Speaker #3: Liam.
Speaker #4: At a higher level, you've noted the core deposit seasonality in your prepared remarks. But deposits have increased year-over-year across all of your geographies. Could you discuss some of the key drivers behind that year-over-year growth, and could we maybe expect some similar core deposit growth in '26 given the new banker?
Uh, new clients. Uh, we we expect those clients, not only income but the loan relationship, but also the deposit relationship. And then also we're, we've been heavily focused on on small building, our small business relationships and small businesses typically are deposit rich in nature. We're, oftentimes, their deposits are larger than than the loans that that were, uh, giving them. So I think that part of the success and Jill talked about it earlier, the bankers that we've added over the last 2 years, starting to get some traction there. And then also seeing some traction on the small business side,
Speaker #4: ads? Yeah, Liam, it's Rob.
I appreciate it. Thank you. And just 1 more for me. Um, how are you thinking about deposit datos in 2026? Given your already low cost core deposit base
Robert G. Butterfield: Yeah. Thanks, Kelly. On that one, you are correct. The fourth quarter, we just had some annual year-end true-up of some of the tax items there. But the rate that we're expecting is right around 19%. I think that's what we were for the first nine months of the year. I think if you're looking at 2026, it's probably right around 19%.
Robert G. Butterfield: Yeah. Thanks, Kelly. On that one, you are correct. The fourth quarter, we just had some annual year-end true-up of some of the tax items there. But the rate that we're expecting is right around 19%. I think that's what we were for the first nine months of the year. I think if you're looking at 2026, it's probably right around 19%.
Speaker #3: So yeah, I think if you look at it, there's always some seasonality to deposits. At our core, we are a relationship bank. So as we're bringing in new clients, we expect those clients not only to come with a loan relationship but also the deposit relationship.
Yeah, it's Rob again. So
Speaker #3: And then also, we've been heavily focused on building our small business relationships. Small businesses typically are deposit-rich in nature, where oftentimes their deposits are larger than the loans that we're giving them.
[Analyst] (KBW): Got it. That's helpful. And then, in terms of it looked like there was some noise too in other fees. I know there was some building lease exit costs that ran through. Was there anything else of note that we should keep in mind as we kind of start to think about a normalized fee rate? Thank you.
Kelly Motta: Got it. That's helpful. And then, in terms of it looked like there was some noise too in other fees. I know there was some building lease exit costs that ran through. Was there anything else of note that we should keep in mind as we kind of start to think about a normalized fee rate? Thank you.
We've been, we've been modeling 28% for the deposit beta. Uh, and and that's essentially I think what we've seen through the through the cycles specifically here in the fourth quarter, and the activity that we saw there, we do think that over time that will start to Trend down some. At this point, we've been able to take, um, that 28% deposit beta by really taking, even the full 25 basis points on some of the exception, price clients and, and also on
Speaker #3: So I think that's part of the success, and Jill talked about it earlier, the bankers that we've added over the last two years, starting to get some traction there.
Speaker #3: And then also seeing some traction on the small business
Speaker #3: side.
On CDs and then a higher amount even on some of our high yield savings accounts. But as time goes by, we think that'll continue to narrow some so we we might get that full 28% on the next cut or 2, but I I see it trending down in 26 depending on the level.
Speaker #4: I appreciate it. Thank
Of activity.
Speaker #4: you. And just one more for me. How are you thinking about deposit betas in 2026 given your already low-cost core deposit base?
Robert G. Butterfield: Yeah. So the other item in there, so we had a total of $1.4 million loss on the disposal of assets. And part of that was building-related, which we adjusted out of our core numbers to get to the $1.55 earnings per share for the quarter. But it also included a $1 million write-off of software-related assets that we're no longer using. And that's not typically an item that we back out of our core number. So that's a $1 million nonrecurring item in there that I wouldn't expect to see going forward.
Robert G. Butterfield: Yeah. So the other item in there, so we had a total of $1.4 million loss on the disposal of assets. And part of that was building-related, which we adjusted out of our core numbers to get to the $1.55 earnings per share for the quarter. But it also included a $1 million write-off of software-related assets that we're no longer using. And that's not typically an item that we back out of our core number. So that's a $1 million nonrecurring item in there that I wouldn't expect to see going forward.
Thank you for the caller. I'll step back.
Thanks Liam.
Speaker #3: Yeah, it's Rob again. So we've been modeling 28% for the deposit beta, and that's essentially, I think, what we've seen through the cycle, specifically here in the fourth quarter and the activity that we saw there.
Thank you. We have nice. All the questions at this time, so I'd like to hand back to mark for closing remarks.
Speaker #3: We do think that over time that will start to trend down some at this point. We've been able to take that 28% deposit beta by really taking even the full 25 basis points on some of the exception price clients and also on CDs and then a higher amount even on some of our high-yield savings accounts.
[Analyst] (KBW): Got it. Thanks for the color. Maybe last one, and I apologize again if this was taken, but for Jill, it seems like payoffs in the move of construction to permanent financing weighed on some growth this quarter. What's your expectation there? I know that's been something you've been talking about for a while. Is this a continued potential headwind here as we look to 2026?
Kelly Motta: Got it. Thanks for the color. Maybe last one, and I apologize again if this was taken, but for Jill, it seems like payoffs in the move of construction to permanent financing weighed on some growth this quarter. What's your expectation there? I know that's been something you've been talking about for a while. Is this a continued potential headwind here as we look to 2026?
Thank you, Lucy. As I've stated, we are very proud of the banner team and our full year 2025 performance, a significant improvement over over 2024. Um, thank you again for your interest in banner and for joining the call today, we look forward to reporting our results again to you in the future.
Have a great day, everyone. Thank you for attending.
This concludes today's call, thank you all for joining. You may now disconnect your line.
Speaker #3: But as time goes by, we think that'll continue to narrow some. So we might get that full 28% on the next cut or two, but I see it trending down in '26 depending on the level of effect
Speaker #3: activity.
Jill Rice: Yeah, Kelly, I did note that I do expect that commercial real estate payoffs will continue to be a headwind as we move into this next year. So we're going to project that we're going to grow our loan book as long as the economy holds up in the mid-single digits over 2026 as well, given the kind of numbers that we're showing in production, the strength of the new relationship managers we've brought on, and the activity they're bringing to the table as well.
Jill Rice: Yeah, Kelly, I did note that I do expect that commercial real estate payoffs will continue to be a headwind as we move into this next year. So we're going to project that we're going to grow our loan book as long as the economy holds up in the mid-single digits over 2026 as well, given the kind of numbers that we're showing in production, the strength of the new relationship managers we've brought on, and the activity they're bringing to the table as well.
Speaker #4: Thanks for the color. I'll step.
Speaker #4: back.
Speaker #3: Thanks, Liam.
Speaker #1: Thank you. We have no further questions at this time, so I'd like to hand back to Mark for closing.
Speaker #1: remarks. Thank you, Lucy.
Speaker #5: As I've stated, we are very proud of the BANNER team, and our full year 2025 performance, a significant improvement over 2024. Thank you again for your interest in BANNER and for joining the call today.
[Analyst] (KBW): Got it. Appreciate it. I'll step back. Thank you very much.
Kelly Motta: Got it. Appreciate it. I'll step back. Thank you very much.
Speaker #5: We look forward to reporting our results again to you in the future. Have a great day, everyone. Thank you for attending.
Mark J. Grescovich: Thanks, Kelly.
Mark J. Grescovich: Thanks, Kelly.
Operator: As a reminder, to ask a question, please press star followed by one on your telephone keypad now. The next question comes from Liam Cahill of Raymond James. Your line is now open. Please go ahead.
Operator: As a reminder, to ask a question, please press star followed by one on your telephone keypad now. The next question comes from Liam Cahill of Raymond James. Your line is now open. Please go ahead.
Mark J. Grescovich: Hi, good morning, guys. This is Liam on for David.
[Analyst] (Raymond James): Hi, good morning, guys. This is Liam on for David.
[Analyst] (Raymond James): Good morning, Liam.
Mark J. Grescovich: Good morning, Liam.
Mark J. Grescovich: So just to take it at a higher level, you've noted the core deposit seasonality in your prepared remarks, but deposits have increased year-on-year across all of your geographies. Could you discuss some of the key drivers behind that year-on-year growth and what we might expect some similar core deposit growth in 2026 given the new banker adds?
[Analyst] (Raymond James): So just to take it at a higher level, you've noted the core deposit seasonality in your prepared remarks, but deposits have increased year-on-year across all of your geographies. Could you discuss some of the key drivers behind that year-on-year growth and what we might expect some similar core deposit growth in 2026 given the new banker adds?
Robert G. Butterfield: Yeah, Liam, it's Rob. So yeah, I think if you look at it, there's always some seasonality to deposits. At our core, we are a relationship bank. So as we're bringing in new clients, we expect those clients not only to come with a loan relationship, but also the deposit relationship. And then also, we've been heavily focused on building our small business relationships, and small businesses typically are deposit-rich in nature, where oftentimes their deposits are larger than the loans that we're giving them. So I think that's part of the success. And Jill talked about it earlier, the bankers that we've added over the last two years starting to get some traction there, and then also seeing some traction on the small business side.
Robert G. Butterfield: Yeah, Liam, it's Rob. So yeah, I think if you look at it, there's always some seasonality to deposits. At our core, we are a relationship bank. So as we're bringing in new clients, we expect those clients not only to come with a loan relationship, but also the deposit relationship. And then also, we've been heavily focused on building our small business relationships, and small businesses typically are deposit-rich in nature, where oftentimes their deposits are larger than the loans that we're giving them. So I think that's part of the success. And Jill talked about it earlier, the bankers that we've added over the last two years starting to get some traction there, and then also seeing some traction on the small business side.
Mark J. Grescovich: I appreciate it. Thank you. Just one more for me. How are you thinking about deposit betas in 2026, given your already low-cost core deposit base?
[Analyst] (Raymond James): I appreciate it. Thank you. Just one more for me. How are you thinking about deposit betas in 2026, given your already low-cost core deposit base?
Robert G. Butterfield: Yeah, it's Rob again. So we've been modeling 28% for the deposit beta. And that's essentially, I think, what we've seen through the cycle, specifically here in the fourth quarter and the activity that we saw there. We do think that over time, that will start to trend down some. At this point, we've been able to take that 28% deposit beta by really taking even the full 25 basis points on some of the exception price clients and also on CDs, and then a higher amount even on some of our high-yield savings accounts. But as time goes by, we think that'll continue to narrow some. So we might get that full 28% on the next cut or two, but I see it trending down in 2026, depending on the level of effective activity.
Robert G. Butterfield: Yeah, it's Rob again. So we've been modeling 28% for the deposit beta. And that's essentially, I think, what we've seen through the cycle, specifically here in the fourth quarter and the activity that we saw there. We do think that over time, that will start to trend down some. At this point, we've been able to take that 28% deposit beta by really taking even the full 25 basis points on some of the exception price clients and also on CDs, and then a higher amount even on some of our high-yield savings accounts. But as time goes by, we think that'll continue to narrow some. So we might get that full 28% on the next cut or two, but I see it trending down in 2026, depending on the level of effective activity.
Mark J. Grescovich: Thanks for the color. I'll step back.
[Analyst] (Raymond James): Thanks for the color. I'll step back.
Robert G. Butterfield: Thanks, Liam.
Robert G. Butterfield: Thanks, Liam.
Operator: Thank you. We have no further questions at this time, so I'd like to hand back to Mark for closing remarks.
Operator: Thank you. We have no further questions at this time, so I'd like to hand back to Mark for closing remarks.
Mark J. Grescovich: Thank you, Lucy. As I've stated, we are very proud of the Banner team and our full year 2025 performance, a significant improvement over 2024. Thank you again for your interest in Banner and for joining the call today. We look forward to reporting our results again to you in the future. Have a great day, everyone. Thank you for attending.
Mark J. Grescovich: Thank you, Lucy. As I've stated, we are very proud of the Banner team and our full year 2025 performance, a significant improvement over 2024. Thank you again for your interest in Banner and for joining the call today. We look forward to reporting our results again to you in the future. Have a great day, everyone. Thank you for attending.
Operator: This concludes today's call. Thank you all for joining. You may now disconnect your line.
Operator: This concludes today's call. Thank you all for joining. You may now disconnect your line.
