Banner Bank (BANR)

Regional banking company Banner Corporation (NASDAQ:BANR) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 11% year on year to $170.7 million. Its GAAP profit of $1.54 per share was 10% above analysts’ consensus estimates.

Company Overview

Founded in 1890 in Walla Walla, Washington, and evolving through more than a century of economic cycles, Banner Corporation (NASDAQ:BANR) operates Banner Bank, providing commercial banking services, loans, and financial products to individuals and businesses across Washington, Oregon, California, Idaho, and Utah.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Banner Corporation competes with other regional banks operating in the Pacific Northwest and Intermountain West, including Washington Federal (NASDAQ:WAFD), Columbia Banking System (NASDAQ:COLB), and Umpqua Holdings (now part of Columbia), as well as larger national institutions like Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and U.S. Bancorp (NYSE:USB).

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Regrettably, Banner Bank’s revenue grew at a tepid 2.6% compounded annual growth rate over the last five years. This fell short of our benchmarks and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Banner Bank’s recent performance shows its demand has slowed as its annualized revenue growth of 1.1% over the last two years was below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Banner Bank reported year-on-year revenue growth of 11%, and its $170.7 million of revenue exceeded Wall Street’s estimates by 1.1%.

Net interest income made up 88.1% of the company’s total revenue during the last five years, meaning Banner Bank barely relies on non-interest income to drive its overall growth.

Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.

The underlying profitability of top-line growth determines the actual bottom-line impact. Banking institutions measure this dynamic using the efficiency ratio, which is calculated by dividing non-interest expenses like personnel, facilities, technology, and marketing by total revenue.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last five years, Banner Bank’s efficiency ratio has increased by 1.8 percentage points, hitting 61.4% for the past 12 months. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

In Q3, Banner Bank’s efficiency ratio was 61.8%, falling short of analysts’ expectations by 199.4 basis points (100 basis points = 1 percentage point). This result was in line with the same quarter last year.

For the next 12 months, Wall Street expects Banner Bank to rein in some of its expenses as it anticipates an efficiency ratio of 59.8%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Banner Bank’s EPS grew at an astounding 11.9% compounded annual growth rate over the last five years, higher than its 2.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Banner Bank’s quality of earnings can give us a better understanding of its performance. A five-year view shows that Banner Bank has repurchased its stock, shrinking its share count by 1.9%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Banner Bank, its two-year annual EPS declines of 1.7% mark a reversal from its (seemingly) healthy five-year trend. These shorter-term results weren’t ideal, but given it was successful in other measures of financial health, we’re hopeful Banner Bank can return to earnings growth in the future.

In Q3, Banner Bank reported EPS of $1.54, up from $1.30 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Banner Bank’s full-year EPS of $5.48 to grow 3.7%.

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Banner Bank’s TBVPS grew at a mediocre 4.7% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 16.1% annually over the last two years from $33.22 to $44.79 per share.

Over the next 12 months, Consensus estimates call for Banner Bank’s TBVPS to grow by 8.7% to $48.67, decent growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Banner Bank has averaged a Tier 1 capital ratio of 12.2%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Banner Bank has averaged an ROE of 11.4%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Banner Bank.

It was good to see Banner Bank beat analysts’ EPS expectations this quarter. We were also happy its tangible book value per share narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 6.1% to $66.50 immediately following the results.

Updated: December 3, 2025 at 11:49 PM EST

Are you wondering whether to buy Banner Bank or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Banner Bank’s business quality ultimately falls short of our standards. To begin with, its revenue growth was weak over the last five years. And while its net interest margin indicates a healthy starting point for the overall profitability of the business, the downside is its net interest income growth was weak over the last five years. On top of that, its estimated sales for the next 12 months are weak.

Banner Bank’s P/B ratio based on the next 12 months is 1.1x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $72 on the company (compared to the current share price of $64.72).