Executive Summary

Q1 2025 EPS of $1.30 and net income of $45.1M; tax-equivalent NIM expanded 10 bps sequentially to 3.92% as loan yields rose and deposit costs fell; adjusted efficiency ratio was 62.18% .
Revenue (GAAP) was $160.191M, roughly flat vs Q4 2024 and up 10.8% YoY; management called out resilient core deposits at 89% of total and solid credit reserve coverage (ACL 1.38% of loans; 404% of NPLs) .
Against S&P Global consensus, Banner posted a significant EPS beat (Actual $1.30 vs $1.218*), while S&P’s revenue framework shows a modest miss (Actual $157.052M* vs $159.673M*), noting definitional differences vs company-reported GAAP revenue; estimates likely need upward revision given margin trajectory .
Call catalysts: CFO guided to potential further NIM expansion in Q2 if the Fed remains on pause and deposit costs stay flat; management flagged emerging tariff and border-related macro headwinds (agriculture, retail) but reiterated fortress balance sheet and capital flexibility (pending $100M sub debt reset on July 1) .

What Went Well and What Went Wrong

What Went Well

Net interest margin expanded 10 bps to 3.92%, driven by 5 bps higher loan yields and 6 bps lower deposit costs; management expects additional NIM tailwinds in Q2 if rates remain on pause (“I would expect some NIM expansion in Q2…assuming funding costs stay flat and loan yields expand”) .
Core deposits remained strong at 89% of total, helping keep total funding cost at 1.55%; CFO noted success in pulling deposits with new lending relationships and seasonality from tax refunds .
Credit reserves and capital robust: ACL 1.38% of loans and 404% of NPLs; CET1 12.60%, Tier 1 leverage 11.22%, total capital 15.23% (estimated); management emphasized “fortress-style” balance sheet positioning .

What Went Wrong

Nonperforming assets increased sequentially to 0.26% of assets ($42.7M), with NPLs at $39.0M; delinquent loans rose to 0.63% of total loans; management cited rate environment and sector-wide operating cost pressures .
Non-interest income decreased $0.9M QoQ, reflecting the absence of Q4 gains on a nonperforming loan and pooled loan sale; mortgage banking revenue softened sequentially ($3.1M vs $3.7M) amid rates >7% .
Emerging macro headwinds: management flagged tariff impacts, Canadian border crossing declines affecting NW WA tourism, and small-business sensitivity to rising costs (“Tariffs will have a negative impact to West Coast businesses… biggest impact… small business and the consumer”) .

Financial Results

Metric	Q1 2024	Q4 2024	Q1 2025	Q1 2025 Consensus
Revenue (GAAP, $USD Millions)	$144.550	$160.571	$160.191	$159.673*
Net Interest Income ($USD Millions)	$132.959	$140.536	$141.083	—
Net Income ($USD Millions)	$37.559	$46.391	$45.135	—
Diluted EPS ($USD)	$1.09	$1.34	$1.30	$1.21833*

Margins & Ratios	Q1 2024	Q4 2024	Q1 2025
NIM (Tax-Equivalent, %)	3.74%	3.82%	3.92%
Efficiency Ratio (GAAP, %)	67.55%	61.95%	63.21%
Adjusted Efficiency Ratio (%)	63.70%	60.74%	62.18%
ROA (%)	0.97%	1.15%	1.15%
ROE (%)	9.14%	10.35%	10.17%

Balance Sheet & Credit	Q1 2024	Q4 2024	Q1 2025
Net Loans Receivable ($USD Billions)	$10.718	$11.199	$11.281
Total Deposits ($USD Billions)	$13.159	$13.514	$13.593
Core Deposits (% of Total)	89%	89%	89%
Nonperforming Assets ($USD Millions, % of Assets)	$29.937, 0.19%	$39.623, 0.24%	$42.727, 0.26%
ACL – Loans ($USD Millions, % of Loans)	$151.140, 1.39%	$155.521, 1.37%	$157.323, 1.38%

Operating KPIs	Q1 2024	Q4 2024	Q1 2025
Average Loan Yield (%)	5.87%	6.02%	6.07%
Total Deposit Cost (%)	1.37%	1.53%	1.47%
Total Funding Cost (%)	1.53%	1.60%	1.55%
Loan Originations (Ex-HFS, $USD Millions)	$777.854	$802.033	$535.834

Segment Breakdown – Loans by Category ($USD Thousands)

Category	Q3 2024 (Sep 30, 2024)	Q4 2024 (Dec 31, 2024)	Q1 2025 (Mar 31, 2025)
CRE – Owner-Occupied	$990,516	$1,027,426	$1,020,829
CRE – Investment Properties	$1,583,863	$1,623,672	$1,598,387
CRE – Small Balance	$1,218,822	$1,213,792	$1,217,458
Multifamily Real Estate	$889,866	$894,425	$877,716
Construction – Commercial	$124,051	$122,362	$146,467
Construction – Multifamily	$524,108	$513,706	$618,942
Construction – 1–4 Family	$507,350	$514,220	$504,265
Land & Land Development	$370,690	$369,663	$396,009
Commercial Business	$1,281,615	$1,318,333	$1,283,754
Small Business Scored	$1,087,714	$1,104,117	$1,122,550
Agricultural Business	$346,686	$340,280	$334,899
One- to Four-Family Residential	$1,575,164	$1,591,260	$1,600,283
Consumer – HELOC	$622,615	$625,680	$620,483
Consumer – Other	$101,546	$95,720	$96,754
Total Loans Receivable	$11,224,606	$11,354,656	$11,438,796

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
NIM trajectory	Q2 2025	Not specified	CFO expects further NIM expansion in Q2 if Fed remains on pause; model shows ~5 bps loan yield increase while funding costs flat	Raised (qualitative)
Loan growth	FY 2025	Mid-single-digit (implied prior plan)	Targeting mid-single-digit for 2025; more growth skewed to 2H if uncertainty clears	Maintained
Deposit costs	2H 2025	Not specified	Potential gradual declines “a couple bps per quarter” under rate cuts scenario	New qualitative detail
Tax rate	FY 2025	Not specified	Q1 tax rate is a good full-year indication per CFO	Clarified
Expenses	FY 2025	~$100M quarterly base discussed previously	Q1 run-rate (~$101.3M) is a decent annualized base; quarter-to-quarter swings ±$2M possible	Maintained
Capital actions	2025	Share repurchase authorization in place	Evaluating $100M sub debt reset (fixed→variable on July 1): repay or replace; core dividend remains priority	New decision pending
Securities portfolio	2025	No strategy disclosure	~$60M quarterly cash flows; rotate into loans; no planned larger “loss sale” currently	Clarified
Dividend	Q2 2025	$0.48/qtr	Declared $0.48 for May 9, 2025 payment; core dividend priority	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
NIM & loan yields	Q3: NIM up to 3.72% on higher loan yields despite rising funding costs ; Q4: NIM up to 3.82% with falling deposit costs	NIM 3.92%; CFO expects further expansion in Q2 under Fed pause	Improving
Deposit costs	Q3: up 11 bps QoQ to 1.61%	Q4: down 8 bps to 1.53%	Q1: down 6 bps to 1.47%
Credit quality	Q3: NPAs rose to 0.28%	Q4: NPAs fell to 0.24%	Q1: NPAs ticked up to 0.26%; delinquencies 0.63%
Loan growth & pipelines	Q3/Q4: net loans up; construction converting; mortgage held-for-sale activity increased	Q1: originations down 33% QoQ amid uncertainty; pipelines rebuilding; 2H-skewed growth	Tempered near term
Tariffs/macro	Not highlighted in Q3/Q4 press releases	New headwinds: tariffs, border crossings, small-business sensitivity; sector exposures quantified (manufacturing ~3% book; retail 12% mostly CRE-secured)	Emerging risk
Capital & sub debt	Dividends maintained in Q3/Q4	Evaluating $100M sub debt reset; buyback considered; fortress balance sheet reiterated	Active assessment
Securities & funding	Q4: pooled loan sale; nonperforming loan sale gain	Q1: ~$60M quarterly securities cash flows redeployed to loans; no planned loss sale	Continued rotation

Management Commentary

“Our first quarter 2025 core earnings were $59 million… Banner's first quarter 2025 revenue from core operations was $160 million… We continue to benefit from a strong core deposit base… Overall, this resulted in a return on average assets of 1.15%” — Mark Grescovich, CEO .
“I would expect some NIM expansion in Q2… assuming funding costs essentially stay flat and we see some additional expansion in our loan yields as adjustable rate loans continue to reprice up…” — Rob Butterfield, CFO .
“Tariffs will have a negative impact to West Coast businesses and the local economies… biggest impact to be felt by the small business community… and the consumer” — Jill Rice, Chief Credit Officer .
“We do have that $100 million of sub debt… moves from a fixed rate to a variable rate on July 1… currently considering whether we repay that or… replace that” — Rob Butterfield, CFO .

Q&A Highlights

Margin path: CFO guided to near-term NIM expansion under a Fed pause; under gradual cuts, earning asset yields flat but funding costs decline; only aggressive cuts would compress NIM .
Credit/Ag exposure: Ag remains a watch area given tariffs; portfolio granularity (avg loan size ~$1.2M in ag; manufacturing ~3% of book; retail 12% and ~93% CRE-secured) helps contain risk .
Loan growth & pipelines: Originations slowed on uncertainty, but pipelines rebuilding; full-year mid-single-digit loan growth target maintained, with more 2H pull-through .
Deposits & competition: Granular, diversified base aids cost control; CD specials persist but core funding remains resilient; seasonality (tax refunds) supported Q1 inflows .
Capital allocation: Core dividend priority; buyback considered; strategic decision pending on $100M sub debt reset .
Fees outlook: Mortgage banking tied to rates; SBA gain-on-sale business line scaling (Q1 ~$800K vs ~$400K quarterly run-rate in 2024) .

Estimates Context

EPS: Banner delivered a significant beat vs S&P Global consensus (Actual $1.30 vs $1.21833*), supported by NIM expansion and controlled funding costs .
Revenue: S&P Global’s revenue framework shows a modest miss (Actual $157.052M* vs $159.673M*), while company-reported GAAP revenue was $160.191M; the discrepancy reflects differing revenue definitions in S&P’s dataset vs GAAP .
Participation: 6 EPS estimates and 5 revenue estimates for Q1 2025*.

Metric	Q1 2025 Consensus	Q1 2025 Actual (S&P)	Q1 2025 Actual (Company GAAP)
EPS ($USD)	$1.21833*	$1.29*	$1.30
Revenue ($USD Millions)	$159.673*	$157.052*	$160.191

Values with * retrieved from S&P Global.

Key Takeaways for Investors

Margin momentum is the core near-term driver: sequential NIM expansion and CFO’s Q2 guide are likely to support upward estimate revisions; watch Fed path and deposit cost behavior .
Funding mix and core deposits (89%) provide a stable base to defend NIM as securities cash flows (~$60M/qtr) rotate into loans; limited reliance on wholesale funding reduces rate sensitivity .
Credit normalization is modest but broad-based; reserve and capital coverage remain strong; monitor ag, retail CRE, and small business exposures amid tariff/border dynamics .
Capital flexibility: pending decision on $100M sub debt reset could optimize interest expense and capital structure; core dividend ($0.48) remains a priority, with buybacks opportunistic .
Loan growth likely back-half weighted; near-term uncertainty dampened originations, but pipelines and pricing remain constructive; mid-single-digit FY25 target maintained .
Expect fee income to be rate-sensitive; SBA gain-on-sale scaling provides incremental offset; mortgage banking tied to >7% mortgage rates .
Reputational and operational strengths (J.D. Power, Newsweek, Forbes recognitions) underpin franchise stability in taking share amid regional disruption .

Additional Source Documents (read in full)

8-K and Exhibits (Investor presentation, Press release, financial tables): First Quarter 2025 .
Earnings call transcripts: Q1 2025 (two versions) .
Q4 2024 press release and tables .
Q3 2024 press release and tables .

S&P Global consensus and actuals used for “Estimates Context” and the “Consensus” column in the Financial Results table. Values with * retrieved from S&P Global.

BANNER CORP (BANR)·Q1 2025 Earnings Summary