Banner Corporation (NASDAQ: BANR) Q4 2025 Earnings Call dated Jan. 22, 2026
Corporate Participants:
Mark J. Grescovich — Chief Executive Officer
Rich Arnold — Investor Relations
Jill Rice — Chief Credit Officer
Robert G. Butterfield — Chief Financial Officer
Analysts:
Jeff Rulis — Analyst
Matthew Clark — Analyst
Andrew Terrell — Analyst
Kelly Motta — Analyst
Liam Coohill — Analyst
Presentation:
operator
Hello everyone and thank you for joining the banner Corporation for fourth quarter 2025 conference call and webcast. My name is Lucy and I’ll be coordinating your call today. During the presentation, you can register a question by pressing STAR followed by one on your telephone keypad. If you change your mind, please press STAR followed by two. It is now my pleasure to hand over to President and CEO Mark Greskovich to begin. Please go ahead.
Mark J. Grescovich — Chief Executive Officer
Thank you Lucy and good morning and happy. I would also like to welcome you to the fourth quarter and full year 2025 earnings call for Banner Corporation. Joining me on the call today is Rob Butterfield, Banner Corporation’s Chief Financial Officer, Jill Rice, our Chief Credit Officer and Rich Arnold, our Head of Investor Relations. Rich, would you please read our forward looking Safe harbor statement?
Rich Arnold — Investor Relations
Sure, Mark, Good morning. Our presentation today discusses Banner’s 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 and statements about Banner’s general outlook for economic and other conditions. We also may make other forward looking statements in the question and answer period following management’s main discussion. These forward 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 release that was released yesterday and the recently filed Form 10Q for the quarter ended September 30, 2025.
Forward looking statements are effective only as of the day they are made and Banner assumes no obligation to update information concerning its expectations.
Mark J. Grescovich — Chief Executive Officer
Mark thank you, Rich. As is customary, today we will cover four primary items with you. 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 Wrights 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.
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 December 31, 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. For the full year ended December 31, 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 31, 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 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 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. 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. Newsweek named Banner one of the most trustworthy companies in America in 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 and 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 Rice — Chief Credit Officer
Jill 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 1231 2024, we experienced negligible loan growth during the quarter. Loan production was offset by higher than expected affordable housing credit, housing tax credit paydowns, a small number of both CRE and shared national credit payoffs, and significantly lower CNI 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. 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 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 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. 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 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. 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. 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 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.
As reported, our overall credit metrics remain strong. Delinquent loans increased modestly due primarily to a Spike in the One4Family 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 31, 2024. 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.
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 1.3.7% 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.
With that, I will hand the microphone over to Rob for his comments.
Robert G. Butterfield — Chief Financial Officer
Rob 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 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 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 higher net interest margin and growth in earning assets. 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 increase in payoffs and reduced lines utilization. The loan to deposit ratio into the quarter at 86% giving us ample capacity 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. Deposits decreased by 273 million during the quarter primarily due to normal seasonality activity as clients use deposits to pay down lines of credit and larger deposit. Clients started to deploy excess liquidity 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. 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. The increase in average earning assets was due to average loan balances increase in 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. 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 J. Grescovich — Chief Executive Officer
Thank you Jill and Rob for your comments on the operating performance of Banner. That concludes our prepared remarks and Lucy, we will now open the call and welcome questions.
Questions and Answers:
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 DA Davidson. Your line is now open. Please go ahead.
Jeff Rulis
Thanks. Good morning. Appreciate the detail on the on the loan front. Sounds like some, you know, payoffs and line utilization impact. Julie, you know thinking about 26 and the outlook payoffs are tough to, tough to gauge. But you’re thinking on kind of net net growth in the, in the coming 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, 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.
Jeff Rulis
And Jill, just to kind of the competitive landscape it seems like the production side is origination’s pretty strong. Is that much of a headwind if you will. I mean that sounds pretty positive if just want to kind of check in on the competitive environment.
Jill Rice
Well 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 expand their loan book. But all in, you know, I think we compete well both in the product offering suite we have and in price.
Jeff Rulis
Appreciate it. Maybe a similar question for Rob on the margin and that outlook as you, as you top 4%, you know, some deposit fluctuations end of the year but your expectations for margin ahead.
Robert G. Butterfield
Yeah, thanks. 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, from the Federal Reserve. 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 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 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. 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. So I’ll let everybody pick their own Fed scenario there.
Jeff Rulis
Got it. Thanks, Rob, appreciate it. I’ll step back.
Mark J. Grescovich
Thanks, Jeff.
operator
The next question comes from Matthew Clark of Piper Sandler. Your line is now open. Please go ahead.
Matthew Clark
On deposits at the end of December and the average margin in the month of December.
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 it came through.
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.
Robert G. Butterfield
Yeah, Matthew, it’s Rob. So spot deposit costs for the month of December were 139. Margin was for December was essentially the same as the quarter, right around 403.
Matthew Clark
Okay. And the 139 is for the month. For the month of December, not year end.
Robert G. Butterfield
That’s correct. That’s the average for the month. Yes.
Matthew Clark
Got it. Okay, thank you. And then just on expenses, you know, 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? You know, non kind of core run rate going into the, going into the first quarter.
Robert G. Butterfield
Yeah, sure. So I, you know, it’s not, I just say in general it’s not unusual for expenses to bounce around a little bit quarter to quarter. And we saw some of those, you know, we saw an increase in IT expenses as the new loan and deposit origination system was fully rolled out early in the, early in the fourth quarter. And then we also saw higher medical claims, which isn’t unusual for the fourth quarter, but I’d just say there were even for the first nine months of the year on medical expenses they were 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 end loaded. Than normal. And then we had some higher legal expenses during the current quarter as well. We have 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 26, I would just expect normal inflationary, whatever you want to call that in that 3% range.
As far as total expenses in 26 compared to 25.
Matthew Clark
Okay, great. Last one for me on special mention in substandard looked like about a 55 basis point increase. Can you give us some color on what drove those changes this quarter?
Jill Rice
Sure, Matthew. When you look at special mention, the largest drivers in the increase were related to downgrading a of couple couple 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’s nothing screaming about a certain industry.
Or segment that we should be worried about.
Matthew Clark
Okay, perfect. Thank you.
Mark J. Grescovich
Thank you, Matthew.
operator
The next question comes from Andrew Terrell from Stevens. Your line is open. Please go ahead.
Andrew Terrell
Hey, good morning.
Mark J. Grescovich
Morning, Andrew.
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 this. I think you still got a million or so shares or maybe a little more on the, on the buyback authorization. You’ve been somewhat active just where the valuations at today. Talk about the appetite for buyback or potentially increasing the buyback. And then. And just any update on how you’re approaching M and A right now?
Robert G. Butterfield
Sure, Andrew. I’ll start with the capital aspect of it. So I mean I think as you saw over the last couple quarters, we’ve taken a number of capital actions middle of the year repaying the $100 million sub debt and then increase in the core dividend last quarter. Then as you mentioned, we have repurchased around 250,000 shares for the last quarter, 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 2 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. 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. But I think if you look at our capital levels right now, we think the capital we target capital more of in 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, would continue to look at repurchasing shares.
Mark J. Grescovich
Yes, Andrew. And this is Mark. As it relates to M and A. You know, 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.
Andrew Terrell
Yep. Okay, I appreciate it. And then Rob, just on the margin, you know, 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, you know, fourth quarter of this year, your margin was up when we digested most of the cuts and then same 4Q of 24, 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, you know, maybe there’s some lag to the loan 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.
Robert G. Butterfield
Yeah, so I wouldn’t expect some headwinds against margin necessarily in the first quarter. We did get the Fed rate cut in December. That’s not fully back baked in necessarily to the run rate in the first quarter. 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 if 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. 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. So I think the repricing aspect of the loan portfolio, even under a flat rate environment, I think it’s more, you call it four basis points a quarter at this point. So if the Fed’s on pause and, 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 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. So 90% of that continues price down 25 basis point as the Fed cut. So that’s just the way we’re looking at it at a high level.
Andrew Terrell
Got it. Okay, thanks for taking the questions.
Mark J. Grescovich
Thank you, Andrew.
operator
The next question is from Kelly Motter of kbw. Your line is now open. Please go ahead. Hey, good morning.
Kelly Motta
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 fourth quarter. Understanding there, you know, 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.
Mark J. Grescovich
Yes, thanks, Kelly. So on that one you are correct. So the fourth quarter we just had some annual year end true up of some of the tax, 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 nine months of the year. So I think if you’re looking at 20, 26, it’s probably right around 19%.
Kelly Motta
Got it. That’s, that’s helpful. And then in terms of it looks like there was some noise too in other fees. I know there was, you know, some, you know, building lease, exit costs that ran through. Was there anything else of note and that we should keep in mind as we kind of start to think about a normalized fee rate? Thank you.
Mark J. Grescovich
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 155 earnings per share for the quarter. But it also included a million dollar 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 million dollar non reoccurring item in there that, that I wouldn’t expect to see going forward.
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, you know, a continued potential headwind here as we look to 26?
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. Still, 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 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.
Kelly Motta
Got it. Appreciate it. I’ll step back, thank you very much.
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 Kuhill of Raymond James. Your line is now open. Please go ahead.
Liam Coohill
Hi, good morning guys. Liam on for David.
Mark J. Grescovich
Morning, Liam.
Liam Coohill
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 could we maybe expect some similar core deposit growth in 26 given the new banker adds?
Robert G. Butterfield
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 the 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 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.
Liam Coohill
I appreciate it. Thank 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, 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 in 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 will 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 FEGDA activity.
Liam Coohill
Thank you for the color. I’ll step back.
Mark J. Grescovich
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.
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 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 lines.