Oct 22, 2026 earnings call — Pacific Financial acquisition and third-quarter results
Reported net profit available to common shareholders of $47.7 million, $1.36 per diluted share, and completed the Pacific Financial acquisition.
Revenue $0.2B (est $0.2B) · EPS $1.51 (est $1.41)
Key quotes
"As noted, we completed the acquisition of Pacific Financial this month adding to our portfolio growth while maintaining strong credit metrics."
"Delinquent loans at 0.56% of total loans increased 5 basis points from the linked quarter compared to 0.39% as of 09/30/2025."
"So on a net basis, I would expect some expansion in NIM in the fourth quarter."
Analyst Q&A 5
NIM outlook and loan growth
Q (Ryan Payne · D.A. Davidson): He asked where net interest margin (NIM) is headed given FHLB runoff and security sales, asked about customer demand and loan growth into 2027, and asked about the fee income run rate excluding the securities loss.
A: Management said they expect NIM to expand in the fourth quarter as about 25% of the loan portfolio repriced and the Pacific Financial deal and portfolio yield moves should add a few basis points, while deposit costs will rise. They said loan demand is uncertain, some clients have paused, but there are meaningful unfunded construction projects and healthy commercial pipelines, and they expect mid-single-digit loan growth into 2027. On fees, they said third-quarter noninterest income was low due to mortgage banking and SBA slowdowns, and a full quarter of Bank of the Pacific (about $400 thousand a month) would add about an additional $800 thousand plus some normalization (maybe $500 thousand).
"On the funding side, I would expect some increase in the cost of deposits as we have seen competitors increase deposit pricing after the Fed increased the Fed funds rate." — Robert G. Butterfield (CFO)
deposit costs, growth, and M&A
Q (Matthew Clark · Piper Sandler): He asked the spot deposit rate at end of September and what deposit beta might be on the way up, whether recent organic deposit growth is sustainable, and whether the bank is open to more M&A.
A: They said spot cost of deposits in September was 1.40% (1.38% for the quarter) and that the interest-bearing deposit beta has been about 28 basis points on the upside but they are modeling something higher, around 40%, so it will likely finish between 28 and 40. On deposit growth, they said Q3 is seasonal and much comes from ag cash (crop harvest), and of the 463 million there could be about $100 million that comes out early in Q4 but balances often reaccumulate by year end. On M&A, they said their philosophy is unchanged, they are focused on the Pacific integration but continue dialogue with potential partners and are prepared to move if the right opportunity arises.
"So spot cost of deposits the month of September was 1.40%." — Robert G. Butterfield (CFO)
Pacific balance sheet and expense impact
Q (Meghan Lynch · KBW): She asked whether Banner is repositioning Pacific Financial’s balance sheet now that the deal closed and how to think about Pacific’s expense contribution and a clear expense run rate.
A: They said they repositioned Pacific’s securities in September and intentionally left the duration short so cash flows can be redeployed into the loan portfolio over time, and they are not planning other balance sheet repositioning now. For expenses, they said to get to a run rate you would back out the $5 million M&A expense and about $1 million REO write-down, then add two months of Bank of the Pacific expenses (their quarterly expenses have been around $10 million), noting they have achieved about 10% of expected synergies and expect to reach 40% cost synergies by mid next year (20% realized 01/01/2027 and the final 10% by July 1), plus normal inflation and investments.
"We just intentionally left the duration short so we can redeploy those cash flows over time into the loan book." — Robert G. Butterfield (CFO)
fixed-rate repricing and capital use
Q (Andrew Terrell · Stephens): He asked how fixed-rate loan repricing will contribute to margin going forward and whether the bank will continue buybacks or hold capital for future M&A, including a CET1 target.
A: They said fixed-rate repricing should add a little pickup, likely a couple basis points a quarter, and new loan yields will also help as commitments roll on. On capital use, they said they repurchased 200 thousand shares in September, find repurchases attractive, will evaluate further repurchases in Q4, and expect to keep capital near current levels while remaining open to the right M&A. They noted CET1 targets would be below 12.5% and that TCE was 9.48% (target upper end about 9.5%).
"I think as we start through the process here, it will probably be a couple basis points a quarter." — Robert G. Butterfield (CFO)
growth drivers and credit monitoring
Q (David Feaster · Raymond James): He asked what gives confidence in the mid-single-digit growth outlook, which markets or segments are strongest, how competition is affecting pricing and underwriting, which credit segments they are watching, and the health of the CRE book; he also asked what management is most excited about and where they are investing.
A: They said competition is fierce and pricing is a lever but underwriting has not broadly loosened; confidence comes from bankers growing existing relationships, bringing in new clients, and originations supported by a healthy construction pipeline and market disruption. On credit, they said they are watching consumer, SBA, and especially office within CRE, stress-testing office, but so far issues are idiosyncratic; they pointed to strong underwriting, required debt service coverage, significant borrower equity and recourse on 99% of the loan book. Mark said he is excited about organic growth opportunities from market disruption, the strong balance sheet and capital flexibility, and investments in operations that should create scalable efficiencies and positive operating leverage into 2027.
"The confidence really comes from the you know, good work that our team has been doing over the past year in terms of who they are calling on, growing existing client relationships, bringing in new clients as well." — Jill Rice