배너 코퍼레이션(BANR) 2026년 3분기 실적 발표 컨퍼런스 콜: 대출 성장 및 순이자마진(NIM) 전망

핵심 요약

• 배너 코퍼레이션(Banner Corporation)의 2026년 3분기 보통주 귀속 순이익은 4,770만 달러(희석 주당 1.36달러)로, 2025년 3분기의 주당 1.54달러와 비교된다.
• 핵심 세전 대손충당금 적립 전 이익(PPOP)은 6,860만 달러로, 전년 동기의 6,780만 달러에서 증가했다. 핵심 영업수익은 전년 동기 대비 6% 증가한 1억 7,900만 달러를 기록했다.
• 총대출은 전분기 대비 10억 달러(8%) 증가했다. 퍼시픽 파이낸셜 인수로 7억 6,600만 달러가 유입되었으며, 자체 대출 성장은 2억 3,500만 달러로 기존 배너 기준 연환산 약 8%의 성장률을 기록했다.
• 총예금은 16억 달러 증가했으며, 이 중 10억 달러는 퍼시픽 파이낸셜 인수를 통해 유입되었고 4억 6,300만 달러는 자체 성장에 해당한다. 핵심 예금은 전체 예금의 90%를 차지했으며, 분기 말 예대율은 84%를 기록했다.
• 세금 효과 반영 순이자마진(NIM)은 전분기 대비 1bp 상승한 4.14%를 기록했다. 경영진은 2026년 4분기에 NIM이 추가 확대될 것으로 예상하나, 2027년의 추세는 연방준비제도(Fed)의 정책과 예금 금리 경쟁 상황에 따라 달라질 것으로 전망하고 있다.
• 신용 지표는 전반적으로 안정적인 수준을 유지했다. 연체 대출은 총대출의 0.56%였으며, 부실 분류 자산(요주의 이하 여신)은 총대출의 1.61%로 감소했고, 대손충당금 적립률은 총대출의 1.32%를 나타냈다.

핵심 재무 데이터

사업 및 영업 실적

상업용 부동산(CRE)이 대출 성장의 주요 원천이었다. 자가 사용 CRE는 1억 달러 증가했으며, 인수 부문 7,400만 달러와 자체 성장 2,600만 달러가 포함되었다. 투자용 CRE는 6,100만 달러 증가했는데, 인수한 잔액 7,700만 달러가 기존 포트폴리오의 상환으로 일부 상쇄되었다.

다세대 주택 대출은 5,700만 달러 증가한 반면, 건설 대출 잔액은 1억 800만 달러 증가했으며, 이 중 7,900만 달러는 자체 성장이었다. 건설 대출은 총대출의 14%를 차지했으며, 1~4가구 주택 건설 대출은 5%를 차지했다.

상업 및 공업(C&I) 대출은 7,200만 달러 증가했으며, 이 중 약 45%는 인수에 따른 것이었습니다. 소상공인 대출은 7,900만 달러 증가했으며, 이는 전적으로 자체 성장에 따른 것입니다. 소비자 대출 잔액은 1억 300만 달러 증가했으며, 이 가운데 4,000만 달러는 주로 주택담보 한도대출(HELOC)을 통한 신규 집행액이었습니다.

신규 대출 집행액은 전분기 대비 2% 및 전년 동기 대비 61% 증가했습니다. 통상적인 계절적 둔화에도 불구하고 거둔 성과입니다. 경영진은 건전한 상업 및 상업용 부동산(CRE) 파이프라인, 건설 약정, 신규 고객 관계, 타 금융기관 관련 시장 혼란 등을 지속 성장에 대한 자신감의 배경으로 꼽았습니다.

순이자이익은 전분기 대비 820만 달러 증가했습니다. 이는 평균 수익자산 증가와 완만한 순이자마진 확대가 뒷받침한 결과입니다. 평균 대출 수익률은 3bp 상승했고, 투자증권 수익률은 7bp 상승했으며, 신규 대출 평균 금리는 6.55%로 2분기의 6.53%에서 상승했습니다.

예금 조달 비용은 5bp 상승한 1.38%를 기록해 높은 시장 금리와 이자부 예금 중심의 증가를 반영했습니다. 무이자 예금은 전체 예금의 32%를 차지했습니다. 배너(Banner)는 이번 분기 중 잔여 연방홈론은행(FHLB) 차입금을 전액 상환했습니다.

비이자이익은 전분기 대비 280만 달러 감소했으며, 이는 주로 퍼시픽 파이낸셜(Pacific Financial)로부터 인수한 증권 매각으로 발생한 210만 달러의 손실 때문이었습니다. 모기지 뱅킹, 미 중소기업청(SBA) 대출 매각 및 스왑 관련 이익 감소도 수수료 수익에 부담을 주었습니다.

비이자비용은 770만 달러 증가했으며, 이는 주로 490만 달러의 합병 관련 비용과 110만 달러의 감액 손실(압류 부동산 관련)에 따른 것이었습니다. 이번 분기에는 인수한 사업 부문의 1개월 치 영업비용이 포함되었습니다.

자산 건전성

연체 대출 비율은 전분기 대비 5bp 상승한 전체 대출의 0.56%를 기록했으며, 이는 전년 동기의 0.39%와 비교됩니다. 요주의 이하 분류 자산은 900만 달러 감소해 전체 대출의 1.61%를 차지했습니다.

부실자산(NPA)은 240만 달러 증가했으며, 여기에는 5,900만 달러의 부실채권(NPL) 및 400만 달러의 압류 부동산(REO)가 포함되었습니다. 총 대출 손실액은 120만 달러였으나, 52만 8,000달러의 회수액으로 일부 상쇄되었습니다.

대손충당금 전입액은 280만 달러로, 대출 손실에 대한 180만 달러와 미집행 약정에 대한 100만 달러로 구성되었습니다. 배너는 또한 860만 달러를 추가해 인수한 대출 포트폴리오의 초기 대손충당금을 설정했습니다.

경영진은 인수한 패시픽 파이낸셜 포트폴리오가 배너의 대출 심사 기준 및 중립적인 리스크 프로필과 부합한다고 밝혔다. 회사는 금리 재조정에 대비해 오피스 및 기타 상업용 부동산(CRE) 익스포저에 대한 스트레스 테스트를 지속하고 있다. 경영진에 따르면 중대한 신용 문제는 금리 인상과 광범위하게 연계되기보다는 개별 기업의 특수 요인으로 남아 있다.

경영진 가이던스

경영진은 2026년 4분기 순이자마진(NIM) 확대를 기대하고 있다. 9월 연방기금금리 인상에 따라 대출 포트폴리오의 약 25%가 금리 재조정 대상이 될 것으로 예상되었으며, 패시픽 파이낸셜 인수 거래는 대출 수익률을 몇 bp 상승시킬 것으로 전망된다. 유가증권 포트폴리오 수익률은 약 6~7bp 상승할 것으로 예상되었다.

2027년 마진 전망에 대해 경영진은 금리 정책에 따라 달라질 것이라고 밝혔다. 배너는 자산의 금리 민감도가 약간 높기 때문에 추가 금리 인상이 이뤄질 경우 NIM 확대를 뒷받침할 것이다. 금리 인상이 중단되더라도 예금 경쟁 상황에 따라 완만한 확대가 유지될 수 있는 반면, 금리 인하는 마진 보합 또는 완만한 축소로 이어질 수 있다.

배너는 한 자릿수 중간대의 대출 성장률이 2026년 말까지 이어질 것으로 예상하고 있으며, 2027년에도 동일한 속도를 유지하는 것이 현재의 전망이라고 밝혔다.

수수료 이익과 관련해 경영진은 4분기 연환산 기준(run rate)에 약 80만 달러의 뱅크 오브 더 패시픽 2개월 추가 영업 실적이 포함되어야 하며, 모기지 은행 및 SBA(미 소상공인청) 대출 활동이 침체된 상태를 유지한다고 가정할 때 약 50만 달러의 정상화 가능성도 반영되어야 한다고 언급했다.

뱅크 오브 더 패시픽의 분기별 비용 기반은 시너지 반영 전 기준 약 1,000만 달러였다. 배너는 목표 절감액의 약 10%를 달성했고 2027년 1월 1일경 추가로 20%의 효과가 나타나고 7월 1일경 마지막 10%가 반영되어 총 40%의 비용 시너지 목표에 도달할 것으로 기대한다고 밝혔다.

리스크 및 주요 관찰 사항

• 금리 상승으로 인해 소수의 차주가 사업 확장 계획을 중단했으며, 이는 초기 대출 수요에 역풍을 일으킬 수 있다.
• 경쟁사들이 가격 정책을 조정함에 따라 예금 비용은 더욱 상승할 것으로 예상되며, 경영진은 이자부 예금 베타를 28%에서 40% 사이로 추산하고 있다.
• 고금리 환경 속에서 모기지 은행 및 SBA 대출 매각 활동이 둔화되었다.
• 배너는 높은 차입 비용에 따른 부실 압력을 확인하기 위해 소비자, 소상공인, SBA 대출, 오피스 자산 및 기타 상업용 부동산(CRE) 부문을 지속적으로 모니터링하고 있다.
• 기업 고객 유치 경쟁은 특히 가격 면에서 여전히 치열하다. 경영진은 배너가 일반적으로 맞추기 어려운 대출 심사 조건을 제시하는 2차 시장 참여자 및 보험사들과의 경쟁도 언급했다.
• 고객들이 운전자금 한도 대출을 상환함에 따라 4분기 초에 최대 약 1억 달러의 계절성 농업 예금이 유출될 수 있으나, 경영진은 일반적으로 다른 연말 자금 유입이 이 유출을 상쇄할 것으로 기대하고 있다.

애널리스트 Q&A 주요 내용

애널리스트들은 마진 민감도에 크게 주목했다. 경영진은 4분기에 대출 및 유가증권 수익률 상승이 단기 예금 비용 압박을 상쇄할 것이라고 밝혔으나, 시장의 금리 전망이 배너가 주로 따르는 예측과 달라 2027년 결과는 여전히 불확실하다는 점을 강조했다.

자본 배분과 관련해 배너는 기본 배당 지급을 최우선 순위로 유지하고 있다고 밝혔다. 회사는 9월에 20만 주를 매입했으며 패시픽 파이낸셜 인수 거래를 완료한 후 4분기 추가 자사주 매입을 검토할 예정이다. 경영진은 또한 현재 자본 수준이 잠재적 M&A를 위한 유연성을 유지해 준다고 판단하고 있다.

패시픽 파이낸셜 인수와 관련해 배너는 인수한 유가증권 포트폴리오의 듀레이션을 짧게 유지하며 재조정을 진행했다. 회사는 즉각적인 추가 재무상태표 재조정을 추진하기보다는 유입되는 현금 흐름을 자체 대출에 재투입할 계획이다.

경영진은 추가 인수 가능성을 열어두고 있으나 단기적인 최우선 과제는 패시픽 파이낸셜과의 통합을 완료하고 자체 성장을 지원하며 통합에 따른 혼란을 최소화하는 것이라고 밝혔다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Hello, everyone. Thank you for joining us, and welcome to the Banner Corporation Third Quarter 2026 Conference Call and Webcast. After today's prepared remarks, we will host a question-and-answer session. [Operator Instructions]

I will now hand the call over to Mark Grescovich, President and CEO of Banner. Mark? Please go ahead.

Mark J. Grescovich

Thank you, Trevor, and good morning, everyone. I would also like to welcome you to the Third Quarter 2026 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

Sure, Mark. Good morning. Our presentation today to us of 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 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 the actual results to differ are available from the earnings press release that was released yesterday and the most recently filed Form 10-Q for the quarter ended June 30, 2026. Forward-looking statements are effective only as of the date they are made, and Banner assumes no obligation to update information concerning its expectations. Mark?

Mark J. Grescovich

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 third quarter 2026 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 want to welcome our new colleagues from the Bank of the Pacific team to Banner. And 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'm 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 $47.7 million or $1.36 per diluted share for the quarter ended September 30, 2026. This compares to a net profit to common shareholders of $1.54 per share for the third quarter of 2025.

The third quarter 2026 performance was impacted by the closure of the previously announced Pacific Financial acquisition. Rob will discuss this in more detail shortly. Also, 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. 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 pretax pre-provision earnings, excluding gains and losses on the sale of securities, changes in fair value of financial instruments, merger and acquisition-related expenses, and building and lease exit costs. Our third quarter 2026 core earnings were $68.6 million compared to $67.8 million for the third quarter of 2025. Banner's third quarter 2026 revenue from core operations was $179 million compared to $169 million for the third quarter of 2025, an increase of 6%.

We continue to benefit from a strong core deposit base that has proved to be resilient and loyal banner, a very good net interest margin and core expense control. Overall, this resulted in a return on average assets of 1.11% for the third quarter of 2026. 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 represent 90% of total deposits. Reflective of this performance, coupled with our strong regulatory capital ratios, and our strong tangible common equity per share, we announced a core dividend of $0.52 per share. In the quarter, we also released our 2025 corporate responsibility report. Banner has always been committed to doing the right thing in support of our clients, the many communities that we serve and our colleagues. The accomplishments highlighted in this report are meant to reflect the deep connection we have with all of our stakeholders and our commitment to creating positive change in the communities we serve.

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 as well as one of the best banks in the world by Forbes. In Newsweek named banner, one of the most trustworthy companies both in America and the world again this year and just recently again, named Banner one of the best regional banks in the country. Additionally, our company was certified by Great Place to Work. S&P Global Market Intelligence ranked Banner's financial performance among the top 50 public banks with more than $10 billion in assets.

The accrual bond rating agency affirmed all of Banner's investment-grade debt and deposit ratings. And as we have noted previously, Banner Bank again 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?

Jill Rice

Thank you, Mark, and good morning, everyone. As noted, we completed the acquisition of Pacific Financial this month, adding to our portfolio growth while maintaining strong credit metrics, a testament to the credit culture at both organizations. Loan originations exceeded expectations, increasing 2% from the linked quarter in contrast to the typical seasonal slowdown and increasing 61% when compared to the third quarter of 2025. Importantly, Banner's credit metrics remain stable. Loan outstandings grew by $1 billion in the quarter or 8% from the linked quarter. Of that amount, $766 million was attributable to the acquisition, while the additional $235 million resulted from organic loan growth.

On a stand-alone basis, $235 million equates to an annualized growth rate of approximately 8% for the legacy Banner portfolio. Commercial real estate was the primary driver of loan growth during the quarter. owner-occupied real estate grew by $100 million, including $74 million of acquisition-related growth and $26 million of organic growth. Investor CRE grew by $61 million, reflecting acquired balances of $77 million that were partially offset by payoffs within the legacy portfolio. Growth within the small balance real estate portfolio was entirely acquisition related.

Multifamily real estate grew by $57 million, including $37 million of acquisition-related growth with the remainder driven by transfers from construction and new originations partially offset by continued refinancing activity into the secondary markets. The construction portfolio increased $108 million, including $29 million of acquisition-related growth and $79 million of organic growth. The majority of this increase occurred within the land and land development and commercial construction segment.

The construction portfolio remains well balanced with 1:4 family construction continuing to represent 5% of total loans and the overall construction portfolio representing 14% of total loans. As discussed in prior calls, we continue to closely monitor the completed and unsold inventory levels within the 1:4 family for-sale construction portfolio. Current levels remain well within historical norms and builders remain cautious regarding Neustar.

C&I loan balances increased by $72 million, approximately 45% of which was acquisition-related while the small business portfolio grew by $79 million entirely through organic growth. Looking at the ag portfolio, the $52 million increase primarily reflects acquired balances. The 1-4 family portfolio increased by $64 million, including $46 million of acquisition-related growth with the balance reflecting custom construction conversions upon completion net of payoffs.

Finally, consumer balances increased by $103 million, including $63 million of acquisition-related growth and $40 million in new originations, primarily via home equity lines of credit. Turning to our credit metrics. Delinquent loans at 0.56% of total loans increased 5 basis points from the linked quarter and compared to 0.39% as of September 30, 2025. Adversely classified assets declined by $9 million in the quarter and now represent 1.61% of total loans.

Nonperforming assets increased by $2.4 million in the quarter and are comprised of nonperforming loans of $59 million and REO balances of $4 million. Net charge-offs were modest during the quarter. Loan losses totaled $1.2 million and were partially offset by recovery totaling $528,000. The provision for credit losses in the quarter was $2.8 million, consisting of a $1.8 million provision for loan losses and a $1 million provision for unfunded loan commitments. Additionally, the allowance for credit losses increased by $8.6 million to establish the initial reserve associated with the acquired loan portfolio.

At 1.32% of total loans, the reserve remained strong and compares to 1.35% as of the linked quarter and 1.36% as of September 30, 2020. I will close by noting that our credit metrics remain strong and reflective of our moderate risk profile. The addition of the Pacific Financial portfolio aligns well with Banner's underwriting standards and the credit culture is highly consistent with our own, further reinforcing our risk profile. We remain well positioned to navigate this economic cycle with a granular and diversified loan portfolio that is supported by a strong balance sheet. A robust reserve for credit losses and capital levels well in excess of regulatory requirements.

With that, I will hand the mic over to Rob for his comments. Rob?

Robert Butterfield

Great. Thank you, Jill. We reported $1.36 per diluted share for the third quarter compared to $1.43 per diluted share in the prior quarter. The decrease in earnings per share compared to the prior quarter was primarily due to merger and acquisition expenses and a loss on the sale of securities acquired in the Pacific Financial merger, partially offset by stronger net interest income and a lower provision for credit losses.

Core pretax pre-provision income increased $4.2 million or 7% compared to the prior quarter. As Jill previously mentioned, total loans increased $1 billion during the quarter, which included $766 million of loans acquired from Pacific Financial Corporation and $235 million of organic loan growth. The loan-to-deposit ratio ended the quarter at 84%. Total security balances increased $158 million during the quarter, primarily reflecting securities acquired in the Pacific Financial transaction after repositioning the acquired portfolio, partially offset by an increase in unrealized loss in the security portfolio due to an increase in interest rates.

Deposits increased $1.6 billion during the quarter as part of the Pacific Financial acquisition. We acquired $1 billion in deposits, excluding acquisition-related organic deposit growth. Organic deposit growth was $463 million during the quarter or 13% on an annualized basis, demonstrating the strength of our balance sheet and our deposit franchise and our client relationships. Core deposits increased $1.46 billion and represent 90% of total deposits at the end of the quarter. Certificates of deposits increased $142 million during the quarter due to the CDs acquired from Pacific Financial.

Total borrowings declined during the quarter as we repaid all outstanding FHLB advances, reflecting the strength of our deposit funding base. Tangible equity to asset ratio was 9.48%, and total shareholder equity increased to $135 million during the quarter to $2.13 billion. Net interest income increased $8.2 million from the prior quarter due to a combination of net interest margin expansion and growth in average earning assets, including the impact of the Pacific Financial acquisition and organic loan growth. The tax equivalent net interest margin was 4.14% compared to 4.13% in the prior quarter.

The increase in net interest margin was driven by higher yields on earning assets as average loan yields increased 3 basis points and the yield on investment securities increased by 7 basis points. The average rate on new loan production for the current quarter was 6.55% compared to 6.53% from the prior quarter. The increase in asset yields was partially offset by higher funding costs, primarily reflecting an increase in the cost of deposits due to a combination of an increase in market interest rates, and the majority of the growth in deposits being in interest-bearing accounts.

Total deposit cost increased 5 basis points to 1.38%. Noninterest-bearing deposits ended the quarter at 32% of total deposits. Total noninterest income decreased $2.8 million from the prior quarter. The decrease was primarily driven by a $2.1 million loss on the sale of securities acquired from Pacific Financial as market interest rates increased during September prior to the sale being completed. Higher debit card transaction expenses, lower gains on the sale of mortgage and SBA loans and lower income from swap related activities also contributed to the decrease. These decreases were partially offset by favorable changes in the valuation of financial instruments carried at fair value.

Total noninterest expense increased $7.7 million from the prior quarter. The primary driver was a $4.9 million increase in merger and acquisition expenses associated with the closing of the Pacific Financial transaction and a $1.1 million increase in write-downs of foreclosed real estate holdings. The current quarter also included one month of expense associated with the operations acquired from Pacific Financial. Our capital liquidity and credit quality metrics continue to position us well to support our clients, communities and future growth opportunities while maintaining a disciplined risk profile. This concludes my prepared comments.

Now I'll turn it back to Mark.

Mark J. Grescovich

Thank you, Jill and Rob for your comments. That concludes our prepared remarks, and Trevor, we will now open the call and welcome questions.

Operator

[Operator Instructions] Our first question comes from the line of Jeff Rulis with D.A. Davidson.

질의응답

Ryan Payne

This is Ryan Pan on for Jeff Rulis. Bigger picture on the margin, some moving pieces with the FHLB advances runoff, I mean, security sale. So where do you see the NIM trajectory from here?

Robert Butterfield

Sure, Ryan. This is Rob. So if we think about the fourth quarter and the asset side of it, I would expect some expansion in loan yields has about 25% of our loan portfolio would have repriced up with the increase in Fed funds rate in September. And then in addition, the closing of the Pacific Financial deal would also add a couple of basis points to the loan yield as well. And then I would expect the portfolio also to see an increase in yield in that 6 to 7 basis point range.

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. So on a net basis, I would expect some expansion in NIM in the fourth quarter.

If we're looking out further, 2027 would really be dependent on Fed actions. I've seen the market pricing in anywhere from 1 to 2 increases in '27 in addition to the increase that they're pricing in December. I will say Moody's forecast is showing something different, and we usually follow Moody's they're actually showing two rate decreases in 2027. So I would say there's a bit of lack of clarity out there around the interest rate trajectory right now. the market is right, and we see some increase in the fourth quarter and then also a few increases in 2027, then I would expect some expansion of our net interest margin as we are slightly asset sensitive. If the Fed were on pause for some reason, I think we'd also see some moderate expansion during 2027, really just dependent on the level of deposit rate competition. And a gradual decline or if the Fed decides to decrease some interest rates in 2027, then I think it's either flat to a moderate compression.

Ryan Payne

Understood. Very helpful. On the loan side of things, strong organic loan growth this quarter. If you could talk to what you're hearing from customers midst of a rising rate environment. I know, Jill, you mentioned that builders might be cautious. But if that could impact demand? And any expectations as we head into 2027 on loan growth side?

Jill Rice

Sure, Ryan. It's a bit early to really peg what's going to happen in terms of loan demand with the rate environment. We have had a I'll call it a handful of clients who have hit the pause button and are stepping back and looking at some of their expansion plans. But again, it's too soon to really know, the strong loan growth was fantastic this quarter. I do think the increasing rate environment that we're moving into is going to be an initial headwind. But that said, we have meaningful unfunded construction projects in process outside of the residential portfolio that -- yes, they are being cautious with new starts.

Commercial and commercial real estate pipelines remain healthy. We're still anticipating a mid-single-digit loan growth as we close out 2026, and I would position that to be the same loan growth rate we will expect into 2027.

Ryan Payne

Okay. And just last for me, trying to gauge a run rate on fee income. And stripping out that loss on securities, is that kind of where we can think of where we should think the run rate is? Or where would you set expectations on fees? .

Robert Butterfield

Sure, Ryan. It's Rob. So noninterest income in the third quarter, I think, was lower than our typical run rate. We have seen lower mortgage banking activity and also SBA gain on loan sale as higher interest rates have slowed activity in these areas. If I think about the fourth quarter, and you wanted to get to a run rate, you would need to add a full quarter of Bank Pacific activity. We saw one month of that in the third quarter. So you need to add to more months in there. They're running about $400,000 a month. So that would be an additional $800,000 on top of what we saw in the third quarter.

And I think there's just a number of areas where we just -- you always see fees move up and down quarter-over-quarter. So I think there's probably some normalization above that after you added Bank of Pacific maybe $0.5 million or something in that range. And I think that gets you probably close to a run rate as long as we see that slowdown in mortgage banking and SBA.

Operator

Our next question comes from the line of Matthew Clark with Piper Sandler.

Matthew Clark

Just a couple more on the margin. if you had the spot rate on deposits at the end of September and then your expectations around the interest-bearing deposit beta, I think it was 28% on the way down. Just curious what you think you might achieve on the way up.

Robert Butterfield

Sure, Matthew. So spot cost of deposits for the month of September was $140 million compared to $138 million for the quarter. So we were seeing some additional pressure in the month of September there. And then as far as the deposit beta on the interest-bearing deposits, as you said, 28 basis points is what we're seeing on the upside. Modeling-wise, we're modeling something higher. We're modeling $40 million. So I would say it would end up somewhere between 28% and 40%.

But that tends to be very lagged as what we've experienced in the past. Oftentimes, I think we've seen some front-running of that. If you think about that deposit cost increased 5 basis points during the third quarter. And typically, we would expect that to be relatively flat without the kind of pressure on market index rates that we saw during the third quarter. So we're hoping some of that it was front-end loaded, but I would expect some carryover from the Fed actions in the fourth quarter.

Matthew Clark

Got it. And then just on deposits on the organic side, really strong. I think some of that was seasonal, but maybe speak to the portion that you wouldn't attribute to being seasonality and where it's coming from and whether or not there's anything -- whether or not those balances are sustainable.

Robert Butterfield

Yes. So we -- I mean the third quarter is always the best quarter for a deposit growth standpoint. There is some seasonality to that, but the majority have been sticking around typically what we see, and it's mostly on the ag side as we see cash coming in from crop harvest and other things, and it builds as you get into the -- go through the third quarter and typically what happens at the beginning of the fourth quarter, we would normally expect that those clients would use that cash flow to pay down operating lines of credit and do other things with that cash.

So if you think about $463 million, there could be $100 million of that, that would come back out in early fourth quarter. But then typically, what happens as you move into the end of the year, we see other clients that start to position their balance sheet for the end of the year. And oftentimes, they will put additional cash on their balance sheet as we fourth quarter. So that usually ends up balancing out. And typically, we would see some increase in deposits in the fourth quarter when you balance those two out.

Matthew Clark

Got it. And then last one for me for Mark, on M&A, I know you were in the midst of integrating this latest deal, but any comments around whether or not conversations have picked up at all in your appetite to consider another deal.

Mark J. Grescovich

Yes. Thank you, Matthew, for the question. Our philosophy hasn't changed. We continue to have dialogue with folks that we think would be great partners with Banner and we're very excited about the Bank of the Pacific combination, Pacific financial closure, and we do have an integration that's going to occur mid-month. So we're focused on that. But to the extent that opportunities arise, we are prepared to move forward. But like I said, we're focused on the current disruption, our organic growth and making sure that the Pacific Financial integration goes extremely well.

Operator

Our next question comes from the line of Kelly Motta with KBW.

Meghan Lynch

This is Megan Lynch on for Kelly Mode. So just sort of on specific a bit more? I know they enhanced balance sheet flexibility given their low loan to deposit and their great funding. I was just sort of wondering that now that you're closed, is there any incremental repositioning of the balance sheet or any sort of opportunities that you guys are seeing or taking advantage of?

Robert Butterfield

Yes. Thanks, Megan. This is Rob again. So what we did there is we did reposition their security portfolio in the month of September. And we let the balances there, but we intentionally left the duration short on that security portfolio and where we repositioned it to. But the thought process being that as the cash flows come off of that acquired security portfolio, we're able to redeploy those back into the loan portfolio. But that's going to happen organically.

We're not looking at doing any type of balance sheet repositioning or anything like that from the security side or from a loan portfolio perspective but we just intentionally left the duration short so we can redeploy those cash flows over time into the loan book.

Meghan Lynch

Okay. That was very helpful. And then so you sort of gave -- you touched on how much Pacific is adding to fees and sort of that run rate, but how should we think about like their expense contribution and sort of clearer run rate on that Pacific's contribution and expenses?

Robert Butterfield

Sure. So to get to a run rate from an expense standpoint, if you start with the total expenses for the third quarter, you would need to back out the M&A expense of $5 million and then also back out that write-down on REO properties that we took of around $1 million. And then from there, you need to add in two months of expense for Bank of the Pacific operations. Their quarterly expenses have been running around $10 million at this point. We've probably achieved about 10% synergies. So 10% off the $10 million gets you to kind of a monthly run rate right now. What we expected was to get a total of 40% cost synergies there.

I think another 20% of the 40% would be realized starting at the beginning of the year, so call that January 1 of '27. And then the last 10% of cost synergies would be realized by mid-next year, call it, July 1 to get to that total of 40% cost synergies that we expected. And then if you're trying to get to a 2027 run rate, you would need to abnormal inflationary increase in expenses, plus a little bit on top of that for continued investments into the organization.

Operator

Our next question comes from the line of Andrew Terrell with Stephens.

Unknown Analyst

Rob, I wanted to ask you about just the fixed asset repricing dynamics on the margin. I think if I recall, I think it was last quarter, it sounded like it's maybe fizzling out a little bit. We've had a pretty tremendous backup in the curve here. Just your views on fixed repricing and the contribution of the margin going forward?

Robert Butterfield

Sure, Andrew. Thanks for the question. Yes. I mean we certainly think there will be a little bit of pick up there. I think it's going to come from a couple of different pieces. It's not only the fixed asset repricing, but it's also the yields on new loans coming on. If you look at the yields in the third quarter, it was up slightly from the second quarter, but not much, and that's just because even though rates had increased, we had commitments out there prior to the rates increasing. So you had some you didn't really realize the full increase in the market interest rate.

So we think there's some benefit just as new loans are coming on and existing loans are paying off. We're still trying to get our full handle around what the benefit of the fixed asset repricing. We're running a couple of basis points, it almost came down to zero. So I think as we start through the process here, it will probably be a couple of basis points a quarter. And as we get a clear trajectory on where rates are going to stay going forward here, then we'll probably get a better sense on what the full impact would be.

Unknown Analyst

Yes. Got it. Okay. I appreciate it. And then capital, you guys leveraged capital just a little bit with the strong growth in the deal sequentially. Just interest in buyback continuing from here versus maybe holding capital or building capital in anticipation of future M&A? I guess, do you have a preference?

Robert Butterfield

The way we're thinking about that right now, Andrew, core dividend is the first thing that we're focused on. If we're looking at something beyond that, I mean we did repurchase 200,000 shares in September after the Pacific Financial deal closed. We think share repurchases are very attractive where we're currently trading that. And so we will evaluate further share repurchases in the fourth quarter. And I think even with the share repurchases, we're probably keeping capital at about the current level or maybe it goes down a little bit. So I think that still provides us with opportunity to consider the right M&A opportunity that could come along.

Unknown Analyst

Got it. And I think it's like 12.6% CET1. Is 12.5% CET1 kind of how you think about capital targets, if you think long term or is it a different level than that?

Robert Butterfield

I think it would be something below that. We've also been focused on the TCE ratio. If you think about the TCE ratio, we were at 10% at the end of the second quarter, we're at 9.48% right now. Bank of the Pacific reduced at about 20 basis points. The increase in the unrealized loss in the security portfolio was the other, call it, 30 basis points of that. our target range to the upper end of our target range is 9.5%. So we're setting at the upper end of our target range right now. And we're above peer median. And if you look at our proxy peers, we were about 30 basis points above where they were at previously. So I think there's additional room to bring down the TCE ratio.

Operator

Our next question comes from the line of David Feaster with Raymond James. .

David Feaster

I wanted to follow up on maybe Jill, your commentary about maintaining a mid-single-digit pace of growth next year. I'm just curious, what gives you confidence in that? What's driving growth? It sounds like there's some construction tailwinds. But are there any markets you're seeing more strength or segments? And just maybe as you touched on the competitive side.

Obviously, it's been tough, especially on the pricing front, but curious if you're seeing that abate at all or whether competition is maybe shifting more towards looser underwriting as well. So just kind of curious on the growth front and the competitive landscape on the loan side.

Jill Rice

Sure, David. So competition continues to be fierce with the clientele that we think on a day in and day out basis. and pricing, it continues to be one of the levers that are pulled. There isn't a ton within the banking industry that's pushing out in terms of underwriting standards, certainly, secondary market, insurance companies. And that sort of competition gives underwriting that we don't generally match. So we have some of that, that we're competing with. But the confidence really comes from the good work that our team has been doing over the past year in terms of who they're calling on growing existing client relationships, bringing in new clients as well.

New team members have been really successful existing bankers have been successful as well in terms of expansion. We benefit from the market disruption as well. So some of the combinations that have occurred or shifts in where decisions are made and cause people to rethink where they want to do banking. So all of that together, just you're seeing it. I'm seeing it, I should say, in the originations. And so those originations are frontrunners to dollars that are advancing on the books, whether it's closings, but and funding up of those closings over time. And again, the construction portfolio is -- there's a lot there as well to pull through.

David Feaster

Okay. That's helpful. And then, Jill, maybe just staying with you, touching on the credit side. Obviously, you guys are phenomenal on the credit front and very conservative. I'm curious as you think about higher rates and you stress the book, are there any segments that you're watching more closely? I mean we got small business consumer. And then just high level, how do you think about the health of the CRE book and the markets across your footprint? Just kind of curious what you're seeing and what you're hearing from borrowers broadly.

Jill Rice

So what are we watching you hit on all of them, right? I mean, we are looking at the consumer, we're looking at SBA. We're watching what the higher rate environment is doing in terms of segments within CRE, we continue to stress the office portfolio and continually look at that as it will -- as if it had repriced in when is it going to reprice, just to kind of watch what is going to be happening or potentially happening based on their most current operating statements.

To date, we don't have very many that would look like they won't work at a current rate reset. I think that speaks to the underwriting we're doing as we're going in, in terms of the required debt service coverages that we expect for various different types of properties coupled with the significant equity that borrowers have in their properties going in recourse that is on 99% of the loan book as well. And global cash flows that can backstop issues with any particular property. So we're monitoring I would say, most of the book on a very regular basis in terms of what can happen in this rising rate environment. But right now, any issues of size have been idiosyncratic and not really related to the interest rate environment.

David Feaster

Okay. That's helpful. And then Mark, maybe just a high-level one for you. I mean, as we talked about, there's a lot of tailwinds for your business, right? You got the back book of pricing story, margin expansion, a strong core deposit base, strong credit loan growth excess capital. There's a lot to like here. Just given your competitive positioning and kind of the tailwinds for the bank in this market, what are you excited about right now? And where are you investing today that can help maybe take the bank to the next level over the next several years?

Mark J. Grescovich

Thank you for the question, David. I think you hit a number of the things I'm excited about, right? We have an opportunity on some growth avenues organically, there's quite a bit of market disruption that's occurring with the combination of other financial institutions, which creates uncertainty in clients' minds in our footprint. We're in a great footprint for business. So I'm very excited about our opportunity to grow organically.

And at the same time, the company is extremely well positioned as you already said, from a balance sheet strength standpoint, a moderate risk profile. Our capital posture that Rob talked about is extremely strong. So it presents quite a bit of flexibility for our company going forward. I would also say that given the improvements that we've made in our operations, then the investments we've made to improve our efficiency will also create some scalable efficiencies and generate positive operating leverage as we go into 2027. So I'm very excited about the how the organization is positioned and what we can do going forward and continue to improve returns.

Operator

There are no further questions at this time. I will now turn the call back to Mark for closing remarks. Please go ahead.

Mark J. Grescovich

Right. Thank you, Trevor. As I stated, we're very proud of the Banner team our solid third quarter 2026 performance. Thank you all for your interest in Banner and for joining our call today. We look forward to reporting our results to you again in the future. Have a great day, everyone.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.